The flip side of the Nasdaq's troubles was a significant improvement for value funds investing in Old Economy industries like energy, finance, and real estate. Long bonds rallied despite the fear of higher inflation because the U.S. Treasury spent some of its surplus on buying back bonds. Better performance from bond funds counts little these days. Investors still prefer equities, but they're taking them in smaller helpings. It's clear from the fund flows that investors are playing it safe.
Fund managers say they're a little more cautious now as well.
Indeed, biotech stocks have taken their investors on a wild ride, too. But you need nerves of steel to invest in biotech. While technology funds have been hard-hit as a group, there are some standouts. What has really come crashing down to earth this year are pure-play Internet funds. RCN hit 72 in February and now trades at 28.