I've been learning a lot about personal finance and investing lately, and one of the things I've learned is that technology companies are notoriously hard to invest in. With the gift of hind-sight, it may be obvious now which tech companies one should have invested in 20 years ago. Obviously, these companies did something right, but it may or may not be a good idea to jump on board with these companies (via the stock market) now and into the future.
The key to a good business is having an unchanging product that people instantly recognize and want to buy repeatedly. Coca Cola makes a good example. They've made the same syrups and pop for over 100 years, and people still want their product even though it has changed very little from the original. Now compare this to a company like Intel or Microsoft or Apple or RIM. These companies need to constantly stay ahead of one another in the race to develop the latest technologies. If you fall behind, you'll wither. As a result, massive amounts of money must be spent on research and development. And even then, there's no guarantee that you'll develop the best new technology. And even after that, there's no guarantee that consumers will like your new technology and buy it. Just look at the tablet and mobile phone wars. These big companies might have brand name recognition, but that doesn't guarantee that their products are the best, since their product lines are constantly changing. As a result, any past success in the industry is no indication of future success.
I've considered possibly investing in well-known technology companies, but the example of RIM's stock price falling over 70% in 2011 is a constant reminder that even once-great companies can fall.
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