A REMINDER ABOUT THE BEST STRATEGY FOR TECH INVESTORS
Today’s chart shows two investing strategies in the tech sector. One leads to solid gains… the other results in solid losses.
Amateur investors often mistakenly think they need to invest in risky, unproven companies to make big gains. Take social media companies like Facebook and Groupon, for example…
And frenzied investors – who paid ridiculous prices for shares of companies with lackluster financial results – were left “holding the bag”…
Sticking with dominant, cash-gushing companies is nearly always the better strategy.
For example, shares of Google (GOOG) just touched their highest level in over four years.
Unlike social media stocks, Google has a steady, profitable business and a growing pile of cash on its balance sheet. It focuses on being the go-to search engine for the majority of Internet users. Google’s dominant position allows it to rake in billions of advertising dollars every year.
As you can see in the chart below, sticking with the dominant Internet company netted investors a healthy 35% gain over the past 12 months. On the other hand, IPO investors who got caught up in the social media hype have lost 50%-80%.
– Larsen Kusick
Source: Market Notes