In the last half of 2000, when most bulls were saying tech stocks would rebound any day, Tom Marsico decided otherwise. Marsico, whose Marsico Focus (MFOCX) had back-to-back 50%-plus gains in 1998 and 1999 partly due to a 40% weighting in technology, dumped virtually all his tech stocks.

The move proved prescient.

Now Marsico is doing it again: He's selling tech after owning a bunch of it for a very profitable one and one-half years.

Marsico has one of the best records of any large-cap growth manager, and a terrific record of predicting the economy.

When compared to their peers, Marsico Focus and the slightly less concentrated and lower risk Marsico Growth fund (MGRIX) have delivered above-average returns five out of the past six years. Since both funds were launched in 1997, they have ranked among the top 10% of large-cap growth funds and have easily beaten the Standard & Poor's 500-stock index.

Marsico put up similarly sparkling numbers over a decade of managing money for Janus. In 1997, he moved across Denver to found his own firm. Janus, whose funds endured a wretched bear market, can only wish it had held onto him.

Down on tech

Marsico says companies have become accustomed to purchasing tech products at heavily discounted prices. It's going to be close to impossible to wean corporate buyers from that habit, says Cory Gilchrist, a Marsico analyst. That makes tech P/Es, which have moved from the mid-teens to the mid-30s, hard to justify.

Marsico has sold off big positions in Cisco (CSCO) and Intel (INTC). He's trimmed Electronic Arts (ERTS) from 4% to 2% of Focus, and he's reduced Dell (DELL) from 4% to 1%.

He still likes Qualcomm (QCOM), which has a commanding position in the new 3G technology for cell phones. And he's bullish on Maxim (MXIM), a semiconductor manufacturer that sells products used in all types of wireless gadgets.

He also likes Samsung Electronics, the Korean maker of computer and electronic equipment. The stock sells at a price-earnings ratio of about 10, partly due to political risk in South Korea, but doesn't have a good, tradable American Depositary Receipt. One will likely be available shortly. (Avoid pink-sheet ADRs on this or other foreign stocks. The bid-ask spreads on these are often 10% or more.)

Where his tech money is going

Marsico is particularly bullish on health care -- where he's stashed about a quarter of his funds. "The demographics of an aging population are powerful," says Gilchrist. Holdings include Boston Scientific (BSX), Forest Labs (FRX), Medtronic (MDT), United Health (UNH) and Zimmer (ZMH).

But that's not all he's buying. Marsico says old economy companies are better leveraged than tech firms to what he believes is a steadily growing economy. While old economy companies have rebounded, Marsico thinks they have much further to go.

Favorites include Caterpillar (CAT), which makes heavy equipment, such as truck engines and mining equipment. "These companies are arms suppliers to industry, both here and in places like China," says Gilchrist. "People are underestimating their pricing power."

Marsico also likes FedEx (FDX), which he thinks has built a superior operation to UPS. FedEx is competing with UPS on ground deliveries now, but most FedEx trucks are owned by franchisees, thus reducing labor and capital costs.

Another Marsico holding is Honeywell (HON). Much of its revenues come from servicing airplanes. So long as air traffic continues to pick up, so will its profits.

He also likes Procter & Gamble (PG). The consumer products giant is expanding sales into developing markets such as China. Unilever, its biggest rival, is proving a second-rate competitor.

Finally, Marsico says Wal-Mart (WMT) will grow faster than many believe -- both in the U.S. and abroad.

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