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Eye On Technology Stocks

It's been a record-setting year for the stock market. As it comes to an end, many investors are wondering if it's time to "hold them or fold them."

The Early Show's Brian Finnerty explains what's hot on the market.

When it comes to picking stocks that are increasing in value and grabbing the attention of investors there's only one sector: technology.

The majority of tech stocks are traded on The Nasdaq Composite Index, which continues to advance into record territory. The Nasdaq is up 63 percent for the year thus far.

Right now there's a huge divergence between the so-called New-Age tech stocks and the Dow and the S&P 500. The Dow is up 20 percent and the S&P 500 is up 14 percent.

Some people say these tech stocks are way overvalued; others say this is the beginning of a new industrial revolution that's going to change the way we lead our lives.

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There's an old saying on the trading floor: "You can't fight the tape," meaning when stocks are going up, don't sell them. And when they're going down, don't try to be a hero.

Basically the advice is hold them until it stops. This is a major, major trend that is not going to end today or tomorrow.

Stocks in focus

Dell: Dell is still the top computer maker for the corporate market. Over the last three years, it has been able to make inroads in the consumer market.

What makes Dell attractive is that it has a better business model. The company uses direct sales and makes built-to-order computers.

And it has been making money for the last three years - something IBM, Compaq and Hewlett-Packard have not been able to do.

EBay: In a very short period of time, eBay created the person-to-person online trading market from scratch. It has 85 percent of the market share, and is 20 to 30 times larger than its nearest competitors: Yahoo and Amazon.

And there's still room for tremendous expansion. EBay is moving into the local auction market. That means, it has been selling everything from cars to high-end items such as pieces of art, things that have a very high margin.

In general, as Jan. 1 approaches, some say there will be some profit taking, but not a lot. Assuming the Y2K problems are over, the only bump in the road would be higher interest rates and more inflation.

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