Posted in Trading on June 14th, 2017
Back in 1981, a movie called The Cannonball Run had me fascinated with the Lamborghini. Not because of the ladies driving the car, but the sleek styling of the supercar, more so than the Ferrari. Today, I favor the Ferrari, but the car of my youth was the Lambo Countach. The earliest memory of the movie, besides the ludicrous premise and characters, is Jackie Chan driving with a partner in a high-tech Subaru. He had warning computers that tracked their route, drive without lights in the dark, and early warning of police cars. They were glasses that highlighted the road and the police car up ahead. This opened my imagination to the idea of computers used for augmented reality.
With the increasingly popularity of Virtual Reality (VR) and Augmented Reality (AR), one would think that this is a recent technology. However, the early premise was postulated in the 1960’s. Ivan Sutherland created the first VR system, and later built a head-mounted system in 1968. Fifty years later, technology has advanced and costs have come down, allowing consumers access to VR and AR technology. More companies are being founded, driving further development in software and hardware.
If one would have invested in VR technology early on, one would have to wait a very long time for that investment to pan out. Although many want to invest like Warren Buffett and Charlie Munger, many do not have the patience to invest for the long-term. Even waiting for five years would be too much for many investors. This is one of the reasons why Ponzi schemes work. People want to see some sort of return right away, no matter how small, like 1% return per month in the case of Bernie Madoff’s fund. But, the misconception of fast returns on technology will cause much pain. We tend to have short-term memories on the technology bubble from year 2000-2001. Maybe this time is different…
There is a small California company that I have invested early on back in year 2001. This company built high resolution small displays that can be mounted on helmets. The technology also used organic light emitting diodes (OLED). These are the same technology now found on many smartphones. They also won several contracts from the U.S. government, furthering their research and development. The displays had the effectiveness of watching a large high-definition television, when mounted in front of the eye. I saw the potential for VR and AR applications with this technology. However, the stock did not recover from the hype and the tech bubble, and floated near its low price for a very long time.
It may be difficult to determine what is hype and what is not. With today’s valuation, one may consider the current tech stock market to be in a bubble. Our readers should take precaution in managing risk and having trading plan – whether the tech stocks decline further or rebound completely. Doing your own research is better than following gurus, following chatrooms, or watching financial television. And sometimes, timing when to invest is better than investing early. Because, the time may never come.
This article covers trading financial securities, such as stocks. The world of trading often comes with rises and declines of securities, and most things do not rise or fall in a straight line. By the time this article is published, circumstances involving what we mention may have changed. Often, changes in securities can be to the detriment to the traders – seldom is it beneficial. A person should only trade with money that they’re willing to lose because losses are guaranteed. By reading this post, you agree that you’ve read our disclosure.