Wall Street's prominent no-no group has taken a turn for go-go

Can we talk? Comedian Joan Rivers uses this polite opening often as a preface to a lurid joke. Well, it seems appropriate now.

You see, a certain off-color, taboo topic needs to be broached this week. It's, er, technology. There, it's out.

After months of pummeling by the press, massive layoffs, and crumbling earnings, this unmentionable industry is now springing from the lips of investment managers.

``Until a week ago, technology was an obscene word,'' recalls Michael Metz, portfolio tactician at Oppenheimer & Co. in New York. But now he proclaims, ``The washout phase is over.'' Sure, companies here and there may get wet, but that black nimbostratus blanketing the whole group has dissipated.

In fact, the computer technology stocks drew numerous buyers this past week as new overall highs were set on the Big Board. The New York Stock Exchange composite index and the Standard & Poor's 500 index climbed into uncharted territory -- as did the Dow Jones transportation and industrial averages on both Thursday and Friday. The Dow industrial average closed at a record 1,335.24, up 10.76 points for the week.

This stock-buying surge is attributed to falling interest rates, renewed progress in Senate budget negotiations, and, perhaps what is most significant, signs that the economy is reviving.

On the heels of an encourging GNP flash, the Commerce Department reported last week that the index of leading economic indicators climbed a solid 0.7 in May, thus adding weight to the belief that business is catching a gust after two quarters of doldrums.

If so, money managers reason that Fortune 500 and small businesses will stop slashing spending plans and ultimately place new orders for computers in another three to six months.

But some investors need more to go on than that. After all, economists expect at the most about 3 percent growth in the GNP for 1985.

So a further rationale for buying computer stocks -- and a more pervasive one -- is that many of these stocks have bottomed out. Prices are so low now that they don't accurately reflect the growth potential of the companies. Most analysts still expect computer companies such as IBM, Digital Equipment Corporation, and Prime Computer to grow at least 10 to 15 percent annually. That's far higher than the economy as a whole. And for younger companies, 20 to 30 percent growth is expected.

In a slow-growth, low-inflation environment ``we're recommending growth stocks, companies that offer good unit growth and don't need price increases to boost earnings,'' says Robert London at Montgomery Securities, an institutional brokerage firm in San Francisco. ``If you were going to buy just one sector today, we think the place to be in the second half of this year is technology.''

The Montgomery buy list includes Western Digital, a chipmaker that has held up well compared with other semiconductor producers. Cullinet, a business software company, also ranks high. But Apple Computer doesn't make the grade.

Last week, as part of its reorganization, Apple announced it would be selling Macintosh computers through retailers instead of using a company sales force. On that news, Apple stock firmed up and rose a bit. But London says, ``There's so much uncertainty about Apple's future. It's a very speculative stock.''

Another touter of computer stocks is John Reese, president of Wood, Struthers & Winthrop, the money management subsidiary of Donaldson, Lufkin & Jenrette.

``These stocks are 50 to 60 percent off their highs. If you take the long-term perspective -- two or three quarters out -- there's tremendous value here,'' Mr. Reese says. His seven portfolio managers handle $1.2 billion in assets, a small fraction of which is in a trio of mutual funds: Pine Street, deVegh, and Neuwirth.

His managers are starting to pick up shares of Digital Equipment, IBM, Quantum, and Digital Switch. But software firms are in a shakeout period. Buyers should wait six months, Reese advises.

But his caution fades when he talks generally about equities vs. bonds. ``Bonds are likely to outperform cash but not likely to outperform stocks over the next six months,'' he says. In balanced portfolios he has shifted from a 50-40 stock-to-bond split to 60 percent in stocks, 30 percent in bonds, 10 percent cash.

Reese expects the Dow to forge ahead to 1,400 or 1,450 this year. Beyond a renewed taste for technology stocks, his managers are laying in a supply of consumer product companies (a traditionally slow economy group) and regional banks (an interest-rate play). They have sold most of their New England regional banks but are holding ``rust belt'' banks on the assumption that localized economic gains and mergers there will lift stock prices. Chart: Interest Rates. *Yields; Source: Bank of Boston.

Percent Prime rate 9.50 Discount rate 7.50 Federal funds 8.00 3-mo. Treasury bills 6.71 6-mo. Treasury bills 6.87 7-yr. Treasury notes 10.05* 30-yr. Treasury bonds 10.43*