I was sitting at having coffee with my old man yesterday morning, talking shop. We were talking technology companies, and he said something that baffled me, “It feels like the tech bubble all over again.” Initially I was quite baffled. What he said was contrary to all my beliefs and current stock holdings, then it hit me, he didn’t get it. It was that simple, he merely did not understand the current market situation for technology companies. I wont go as far to say my fathers a dinosaur or lacks investing intelligence, he just doesn’t think about tech companies the way I do, the way investors should in the current market.
It hit me, like a ton of bricks, and made perfect sense. A majority of investors are so worried about their past mistakes they can’t see the future right in front of them. So many long term investors are fearful of the chaos the tech bubble of the 90′s wreaked on their portfolios, how they were fooled into thinking that companies had potential when they did not. Today, many of those investors are still around, and they watch the market with blinders on. These individuals fail to realize the growth potential of a technology company compared to the ig box store, the growth potential in mobile, the future of the worlds technology needs. No longer are companies coming to market that don’t offer services, revenues, or users. The technology companies of today are part of our daily life. The younger generations no longer check the paper for the news, rather log into their twitter from their smartphone. The dinosaurs of the investing world will be missing the growth potential and great returns in the coming months.
I constantly hear that the first day of Facebook will likely be huge, but after that the day of reckoning will come. Why is Facebook destined to trade down? I am not suggesting that the stock will trade in one direction, it’s a market, stocks trade both directions. To suggest that the peak of Facebook’s stock price and return to investors will be the first day is just ridiculous. This could be the year of tech, or the decade of tech for that matter. The growth potential is huge, the monetization will come, and the returns for investors will be obvious.