If there’s one industry that has come on in huge leaps and bounds over the last decade or two then it’s the technology industry. By definition technology is an area that will always be progressing and moving forward, but at the same time it also tends to become exponential in this growth as each new breakthrough leads to more possibilities and cheaper and easier manufacturing. While technology once only meant things like desktop computers that might have existed in the family home, business tools and a few gadgets; today almost everyone you meet owns multiple pieces of technology from games consoles to netbooks and is usually carrying at least one powerful piece of technology in their pocket. Gadgets like mp3 players and smartphones that didn’t exist twenty years ago have changed the way we live our lives, while the improved manufacturing and availability has meant that everyone can now own one.
This makes the industry a great place to invest if you’re looking to make a big profit, but it’s also a highly volatile one and one that could be quite risky as things are changing so fast and some companies are inevitably being left behind.
So what’s the solution? It’s to think critically about which technology is most likely to succeed, it’s to avoid taking risks, and it’s to put on your futurist hat and think about what’s likely to change the way we live our lives. Here are some tips to consider when betting on the next big technology trend.
While taking a risk could potentially be a very profitable move (whoever took a risk with Apple when they launched the iPod probably laughed all the way to the bank), other risks might not be so smart. Today a company like Apple offers a very tempting option to investors because their technology is based around simple iterations and upgrades to satisfy a built in and loyal customer base. While eventually the public may demand something a bit more ground breaking from the company, it’s unlikely that they’re going to suddenly make any substantial losses. On the other hand, betting on Microsoft as they try to push Windows 8 on the public is a lot more risky because it’s an idea we’re less familiar with.
Try to look at the business models of the companies that you’re investing in too and how stable they are. According to Nintendo, they began making profit on their Wii U the moment they sold their first game – which puts them in a much stronger position than most console manufacturers who operate on huge loss leaders.
Sense the Trends and Directions
Before a big paradigm shift comes along to stir everything up you can normally sense a few signs that things will be going in that direction. Right now for instance we’re seeing greater integration of the cloud into our devices, we’re seeing a lot of interest in augmented reality and science fiction is portraying a lot of holographic interfaces. What does this tell us about the directions technology is heading in, and can you rely on the gut feeling that generates to act as a compass for your investments?
Sandra Martin is a stock market trader and is into the field for long. She makes sure to refer to Stock charts before making any investments.None found.