Breaking the Tech Addiction: Five Investor Delusions About the Sector

Tech investors, it's time for the analyst's couch.

Despite the fact that many big-name tech stocks have fallen 70%, 80%, even 90% in the past year, many tech die-hards can't get beyond their dependency on the battered sector. Consider the evidence: Of the 20 most commonly held stocks in Merrill Lynch accounts, 13 are tech companies. And while tech sector funds have seen redemptions this year, investors haven't been running for the exits: $3.8 billion has been pulled out through July, following net inflows of $53.6 billion in 2000.

Why the love affair with technology? For starters, some of it is warranted. ...