Article by Liam Dann, originally published in the NZ Herald
New technology trends present great opportunities for investors but getting the timing right isn't easy, says Pie Funds chief executive Mike Taylor.Three big trends were currently shaking up the business landscape, Taylor said.
Electric cars, renewable energy and online retailing were all approaching the tipping point where they could start to make major social changes.
"If we look at something like retail and the move to online, the tech bubble occurred 17 years ago," Taylor said.
"Internet stocks went to the moon between 1995 and 2001, then they collapsed and most of them went out of business. It's actually been 15 years after the move to online has really gathered momentum."
So if you look at the stock price of a traditional retailer like Walmart and an online retailer like Amazon, it is only in the past few years that they have really started to diverge.
Getting the timing right for investing in big tech trends required getting in at the right time in the cycle, Taylor said.
The two options were to get in very early when technology was first developed or to go in the second phase after the initial wave of hype had died down and the technology was actually being adopted.
"What you don't want to do is buy into a bubble. So when the technology is new and emerging and not widely adopted you've got to be careful you're not buying an over hyped asset class."
For most investors it made more sense to get involved when the technology was on the verge of going mainstream.
Another recent example was solar energy which was extremely hot as an investment just prior to the GFC.
Again they collapsed but now as technological advances lowered the cost of solar for consumers it was starting to reach critical mass.
Investing in individual stocks could still be risky for small investors but there were options like clean energy funds that offered exposure to the wider renewable energy sector and even ETF's that covered specific sectors like online retail.
This article is general information only and is not intended to be financial advice. Before relying on the information in this article, we recommend you seek independent financial advice. Past performance is not an indicator for future performance.