Dow Jones 7864.23 -65.07 1:00 pm PST, February 7, 2003  NASDAQ 1282.46 -19.27 For info, visit access.smallcapnetwork.com S & P 500 829.69 -8.46 To be removed, please click here Russell 2000 358.78 -5.96 VOLUME 02: ISSUE 96 Watch your P's (portfolios) and QQQ's Once Desert Storm concluded in the early 90's, the market began its exponential rise that lasted until March 2000. While it is doubtful a market of that kind will return anytime soon, investors may want to keep a small toe in the market in the event that pending economic or geopolitical situations release the market from its range-bound malaise-one way or the other. If you're looking for quick and cheap tech stock exposure, or at least exposure to a possible tech market move (up or down), consider the NASDAQ 100 Tracking Stock-known by euphemism and symbol as the QQQ. As the most heavily traded of the genus known as Exchange Traded Funds (ETF)--vehicles which fairly closely mirror the movement of their underlying index or asset class-- the QQQ specifically reflects the progress of the Nasdaq 100. Big and Little'uns An ETF is merely a kind of index mutual fund, and while not actively managed, the weight of each stock is tracked with the same representation as is found in the actual index. The top three holdings in the QQQ are Microsoft, Intel and Cisco, representing percentage weights of around 11%, 7.5% and 5% respectively. There are also biotech, retail and healthcare constituents. In essence, if the shares of a company are in the NASDAQ 100 index, they're also resident in the QQQ. There are more than 100 other ETF's out there and they represent total assets of over $100 billion. New offerings are being added monthly. The good news, arguably, is that from its peak of $120 in March 2000, the QQQ has vapored to its current level of $24. For those who think the bottom is at hand, buying a small position in the QQQ will give instant, liquid exposure-average daily volume is 65 million shares-- to the market without the hassle or fees of a managed mutual fund. The ETF can be traded as a single stock --as in commission only-and, as noted, the market is extremely deep. Adjustments are made as companies come and go, so there is a measure of management, but the emotion is removed. By definition, it is unlikely the QQQ will outperform the actual market/index. But since even managed funds rarely outperform the index, a position in the QQQ may make some sense for those wishing to bottom fish. And given the substantial volumes, those investors tired of being violated by market makers can rest easy. Dropping your shorts For others who think the end may not be anywhere in sight yet, the QQQ's can be shorted-meaning sold and then bought back at a (in theory) lower price. There are also options on the QQQ for those with lots of fast money and the time to monitor their positions. Since most of us don't have that kind of time, a straight purchase (or short sale) of a small number of QQQ shares may well be enough of a proxy should the market pop or drop. There are, as I said, currently more than 100 ETF's with various acronyms. SPDR's (Spiders) mirror the S&P 500, DIA's (Diamonds) represent the DOW, and there are even things called iShares which can represent markets such as Japan's. Once a product comes into focus on Wall Street, it seems to replicate with exuberant abandon. Suffice it to say there's something for everyone and lots of information available through either a Google search or a visit to www.amex.com. Cheap and, hopefully, cheerful Given that fees for managed mutual funds can hit 3% annually, ETF's certainly make sense from a cost/benefit perspective. These babies can be volatile though, as the QQQ ride over the last 3 years has shown. They should probably be used as a tech market proxy rather than an asset class. That means taking a small position-long or short-that represents your market view. Or protects you from adversity. TRADER TIP The one truism is that over the next few weeks or months, volatility will increase. The key to successful investing is not getting locked into situations that, due to circumstances such as low liquidity or wide spreads, can instantly destroy even a profitable position should stocks gap. Review your positions and make sure that your portfolio constituents trade widely and the trading spreads are tight. If you tend to like market orders-we would prefer to use limits-make sure that the stock has the depth necessary to ensure successful, timely execution at your  price.  Next week we'll look at limit versus stop versus stop limit orders. There is a huge difference. 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