Contrary to persistent rumours presumably started by those obscenely rich oil barons who have a mighty stranglehold on the S&P/TSX Composite Index, technology is not dead.
Last I checked, Nortel Networks (TSX:NT) still had a pulse (although the stock has lost its appeal as a swing trading machine, spinning its wheels when it's supposed to be in an uptrend).
Also, reports of the death of the fund manager has been, in the words of one-time market speculator Mark Twain, "greatly exaggerated.”
For example, Bob McWhirter, the grim-faced portfolio manager of the Northwest Specialty Innovations Fund, is alive and well despite having been humbled in the Globe and Mail's annual stock-picking contest by five-year-old "fund manager" Emilia Loewen and her stuffed dog Sam (more on that later).
Apparently, in spite of the horrid performances of many high-tech stocks, people still have some use for high tech.
For instance, this column is not being tapped out on the trusty 1947 Remington typewriter, but an actual computer - even though the original computer has been out for repairs and at the mercy of the crack team in Future Shop's tech support department for seven weeks! (Boy, it sure felt good to get that off my chest).
If you've given up on tech, it's perfectly understandable. Oil is dominating the radar screens of virtually everyone associated with the market. It's become the catalyst for all stock market action, which may explain why even quality technology stocks have struggled to gain any traction.
Five years after Nortel was the elephant of the S&P/TSX index, oil stocks on the index are up 62 per cent this year and now boast an elephantine weighting of 26 per cent on the largest Canadian stock market index. Since the post-tech bubble bear market bottomed three years ago, the S&P/TSX index is up 93 per cent and flirting with the index's all-time high of 11,388.80 when Nortel was trading at $122.
That's a stunning move, particularly considering that tech has been a laggard in this dramatic market rebound.
Yet it may surprise you that there are actually Canadian tech stocks that are quietly enjoying banner years while performing in the shadows of the new movers and shakers such as oilsands play UTS Energy, a 470-per-cent gainer year to date (leading all TSX stocks over $1).
The S&P/TSX Information Technology Index is actually down only nine per cent this year in spite of having to carry the baggage of Nortel, down 30 per cent, and Sierra Wireless (SW), down 65 per cent.
While you were being mesmerized by the booming oilsands stocks, a tech company you may not even have heard of but wish you had, Axia NetMedia (AXX), has quietly ground out a year-to-date return of 172 per cent, the 11th best showing on the TSX.
Ironically, Axia, a major player in the building of the high-speed Internet Protocol network Alberta SuperNet project, operates in the shadows of Calgary's oil towers and is run by a former Husky Energy CEO, Art Price.
But not all of the tech winners are based in Oil Town. Some are actually within a stone's throw of Bay Street, such as Aastra Technologies (AAH) and Geac Computer (GAC). Aastra is up 70 per cent year to date and Geac is up 38 per cent.
And McWhirter deserves some kudos for an admirable performance in a nasty tech market. The Northwest Specialty Innovations tech fund he manages boasts a spiffy one-year return of 18.5 per cent while, in the same span, the tech-weighted Nasdaq index has returned a measly 5.7 per cent.
Unfortunately, McWhirter made a poor choice as one of nine "experts" in the Globe's stock-picking contest. McWhirter picked Calian Technologies (TSX:CTY), which is down about nine per cent year to date. Emilia Loewen, the daughter of a Report On Business editor, has been kicking some serious butt with her pick, Shell Canada (TSX:SHC), which is up 61 per cent and outperforming seven of eight rivals, all of whom allegedly make a living at this game.
How pathetic is the performance of some of the Globe's experts?
Only two others picked oil and gas stocks and one of them, fund manager Michael Smedley of Canadian General Investments, somehow managed to unearth an oil stock that has gone down so far this year. Smedley's pick, Centurion Energy (TSX:CUX), is down about 11 per cent and performing, well, like a tech stock.
As long as oil stocks remain in vogue, investors should tread carefully and pick their spots in the tech sector.
Of course, nobody knows for sure how long this wild bull market in oil and gas stocks will run, but one oil and gas specialist believes it can run for several more years. Josef Schachter, president of Schachter Asset Management, uses a golf analogy to underscore that point.
"What we're saying to people is that you've just finished playing the fifth hole on a golf course," says Schachter, whose firm does institutional research focused on the oil and gas industry. "You've played your best round yet. You're at Pebble Beach. You're playing below your handicap. So do you want to walk off of Pebble Beach at the sixth hole?" Schachter, who is gunning for his third straight title as Business Edge's top stock picker, advises caution in the short term to guard against a correction. For Schachter's top picks, see Pro's 3 Stars on Page 18.
* SIGN OF THE TIMES: A caller to ROB-TV's Market Call program recently asked guest Ross Healy about the prospects for Petro-Canada (TSX:PCA), saying that she'd bought the stock as an income trust candidate!
Healy, the snowy-haired CEO of Strategic Analysis Corp., almost fell out of his chair before stating that he thought Petro-Canada might become a trust about the time the caller was his age.
The day a caller asks about the chances of Nortel becoming an income trust might be a signal to flee the booming income trust sector.
* BLEAK PICTURE: Investing legend and photographer Jim Dines provides a thought-provoking view from a recent visit to the Arctic.
Wrote Dines in the Dines Investment Letter: "Your editor has just returned from a quick visit above the Arctic Circle, to the Thelon Wildlife Refuge to photograph animals, but none were there.
"The temperature was an inauspicious 70° F, same as in Miami Beach, the ground tundra was soggy and animals were still far north waiting for cold weather to kill off the veritable clouds of mosquitoes and blood-sucking flies that unfortunately mistook your blood-donor editor for a bear, caribou or muskox.
