The Bad News Victims of 2008 are the
New Victors of 2009

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The Bad News Victims—
Profits from Selling Short
Tech

Tech is a broad category, but it has taken a hit and will take an even bigger one as one cult name after another legs down in the face of drastically reduced corporate IT spending and reduced consumer electronics purchases.

There are many ETFs and most mirror the general move in the Nasdaq. The best action this year was in selected names—Palm (PALM) down 65%, Motorola (MOT) 70%, Dell (DELL) 55%—and that will be next year, too. Look for companies that are a weak second or third in their market space or overly dependent on discretionary spending by businesses or consumers.

Tech will continue to take a hit in 2009 and make good short trades. I would avoid or short stocks like Dell (DELL), Sun Microsystems (JAVA) and the Semiconductor HLDRS (SMH).

What about lousy trades? Most of the bad trades this year were based on timing, not fundamentals – although some companies clearly outperformed the market.