Once upon a time, exploration shares were the stock-market punter's paradise or graveyard. These days, however, those happy to take on more risk for the prospect of a higher reward are increasingly looking at technology shares.

Investing in shares is seen as involving more risk than holding cash or putting money in property, but within this category there are very different levels of risk. The cautious private investor is usually advised to look at reliable blue-chip shares with a track record of delivering solid, if unspectacular, growth.

Stocks like AIB, Bank of Ireland and CRH fall into this category although their performance in recent years has been far from dull. However even quality blue-chips are unlikely to make millionaires of investors as firms like Microsoft have done.

Large companies plying their trade in mature markets with established customer bases have little chance of competing in the growth stakes with firms selling software that is set to revolutionise entire areas of business or consumer activity.

Those seeking the next Microsoft have plenty of candidates to choose from. However, many of the up-and-coming technology stocks, European as well as American, are listed on the US Nasdaq index rather than their local stock market which means that the private investor has to assume some exchange-rate risk as well.

Of the big Irish technology stocks, CBT, Esat and Iona are all quoted on the Nasdaq and only Iona has an Irish listing. However, the Developing Companies Market (DCM) in Dublin and the Alternative Investment Market (AIM) in London have provided some smaller firms - such as telecommunications group ITG or Rapid Technology - with a means of dipping a toe into the investment market.

The decision by the Government to float upward of 25 per cent of Telecom Eireann next year should also provide the sector with some critical mass as it accounts for just a tiny weighting in the ISEQ index of shares at present.

"It will provide a lot more visibility to the sector here in Ireland," says Ms Gemma Houlihan, technology analyst with ABN Amro.

Like the Irish Permanent and First Active flotations, the sale of Telecom shares should also have the advantage of significantly expanding the investor base by offering Telecom customers a chance to get involved in share ownership. There are also a number of emerging companies in the high-tech area which are prime candidates for flotation when the global investment climate improves. Among these are Baltimore Technologies, Eurologic, Flexicom, Peregrine Systems and Trintech while a whole host of other Irish companies are reckoned to be just a few years away from flotation.

Having a greater number of technology companies in the Irish market would allow investors to reduce their risk somewhat, by investing across a basket of shares rather than being fully exposed to single one-product stocks. Irish investors can, of course, also invest in any of the big global players although the downturn in Asia has put a bit of a dampener on the high-tech sector worldwide.

However, Mr Gerry Hennigan, analyst at Goodbody Stockbrokers, says each company should be examined on its merits, taking into account factors such as how its sector is doing and the extent of its exposure to Asia and other troubled regions of the globe.

While the semi-conductor industry is faring badly at present, suffering from oversupply, other areas such as training software or knowledge-based systems which exploit customer information are doing very well. Fourth-quarter results should be closely scrutinised for further clues on the outlook for all of these areas.

But those interested in investing in the high-tech area should bear in mind that it is not for the faint-hearted.

Technology stocks, particularly those listed on the Nasdaq, tend to trade on high price/ earnings ratios which reflect their potential to grow and expand rapidly. Any hiccup in the earnings curve can be cruelly punished as investors in CBT will confirm.

The Dublin-based interactive training software company floated on the Nasdaq in 1995 and successfully delivered 14 quarters of growth. But its failure to match analysts' third-quarter earnings forecasts saw the share price decimated in a matter of weeks. The shares lost almost half their value in a single day and in the space of a few weeks, the stock fell from more than $60 (£41) to less than $7 (£4.80).

However, volatility works both ways. If investors can lose half their money in the course of one day, they may also double their funds over a short period if things go well. An investor who bought into Iona at $16 in October would have seen his shares rise to $29 within the month, a return of more than 80 per cent.

Much of the volatility in these shares is due to the presence of what are known as "momentum investors" on the companies' list of shareholders. Such investors are content to retain their holdings while earnings and share prices are rising but as soon as the "momentum" disappears from the stock they sell, leaving private investors to scramble in their wake.

In comparison to CBT and Iona, Esat - the other highly visible Irish high-tech stock - has been fairly stable and analysts suggest that telecommunications' firms generally are slightly less risky than companies involved in other areas.

"The business is more easily understood and the companies are easier to judge and their progress is clearer as well. Although they offer a very good return, the risk involved in them is perceived to be lower," Ms Houlihan says.