Y2K Mutual Fund?

greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread

Many mutual funds are geared towards special interests -- enviromental funds that only invest in environmentally friendly companies, pro-gay funds only investing in companies with spousal equivalency, etcetera. I suspect someone soon will offer a mutual fund including only companies which certify Y2K compliance. When/if anybody offers such a fund, I hope somebody posts about it here. However, if such a fund were available, would you invest in it?

-- Elisabeth Riba (lis@netcom.com), June 16, 1998


No way, for two reasons.

The first is that any company that's Y2K compliant can still be heavily impacted by events outside its control. It might be in a town where the electricity or telecomms fail -- especialy bad if this is not a problem for the company's competitors. In a similar vein, its bank might be the one with the worst Y2K gremlins. Or one of its major customers might stop ordering because it gets into trouble.

In short, there's no way to predict in advance whether a company will have trouble as a result of Y2K or not.

Which brings one to the second reason. At some point the investment community will realise the above. At that point the only sensible thing to do is to sell your shares and wait out Y2K in cash. But as soon as more than a few have done that, the market will crash.

IMHO, the fact that it hasn't done so yet is a cause for concern. It means that Y2K is still not regarded as serious by many who ought to know better, and therefore by implication precious time is still being wasted.

-- Nigel Arnot (nra@maxwell.ph.kcl.ac.uk), June 17, 1998.

I'd rather invest in a mutual fund that specialized in small computer companies whose primary goal was fixing Y2K bugs. For example, Dr. Edward Yardeni at a senate banking committee hearing on June 10th, referring to DEC's Y2K readiness:

"There must be problems with them. How else to explain the 285% increase in earnings during the quarter ended April 30, 1998, from a year ago for Accelr8 Technology Corp., which sells a Y2K product designed to fix the huge installed base of Digital's VMS systems."

Are there any such mutual funds focusing on Y2K repair companies?

-- Art Frank (Artfrank@ix.netcom.com), June 20, 1998.

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