During the tech frenzy in 1998 and 1999, investors wanted to be where the action was. That meant technology. Many of them threw caution to the wind and put every dime into the new economy, which means technology, Internet, and biotech companies. When those companies faltered, some investors were left with losses of 50 percent and more. It's not foolish to invest in technology.
Technology represents the future, and it's an important investment.
But investors need diversification, too. For some investors that means mutual funds with a value strategy. For others it means bonds, or even cash. The lesson here is a simple one. Don't put all your eggs in one basket.