Why the Stock Market May Find the Technology Shelter Flimsy
Though fantasy adds color to life, as does an affordable gamble, there should be little room for them in professional stock market circles. Tales of new breakthroughs can be most enticing, but ‘hard’ innovation is never a stable foundation for sustained business performance. Though top corporations may hold innumerable patents, their true innovation lies in business processes. Entrepreneurs with great ideas do not deserve your capital unless they have systems and resources in place.
Branding, financial prudence, strategic insights, and top human resource development policies, are typical ingredients of the kind of success which the stock market craves. Indeed, there are large sectors of the economy which produce consistent profits and dividends for investors, without any intellectual monopolies. The Information Technology space, which is often touted as an example of performance through proprietary services, is actually, on careful analysis, a reflection of excellence in internal process development.
The stock market also has bad experiences of crippling product liabilities for some of their holdings, which once yielded superior returns. Companies with generic product lines never take such hits, though they have to rest content with smaller margins. The latter can be managed through tight cost controls and scale efficiencies in any case.
You could lose occasional stock market opportunities by staying away from purely technology based securities, but this approach is likely to protect capital in the long run. Functional, strategic, and operating excellence count for much more in realizing continuing profits and steady dividends, though no one should complain if companies have effective R&D as well! This is why factual information on specific actions is worth so much more than biased accounts of products and services.