I tried, I really did. But I couldn't get a single nontechnology stock into the
Future 50 stocks. The one nontech stock that I nominated to fill one of the six open slots on the list -- retailer Target ( TGT) -- garnered a rather pathetic 6% when followers of this column cast their ballots. It finished ninth out of a list of 10 nominees. In fact, only two nontechnology stocks, Target and Mexican cement-maker Cemex ( CX), made the list of 36 semifinalists. (For more on the nominees and the vote, see my July 21 column, Help Jim Pick Six For His 'Fantastic 50 .) And it wasn't just that my voters ignored nontechnology stocks. They scorned them. The inclusion of Target got comments such as "Target? Where's the growth there?" and "That is the sorriest bunch of nominations I've ever seen. Target, the department store, is going to outperform Nortel Networks ( NT) or Applied Micro Circuits ( AMCC) over the next five years? Are you kidding me?" I find this both surprising and intriguing. Stick With Strength to Beat August Heat .) I don't think you need to rush right out to apply this strategy -- August and possibly September are likely to have a few nasty surprises still in store for us. In fact, I think it's a good time to use some stop-loss orders. Over the next month or so, however, I'll be gradually implementing this strategy. But that said, I also think it's important to understand that just because I want this to happen (and very badly, indeed) -- and just because I believe it will happen -- doesn't mean that it has to happen. While I think a late September rally that extends for the rest of 2000 is the most likely market scenario, it's not the only possible outcome. And anyone who invests as if it is takes a high-risk gamble. So even though I think it makes sense to build a portfolio on this favorable scenario for technology stocks, I also think it makes sense to plan for a future that's unfavorable for those stocks. Which brings me back to where I started -- with the scorn heaped on my nomination of Target. Let me connect the two problems -- macro market call and micro stock pick -- this way. I think it's true that Applied Micro Circuits will outperform Target if everything goes right at both companies. Similarly, a portfolio loaded with high-growth, high-multiple technology stocks will outperform one that more closely mirrors the S&P 500 -- if everything goes right for the technology sector over the next six months. The difference is that it is much more likely that something material will go wrong for Applied Micro Circuits than for Target, simply because it is harder to increase earnings at 133% than it is to increase earnings at 16%. (Similarly, I think there's a lot more that can go wrong with the technology sector than with the broader market.) Federal Reserve will not raise rates this month. My picks here would be Golden State Bancorp ( GSB) and Providian Financial ( PVN). I'll write more about those and other financial stocks later in the month when I've got a slot for another hedging stock in Jubak's Picks. Over the next month or so, then, I'll be looking to buy two different kinds of stocks. As in this column, I'll be looking for stocks with strong profit potential that are also a hedge in case the technology sector doesn't behave as I think it will in the fall. And, as in my next column, I'll be looking for the strongest technology stocks -- and weeding out the weakest in Jubak's Picks -- so that I can get the maximum return if technology stocks do rally. Those are two very different kinds of stocks, but all as part of a single strategy.