COVER | Let it rain! These STOCKS will keep you from getting soaked.

JUST OUTSIDE San Antonio is a vast hole in the ground. Bordered by roads and railroad tracks, it covers 844 acres, and it isn't pretty. Trucks and trains carry an average of 30,000 tons of gravel and related material out of the quarry every day, to be used for roadbeds and the foundations of commercial buildings, houses, prisons and schools. This is about as far from the new economy as you can get.

Technology is sexy. Rocks are not. But in investing, now may be the time to consider rocks and other low-tech investments. At Martin Marietta Materials, the nation's second-largest gravel company, revenues and profits are growing quickly because of acquisitions and a federally funded acceleration in highway and airport construction that will continue regardless of what the economy does.

Whether the technology-stock boom of 1999 was "the greatest financial mania in American history," as James Gipson, co-manager of Clipper fund, calls it, remains to be seen (see "Yes, There Is a Sanity Clause," on page 44). In fact, as 2001 got well under way, the stock market sent mixed signals--stocks of both the old and new economies were running neck and neck but going nowhere in particular. This is the classic Wall Street quandary, and your best offense in the face of the market's indecision is the simplest in the investor's playbook: broad, deliberate diversification that puts you in all sectors of the economy.


Should you still own leading technology stocks? Yes, not despite their weak prices but because of them. This is classic contrarian investing, like buying suntan lotion when the rain pours. We suggest three such stocks on page 39. But why pig out on technology stocks when you can also buy shares of first-class companies in other sectors for very low prices?

The reason that diversification serves you best right now is that the stock market lacks clear direction. Will technology keep getting soaked, or come in out of the rain? And what about the energy, financial, health care and utility stocks that had their day in the sun last year? Nobody knows how this storm will end, but wherever the sun shines, you'll be there.

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