Index funds fall, too, when the market drops

The Ticker

May 26, 2000|By JULIUS WESTHEIMER

Will buying an index fund protect you from a stock market decline? "With index investing, you could still suffer `motion sickness' of a turbulent market," says Michael Stolper, investment adviser. "Index investing only captures the trend of a portion of the market, but index funds will fall just as quickly as other funds if the market drops."

WALL STREET WATCH: "Steer clear of overpriced New Economy stocks. Recently, the price-earnings ratio for Nasdaq companies has been extravagantly overpriced - in the 150-200 range. A range of 12 to 20 is reasonable." (Ralph Wagner, mutual fund manager)

"Look overseas for the next Internet boom," says Bill Brennan, financial planner. "Other industrialized companies - notably Japan - are years behind the U.S. in making the Internet part of everyday life. Opportunity: Consider a U.S.-based mutual fund with significant overseas technology holdings."

"Companies with a steady record of raising dividends generally provide superior price appreciation." (Charles Babin, investment adviser)

Goldman Sachs strategist Abby Joseph Cohen has backed away from tech stocks, but Goldman Sachs technology analysts suggest holding Oracle, Cisco, First Data, EMC and Dell. (Maria Bartiromo, Individual Investor)

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