Page 458 - How to Make Money in Stocks Trilogy

328 INVESTING LIKE A PROFESSIONAL

these were all large mainframe computer manufacturers, and they failed to
perform during that cycle. Why? Because while the computer sector was hot,
older industry groups within it, such as mainframe computers, were not.
Meanwhile, the computer sector’s many new subdivisions performed
unbelievably. During that period, you could have selected new, relatively
unknown stocks from groups such as minicomputers (Prime Computer),
microcomputers (Commodore International), graphics (Computervision),
word processors (Wang Labs), peripherals (Verbatim), software (Cullinane
Database), or time-sharing (Electronic Data Systems). These fresh new
entrepreneurial winners increased five to ten times in price. (That’s the
“New” in CAN SLIM.) No U.S. administration can hold back America’s
inventors and innovators for very long—unless it is really stifling business
and the country.
During 1998 and 1999, the computer sector led again, with 50 to 75 com-
puter-related stocks hitting the number one spot on Investor’s Business
Daily’s new high list almost every day for more than a year. If you were alert
and knew what to look for, it was there to be seen. It was Siebel Systems,
Oracle, and Veritas in the enterprise software group, and Brocade and
Emulex among local network stocks that provided new leadership. The
computer–Internet group boomed with Cisco, Juniper, and BEA Systems;
and EMC and Network Appliance had enormous runs in the memory
group; while the formerly leading personal computer group lagged in 1999.
After their tremendous increases, most of these leaders then topped in 2000
along with the rest of the market.
Many new subgroups have sprung up since then, and many more will
spring up in the future as new technologies are dreamed up and applied. We
are in the computer, worldwide communications, and space age. New
inventions and technologies will spawn thousands of new and superior prod-
ucts and services. We’re benefiting from an endless stream of ingenious off-
shoots from the original mainframe industry, and in the past they came so
fast we had to update the various industry categories in our database more
frequently just to keep up with them.
There is no such thing as “impossible” in America’s free enterprise sys-
tem. Remember, when the computer was first invented, experts thought the
market for it was only two, and one would have to be bought by the govern-
ment. And the head of Digital Equipment later said he didn’t see why any-
one would ever want a computer in her home. When Alexander Graham
Bell invented the telephone, he was struggling and offered a half-interest in
the telephone to the president of Western Union, who replied, “What could
I do with an interesting toy like that?” Walt Disney’s board of directors, his
brother, and his wife didn’t like Walt’s idea to create Disneyland.