They will collapse because the specific, individual companies were not able to keep up with the rapid pace of change in the world of technology. Technological developments will continue to drive economic growth, lift productivity and reshape the economic landscape for years to come. You and I definitely want to invest in technology, but we will do so very carefully and with our eyes wide open to the volatility inherent in even the best tech stocks. Lucent has run into the same kind of problems Ericsson had a year ago. Lucent is having trouble matching production with customer demand.
Most technology companies run into problems every once in a while.
Growth, even in hot industries, does not come in straight lines. Our best strategy is to buy stock in these great companies when they stumble. Lucent has stumbled, and it may be six months before earnings are back in target. But the moment the outlook improves the stock will shoot ahead. The only question is what price to pay.