Smarter Money: PMC-Sierra Is the Waterloo for Tech Momentum Funds
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Before Thursday, 2001 already seemed to be too good to be true for tech momentum funds. After the disaster of 2000, I am sure many of these managers expected redemptions and a continuation of the awful tech tape that we saw in the fourth quarter.
Instead, buoyed by the Fed's cuts, the stocks of the technology companies these funds held exploded to the upside. Some of the hardest-hit areas -- personal computers, networking and telecom -- were on fire for most of January. The result? Many momentum funds were already up 20% from the first days of the year. The performance numbers going into Thursday were huge! By contrast, balanced funds -- funds with assets in an array of industries -- were performing well, respectably, even. But they had been left wallowing in the mud while these hares dashed off. You only saw the tech momentum funds' fluffy little white tails if you strained real hard and had Leica binoculars. ...
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