Then: Buy Nifty 50; Today: Buy Tech

NEW YORK ( TheStreet) -- If you are old enough, you may remember something called the Nifty Fifty, which during the 1950s and 1960s were touted as solid-performing stocks you could buy and hold forever.

It turns out that "forever" lasted until 1972, when a 10-year bear market took over. Until then they had a good run.

Looking over the list, what strikes me is how well the Nifty Fifty mirrored the U.S. economy at the time. Lots of manufacturing, retailing, energy development and beer. There are some interesting entries too. S.S. Kresge. Really? Simplicity Patterns? Yes, that Simplicity Patterns, which sold sewing pattern guides. Eastman (ahem) Kodak.

*(If you count you will see there are only 49 stocks on this list. A good deal of research did not produce an alternative list. I did learn, however, there was not universal agreement on exactly which stocks constituted the Nifty Fifty.)

The Nifty Fifty was rooted in the notion that strong, reliable and growing companies existed at the heart of the economy. Today, that means technology.

Clearly, there were more Simplicity patterns in households in 1965 than semiconductors. But today quite the opposite is true.

The numbers prove at once where the profits are being made in today's economy and why buying technology now is "prudent," a word in the nomenclature of Wall Street that means reasonable and not unduly risky.

First, the prudence. According to a year-end report I requested and received from Standard & Poor's, the forward price earnings ratio of the S&P Technology sector stands at 12.2x (where x stands for times earnings), compared to a 15-year average of 23.8x. For those of you who believe that forward estimates are too aggressive, the trailing price earnings ratio (based on what these companies have already earned) is 14.6x, compared to a 15-year average of 26.7x.

Further, many tech companies have bullet-proof balance sheets. There's Apple ( AAPL), which is expected to have as much as $200 billion in cash and equivalents on its balance sheet by the end of 2013. Venerable IBM ( IBM) has over $70 billion in retained earnings and nearly $13 billion in cash on hand. A lesser-known and smaller technology company, Cognizant Technology Solutions ( CTSH), which provides IT consulting and outsourcing services, has no debt and over $2 billion in cash and equivalents on hand (though it does not yet pay a dividend).

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