My Advice For Investing Money
So I get asked all the time for advice about purchasing stocks. And while I’m no financial guru, I am more knowledgable than many my age. I’m the guy that has been saying for over a year and a half that AAPL (Apple) is going to $1K. And I still believe it. So if someone asks me for advice on a stock to buy, I’ll easily recommend AAPL. Sure, at over $600 a share, it looks expensive. But there is more growth in that stock. Oh, and AAPL is now paying a dividend. Now, I will admit that I didn’t like the idea of a dividend at first. It just wasn’t something Steve would have done. But it does make sense if you want to reward long-term investors. A dividend basically gives away profits to the ownership of a company. How else would an investor ever make money off of a company that they own without a dividend? They’d have to sell their stake (stock) in the company at a higher value than when they bout it. And this doesn’t make sense if you are looking for a steady and long-term revenue stream. So while I see upside and long-term value with AAPL, it’s becoming priced too high for many potential young investors.
So what other alternatives are out there? The list is vast. But I’d start looking at component suppliers for smartphone and tablet manufacturers. Companies that produce the components for your iPhone 4S or Galaxy S2, your iPad or Galaxy Tab 10.1 are seeing their volume of sales increase tremendously during this next wave in personal computing. The tablet market is expected to surpass the PC market in coming years as consumers look to purchase devices that are more portable. So while sales of smartphones and tablets increase, sales of components for those devices will increase as well. All of these devices use flash memory and touch panels. So investing in companies that make those components would be smart. Are you going to see gains on those investments like you would with AAPL? Of course not, but a stock portfolio should be diverse. Should. I’ll be the first to tell you that my portfolio is 90% AAPL. I haven’t made any new investments since 2008. But that will change this year when Facebook goes public.
Facebook (FB?) will be the new glamour stock. Get in early because at this moment, I can’t see Facebook being a long-term stock. I see a relatively short surge before it plateaus off. 5-8 years at worst. 10-15 at best. Facebook has a huge audience to display ads to, but Facebook will have to become more to be a stock worth owning for a long time. One thing that Facebook has going for it, is that it is synonymous with social networking. You think search (Not even web search, but search in general.) and Google comes to mind. Running and Nike. MP3 player and iPod/Apple. There are just some companies who’s brand is so strong that it makes their stock even more attractive. I believe Facebook has that potential. I mentioned in my post, The $1 Billion App, that with Facebook’s purchase of Instagram, it is showing that it is serious about protecting some of its core functionality. You can expect more acquisitions which will increase Facebook’s functionality and give the company valuable intellectual property. That is also of value when looking at a stock.
So how do you start? I started on eTrade but I acquired my AAPL shares while working for the company. Taking part in an employee stock program is great. You first need to believe in the company and it’s business model. But those programs allow you to purchase shares at a lower price than their street value. To a new investor, I’d recommend looking into mutual funds that are loaded with tech stocks. Technology is the future. There is money to be made there. Go to your local bank and talk to an investment planner. Decide on how much risk you’re willing to take. But most importantly, do some research on your own.