John Spence

Technology Sector Down Over 50% for the Year? Keep Those Tech Indexes Coming!

As of yesterday, the Dow Jones Technology Sector Index was down over 53% for the year, and predicting when the tech sector will actually bottom out seems to be the main hobby of financial writers and pundits these days.

Amidst these unhappy times for tech, Upside Media recently launched a set of indexes designed to measure the performance of the high-technology industry and the sub-sectors that make it up.

Upside Media, which covers the hi-tech industry, has launched 15 indexes in all. The Upside.com 150 index is designed to track the entire sector. From there, the remaining indexes are broken down as follows:

• 2 sectors - computing, communication
• 4 groups - services, software, hardware, components
• 8 subgroups - online services, communication services, application and system software, communication software, computing hardware, communication hardware, computing components, communication components

The move is another example of a media company designing indexes for the industry it covers. For example, in tech we have the Fortune e-50 Index, The Inter@ctive Week Internet Index, the CNET Tech Index, The Industry Standard 100, and TheStreet.com Internet Index.

But the new Upside.com 150 family sets itself apart from other comparable indexes because of its comprehensive coverage of the sector. A good thing too - gone are the days when when investors rushed at any fund tracking a "tech" or "Internet" index.

"It certainly has been a trend in the last couple of years - everyone wanted to ride the Internet wave, so you see a lot of indices now that have the word 'Internet' in them," said Brian McCune, the Upside.com analyst who was primarily responsible for designing the new index family. "Those indices are narrowly focused, which is inappropriate now that the bubble has burst. We're not interested in playing the Internet hype game, and it's too late for that anyway."

The Upside.com 150 holds more companies than most tech indexes, and also breaks the sector down into various groups and subgroups to form a clear picture of what is going on in the sector as a whole.

S&P Index Returns

Here's the February returns for the major Standard & Poor's (S&P) indexes to keep the index data junkies busy through the weekend:

Source: Standard & Poor's, all data as of end of February, 2001