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Friday, February 11, 2000

Tech Titans Say No Bubble

Reported by Jason Shank

One of the most eagerly anticipated sessions for advisors at today's TD Waterhouse Institutional Services Conference was the special panel session on Investing in Technology with Van Wagoner Funds' Garrett Van Wagoner and Firsthand Funds' Keven Landis.

Those advisors who have put their clients into the two technology titans' funds over the last two years have been rewarded with skyrocketing returns and ample fodder for cocktail party bragging. Van Wagoner has several funds among the leaders for 1999, while Firsthand's CEO managed the top-performing fund of the last five years -- Firsthand Technology Value, not to mention solid triple digit returns on his other funds.

The two sat down with Sandy Ward, the mutual funds editor of Barron's to discuss their views on their area of expertise, the technology sector and give the attending advisors some insight into possible trends for the future.

The first question posed to the panelists was a fairly simple one, but one that resounded as many sessions at this year's conference have at least some reference to the Internet "bubble" and the US stock market "bubble" -- whether they exist and if so, are they about to burst.

The question was simply "Are we in a bubble?"

"For the long-term, tech equals growth and if you're in tech, you're on the right side of growth. No, we're not in a bubble," said Landis.

Van Wagoner expanded on this in agreement, saying that "Fundamentals have never been better -- I have never seen so many good companies with solid management."

This said, Van Wagoner added that "when I'm bearish on tech, I'm still maybe 60% tech. We've cut our tech holdings from 90% to about 75%" and compared technology to the influence of the railroad at the turn of the century in expressing his continued enthusiasm for the sector.

When queried about the future of PC stocks, Landis said "I've never owned a PC (stock) and I've never owned a dot-com -- if the Internet is a tree and PC stocks are the leaves, I think that the leaves are not the most exciting part of the tree."

In keeping with the tree analogy, Van Wagoner responded to a question about Microsoft's problems by saying. "It's hard to believe that they have any problems, but they are very PC-centric and not so network-centric, but they're trying to get back into the game. But they're having to work their way in from the leaves to the branches. They play a very rough game, and they have cash-flow any sultan would be proud of, and I wouldn't want to be competing with them."

While both agreed that any changes to interest rates will not affect their core stock-picking, Van Wagoner did say that "Alan Greenspan is sitting across the poker table holding four aces. He's said that he wants things to slow down and he's sending warning shots across the bow of the financial markets of the United States. If he wants to slow things down -- he will. That said, it won't affect how we do business -- we're long-term investors."

"I think what Garrett's saying is that this could be a terrific opportunity to get into some excellent mutual funds," Landis said as the audience laughed. 

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