Growing Rich - Arabictrader.com

GROWING RICH WITH GROWTH STOCKS
first century, I believe it’s going back over to China. I think we better
accept that fact and learn from it. The only threat we have in this
country over the next 15 to 25 years is getting along with China.”
Papp has even started a mutual fund that invests solely in U.S. multinationals
that get a large part of their overseas earnings from the
Pacific Rim.
“I believe the computer, new telecommunications, fax machines,
and other to-be-announced improvements in technology will cause
dramatic population shifts and changes in industry that few people
appreciate today,” Papp predicts. “I expect the size of many of our
big cities to decline, more people to work at home, and more firms
to have two or three people share an office as many accounting firms
are doing today. These innovations will allow people to avoid crowded
cities, pollution, high-tax states, and high-crime areas. As we rush
into the post-industrial, or informational society, we will begin to
realize that the electronic and medical-technology industries are more
important in today’s worlds than the railroads or electricity were to
their ages.”
TECHNOLOGY INVESTING FOR NERVOUS NELLIES
Don Yacktman is a little more nervous about investing in technology.
You won’t find many high-tech names in his portfolio, if any.
The reason: He believes the potential risks in this area are greater
than the rewards. “There are two main problems with technology
companies that normally keep me out of them,” he argues. “One is
pricing. Most of the time, they are overpriced. I’m looking for stocks
priced below their private-market value. Technology stocks customarily
sell at a high premium to actual value based on optimistic investor
expectations.” While some contend that technology stocks should be
valued differently because of their strong growth prospects, Yacktman
disagrees, especially since there’s no assurance this upward rise will
continue into the next quarter, let alone next year. Another reason
for Yacktman’s wariness of technology stocks is that many of these
businesses are early-stage capital goods providers. “In the early stages,
when they’re making money, the stocks are extremely expensive,” he
insists. “When they come down in price, they start to look more like
cyclical businesses. By then, the return on assets has dropped to a
level where you wouldn’t want to own them anyway. In either case,
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