Peter Sander - The 100 Best Technology Stocks You Can Buy 2012

T HE

BEST

TECHNOLOGY

STOCKS

YOU CAN BUY

2012

Tips to identify growth technologies

Strategies to blend tech stocks into
portfolios

Advice on balancing short- and
long-term gains

PETER SANDER AND SCOTT BOBO

Welcome, tech investors, to the first edition of The 100 Best Technology Stocks You Can Buy. This book will serve as your guide to adventure in one of todays most dynamic investing spaces, known informally as the tech sector, or just plain tech. Here we will introduce you to the technology companies that we feel are best positioned as candidates for your personal investment portfolio. Along the way we will give you information and background that will help you understand and interpret the volumes of sometimes bewildering data that issue daily from Wall Street, not to mention Silicon Valley, the Pacific Rim, and elsewhere.

The tech landscape can be pretty intimidating to even the most astute investor. There are a great many unfamiliar concepts and a great many unfamiliar business models. The terrain can change dramatically over time, and companies that had been high-flyers can be grounded by market shifts, upstart competition, or a disruptive technology that renders their business obsolete practically overnight. Our goal here at 100 Best is to guide you through the turbulence and, ultimately, to inspire you to chart your own courseone that suits your needs, your budget, your time, and your vision.

You are holding a copy of the first edition of what we hope will be many to come for this new title. Its good to focus some attention on one of the fastest-moving areas of the investment markets but, as the clich goes, it isnt just about the destination, its about the journey. Many people come to the technology sector looking for the sexy stock and quick returns. What brings you here? Whats the appeal of technology for you?

If its a gambling opportunity youre looking for, you might be disappointed. We expect youre here because you want to own something, rather than bet on something. What wed like to offer is closer to a Sure Thing, although we cant promise that either. Anyway, if youve been in the world of individual, do-it-yourself investing, youve seen enough Sure Things already.

In fact, this is why weve created this book, the latest in the 100 Best series. Our goal is not only to offer a fresh perspective on individual investing, but also to shed some light on one of the more mysterious corners of the market. In addition, we offer our 2012 picks for the best technology stocks to invest in. As in the other books in our 100 Best series, we offer fish and some helpful advice on fishing.

Okay, another tired clich, perhaps. And perhaps not even accurate, for the fish we offer arent really cooked and ready to eat. The 100 fish we offer take the form of selected companies, their stories and their upside and downside potential. Theyre meant to be bait, not fish. Theyre ideas for you to pursue further, research further, and to consider against your own interests, intuitions, and investing strategies. They are food for thought.

Okay, since were running out of clichs, perhaps its time to get down to business and talk about the phrase Best Technology. What does Best mean in this context? Whats a technology stock? And why do we need a book on the world of technology stocks?

Our story starts with the mother ship: The 100 Best Stocks You Can Buy. Manyperhaps mostof you have seen that book. You may have the 2012 edition already; you may have even purchased it along with this book. You may be one of the loyal readers who have followed 100 Best Stocks and all of its lessons and recommendations from its inception fifteen years ago.

This book is built on the approach established in 100 Best Stocks You Can Buy but extends it further into the specific area of technology stocks. The value-based investing methods described in that book are employed here but are applied to the technology sector alone. The same rules applytheres no secret sauce for investing in technology as opposed to the broader market. Both books have their place, and both belong on your investing bookshelf.

The 100 Best Stocks You Can Buy2012 and all previous editions provide you with what we feel are, overall, the 100 Best Stocks you can own. They balance safety and current income with long-term success and growth. They represent the best of all worlds, companies youll do well with primarily over the long term. These are companies that would constitute an appealing, diversified portfolio for 2012 that balances risk and return.

The stocks that we recommend in The 100 Best Technology Stocks You Can Buy represent the best stocks in what is inherently a more volatile and riskier segment of the overall market. Because of the two well-known tech bubbles of the past decade, some people may feel the sector is too volatile and is not where they want to be. Fair enough. We dont think anyone should lose sleep worrying about his or her investments. Others, though, understand that good companies, companies with stable markets and sound management, do well in up cycles and down cycles and the specter of the bubble is nothing to fear. These are the companies we look for. But these arent investments you can make one day and ignore for twenty years; all investments these days must be watched and managed as you would manage a business. The world just changes too fast to do anything else.

In The 100 Best Technology Stocks You Can Buy2012, we provide you with what we feel are the best choice of stocks in the technology sector. Certainly, we dont recommend that an individual investor buy all 100 issues; a manageable portfolio should provide diversification, and technology stocks should represent only part of that mix. What weve done here is to provide you with insight on a selection of issues that are safe, well positioned for growth, and appropriate for most investors.

In our (naturally) biased opinion, we all should own some of the 100 Best Stocks somewhere in our portfolio. In fact, perhaps, in a large portion or even a majority of our portfolio.

And in our world view, one of the major premises of owning stocks is to keep up with economic progress. As an alternative, you could buy a bond. What are you doing? Youre lending money to a company to do something with it; youll be paid back with interest eventually. But do you participate in the growth of that companys business, its productivity, or market share? Do you get a share of its better ideas or new products? No, you get a fixed, predetermined return, the value of which may well be diminished by inflation, the interest rate climate, or God forbid, an all-out default if the company goes belly up.

Put your money in a CD or some other fixed investment and you avoid the last risk, but you still face the other two. Buy a commodity or a commodity future and your success is left to the whims of supply and demand, with no management team or any other guidance working to make sure that things turn your way. And real estate? Well, we all know what happened with that one in 2008.