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Tech investing a crapshoot
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May 17, 2000: 12:36 a.m. ET
Van Wagoner says tech shakeup has taken casualties, created bargains
By Staff Writer Alex Frew McMillan
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LAS VEGAS (CNNfn) - As he sits at the bar in the Bally's Casino, Garrett Van Wagoner is well aware that investing in technology has been a crapshoot this year. "It is a little ironic," he said, as slot-machine sirens wail and coin slots ching around him. "It's a little ironic that the show is here."
 A bunch of speculators left the stock market a lot lighter after the April tech crash than the tourists from Kansas and South Carolina happily plugging their change into the one-arm bandits here in Vegas will, Van Wagoner pointed out. He's here for the Las Vegas Money Show, of course, to talk investing and the five Van Wagoner funds he runs rather than hit the blackjack tables.
Those speculators haven't come back to the stock market and likely won't, Van Wagoner said. Many margin traders got cleaned out, he said. But he thinks the tech crash has been a necessary evil.
"It had to happen. Everybody knew it had to happen. And everybody kept hoping it wouldn't happen," Van Wagoner said.
Go-go gadget tech boosterism has gone
In February, when he told an investment conference in Los Angeles that the days of 200 percent annual tech gains were over, the crowd booed him. The crowds in Las Vegas listen now and seem more subdued, he said.
Though investors are understandably skittish - he was still talking the market higher precrash -- he thinks many of his favorite tech stocks are back to reasonable prices now. He sold Ariba (ARBA: Research, Estimates) around 125 to 150 in February and has now been buying it back in the high 50s or low 60s, for instance. Of course, he too followed a lot of other stocks down. No one knows exactly where the market is moving day to day.
The 25 best tech stocks
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Have investors lost confidence? Some, sure. He is here if they have, Van Wagoner said. Many mutual-fund companies concentrate on the big institutional money and skip retail investor shows like the Money Show, which has drawn 14,000 individual investors here to events at the Bally's and Paris hotels.
The Van Wagoner funds have an unusually high retail component, as much as 70 percent, so he comes to events such as these to hit a large number of the individual investors he can't spend 30 minutes on the phone with all at once.
Burned investors not coming back
"People got taken out in body bags in April," he said. "I'm sure there are people who bought the fund at the top and are saying I'm not going to do that again." He tries to make them understand the sector and its place in their portfolio, depending on their risk tolerance and time horizon.
 In addition to the people who got burned by tech and will never come back, there are plenty of investors, here in Vegas waiting on each hot tip, looking for that horse to let it ride on, waiting for a duplicate of last year's 80-plus percent Nasdaq run up. "Absolutely. They want it, and they want it now. That's OK. It's not going to happen."
He favors strong, steady but less spectacular growth once the Fed move works its way through the market. Wireless, optical communications and software infrastructure companies hold particular promise now, he said.
Tech sectors to stick with
The software infrastructure companies were punished particularly harshly in the selloff because so many of them were new and untested and lacking in investor confidence. On the other side of the coin, semiconductor makers held up better than almost any tech sector because many are established and not competing with a flurry of new IPOs, he said.
Faced with the Fed raising rates, Van Wagoner is sticking with the "short-term, concerned, long-term optimistic" cliché. But right now is the time for tech-stock investors to pick up their favorite, select companies at prices that will seem very reasonable next year, he said.
At a lunch panel here at the Money Show on Tuesday, Van Wagoner was one of five portfolio managers and stock pundits who gave their top five tech-stock picks for 2000.
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