There are so many different sectors available to invest in with the stock market. Sometimes it can become confusing or downright impossible to know which sector to focus on. Today I would like to talk about investing in the high-tech sector of the stock market. I’m going to talk about several questions to ask yourself that will help you decide which high-tech stocks are poised to bring you the most profit.
Do some research and you’ll see that over most five-year periods and even most 10 year periods, the high-tech market has outperformed the general market on an average basis by 3 to 6 times. The reason for this is that many high-tech companies, if not most high-tech companies, tend to grow much much faster than the rest of the economy.
Will this trend continue? I’m willing to bet that it will because our economy, in fact our entire world, has come to rely on electronics and computers so heavily that I just can’t foresee us not continuing to rely on those things into the future… can you?
The fact of the matter is, you don’t have to be an engineer or even a computer scientist in order to make a lot of money investing in the high-tech sector. Most of the time it just takes a little common sense and, of course, a sound investment strategy.
The first question to ask yourself when trying to determine whether to invest in a specific high-tech stock is this… is this a company I should invest in at any price? That may be a little confusing so let me explain.
You’re going to want to look at three or four main factors including the management of the company, the market that it is then, and the product or service that the company sells. The most important of these factors is management since good management is essential for high-tech companies. Next focus on the market and try to figure out if the market is increasing and will continue to do so into the future. As far as products go, these things change so often that it’s the least important thing to look at, but still important.
The second question to ask yourself is this… what price should I buy the companies stock? If the company meets the first three criteria that I mentioned above then your next question is to simply determine what a good price for that stock would be.
Everybody does their own stock analysis based on their own set of criteria, and the level of mathematics that they’re comfortable with but there are several things you can look at such as the price to sales ratio as well as the book value per share and the price to earnings ratio. These three things alone will give you a fairly good idea of what the value of the company’s stock should be as a matter of price.
So there you have several quick tips on how to determine which stocks to invest in within the high-tech industry. Of course, you’re going to want to be sure to do your own research before you make any investment decisions regarding your own money.