Gilder's Status Suffers as Tech Stocks Sicken

George Gilder always insists that he isn't a stock picker. But his fondness for the big picture won't save him now from investors' wrath.

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When tech stocks caught fire last fall en route to a stunning 85% gain in the Nasdaq , Gilder was cast in the role of shepherd leading his flock up the mountain. Ostensibly focusing on the revolutionary technologies of the future, he took on the mantle of market guru when he chose stocks like Qualcomm (QCOM) before they became household names with their outsize gains.

With tech stocks well off their highs and the Nasdaq losing a quarter of its value over six weeks, some investors now see Gilder as the goat, not an innocent swami of networking technology, but nothing more than a stock tout. And while Gilder's early picks still look inspired, his choices early this year have meant big losses for many investors who had come to expect huge gains.

Moving On

Gilder, for those who aren't acquainted with him, publishes the $300-a-year Gilder Technology Review, which expounds on technologies that he thinks will be phenomenal successes 10 years out. Gilder's fiery prose and characteristically enthusiastic write-ups of companies, including JDS Uniphase (JDSU), Ciena (CIEN) and Qualcomm, helped stoke the tech inferno of 1999. Gilder's index of 35 stocks he has picked soared 284%.

Up the Mountain Early Gilder picks still look prescient.
Company	Percentage Change
	1999	2000	Cumulative
Applied Micro Circuits (AMCC:Nasdaq)	+649%	+191%	+2,143%
Qualcomm (QCOM:Nasdaq)	+2,619%	-55%	+1,152%
JDS Uniphase (JDSU:Nasdaq)	+830%	+16%	+972%
Broadcom (BRCM:Nasdaq)	+351%	+70%	+639%
Conexant (CNXT:Nasdaq)	+606%	-44%	+312%
Nasdaq Composite Index	+85%	-18%	+53%
Source: Yahoo! Finance. Figures through Oct. 9

But this year the tide has turned for tech stocks. The Nasdaq Composite Index is now off more than 20%, and onetime highfliers like Qualcomm have taken heavy hits, losing 50% of their value and more. Tech funds collectively are down 5.3%, and telecom funds are down 14.4%. As a result, Gilder's index of 35 stocks has slid into negative territory for the year, down 2%. Worse still, Gilder's own investments, as he wrote to his subscribers Monday, are down 40%.

Gilder says some of his largest personal investments are in Qualcomm and Global Crossing (GBLX). Qualcomm and Global Crossing have been two of the companies in his index that have proved to be painful to hold on to this year: Qualcomm is 54% off its January high, while Global Crossing is 57% below its February peak.

It remains unclear whether Gilder holds other stocks on his list; neither Gilder nor his publisher returned calls for comment. While that mystery hangs over his existing picks, Gilder has said that to avoid conflicts he refrains from buying stock in companies added to the list.

All Bammed Up

This kind of performance, while hardly unusual in the bear market that has developed in technology stocks, isn't giving Gilder investors a great deal of confidence.

"Gilder's vision was amazingly well aligned with Mr. Market's worldview from October '98 through March '00," says one former Gilder follower who recently discontinued his subscription and didn't want to be identified. "But Mr. Market has moved on."

. . . and Down This year's picks suffering amid Nasdaq retreat.
Company	Stock Price
	Pre-Gilder Mention	Gilder Effect*	Lately
Agilent (A:NYSE)	$76.50	$96.50	$44.75
Avanex (AVNX:Nasdaq)	55	135.80	84.50
Motorola (MOT:NYSE)	54.66	58.30	21.12
Terayon (TERN:Nasdaq)	68.44	115.30	34.87
Xcelera (XLA:Amex)	32.25	60	13.93
Source: Yahoo! Finance. *Same-week post-Gilder pick peak. Figures through Oct. 12.

"I am getting beat up this year," adds Bammer, an otherwise unidentified Gilder subscriber who posted his comments on the Gildertech message boards recently. Gilder is "still telling us that Global Crossing, Globalstar (GSTRF), WorldCom (WCOM) and others still boast great technology and good management. Should we just stay patient? This is frustrating," Bammer writes.

A Virtue

Gilder's replies to such sentiments tend, as one might imagine, to take the long view. "Timing is critical in stock performance, but over the years it dwindles sharply in effect," wrote Gilder in response to a reader who took issue with his purple prose and his picks.

"If the judgment of the report is correct," wrote Gilder, "your current qualms will seem insignificant."

Indeed, Gilder's friendly critics tend to side with the man when the herd gets hostile.

"Since Gilder's past record has been so phenomenal, investors' expectations are even greater," says Jerry Talansky, a longtime Gilder subscriber who says he "respects the man's intellect" but is skeptical of his stock picks. "Unfortunately, a bear market makes everybody look like an idiot."

"Anybody that takes anything as gospel -- be it from Gilder, William O'Neil, Abby J. Cohen, Ralph Acampora, CNBC, etc., etc. -- are sheep and deserve to be shorn," says Talansky, who says he's made a fortune on Gilder stocks.

Ultimately, time may be on Gilder's side when it comes to notable technologies. But the steep drop in his recent picks makes him look severely ill suited as a stock guru.

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