(November 27 – 08:55 ET) – “From nowhere, an industry races to the top of the stock charts, its benchmark index up a sizzling 39% in less than a year,” write E.S. Browning and Grep Ip in today’s Wall Street Journal.

“Nasdaq tech stocks? Try utilities.”

“The Dow Jones Utility Average is also one of this year’s best performers. Most investors missed the move as they sought to make real money fast by loading up on Internet stocks. Which happen to be down an eye-popping 59% so far this year, even with Friday’s rally on Wall Street in half-day postholiday trading.”

“All tech, all the time. Playing momentum pays. Buy on the dips. Valuation is for wimps. Those investor mantras helped the Nasdaq Composite Index triple in the 17 months from October 1998 through its all-time high in March of this year.”

“As the Nasdaq bubble deflates — having fallen 42% from a peak of 5048.62 — stunned investors are finding out how much the world has changed. Or, more precisely, changed back. Not only does valuation matter, it can make you a lot of money, while momentum and dip-buying can be hazardous to your financial health. Thought slow-but-steady-growing Procter & Gamble was expensive at 20 times earnings? You were wrong: It has rallied 40% since trading at that valuation in March. Thought Juniper Networks was cheap, even at 1,500 times earnings? Wrong again: it is down by almost half since sporting that price-to-earnings ratio in September.”

“Investors today find themselves having to unlearn some of the powerful strategies that were the most popular in the late 1990s. Since the middle of March, survival in the stock market has meant no longer investing like a 22-year-old and learning again to act like your grandfather.”

” ‘The game is not as easy as people thought it was over the past few years,’ says Robert Morris, chief investment officer at Jersey City, N.J., fund-management group Lord Abbett.”

“But the re-education process could be long and painful. Indeed, even as tech stocks have continued to fall, investors have kept putting money into mutual funds that invest in the tech darlings. ‘I still think there is a lot of expectation that the new metrics are going to come back,’ says Henry Herrmann, chief investment officer at Overland Park, Kan., mutual-fund group Waddell & Reed. ‘The place that it is most ingrained is in ordinary investors. I think ordinary investors still think there is great opportunity for day-trading gains. I don’t know how much they appreciate that what we saw last year and this year was a one-time phenomenon that we aren’t likely to see again soon. ‘ “