Technologies trading can refer to a lot of different things, but they all have one thing in common: technology. Technology has reshaped the world and will continue to have a huge impact on our lives in the years ahead. For example, just a few decades ago virtual reality and augmented reality seemed like science fiction. Now? It seems like a new “AR” technology is being released every month.
Investing in Apple and Google
Normally, when people use technology trading in an investment sense, people are talking about investing in tech companies. If you have invested in Apple or Google back fifteen or so years ago, your stock portfolios would have enjoyed tremendous growth over the past several years. Back in September of 2002, Apple shares (AAPL) were selling for only a buck a piece! Now individual shares are selling for more than $100 dollars. If you had bought $10,000 dollars worth of shares back then, your portfolio would now be worth more than a million dollars!
Google’s share prices haven’t enjoyed as explosive of growth. They launched at over $60 bucks a share and quickly climbed up to over $100. Still, even if you bought shares at $100 bucks a pop, your portfolio would have enjoyed breakneck growth as shares are now worth over $700 dollars.
Trading technology stocks is a great way to invest in a high potential industry. Of course, we should warn you that the technology field is very, very competitive and conditions can change rapidly. All it takes is one major breakthrough and a long established company can quickly find itself under threat.
Risk is higher with technology stocks
Understanding the risks is one of the most important concepts in understanding how to trade technologies stocks. The tech industry attracts the best and brightest, as well has huge investments. Tech companies can produce tremendous revenues, often with high profit margins. This means that they have a lot of money to invest. Established giants can quickly find themselves falling behind competitors.
Remember how Apple was selling for only about a buck at the turn of the millennium? That’s because Apple, a dominant computer company in the 1980’s, was obliterated by Microsoft and other tech companies in the 1990’s. So Apple, under the leadership of Steve Jobs, shifted from being a computer company to being more of a consumer electronics company.
iPod put 100 songs in our pocket and billions of dollars in Apple’s pocket
Their first breakthrough invention in the new century was the iPod. This small personal music player promised to put hundreds of songs in your pocket. And it delivered. Stock prices began to climb, and then Apple reinvested its profits from the iPod into creating new devices, like the iPhone. Now, Apple is one of the largest companies in the world, with a valuable in excess of $500 billion dollars.
The of sinking of Sony stocks
Other companies, like Sony, had the technology to create a device like the iPod, but not the innovative vision. Sony, for its part, was once a giant in the personal music space, with the Sony Walkman CD player the gold standard of on-the-go music in the pre iPod days.
Now? Sony has been crushed in its own right. Stocks for Sony briefly peaked at $142 in 1999 during the tech bubble. In 2007, before the Great Recession, they were trading for nearly $50 dollars. Now? About $25 dollars. And Japanese companies are known for their resilience because of the stable institutional investors in Japan.
So what’s the point of this rather long story? Tech companies rise and fall, and often very quickly. This is true of any company, but for the tech sector, movements can happen more quickly and more dramatically. Often, it only takes one good technology to make or break a company.
Apple’s revival followed quickly after the iPod’s success. The company poured solid profits back into new technology, such as its now ubiquitous iPhone. Recently, Microsoft has enjoyed a resurgence powered by its cloud computing business. Sony is being kept afloat by its successful video game console and a few other key devices.
Who knows what the future holds, but if you can find the next hot technology stock, you might strike it rich!
Other meanings for technology trading
Besides stocks, some companies trade technology more directly, often through the sale or licensing of technologies. This offers a great way for companies to make money. Production is hard, but if you come up with a great idea, you can patent it and then make money off of that patent.
Technology trading is also occasionally used to refer to trading through technology platforms. Once upon a time, for assets to be traded there needed to be a trading floor. Then real people would call out trades. Now, most trading is conducted through computers, though trading floors still exist, but mostly for nostalgia.