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OK, so I admit it: I’m a geek.
I love technology. I eat, sleep and breathe the stuff. Been doing it for nearly a quarter century, now.
I began reporting on tech and investment strategies back in the 90s at the LA Times.
Then, when Microsoft drafted me to help start MSN Money, I was suddenly through the looking glass and into the thick of it; sitting for hours in meetings with amazing young technologists … watching the process from the inside … and later developing the StockScouter screening software that has helped me pick many of the biggest early winners in technology.
Nowadays, as I help individual investors harness this great new bull market in technology, I put that experience to work every trading day of the year.
Unfortunately, the vast majority of American’s aren’t nearly as comfortable with technology as I am.
Sure; they love their computers, smartphones and tablets. Most have mastered email, Amazon.com and Facebook. Still more have benefited from medicine or other treatments developed by a biotech firm.
But ask them to identify the next new tech superstar, you’re going to get a blank stare.
So it’s not surprising that more than a few of our readers — including Charlie from Jacksonville, FL — have messaged me to say, “I’d invest in technology companies if I could; but frankly, I wouldn’t even know how to begin.”
I understand! After all, to find the next big winners yourself, you’d have to …
1. Identify tomorrow’s technology titans: Separate the wheat from the chaff; the overhyped dead-end stocks that can only cost you money and break your heart from the companies that are destined to be the Amazons, Apples and Microsofts of the 21st Century.
That takes more than just hard work. It takes a deep, visceral understanding of how technology works as well as the qualities that are required to transform a small, virtually unknown company into one of tomorrow’s tech titans.
That’s my specialty; my passion; what I’ve done every day since the early 1990s and what I’ve do every trading day of the year right now in 2014.
It also helps to know which stocks industry insiders are most excited about now. The young companies that the savviest players inside America’s smartest technology companies are buzzing about.
As a part of that community, I know many of the players and speak to them regularly. I know who to call when I have a question. And I have access to the CEOs and other key players at many of the most exciting up-and-comers.
2. Buy them right: Paying too much for one of these young technology titans is no way to get rich — but it is a way to buy into more stress than anyone wants.
Buying at the IPO then watching helplessly as your prized stock plunges by half when the IPO hysteria dies down is a prescription for heartburn or worse.
3. SELL them right: It’s not just about making money on paper. It’s about keeping what you earn. That means you need to know when to cut a loss, take a profit — or, if a major correction is in the offing, take your money off the table entirely.
Put simply, doing it right can be a full-time job. My guess is you already have several. But that’s why I’M here!
Helping you profit from great technology companies — from the new technology superstars — is what I do.
Here’s how I do it:
What to buy
I begin with companies that …
- Are big enough to matter with revenues of $200 million to $1 billion per year — so you know you’re buying a viable company with real earnings power likely to weather any storm …
- Have proven management teams that have surpassed expectations revenue growth and have lifted their earnings guidance — so you know the prospects for future growth are solid …
- Have gone public in the past six months to two years or so and have already undergone their post-IPO slumps — so you get them when the hype has died down and valuation is subdued …
I also strongly prefer buying companies that …
- Address a very large market with few competitors so they have room to run without interference …
- Have rock-solid patent protection so they’re not forced to cut prices to compete …
- Are easy to explain so tech-challenged mutual fund and hedge fund managers and everyday investors can understand them and get excited about them …
- Work in a niche that is not well known at present so they’re still bargains … but are likely to skyrocket in value as they become widely known, and that …
- Make things that are better, cheaper or faster than their competitors.
When to sell
Knowing when to buy is critical — but knowing when it’s time to take your money off of the table is absolutely critical. My sell signals are typically triggered when one of the following occurs:
1. The stock’s valuation moves from incredible to outrageous …
2. The company posts more than one quarterly earnings miss in a row …
3. The stock sinks below price support on high volume, or …
4. I spot a greater profit opportunity in a newcomer.
That’s it! That’s my entire process. Now, you can be an expert tech stock picker, too. It’s not rocket science, even when you’re buying companies that make rockets: Buy low, sell high, and make sure you know the difference.
Or, if you prefer, just stay tuned and we can do this together.
Best wishes,
Jon Markman
