There are two major schools of technology investing. The first believes that all investments these days are fundamentally technology investments. Every big company relies to a greater or lesser degree on the innovations and efficiencies of technology to replace the high costs and laggardly habits of human beings. The faster they do this, the higher their returns.
The second school covets the pop and fizz of the new. It rejects the tedium of earnings-based valuations in favour of the helium of potential. It piles into the latest new share offerings and regards Twitter as the future of mobile advertising, not a punchline.
One school feels like traditional, copper-bottomed investing, the other like a long night in Las Vegas. Each attracts investors with very different risk profiles. As you consider where to park the last of your cash for this tax year, it’s worth trying to parse the ever broadening category termed ‘-technology’.
If tech investing only screams to you of 25-year-olds in hoodies with no concept of a business model, then you will miss out on significant shifts in mainstream companies.
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