| When
dealing with technology, we are
constantly making breakthroughs and
improving on what we have. Everything is
getting faster, smaller, and online. But
with all of these new advancements
coming out, no one knows what new
product or improvement will come out
first.
OK, let. s face it.
No one pays attention to the long-term
evolution of the human race and its
relationship to technology. People just want
to make money off of it. There. s
just one problem. New products and
advancements in the technology field
come out every day, and the stocks
of these companies don. t always
go up as a result. So how do you pick
a company that. s got a truly
great moneymaking idea? The answer could
be very complicated, or you could take a
simpler approach as a general guideline.
When new products
come out,
the market is aware of them, and
stock prices adjust accordingly within a short
period of time. If Apple Computer
Inc. (AAPL) comes out with a
G5 chip that performs a billion and a half
calculations per second, that. s huge.
The stock price would almost assuredly
go up. If you know it. s
coming, or if it just came out, Apple
might be a good buy. On the other hand,
if Apple comes out with an improved G4
chip that. s 20 megahertz faster
than the last, sure it. s a new
technological advancement, but will it
affect the stock price? Will 20 MHz
really increase profits? Probably not.
Look at the Palm
Pilots. When the handheld computers first came
out, they introduced a whole
new way of doing whatever you could
do on them. Features were added in
every version, and their usefulness increased, as
did profits. But if you
look at stock price differences between the
before-palm pilot era and
after the first one was introduced, you. ll
see a giant climb. Now look
at the stock price difference between before
and after the introduction of
the Palm Pilot 4. Nothing. It
wasn. t anything truly new, and
it didn. t boost profits enough to
make a real difference, especially
compared to all the hype new handheld
computers get.
When "new"
technology is
introduced, ask yourself
if it. s new or original
enough to make money. Is it a big
improvement? Is it just a slight modification? What
would make people buy this over
other things? In a way, you have to
think from a marketing perspective. With
technology, you never know what.
s next, and you never know what
the public will buy. By thinking it out
from different angles, you can usually
get ahead and make guesses that pay
off more times than not. Remember (especially
in the technology field), it. s
fine to be wrong, just not more than
half the time. |
