Wall Street
By Stephen Gandel

(MONEY Magazine) – Stocks have been lagging, with only international equities showing gains in recent months.

NOTES AND SOURCES: Unless otherwise noted, data as of April 21 from Lipper, New York; 877-955-4773. Bond index data from Lehman Brothers. Market benchmark index levels from Bloomberg. Stock data from Thomson/Baseline. Fund category averages as of April 14. Monthly S&P ratios as of April 13 from Standard & Poor's. Ratios are based on previous four quarters of earnings. [1] Annualized. [2] Price change only.

Sivy 70


Why Tech Stocks Have the Blues

NOTES: As of April 26. Earnings are for first quarter. Estimates are as of Jan. 1. SOURCES: Thomson/Baseline, Bloomberg.

• Remember the technology two-step--when one move forward for the market meant a double hop for tech stocks? These days Wall Street is doing that dance in reverse. Six of the eight technology stocks in the Sivy 70 are down more than twice the market this year. What gives? Analysts have been lowering earnings forecasts. But they didn't lower them enough for bellwether IBM (IBM), which badly missed expectations in the first quarter due to weakness in its services business. And that's the Big Blue unit touted as having the most potential. "We haven't had the significant technology spending cycle you would expect with an economic recovery," says Jason Trennert, chief investment strategist at forecaster International Strategy & Investment Group. Trennert does say that things may be turning around for tech, though. It's been six years since companies made large capital investments in technology; they'll have to start making upgrades soon. And, Trennert adds, big tech stocks in particular seem reasonably priced.

Indeed, some value investors are biting. Robert Torray, who runs the Torray Fund, recently bought nearly 2 million shares of Intel (INTC). The world's largest chipmaker, helped by rising laptop-computer sales, had stellar first-quarter earnings. Yet its stock is down slightly this year. "Tech is not my bag," says Torray. "But Intel was too good a value to pass up." --STEPHEN GANDEL

Money 50


Good News: Fee Cuts on the Rise

NOTE: As of April 26. SOURCES: The fund companies.

• Thanks to tougher competition and increased regulatory scrutiny, it's becoming less expensive to invest in mutual funds. American Funds, Fidelity and Vanguard recently cut fees on many funds, including 12 of the MONEY 50. Other funds have had distribution or sales charges wiped out. And many companies implicated in the market-timing scandals have cut fees as part of their settlements with regulators. Says Morningstar director of fund research Russel Kinnel: "The trend has been positive, but there's a lot of room to cut."

Fees are down during the past year, but funds sold to retail investors still charge average expenses of just under 1%, almost exactly what they dinged you in 1989--this during a period when fund assets have ballooned to $6.2 trillion from $550 billion. That kind of growth makes recent fee cuts--which generally amount to less than $2 per $1,000 invested--seem a little stingy, no? "Obviously these are for-profit companies, but investors should be paying a lot less," says Kinnel.

That day may come soon, according to Lipper analyst Jeff Tjornehoj. "Investors are starting to take low-fee offerings to heart," he says. "That's the biggest part of the competition right now." Since early last year, 844 funds have cut management fees, while only 135 have hiked charges. Research shows that cheaper funds outperform expensive ones over the long run. So be sure to check out the SEC's Cost Calculator at sec.gov/investor/tools/mfcc/get-started.htm when you're comparing funds. --T.K.