I started with shares and bonds at a fairly young age, at around 13 years old. It was my Grandfather who sparked the interest and today I really understand the importance of investments, both for society as a whole and for the one’s private economy. In this article, I will present my personal opinions in what is undoubtedly the two hardest tasks to complete when investing in stocks.
First thing is when to buy and when to sell. The whole idea is to buy low and sell high, easy, right? No. This practice takes a lot of discipline a future planning. There are many indications that show when to buy a specific stock, such as PE value or future deals that will increase the value of the company, hence the stock. The stock market might show an upward trend or a descending trend, one has to navigate these trends and hopefully be successful in buying and selling at the right times.
Another option is to invest in companies who go initial public offering (IPO). Money has been pouring into startups within the tech sector the last couple of years. When big companies undertake risks, also known as ventures, it has been shown that many decide to invest in the technology industry. The current interest rates are low and there are few alternatives to returning high profits than what tech startups can accomplish. Big companies and funds are throwing big money into many risky startup firms, increasing the prices of deals. Ironically huge sums of money can distract and disorientate tech entrepreneurs and lead to the enterprise extinction.
Continuing on this topic, startup firms whiting AI and automated cars are usually valued so high, that it is difficult to invest in these startups. These companies can even be valued high even though they have no revenue. Therefore, many tech investors should not be surprised to see unsuccessful returns.
This matter sparks the dilemma in, what I think, is the second hardest thing to do when investing in stocks, namely in what to invest in. It might seem clear to many what technologies such as AI are the future, but if these companies are overvalued, many investments might be bad in those sectors. However, no one can know for certain what will be next after we have seen the smartphone and ‘the cloud’. One wants to invest in a safe sector with low risk and high reward. The economic trends and bubbles should also be considered because they are good indicators if an investment will be successful or not.
You might ask, what are you going to invest in Elias? Well, I cannot know for sure, but I truly think the AI and tech business is truly interesting. I am certain that this sector is the future and it is only a matter of time until it becomes the present. Other fields are food. Everyone will need food, now and tomorrow, and until the human race goes extinct. I see this as a safer investment, but if a startup shows real promising figures and innovations I will not hesitate for a chance to invest. And what many might fail to realize is that biomedical and GMO also will be big in the future. You could create a reference to the internet in the 70s, no one believed it would change anything, but it did, it changed everything in fact. We are in the same stages with GMO and I think this is another really interesting field to invest in, alongside AI.