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. Nineteen of the stocks in the index have lost ground so far this year, by more than 20, and the index itself is down 25 since its launch. In of this year, Merrill Lynch rolled out Nanotech Index NNZ. X of stocks all small and microcaps. Nanotech stocks add another layer of risk, because of them are very small. Whats more, the diversification benefits normally found in mutual funds are largely negated in such offerings.

Its possible that nanotechnology could turn out to be the greatest thing since sliced bread, as its fervent promoters are hoping. Those that have bitten the or merged into other funds include such classics as Zero Gravity Internet, Westcott Nothing But Amerindo B2B, Turner B2B ECommerce and StockJungle. com Pure Play Internet. But just because something is cool and seems like the next big thing doesnt mean its necessarily good investment. If any do come along eventually, would treat them with extreme caution.

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. Whats more, the diversification benefits normally found in mutual funds are largely negated in such offerings. The term refers to the creation or manipulation of objects smaller than nanometers across. 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.

For example, Harris & Harris gained 369 despite having virtually no revenue, let alone profits, and of the other stocks in the index have lost ground so far this year, by more than 20, and the index itself is down 25 since its launch. In of this year, Merrill Lynch rolled out Nanotech Index NNZ. X of stocks all small and microcaps. The few survivors, such as Munder NetNet MNNAX and Jacob Internet JAMFX, have been wildly volatile and destroyed lots of shareholder value.

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