“Identifying opportunities early is the name of the game”

System

BrockStoker wrote: »

W

On the other end of the spectrum, there is technology. Why would you not invest in technology? .

I guess you've not followed the news this week.

Facebook shares down 23% in a single day losing $120Bn in value even though it increased its profits over the last quarter because it just missed analysts projections.

The same week Twitter's shares dropped 20.5%.

Apple's shares dropped 7% in 2 days in April as there were reports of weakening smartphone demand. The drop was triggered not by anything from Apple but by one of their suppliers reporting a weakening growth.

When companies are successful there are expectations on their growth placed on them and when they miss that expectation, even by a mere fraction and even though there is growth, they drop in value like a stone. One of the problems with technology and investing in it is that some things like websites and social media platforms fall out of favour eventually and that fall can be rapid (Myspace etc), or the sector can reach saturation point where everyone already has a device and devices are good enough that the majority of people feel no need to upgrade as is happening in mobile phones, laptop and PC desktop markets.

darkidoe

Linton wrote: »

Its impossible to say with more than about 50% certainty

Investing in tech isnt that easy. The problem I see is that what the market regards as the Tech sector includes companies that get their money from other things with technology being merely an enabler. For example Google and Facebook are primarily sellers of advertising space. VISA, MasterCard and PayPal would arguably be better placed in a Financial sector. Amazon is in retail as is Alibaba.

If you really want tech you then have the problem that most tech companies fail, the lucky investors are those who invest in companies that are bought out after their shares go on the market. The chances of you picking the next Google/Facebook etc are virtually zero.


Healthcare and biotech are very different investments. Healthcare should be generating cash whereas biotech is as risky as investing in gold prospectors - most discover nothing of any value. And then, different again, are the drug manufacturers.

I would agree with this. Not only are you getting in early, you are getting into a very diversified range of sectors. There is no need to cherry pick sectors. In fact the reverse - I would advocate rebalancing to quieten down the over exuberance of the market.


One problem with buying in dips is that the price may rise a lot before you get one. Better in my view to invest broadly as soon as you have the money. Investing in a crash needs some nerve - did you take out a second mortgage to buy wildly during 2007-2009? With hindsight its a no-brainer. Doing so with the information available at the time is rather different.

So my growth policy is to remain fully invested in as wide a range of sectors as possible with a strong bias towards small companies. I wouldnt agree at all that !!!8220;Identifying opportunities early is the name of the game!!!8221;.

Linton you should write a book or a blog. I would read it.

Prism

Tarambor wrote: »

I guess you've not followed the news this week.

Facebook shares down 23% in a single day losing $120Bn in value even though it increased its profits over the last quarter because it just missed analysts projections.

The same week Twitter's shares dropped 20.5%.

Apple's shares dropped 7% in 2 days in April as there were reports of weakening smartphone demand. The drop was triggered not by anything from Apple but by one of their suppliers reporting a weakening growth.

Drops like that are minor blips on the long term. The general question could be 'are technology companies in general likely to be more profitable than other industries in the long term?'. For example, what Facebook has done over the last few months has probably turned them into a better business long term. That doesn't satisfy the short term investors, many of which have bailed.

If I was forced to pick a single sector to put all my money in it would be tech. Luckily non of us have that little choice.

BrockStoker

Voyager2002 wrote: »

Broadly I agree, but I think you need to read up on the 'dot com' boom and bust around the year 2000. Many (most?) tech shares have yet to recover to the values they were at before the 'correction'. Even a fantastic company like Amazon is unlikely ever to achieve the level of earning needed to justify its present valuation.

It may be true that some shares have yet to recover, but tech funds have made big gains since then. I don't see why those shouldn't continue. As with any sector, potential bubbles and crashes can occur. Nothing new there. Hold cash, buy in dips, and you will be fine over the long term.

Voyager2002 wrote: »

Two points:
1. Many members of these 'growing and ageing populations' cannot afford to pay for their own healthcare and so it is their governments that are paying. We have seen the likes of "austerity" across the world, with governments increasingly unwilling to meet these costs;

Yet people still need medicines/healthcare, and companies catering for that are making good profits right now.

Voyager2002 wrote: »

2. The rate of discovery of new drugs has slowed fairly dramatically, for a host of reasons.

I don't think that is the case. Just the opposite in fact, or at least the pace has been picking up if it had slowed down in the first place. However the focus is shifting. I posted this article on here before, but I think it's worth posting again:
https://seekingalpha.com/article/4183984-comes-next-biotech-revolution

Voyager2002 wrote: »

In short, while I agree with your central thesis there are good reasons why, during periods of economic growth, this sector is less profitable than most others and delivers slow or zero growth.

Can you back that up with data? While I agree the last few years (excluding the last 2-3 months) have been very slow for the sector, that was mostly due to politics (along with fears of generic drug competition), but new drugs coming to market have the potential to generate significant growth, as they always have done, irrespective of the condition of other markets. Healthcare/biotech is considered a defensive play for this reason, while at the same time having the potential for significant/aggressive growth.


My holdings have generated significant gains over the 3-4 years I've been investing in them.

Voyager2002 wrote: »

Energy is not the same as oil

Oil is energy though, and for the time being at least, the world runs on oil mainly.



Anyway, my holding in that sector is in Artemis Global Energy, which Trustnet describes as "Commodity/Energy". The commodity in question is mostly Oil, so you can argue that one with Trustnet:)



Sure that is starting to change, but developing economies are reluctant to give up oil, and that will ensure prices remain high (possibly even go higher) as reserves in the ground diminish.

kidmugsy

The "tech" industry of around 1840 was railways. And nobody ever lost a penny on those, did they? Sure thing, railways.

aroominyork

BrockStoker wrote: »

Hold cash, buy in dips, and you will be fine over the long term.

Or don't try to time the market. Discuss. If you support the former, is it nerve or experience which makes the difference?

BrockStoker wrote: »

Anyway, my holding in that sector is in Artemis Global Energy, which Trustnet describes as "Commodity/Energy". The commodity in question is mostly Oil, so you can argue that one with Trustnet:)

And if you'd invested five years ago you'd make made a whopping... nope, sorry, you'd have lost 12%. In fact it's been a steady ride down since the fund was launched in 2011 except for the last two and a half years which, Brock, I'd guess is when you bought in?

Malthusian

Every single share in every single company is a tech share with the possible exception of shares in a brothel. The only difference is how old the technology is. And Facebook is old technology. Only old people think Facebook is an exciting tech stock; young people, to quote a young person, only use Facebook to let the old people know they're still alive.

However, investment banks and business papers are run by old people (who are still on Facebook) so it's portrayed as an exciting tech stock.

When something happens which briefly reminds old people that Facebook is not going to grow and grow and grow and eventually generate $63bn a year profit, but will instead go the way of MySpace and Kodak (even if it's not for another 20 or 50 years), this naturally causes a great disturbance in the Force. Until everyone realises that everyone has too much to lose by acknowledging painful truths and the shares stabilise.

The trouble with "investing in technology" is that everything a retail investor invests in is inherently old tech, like Facebook, by virtue of the fact that it has been around long enough to jump through all the hoops to get a public listing. The tech that will in due course replace it is held mostly by people with enough cash for direct investment in venture capital or angel investment.

Hence why people who invested in technology funds are among the few people who are still in the red following an investment in 2000.

I have a strong bias towards smaller companies in my portfolio because I made an investment decision to trade higher volatility for growth potential, but that's different from investing in tech, which is a marketing slogan, not an investment decision. As others have said there is no obvious connection between ad platforms Facebook and Google, warehouse discount retailer Amazon, the positively ancient PC manufacturer Apple and straight-to-video publisher Netflix, and no obvious reason why these firms would be expected to have higher growth potential or profitability than any other business in the index. Tech, FAANG etc are all meaningless marketing labels.

Wildsound

For those talking about Facebook, they might have forgotten the days when it listed on the stock exchange in 2012, only to watch their share price halve in less than 6 months. Well... If you had bought on launch, bittng hard your lip on the dip, you would still be 500% up on your investment.

Also, just put "Facebook Share Price" into Alphabet's well known search engine and take note of the 1 and 5 year graphs. Take note of the prices over time and realise that there have been other "blips" but these have not changed the course of the share price. Why would it be different now? The questions you ask about the share now are probably the exact questions you were asking at all those other "blips" in time

A_T

talexuser wrote: »

The US because Trump would love a mini boom before the next election. Not the US because the bull run will end soon being overvalued. Europe because the EU will want to show the 26 that leaving has poor economic consequences for the UK and is not worth it. The UK because leaving the EU will result in a boom after successful negotiations. China because a growing middle class want an improved standard of living. Not China because debt gets out of control.
Cont on page 94...

the US is not overvalued it's been 40-70% of the market for a hundred years apart from the 80s Japan boon.

Alexland

A_T wrote: »

the US is not overvalued it's been 40-70% of the market for a hundred years apart from the 80s Japan boon.

Yes a lot of valuable listed companies are in the US but market capitalisation isn't an indicator of if they are overvalued or not. That's down to their individual fundamentals.

Alex