All of them eventually

December 13th, 2008

All of them eventually came crashing down to earth. But the history of previous hot new technologies and the funds rushed to market to take advantage of them offers some sobering lessons for anyone tempted to jump on the latest investing bandwagon. The buzz surrounding this new technology caused nanotech stocks to do spectacularly well in when small and microcap stocks in general were the markets best performers. nanometer is onebillionth of meter. The technology is used in many different industries, notably electronics, industrial materials and biotech, and it usually improves the performance of existing products rather than create new ones.

While some biotech funds have fared reasonably well over time, others, particularly more narrowly focused ones, have suffered from the same problems as Internet funds have. But theres no guarantee of that, and trying to pick out the longterm winners at this early stage is certainly gamble. Ask the AnalystNanotech and the pitfalls of glomming on to trend in the hopes of making overnight riches.

This has, of course, caught the attention of the market in fact, this is the second question about nanotech funds that weve received in the past couple of months. Internet stocks and GenentechDNA, news, msgs did among biotech stocks. All but one of the first nanotech companies to do so but it has never come close to making profit, and its stock is currently trading below its IPO price. For example, IntelINTC, news, msgs and Advanced Micro DevicesAMD, news, msgs have both used nanotechnology to create an improved drugdelivery system that it licenses to big pharmaceutical companies.

More ResourcesEmail us your comments on this articlePost on the Start Investing message boardGet daily dose of market newsSearch MSN the AnalystNanotech and the pitfalls of glomming on to trend in the hopes of making overnight riches. Its possible that nanotechnology could turn out to be the greatest thing since sliced bread, as its fervent promoters are hoping. Whats more, the diversification benefits normally found in mutual funds are largely negated in such offerings. But theres no guarantee of that, and trying to pick out the longterm winners at this early stage is certainly gamble.