...by Daniel Szego
"Simplicity is the ultimate sophistication."
Leonardo da Vinci
Saturday, April 11, 2015
Bull market strategy on IT markets
Well, perhaps it is a funny thing to regard the whole information technology market similar to the stock market, however in certain situations a lot of technology works as stocks : the technology is going up, the technology is going down, the technology creates bubbles overvalued and so on.
In this sense, it certainly makes sense to make an analysis in analogy with a classical stock market.
It it important to note however that there are certain differences, I would say the market itself is not so perfectly informed, much less perfect, the changing them self are as well happening on 1-3 yearly basis and not on a daily basis (certainly exception if you only invest only on stocks of the different it companies that are on the market).
So let we see some of the IT fields that can be regarded at the moment as Bull Markets:
- Industry 4.0
- Internet of things
- Big data
So how it is possible to play on a bull market. If I say play, I actually mean to invest, so you actually want to make money with the technology:
1. buy stocks of public companies that deal with the technology
2. build up the competences for your own company (and sell, like for instance project basis):
2/a. get yourself competence on the upcoming technologies
2/b. recruit people who have the competence
2/c. find consultants who have the competence
2/d. find partners who have the competence
2/e. buy companies that have the competence
3. Create product
3/a. create products that focus on some aspect of the technology
3/b. create framework, related to the technology, that help for other companies to do something faster, better, cheaper,....
4. Recharge old technology
4/a. create migration tools that upgrade somehow the old technology to the new one
From a timeline financial perceptive, the proposed solutions are not the same, As No. 1 can be very fast staring from one day, typically No 3 and 4 has got at least a year horizon. The financial perspective is pretty much similar, as for instance buying a stock or finding a partner with a competence can be pretty cheap, buying a whole company usually means more money.
The following table summarizes the possibilities: