Do you want a hot stock? Try Pharmacyclics, which has doubled over the past year and now goes for 230 times earnings. Or GoDaddy, the Web host that recently popped 30% in its first day of trading. If you have any sense of value, though, you wouldn't touch these with a barge pole. In the late stages of a bull market (ours is now six years old) momentum stocks go up for no better reason than that they have been going up. When the bear arrives, these are the stocks that crash the fastest and the most furiously. The purpose of today's essay is to help you avoid them. Biotech and the Internet lead the parade of faddish investing themes. Following close behind is another category of stocks that, while not nearly as speculative, are clearly overbought: stocks with good dividends. Income-starved investors are clamoring for the shares of Pfizer, Verizon and funds that buy such companies.
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