You are probably trying to figure out how to play technology stocks in 2001 -- or whether to play. You are not alone. From the mutual fund portfolio manager in Boston to the most aggressive hedge fund manager in midtown Manhattan, everyone is trying to puzzle out tech now.

Eating Humble Tech Pie

Your Portfolio in the Balance: How to Wean Yourself Off Tech

Bubble Math and How to Avoid It Next Time

Lessons From the Folly: Opening the March 10, 2000, Time Capsule

Riding the Rambus Still Too Dear for Some

Learning How to Bottom-Fish, Part 1: Cash Flow

Learning How to Bottom-Fish, Part 2: Buying on the Cheap

A Year Later, Bankers Find the Well Is Dry

Poorer but No Wiser, Investors Remain Captivated by Tech

On the Level: When It Comes to Tech, Think Like the Big Boys and Beware

One factor you should weigh in gaming tech stocks this year is how the big money -- the aforementioned investment managers -- will likely line up on the sector. They have the money, and money flows set the tempo for the market. If you are going to dance with tech instead of sitting this one out, you need to hear the beat of the drummers.

So, here is my take on tech in 2001. This analysis is based on two things -- my view of tech earnings in the year ahead and how the big boys and girls who control the hundreds of billions of dollars are likely to react to the earnings news.

Let's get to the earnings front first. After all, profits ultimately drive stock prices.

Tech earnings are crumbling, and profit margins are compressing. That's the basic bad news. Compounding the problem is that last year's quarterly earnings were so good that the 2001 comparisons may well be terrible at least through the third quarter of this year. Take a look at the quarterly operating earnings growth of the S&P Technology Sector in the past year, courtesy of Sanford C. Bernstein: plus 38.5% year-over-year in the first quarter of 2000; plus 52% in the second quarter and plus 43.6% in the third quarter.

Unless the U.S. economy pulls a 180 tomorrow, this year's numbers will not beat those in the first three quarters of the year. The roughest earnings comparison for tech stocks is likely to be either the second or third quarters -- not the first quarter.

What does this mean for tech stocks?

Expect earnings warnings and downgrades to continue into the summer.

Not only will companies miss their numbers in the first half, the second half of the year also looks extremely iffy. The Fed's interest rate cuts are unlikely to kick in as soon as you may hope.

Look for 2001 and 2002 earnings estimates to be taken down more.

Don't expect "earnings visibility" from companies until the second half, at best.

The comps won't get easier until the fourth quarter, at the earliest.

How might the big money play this scenario?

First of all, they will try to anticipate the continuing earnings debacle. That means more selling pressure if they get the slightest hint of bad news. They will lighten up to avoid the rush that should hit between now and June. And, they will dial down their growth estimates for tech in 2002 and 2003. That in turn will make them even more price-conscious buyers when the upturn comes.

What does this mean for you?

Tech stocks are unlikely to sustain their current oversold rally. The current mania for finding a bottom in tech suggests to me that some people have their heads up their rear ends. It is quite possible we do not see a tech bottom until late summer.

You should use the most conservative earnings assumptions when valuing the stocks in you portfolio. Use realistic growth rates. Do you really want to pay two times that growth rate? Or should you pay closer to one times? How sure are you that today's earnings estimates won't be marked down tomorrow?

One final thought.

Diversify your portfolio away from tech unless you have some legal or business constraints that limit you to tech. I don't care how much of a long-term investor you say you are. You should not have 50% of your money in tech.