Those who still have their holdings are sitting on substantial losses, despite the fact that names such as Google and Apple have subsequently become not only two of the most famous worldwide brands, but highly profitable companies as well.
Yet while technology and the internet have transformed the way we live our lives, and the way companies conduct business, this hasn't always translated into profits for British investors. At the beginning of 2000 investors were ploughing hundreds of millions of pounds into technology funds. The most popular at the time was Aberdeen Technology - it was raking in more money a week than it had attracted in almost 20 years.
Eleven years later, investors have seen the fund sold on to New Star, then Henderson Global Investors. Despite a modest recovery in technology share prices in the past five years, if they invested a lump sum at the height of the boom they now have less than half their money.
Figures from Morningstar show that a £1,000 investment in Axa Framlington Global Technology at the end of 1999 is today worth £454, a similar amount invested in Invesco Global Technology is worth £304, while Henderson Global Technology has turned the same sum into £528. A number of other funds, including Framlington's NetNet and Jupiter Technology, have been closed, merged or sold on.
But while these shocking figures may have turned a generation off completely, there are strong signs of more positive growth in this sector.
Over the past three years Axa Framlington Global Technology has doubled investors' money, as has GLG Technology; while Polar Capital Technology – a well-rated investment trust – has turned £1,000 into £2,409, making it the best-performing fund in the sector. This trust has also delivered positive returns over one and five years and is managed by Ben Rogoff, who previously ran the Aberdeen fund.
Rob Morgan, an investment analyst at Hargreaves Lansdown, said: "In a low-growth environment it is perhaps not surprising that many investors are naturally drawn to sectors where there is the capacity for growth." A new idea can rapidly translate into worldwide sales: look at the success of the iPhone.
As Mr Morgan pointed out, people only have to think about where they spend their money, and how they live their lives, to see the potential that companies have in the technology, telecoms and media sector.
Just as there was a massive boom in the number of people buying mobile phones a decade ago, now we are seeing a huge rise in the sales of "tablet" computers (such as iPads), smartphones and other mobile computing devices.
But the risks inherent in the sector are also abundantly clear from the trends we see around us. Nokia, for example, had been one of the biggest players in the mobile handset market. But its failure to capitalise quickly on the touch-screen technology that has driven the smartphone market has led to a significant decline in its sales, profits and share price.
So the speed at which companies can grow and transform markets can conversely have a similar rapid effect on the fortunes of others; and it can be almost impossible to predict these changes.
The nature of technology investing has also changed. Where a decade ago many technology stocks were risky start-ups, today the sector includes some global giants.
Mr Morgan added: "Companies like Apple don't fit most people's stereotype of a technology stock. This is a global brand that, thanks to its impressive sales, has huge cash reserves, rather than debt. In that respect it is a blue-chip stock and a relatively safe investment."
But investors don't have to pile in to higher-risk technology funds to gain exposure to such companies. Most global funds will have a significant exposure to this sector – via Apple, Intel, Dell and Hewlett-Packard in the US, or Asian giants such as Sony, Samsung and Hitachi. Likewise, any US fund – whether it is actively managed or a tracker – is likely to have a significant technology weighting.
But it is still easy for investors to get caught out by the technology hype. The potential of the "next big thing" to make lots of money is something many investors – both amateur and professional – find hard to resist.
Recently there has been a lot of interest in social media sites. When LinkedIn floated on the US stock market in April this year its share price doubled on the first day as the volume of shares traded meant investors effectively bought and sold the company three times over.
This has led to Monopoly-money style valuations being attached to the likes of Groupon, Zynga (the makers of the online game Farmville) and Twitter, which some have suggested could float for $10bn. You don't need 140 characters to suggest that it's a big price tag for a company that has yet to make a profit.
Nick Evans, one of the managers of the Polar Capital Global Technology fund, said it was easy to compare the hype around social media stocks today to the last technology bubble. But he said there were considerable differences. "Overall, social media valuations do look stretched, but this is the only area of the sector that does. To say a bubble is forming in the sector as a whole looks unjust."
But other managers can see clear parallels to the dotcom boom. Stuart O'Gorman, the director of technology at Henderson, said: "In the Nineties everyone agreed that the internet was going to explode over the next decade and transform the way we shop, communicate and do business."
Because everyone could see the logic of this assertion, investors piled in to dotcom shares. The assertion certainly proved to be true – but a lot of people lost a lot of money in the process.
Mr O'Gorman added: "We can see the same things happening with some social media companies. The question is whether companies like Facebook can monetise their dominant position. The trick for investors will be spotting the Googles and Amazons of tomorrow."
He said technology had over-promised and under-delivered in the past. "Do you remember 3G in 2000? Everybody was expecting an iPhone and what we got was a ghastly NEC/Vodafone 'Live' product."
If investors want to avoid such traps while simultaneously profiting from growth in the sector, they could do a lot worse than follow Mr Buffett's example: buy technology stocks, but only when you understand the rationale for their success, and ensure that the company – like IBM – has a good record of delivering value for its shareholders.