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Back to the Basics

Flight to quality, yes. Flight from tech stocks, no.

That was the general (and admittedly simplified) message from investment experts at the Internet Investment Forum in Los Angeles last Friday.

The proceedings might have been a bit gloomier had the Nasdaq not rebounded from its precipitous plunge last Monday and Tuesday. But the latter-week comeback of Internet stocks ensured discussion focused on corrections and opportunities rather than bubbles and bailouts.

"I think what we're seeing here is a clear flight to quality," said Debbie Simon, vice president of Houlihan Lokey Howard and Zukin, a Los Angeles investment bank. Simon, who heads the office's Internet valuation practice, said investors aren't fleeing from the tech sector as much as they're moving their money from the highly volatile stocks of smaller Internet companies to the market leaders.

In the end, as always, it's about fundamentals, said Robert Burgoyne, technology strategist for Monument Funds Group. The company's Monument Internet Fund is heavy on stalwarts such as America Online (AOL), Cisco Systems (CSCO) and Sun Microsystems (SUNW), companies that are profitable market leaders and more likely to bounce back from a sector-wide correction.

Burgoyne also said that, no matter how occasionally volatile tech stocks become, the sector as a whole will continue to outpace the rest of the economy for years to come.

David Eisner, CEO of iExchange.com, said it was important for individual investors to avoid "momentum" and "panic" trading, and to adhere to a rational investment strategy.

iExchange.com is a marketplace in which stock picks are posted, with those submitting the picks (the "analysts") rated and ranked based on accuracy. (A similar site is StockJungle.com, a company that presented at Friday's Start-Up Live Showcase.)

I know all of the above sounds extremely basic, but that was the point of the investment panelists: In turbulent market times, it is more important than ever to stick to the basics. Not only will it ensure the ability of your portfolio to weather a downturn, it will allow you to find bargains when everyone else is selling off in a margined-out frenzy.