Dick Sears
Friday, September 9, 2005
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"Broadband" by Holly Seeger/Today Video. Also this.
How's that for an oxymoron? Who ever heard of
a conservative Gilder portfolio? But everything is
relative, and clearly some Gilder portfolios will be
more conservative than others. All GTI stocks are
risky, but not to the same degree.
Suppose you wanted to invest in Gilder stocks,
but you hadn't the stomach for the full monty.
How would you select the less risky ones?
If you are like me, afraid to get your hands dirty
reading musty financial reports, you would need
a method that didn't rely on judgment.
An interesting approach would be to choose the
companies that pay dividends. They are bound to
be larger and more stable. And they are likely to
have higher quality earnings and a more secure
future. High flyers don't pay dividends.
Your subset would be the blue chips of the Gilder
stocks, sort of like General Motors, US Steel, and
AT&T, er, well, you know what I mean. (That was
just my little reminder that all stocks are risky.
The future is always uncertain.)
Until two years ago, hardly any GTI company
paid dividends. But the new tax law's more
favorable treatment of dividends has changed
the picture.
Currently nine GTI companies pay dividends:
ADI, INTC, NSM, QCOM, S, SKM, TSM, TXN, and
XLNX. If you're looking for a less risky subset of
the Gilder universe, that's a possible portfolio.
But as John Ruskin said, the work of science
is to substitute facts for appearances, and
demonstrations for impressions. (That is the
motto of the Society of Actuaries, of which
I used to be a Fellow.)
In that spirit, here is a comparison of average
returns for GTI stocks over the last two years:
| Dividend Payers |
All Others |
|
| 2004 | + 11.6% | - 3.3% |
| 2005 to Date | + 13.2% | + 2.1% |
The dividend stocks are looking pretty
good.
You get less risk but a better return. It's only two
years, of course, and when the market takes off,
the high flyers will probably lead the way. But if
you want less risk, this could be the ticket.
In other news, Qualcomm (QCOM) finally crossed
into the black for the year this week, thanks to a
30% gain since the end of June. Last year it was
up 57%, which made its pullback earlier this year
understandable. But Mighty Q is unstoppable.
The
Market Day by Day
The bulls celebrated their return from the beach
in grand fashion. It's not often the GTI is up every
day of the week. This looks like a market that
wants to go up, way up. It's always a good sign
when the GTI blows away the NASDAQ.
Returns for the
Week:
Gilder Technology Index (GTI):
+ 3.9%
Nasdaq Composite
Index (NSD): + 1.6%
S&P 500 Index (S&P): + 1.9%
| Historical Returns | GTI | NSD | S&P |
| 1997 (est'd) | 21% | 22% | 31% |
| 1998 (est'd) | 48% | 40% | 27% |
| 1999 | 284% | 86% | 20% |
| 2000 | - 44% | - 39% | - 10% |
| 2001 | - 43% | - 21% | - 13% |
| 2002 | - 56% | - 32% | - 23% |
| 2003 | 130% | 50% | 26% |
| 2004 | 3% | 9% | 9% |
| 2005 to Date | 3.3% | 0.0% | 2.4% |
| Avg for 8+ yrs | 10.3% | 6.2% | 6.1% |
| Last 52 wks | 23% | 15% | 10% |
|
Since the high of 3/06/00 |
- 78% | - 57% | - 19% |
|
Since the low of 10/09/02 |
266% | 95% | 60% |
Makeup of the
GTI:
The GTI companies are those "Telecosm
Technologies" in the Gilder Technology
Report whose stock is readily available to
investors. If a company is not traded on the
NYSE, AMEX, or NASDAQ National Market,
it is not in the GTI.