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GROWING RICH WITH GROWTH STOCKS<br />
and Hewlett-Packard for <strong>com</strong>puters and printers. He also owns a few<br />
smaller high-tech firms, but all have been in business for decades.<br />
“What changed to make me want to buy them?” Papp asks. “The<br />
major thing is that their degree of cyclicality went way down. That’s<br />
because electrical products and electronic <strong>com</strong>ponents are now the<br />
biggest segment of our manufacturing society. You can’t have a society<br />
that’s booming while electronics are going down, because they<br />
are the dominant factor. The economy moves with them. They’ve be<strong>com</strong>e<br />
that important.”<br />
STICK WITH THE STRONGEST AND BEST<br />
Shelby Davis has a similar discipline for buying technology shares.<br />
Although he doesn’t invest heavily in this sector, when he does, he,<br />
too, buys the most diversified behemoths, including Motorola, Intel,<br />
IBM, Texas Instruments, and Hewlett-Packard. “That way, I’m not<br />
betting on a pure-play product,” he explains. “These <strong>com</strong>panies all<br />
have other businesses to fall back on if one product loses market share<br />
because someone beats them to the punch or they fall asleep at the<br />
switch. The smaller high-tech firms can go up like rocket ships, but<br />
they can also flame out. Memorex was a rocket. You could say nothing<br />
but wonderful things about Memorex’s products and the growing<br />
markets it served. The <strong>com</strong>pany made tapes and floppy disks for<br />
<strong>com</strong>puters. What could be better? Yet it’s been a very tough business<br />
because supply exceeded demand and price cutting was lethal to the<br />
<strong>com</strong>pany’s ability to sustain <strong>com</strong>pounded earnings, which have since<br />
been nil.”<br />
THE KEY ECONOMIC DRIVER<br />
Robert Stovall agrees that, since technology is now our biggest industry,<br />
investors must take it super-seriously. “When I started out,<br />
automobile manufacturers, construction <strong>com</strong>panies, and natural-resource<br />
extractors were the most important businesses for an investor<br />
to follow,” he recalls. “We then moved along to <strong>com</strong>puter hardware.<br />
Now it’s <strong>com</strong>puter software, along with tele<strong>com</strong>munications of all<br />
sorts. It doesn’t matter whether you’re talking about wireless, fiber<br />
optics, or whatever. All of these <strong>com</strong>munications technologies will<br />
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