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A bit more than a year ago, when Brazil was about to devalue its currency, and various pundits were talking about how the world's financial markets could again be teetering on the brink, hedge fund manager Edward Bozaan was busy shopping.

It was a good time for Bozaan, who focuses on good companies in severely depressed markets for his

Global Stabilization and Recovery Fund

. He was picking up Brazilian cellular phone companies (aka celcos) like

Tele Nordeste Celular

(TND)

and

Telemig Celular

(TMB)

, along with

Vimpel-Communications

(VIP)

, the Russian cellular provider. They were huge hits, helping him to a 115% return in 1999.

"A year ago with these stocks you had huge growth stories trading at enormous discounts," explains Bozaan. "It was an irresistible proposition."

Yet he has become less enamored of these stocks over the past year. Bozaan makes his living going into the places everyone has gotten scared out of. For his taste, too many investors have fallen in love with global tech, media and telecom, a triumvirate known as TMT.

Overweight What's Overvalued

Half of the 251 fund managers who took part in a recent

TheStreet Recommends

Merrill Lynch

survey said that they were overweight TMT, while only 17% were underweight. Yet, 73% said they thought TMT stocks were overvalued, with many saying they were looking to lighten positions in the coming year.

It was probably these managers' embrace of TMT, which before last year had seemed mostly an individual-investor phenomenon, that sent the stocks into their stratospheric run last fall, reckons Merrill global strategist Trevor Greetham.

"This leg-up has been institutions moving in and buying the story," he says. "They're saying you can't afford to be underweight a large sector that is rising."

Even global hedge funds, which once spent their time investing in currencies and the like, have gone whole hog for tech stocks. The latest filing by

George Soros

? A $15 million commitment to Internet retailer

Bluefly

(BFLY)

.

Regardless of what you think of their valuations, the global overweighting of tech, media and telecom is a bit worrisome. When everyone is bullish about something, contrarian investors start to worry that all the good news is priced into the market, and, even if it isn't, that there aren't very many people left to buy the story.

One of the worst examples of this was 1998, when many hedge funds were borrowing yen, which they assumed would stay weak, to finance investments in, among other places, Brazil and Russia. When the yen, contrary to almost everyone's prediction, started to strengthen, there were a lot of forced sellers. This further strengthened yen and created even more forced sellers. It's one of the reasons Bozaan got all those bargains to pick through.

Lehman's Applegate: No Fear

Scared? The guy who, if he did not invent it, has probably done the most to popularize the notion of TMT, is not. Jeff Applegate is the chief investment strategist at

Lehman Brothers

, where the model portfolio has been overweight tech since the summer of 1993, and he still thinks that betting on the global convergence of tech, media and telecom is a good idea.

"Our conclusion is going to be, we want to be overweight tech even though there are going to be some significant swoons," he says. "Very broadly defined, are tech stocks still the growth stocks of our era? Yes." Currently, technology stocks make up 53% of Applegate's portfolio, compared with 33% of the

S&P 500

. Communications stocks come in at 22%, against the S&P's 8%.

And Bozaan, though the rush of money into TMT unnerves him, is still holding on to some of his Vimpel and Brazilian celco shares. "The story has changed from

their being extremely cheap to being somewhat fairly valued, but with huge growth ahead," he says. Still, these stocks "no longer warrant the enormous weighting we had," and he is scaling back.

With the money he's raised from the sales, Bozaan is buying unglamorous things like a company called

Bavaria

. It is a brewer in Colombia, where the

State Department

warns against traveling because "narcotic traffickers, guerrillas, paramilitary groups and other criminal elements continue to affect all parts of the country, both urban and rural."

It's the kind of investment that helps Bozaan sleep at night.