Is it worth investing in technology?

[KingstonU]

Hello there, I would like to say that Anandtech has become one of my favourite sites that I check regularly.


Edit* I see that others have asked similar questions, my apologies for not looking before I post, though my question is specific to technology stocks*

I have been toying around with the idea of investing a bit of money in online stocks from companies like AMD, Intel, Nvidia etc... since this is an area of interest to me.

Does anybody have any recommendations or advice? books I should read? should I stay away? is there a certain amounts of stocks to buy that are more worthwhile? I mean if I was to invest say $500, is that not enough to be worthwhile perhaps?

note also that I am in Canada, can I use a site like ShareBuilder or Zecco?

Thanks for you comments, and thanks for all your interesting posts on this board.

 

[doze]

Give me all your money... I am 1337 at teh stocks we can make mad cash yo

Seriously though my dad got me this book called The Wealthy Barber which has lots of good general info. about getting started in investing.

 

[Miramonti]

Depends on how wise you are.

Technology = volatility = potential for :thumbsup::thumbsup:...as well as potential for :thumbsdown::thumbsdown:.

Do you feel lucky?

 

[Stunt]

Buy a tech etf if you want to buy tech stocks.
Volitile but should be a good investment short term.

 

[her209]

I invest in tech companies that I am comfortable in, i.e., they won't go bankrupt anytime soon.

 

[MetalMat]

Originally posted by: her209
I invest in tech companies that I am comfortable in, i.e., they won't go bankrupt anytime soon.

But the rate of growth is pretty low compared to some other ones Just depends on how aggresive you want to be.

 

[Engineer]

Originally posted by: her209
I invest in tech companies that I am comfortable in, i.e., they won't go bankrupt anytime soon.

Didn't you just lose a ton (% wise) in AMD? :Q

(sorry, had to do it! 😛 )

 

[her209]

Originally posted by: Engineer

Originally posted by: her209
I invest in tech companies that I am comfortable in, i.e., they won't go bankrupt anytime soon.

Didn't you just lose a ton (% wise) in AMD? :Q

(sorry, had to do it! 😛 )

Yes, 28% 🙁

Bought back in October hoping their stock prices would jump after their earning report. AMD reported 50% more profit compared to the same quarter last year but the analysts still managed to drive the prices down. Bastards!

 

[iversonyin]

Originally posted by: her209

Originally posted by: Engineer

Originally posted by: her209
I invest in tech companies that I am comfortable in, i.e., they won't go bankrupt anytime soon.

Didn't you just lose a ton (% wise) in AMD? :Q

(sorry, had to do it! 😛 )

Yes, 28% 🙁

Bought back in October hoping their stock prices would jump after their earning report. AMD reported 50% more profit compared to the same quarter last year but the analysts still managed to drive the prices down. Bastards!

I'm down 10% as well. Just a small amount. Its alright. I don't think AMD's valuation is blown out of water.

 

[Legend]

Have you ever invested before? In case you're short term memory is poor, tech stocks are the ones in the late 1990s that tanked. I don't know if the P/E has settled back to what it should be or if it's still slightly bloated. Tech stocks tend to be rapid growth, increasing risk and volatility. There's a good chance you could lose money if you invest poorly.

 

[MetalMat]

Originally posted by: iversonyin

Originally posted by: her209

Originally posted by: Engineer

Originally posted by: her209
I invest in tech companies that I am comfortable in, i.e., they won't go bankrupt anytime soon.

Didn't you just lose a ton (% wise) in AMD? :Q

(sorry, had to do it! 😛 )

Yes, 28% 🙁

Bought back in October hoping their stock prices would jump after their earning report. AMD reported 50% more profit compared to the same quarter last year but the analysts still managed to drive the prices down. Bastards!

I'm down 10% as well. Just a small amount. Its alright. I don't think AMD's valuation is blown out of water.

Does AMD have anything looking ahead in the future? Cause right now Intel is beating them and Intel seems to have the upper hand in the forseeable future.

 

[IntrinsicValue]

1. If you are investing small amounts (like less than $50,000) you should not day-trade. In fact, the less you invest, the longer you should be willing to hold onto stocks. This is because the cost it takes to make stock transactions will significantly cut into profits of smaller investments. Therefore, since you're looking at $500 to invest, I recommend chosing ONE stock and plan on keeping in there for quite some time.

2. Do not choose well-established stocks that are already trading for close to their worth. It will take too long for them to make you any real money. Instead, search for "growth" stocks or "value" stocks.

3. Learn about companies before you invest in them. This does not mean simply knowing what they sell. Learn everything you can about them, including (to name just a few things): past 3 to 5 years of earnings, past 3 to 5 years of sales, how many mutual funds are invested in them, how much of their management is invested in them, new products or acquisitions they're planning, and compare that information to similar information of their competitors.

4. Don't focus on P/E's. They are the RESULT of current market activity, not necessarily an indicator of future value.

5. Do not buy stocks that friends (or people here) recommend based SOLELY on their recommendation. Do your homework first.

6. When investing larger sums of money, you must set a "floor" and "ceiling" for a stock PRIOR to buying it. However, AFTER you purchase the stock, the floor should move in relation to the "high" of the stock price. The ceiling should move only after you re-evaluate the stock once it hits that price point. In other words, have an exit strategy. (This will be less important for you since you're investing so little. Your risk is low, so you shouldn't be panicking on sudden price-movements since the most you can lose is $500.)

7. Regarding technologies, I am invested in numerous securities - and only two could be considered "tech" stocks. I find tech stocks to be highly volatile by nature -- technology is fast-paced and new products are developed very quickly.

8. Don't invest money you can't afford to lose.

 

[AnonymouseUser]

Originally posted by: Legend
Have you ever invested before? In case you're short term memory is poor, tech stocks are the ones in the late 1990s that tanked. I don't know if the P/E has settled back to what it should be or if it's still slightly bloated. Tech stocks tend to be rapid growth, increasing risk and volatility. There's a good chance you could lose money if you invest poorly.

Industry groups are cyclical in the stock market. Tech was the leader in late 90's, but were laggards in the last few years. Oil/Gas was the leading industry group for the last couple of years, and are now lagging.

Financial stocks are the leaders now, with stocks such as NYX, ICE, CNS and GROW leading the pack.

Sticking with strictly one Industry group will lead to minimal gains over time. Move your money around (like the institutions do) to stocks in leading groups and you'll do much better.

 

[Engineer]

Originally posted by: AnonymouseUser

Originally posted by: Legend
Have you ever invested before? In case you're short term memory is poor, tech stocks are the ones in the late 1990s that tanked. I don't know if the P/E has settled back to what it should be or if it's still slightly bloated. Tech stocks tend to be rapid growth, increasing risk and volatility. There's a good chance you could lose money if you invest poorly.

Industry groups are cyclical in the stock market. Tech was the leader in late 90's, but were laggards in the last few years. Oil/Gas was the leading industry group for the last couple of years, and are now lagging.

Financial stocks are the leaders now, with stocks such as NYX, ICE, CNS and GROW leading the pack.

Sticking with strictly one Industry group will lead to minimal gains over time. Move your money around (like the institutions do) to stocks in leading groups and you'll do much better.

NYX getting the big bounce lately from being Cramer's stock of the year pick! 😉

 

[AnonymouseUser]

Originally posted by: Engineer

Originally posted by: AnonymouseUser

Originally posted by: Legend
Have you ever invested before? In case you're short term memory is poor, tech stocks are the ones in the late 1990s that tanked. I don't know if the P/E has settled back to what it should be or if it's still slightly bloated. Tech stocks tend to be rapid growth, increasing risk and volatility. There's a good chance you could lose money if you invest poorly.

Industry groups are cyclical in the stock market. Tech was the leader in late 90's, but were laggards in the last few years. Oil/Gas was the leading industry group for the last couple of years, and are now lagging.

Financial stocks are the leaders now, with stocks such as NYX, ICE, CNS and GROW leading the pack.

Sticking with strictly one Industry group will lead to minimal gains over time. Move your money around (like the institutions do) to stocks in leading groups and you'll do much better.

NYX getting the big bounce lately from being Cramer's stock of the year pick! 😉

Hah! He is late to the party (as usual)! I will say though, he does have a good pick from time to time.

As for tech, RVBD looks to be a good one. I am watching RVBD, and if it hits $35.27 soon, with heavy volume (completing a double-bottom base) then I am jumping in.

 

[IntrinsicValue]

Originally posted by: AnonymouseUser

Originally posted by: Legend
Have you ever invested before? In case you're short term memory is poor, tech stocks are the ones in the late 1990s that tanked. I don't know if the P/E has settled back to what it should be or if it's still slightly bloated. Tech stocks tend to be rapid growth, increasing risk and volatility. There's a good chance you could lose money if you invest poorly.

Industry groups are cyclical in the stock market. Tech was the leader in late 90's, but were laggards in the last few years. Oil/Gas was the leading industry group for the last couple of years, and are now lagging.

Financial stocks are the leaders now, with stocks such as NYX, ICE, CNS and GROW leading the pack.

Sticking with strictly one Industry group will lead to minimal gains over time. Move your money around (like the institutions do) to stocks in leading groups and you'll do much better.

Normally, I'd agree completely with this, and in fact I own(ed) 3 of the 4 you mention - exept CNS. I just sold GROW a week or two ago at over 100% profit, but still own ICE and NYX (plus NMX, which is an IPO competing with ICE).

However, while I do agree with you that being in one industry over a long period of time will probably hurt you, I'm not sure moving his money around like institutions do is a good idea if he's only investing $500. Especially since he seems to be a new investor and probably wouldn't know where to move it to.

Instead, what I would do if I were him is stick his money into a growth stock of a company that he knows. Meanwhile, he should save money, do a LOT of research about investing, and use a Stock Simulator to practice and apply his knowledge.

Once he has a larger sum of money saved and has consistently made profits (and learned from his mistakes) in the Stock Simulator, then I think he could start applying the idea of 'investing like the pros'.

 

[HamSupLo]

investing or speculation?

 

[AnonymouseUser]

Originally posted by: IntrinsicValue

Originally posted by: AnonymouseUser

Originally posted by: Legend
Have you ever invested before? In case you're short term memory is poor, tech stocks are the ones in the late 1990s that tanked. I don't know if the P/E has settled back to what it should be or if it's still slightly bloated. Tech stocks tend to be rapid growth, increasing risk and volatility. There's a good chance you could lose money if you invest poorly.

Industry groups are cyclical in the stock market. Tech was the leader in late 90's, but were laggards in the last few years. Oil/Gas was the leading industry group for the last couple of years, and are now lagging.

Financial stocks are the leaders now, with stocks such as NYX, ICE, CNS and GROW leading the pack.

Sticking with strictly one Industry group will lead to minimal gains over time. Move your money around (like the institutions do) to stocks in leading groups and you'll do much better.

Normally, I'd agree completely with this, and in fact I own(ed) 3 of the 4 you mention - exept CNS. I just sold GROW a week or two ago at over 100% profit, but still own ICE and NYX (plus NMX, which is an IPO competing with ICE).

However, while I do agree with you that being in one industry over a long period of time will probably hurt you, I'm not sure moving his money around like institutions do is a good idea if he's only investing $500. Especially since he seems to be a new investor and probably wouldn't know where to move it to.

Instead, what I would do if I were him is stick his money into a growth stock of a company that he knows. Meanwhile, he should save money, do a LOT of research about investing, and use a Stock Simulator to practice and apply his knowledge.

Once he has a larger sum of money saved and has consistently made profits (and learned from his mistakes) in the Stock Simulator, then I think he could start applying the idea of 'investing like the pros'.

I fully agree with using a fantasy stock game to practice, at least a year before using real money.

I disagree with the statement that $500 isn't enough to follow leading industry groups.

Had one put $500 into a single leading oil stock (JOYG) 2 years ago (Jan 05) and pulled it out when oil lost favor (Feb-May 06), it would've been worth ~$1500. Flip that into GROW or ICE in Oct 06 and it would be worth ~$3000-$4500 already.

Had one put $500 into a single leading Tech stock (HPQ) 2 years ago, it would be worth ~$1000 now. Not bad, but he obviously could have done better.

EDIT>> RACK would be a better example. $500 in RACK 2 years ago would have been worth ~$2500 at it's peak, but only worth ~$1500 now.

With small $ amounts, I feel it is even more important to follow the leading groups, and don't worry about diversification until you have $10000 or more. Just remember to cut your losers early and hold your winners longer.

 

[patentman]

Honestly, the best practices for most investors is to make periodic investments in a variety of highly traded stocks.

I'd recommend starting out with a mutual fund. The "American" line of funds and the "Vanguard" line of funds are good places to start.

Minimum inital investments for mutual funds typically range from $500-$10k. Find one that you can get into that looks pretty good to you, and buy it. Then make periodic investments (e.g., biweekly or monthly) into the same fun through an automatic investment plan, even if all you are adding is $50-100. You would be suprised at how that adds up.

I started this way when I was 22 or 23. Whenever I got a pay increase I set aside a bigger portion of my salary for investment. I now have ~10 different mutual funds, averaging a 14-16% return, with well over 100k invested.

Time is everything when it comes to sound, relatively low risk investments. Plug some numbers into a 30 year investment using the investment calculator at bloomberg.com and you will see what I mean (pay attention to the growth in the last 5 years in particular).

The way I'm going, I should be able to retire when I am 50 instead of 65.

Oh, not that I am against investing in individual stocks. I've done some of that too. Just remember that investing in individual stocks is a lot riskier than investing in a diversified portfolio or mutual fund. Just don;t invest more in any one individual stock than you can afford to lose.

 

[IntrinsicValue]

Originally posted by: AnonymouseUser

Originally posted by: IntrinsicValue

Originally posted by: AnonymouseUser

Originally posted by: Legend
Have you ever invested before? In case you're short term memory is poor, tech stocks are the ones in the late 1990s that tanked. I don't know if the P/E has settled back to what it should be or if it's still slightly bloated. Tech stocks tend to be rapid growth, increasing risk and volatility. There's a good chance you could lose money if you invest poorly.

Industry groups are cyclical in the stock market. Tech was the leader in late 90's, but were laggards in the last few years. Oil/Gas was the leading industry group for the last couple of years, and are now lagging.

Financial stocks are the leaders now, with stocks such as NYX, ICE, CNS and GROW leading the pack.

Sticking with strictly one Industry group will lead to minimal gains over time. Move your money around (like the institutions do) to stocks in leading groups and you'll do much better.

Normally, I'd agree completely with this, and in fact I own(ed) 3 of the 4 you mention - exept CNS. I just sold GROW a week or two ago at over 100% profit, but still own ICE and NYX (plus NMX, which is an IPO competing with ICE).

However, while I do agree with you that being in one industry over a long period of time will probably hurt you, I'm not sure moving his money around like institutions do is a good idea if he's only investing $500. Especially since he seems to be a new investor and probably wouldn't know where to move it to.

Instead, what I would do if I were him is stick his money into a growth stock of a company that he knows. Meanwhile, he should save money, do a LOT of research about investing, and use a Stock Simulator to practice and apply his knowledge.

Once he has a larger sum of money saved and has consistently made profits (and learned from his mistakes) in the Stock Simulator, then I think he could start applying the idea of 'investing like the pros'.

I fully agree with using a fantasy stock game to practice, at least a year before using real money.

I disagree with the statement that $500 isn't enough to follow leading industry groups.

Had one put $500 into a single leading oil stock (JOYG) 2 years ago (Jan 05) and pulled it out when oil lost favor (Feb-May 06), it would've been worth ~$1500. Flip that into GROW or ICE in Oct 06 and it would be worth ~$3000-$4500 already.

Had one put $500 into a single leading Tech stock (HPQ) 2 years ago, it would be worth ~$1000 now. Not bad, but he obviously could have done better.

EDIT>> RACK would be a better example. $500 in RACK 2 years ago would have been worth ~$2500 at it's peak, but only worth ~$1500 now.

With small $ amounts, I feel it is even more important to follow the leading groups, and don't worry about diversification until you have $10000 or more. Just remember to cut your losers early and hold your winners longer.

Yes, of course it's easy and clear to see this in hindsight. However, as he is a new investor, I'm guessing he'd have no idea how to find those stocks or how to analyze the proper indicators that lead to major price movement. What would more likely happen is he would try to time the market, jump on board too late, and end up on the tail end of the rally before the big pullback. Then any minimal profits he made would be absorbed by the action of buying and selling, plus taxes.

I'd rather see him use a stock simulator to practice real trading on, and leave his real money in a relatively safe growth stock until he begins understanding more of the nuiances of the market.

I'm not a big fan of mutual funds (as mentioned by patentman), but even so... I'd rather see him put his money in a small-cap fund while he learns stocks than to try to succeed at 'market timing' before he is ready.

 

[KingstonU]

Thank you for all your comments. I am very happy that some of you pointed the way to Virtual Stock Exchange games. Genius that is. I've been looking around and I noticed that anybody who invested in AAPL (Apple) early like 5-10 years ago would be a winner today, aswell as anybody who invested in NTDOY (Nintendo) 1 year ago.

Thus far, virutally at VSE, I've already lost like 4% 🙁 , but that was just picking random stocks that I knew nothing about since it is fake money after all and I'm trying to learn from it 😉

Thanks again!

 

[AnonymouseUser]

Investing in Tech stocks is a losing proposition at this point. Lots of Tech stocks took a beating the past week, today being especially bad. AMD, INTC, RACK (down 45% in two days!), AAPL, RIMM, RVBD, and NVDA all took a beating. A bear market may be upon us, and going to cash is the safest thing to do (even for those who invest in mutual funds).

 

[CPA]

Jim Cramer say No, stay out of tech.

 

[JackBurton]

Good suggestions here.