Tech Investor's Rules of The Road

1. KNOW THE COMPANY
If you can't explain in layman's terms what the company makes or sells, you probably shouldn't invest in it.
2.LOOK TO THE FUTURE
What are the prospects for sales and profit growth? Is the company well positioned to take advantage of important trends, such as the expansion of the Internet?

3.EVALUATE THE MARKET
The company should command the No.1 or a strong No.2 position in its market niche. The product or service should be different enough that the company doesn't have to compete on price alone.

4.MIND THE FINANCIALS
The less debt the better. High-tech companies can burn a lot of cash developing new products and opening new markets. The company should follow conservative accounting practices.

5.RATE THE MANAGEMENT
A solid management team is a must. It's a plus if managers own at least 30% of the stock or have a significant portion of their compensation tied to the company's long-term success.

6.BUY AT A GOOD PRICE
Buy stocks that are selling at a price-to-earnings ratio that is less than the company's projected earnings growth rate. Be wary of those selling at a p-e in excess of their growth rate.

7.WATCH YOUR INVESTMENT
If the market's going up and your stock isn't, that might signal trouble in the company. A delayed product introduction or an earnings report that's below the Street's expectation are yellow flags. It's time to reevaluate.