Downsides of tech investing

source

technology is becoming the talk of the town and without doubt it should be. We have seen massive disruptions of many sectors with more to be added to that list. Many tech companies are into not just technological production but advancement. While this may present opportunities for investors, there is a need to ask questions like, 'can it also come with pitfalls'. It is indeed becoming a very competitive ground meaning long term investors need to be extra careful when picking investment opportunities. You wouldn't want to face a declining market courtesy of tech advancement.

Let's take for instance, how is the cell phone market today? How many people are now interested in button phones? What happened to investors that poured their money into this early phone structure. I don't know which company really dominated your country by that time but over here, there was a rising demand for Nokia products courtesy of a durable battery and resilient phone appearance. In short, one company that has seen itself overpowered has been Nokia, I wouldn't have thought they'll easily be runned down. Another sector that pushed them to the wall was their non compliance with android softwares at an early stage. Windows was good with Nokia, yet the limitations of app access made them a full time victim when Android incorporated sharing and easy gaming.

source
This is happening in diverse sectors, we have seen social media industries come and go. Even before the full surfacing of Facebook, there were competitive likes in which Mark Zuckerberg threw off the cliff courtesy of some advancement he made on his platforms. People want where things are happening these days and even Mr Zuckerberg knows this. Why did you think he bought WhatsApp and Instagram? Maybe you think he is ALL money, no, it is the trends of tech that led the wheel. We saw users shifting interest and without doubt Facebook would have been outrunned. Nevertheless, one can't go around and buy out all competing trends (or perhaps not all will be ready to sell). So what happens from here?

Fast forwarding to the era of blockchain, cryptocurrency and AI you can tell much from here. Projects are rising and falling within a year or two. Basically, not all came out with hype intention, the truth is just that something new just hit the town making the former obsolete. Technology is becoming a trend of 'next big thing'. Our eyes have seen disrupting technology. When looking at the future of IoT (internet of things), AI, blockchain and even quantum computing, former technologies are literally left bleeding. When people talk about trending technologies and the need to jump in, one of the things that needs careful attention is its elastic limit.

Cutting edge solution cutting down industries

The rise of technology is creating both big opportunities and big risk. Nevertheless, I am seeing added advantage for established companies who can easily blend, the entire pressure is really centering on smaller ones. We are seeing cutting edge and innovative solutions that tech is currently offering. I once talked about how AI search is pushing to replace Google search so you should know what this means. If big corporations are facing the pressure then it's really intimidating. How one can easily create a photo of his choice thanks to AI, this raises high concern about the future of photography and videography. We saw the likes of Netflix overpowering cinemas.

source
Another added disadvantage is that investing takes time to mature. Take for instance, a new company A, delivers a product that can solve 'problem c'. At it first inception, it won't be making the needed profit and profit is dependent upon global usage. Let's say the feasibility studies shows that in five years time this product will span into several continent or countries making this product profitable. It's good for investing right? An investors hops in and in it 3 years in business another company B produces a new products with added advantage ( solves problem 'cd'). First tech cycle is yet to be completed and another has surfaced. We know humans, they'll definitely move over. Company A became a victim of slow adoption speed.

You may be thinking there is a need to shrink the maturity cycle to pull out interest. This also comes at a risk, why do some investments end up as bubbles? You don't just boast of a product when the test run for error process is not met, you may end up losing investors interest with a sharp market decline. Adding to that, a lot of investors are becoming 'short lived' in the field of tech investing. With years of knowledge, many are beginning to operate on a 'get in early get out early' strategy when it comes to tech investing. This process has always led to inflated market valuations. Maybe you have to take a look around the world of technology. A lot is happening that easily gets investors persuaded and distracted.

To conclude, let me add, the rise of tech advancement is coming at a cost of capital liquidation to investors. All we see these days are sharp green candles followed by falling knives. This calls for thorough research before leaping into an assumed latest tech, it can be obsolete the next day. There is a lot of rivalry taking place in tech markets as we speak and from my views this seems just to be the beginning. Investing has never been a safe water and we are seeing it becoming even more dangerous.

Posted Using InLeo Alpha