Technology and Innovation

Some of the most exciting companies you can invest in are technology and innovation stocks. When buying tech stocks there are thousands to choose from all over the world.

Most investors first think of finding these stocks on NASDAQ, London’s AIM, or the Toronto Venture Market. But the truth is that some of the world’s best technology and innovation stocks exist at home on the Australian Stock Exchange (ASX).

For Aussie investors, that means you have the chance to invest in these small stocks before they hit it big and potentially turn into multi-billion-dollar companies.

Investing in technology stocks is smart

Our view is that investing in technology and innovation stocks provides opportunities that no other industry in the market offers. In fact, sometimes technology and innovation stocks provide opportunities that come around only once in a generation.

Of course, there is risk involved in tech stocks. But investors who are comfortable with a higher level of risk and have the experience may be able to ride out the market, particularly if they start investing early.

Think about the incredible run these kinds of stocks had during the 1980s. For example, the NASDAQ more than tripled over that 10-year period. The rise of the ‘once-in-a-lifetime’ tech sector appeared during the 90s, too.

That did culminate in an equally seismic tech bubble collapse. But if you had invested in technology and innovation stocks and sold out after doubling, tripling, or even seeing your investment rise 10-times, you wouldn’t really care about the end of the bubble.

Major players like Apple, Facebook and Google have shown that sky-high booms are possible, but the question for smart investors is how to separate the valuable players from the one-minute wonders.

Once again, we are faced with the idea that tech is too big to fail. Rather than falling prey to the systematic overconfidence people feel for tech stocks, it is wise to remember to look out for those qualities that make for good long-term investments.

While some tech companies appear complicated, others — like Facebook or Afterpay — have fairly simple business models with an obvious target market. If you understand the business behind the share price, it may be worth taking a closer look.

Technology stocks are the future

Right now, with the immense pace of innovation, there has never been a better time to invest in technology and innovation stocks.

If you’re smart enough, you’ll keep an eye on tomorrow and invest for the future. If you do, we don’t think you’ll find anything more exciting and full of potential than technology and innovation stocks.

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Money Morning Australia