Beware a New Tech Bubble, Fund Managers Say

September 02, 2003, 1:00 a.m. EDT 2 Min Read

Technology funds are up 36% year-to-date through last Tuesday, making them the best-performing equity category so far this year, according to Lipper. Thats great news, but it has some fund managers worrying that investors might think happy days are here again, Reuters reports. And according to Money magazine, some investors are again flocking to unprofitable technology firms.

Some managers viewed Hewlett-Packards recent disappointing results as an early indicator that the tech rally could soon falter. "Theres certainly some who feel that tech has gone too far, too fast, and this is an indication that things arent as good as the market believed," Rick Meckler, president of LibertyView Capital Management, told Reuters.

Valuations, particularly in the semiconductor sector, could also present a problem, Chris Traulsen, an analyst with Morningstar, told Reuters. Ken Smith, co-manager of the Munder Future Tech Fund, agreed, saying: "Some valuations are very high, and there really needs to be an acceleration [of profits] to justify these valuations."

Even more disturbing, Money magazine reports that 119 technology stocks of companies with market capitalizations of $500 million or more have more than doubled so far this year but a full 40% of them arent expected to post a profit this year. And among the companies And some of the increases are staggering. Ask Jeeves is up 570% in 2003. And the unprofitable XM Satellite Radio and ImClone are up 400% and 300%, respectively.

Northern Trust Eyes N.Y.-Area Offices in Asset Push:Wants to Offer Better Service to High-Net-Worth

Northern Trust Global Advisors said it will expand into the Northeast by opening offices in Manhattan and Connecticut this October in an effort to develop more institutional and high-net-worth assets.

The unit of the Chicago banking company said it will put 50 investment professionals in the two offices, 33 for institutional investment management and 17 to get business from wealthy individuals and families.

"We have a good base of private clients in New York, and they have been committed to Northern Trust," said Kevin J. Rochford, the managing director of global sales and client servicing at Northern Trust. "They liked us even if we were based in Chicago or Florida.

"Now, with us physically here, they are a cab ride away from communicating with an executive. Their quality of service jumps dramatically as we become more intimate with these clients. These are individuals that are successful and have achieved a lot. Our level of service cannot be done successfully by relying on e-mail, voicemail, Blackberry or even a quarterly visit."