Technology thrills and spills

High-tech has certainly been the place to be for mutual fund investors over the past 18 months. To the end of May, the average Science and Technology Fund showed a one-year return of 63.6%, according to figures published by The Globe and Mail.

And that was the average — seven funds actually returned over 100%! But look at the three-month numbers and you see a different story. The NASDAQ plunge in late March and early April really took its toll. The average fund was down almost 17% over that time. Many lost over 20%.

Now it has all turned around again. The first three weeks in June saw big gains for most of the tech funds. Many of them recovered most or all of the losses they had suffered in the previous three months.

Does that mean we’re off on another huge run? I don’t think so. My feeling is that the spring correction was overdone and that we’re now seeing a reaction to that.

The result may be to push the prices of some high-tech stocks back to unrealistic levels. So I look for a lot more volatility in this sector in the months ahead. Long-term, I believe there are good profits to be made here. But you’d better have a strong stomach because the ride will be bumpy/p>