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Canadian Penny Stock Guide: Find where to find Penny Stocks that pay well.

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Topic: Penny Stocks

Technology Stocks to Invest in: Some tips—plus a look at blockchain and bitcoin

Bitcoin and other cryptocurrencies are highly speculative, but there are reliable characteristics to look for when hunting for the best technology stocks to invest in

There’s a delicate balance between risk and reward with tech stocks. Fast-changing technology can offer huge opportunities for investors in these stocks. However, fast change can also bring dangers. The success or failure of any technology stock is subject to many different factors.

If you find the best technology stocks to invest in, they may play a significant role in your portfolio, but you should be well aware of the risks involved with these types of growth stocks. Above all, make sure your tech stocks fit into a balanced investing approach.

Are Penny Stocks Worth It?

Learn everything you need to know in 'Canada's Penny Stock Guide' for FREE from The Successful Investor.

Canadian Penny Stock Guide: Find where to find Penny Stocks that pay well.

 I consent to receiving information from The Successful Investor via email. I understand I can unsubscribe from these updates at any time.

What you need to know about finding technology stocks to invest in

The best tech stocks have strong growth. Investors should also scour a technology stock’s balance sheet to glean any hints of hidden value like research and development.

The success or failure of any tech stock depends on a variety of factors. The company may start out with a promising business plan. But it needs all sorts of things to prosper in the long run: the right employees, a favourable economic and regulatory climate, a favourable competitive environment, favourable research outcomes, adequate financing, perhaps the right merger partner or acquisition—the list is long.

What to know while selecting the best tech stocks:

  • High research and development budgets let tech stocks keep adding profitable new products to their lines and continue improving existing ones.
  • High cash and low debt aids new product development.
  • A strong reputation helps win new contracts.
  • Often tech stocks will offer different classes of shares that come with various shareholder voting rights.(Investors can save money by purchasing the lower priced shares although they give up some rights).
  • Is there a history of innovation success?

Instead of going to extremes with technology stocks to invest in, try a middle-of-the-road approach to investing

This comes naturally as you develop a successful investor mindset. A steady, middle-of-the-road approach offers better odds than erratic or extreme alternatives. That’s because it relies less on timing, or on guessing right about the future. Instead, it helps you take advantage of what you might think of as the laws of financial physics.

For example, successful investors mainly invest in stocks that own prosperous businesses. That’s because these businesses tend to continue to prosper. Those that are failing may keep on failing, barring rare and unforeseeable revival efforts. Businesses that have not yet prospered may never get anywhere, no matter how much temporary success they find in the stock market.

You still have to decide what stocks to buy and what stocks to sell, and some of your decisions will disappoint you. But with the right mindset, your best choices will produce a lot more profit over long periods, and will overwhelm the costs of your disappointments.

If you’re going to hold a tech stock in your portfolio we recommend that you only hold the very best—such as the stocks we recommend in our newsletters.

Bonus Tip: Technology stocks to invest in: Bitcoin and cryptocurrencies are investment manias…but blockchain is likely here to stay

The blockchain technology that bitcoin rests on seems to have a lot of commercial applications, and is undoubtedly a revolutionary invention. But bitcoin is just the first of many digital “cryptocurrencies” that blockchain technology can create. Why assume blockchain is the ultimate cryptocurrency?

Why assume that the U.S. won’t join other governments including China, South Korea and India in moving to limit the use of cryptocurrencies?  For that matter, the biggest U.S. dollar user of them all is the U.S. government. The second biggest spenders are state and local governments. Governments may use blockchain technology for their own purposes, of course. But they have no incentive to support bitcoin, or any cryptocurrency that can thwart taxation and help people hide assets and transactions

Entrepreneurs launched a wide range of blockchain-based bitcoin alternatives, and bitcoin enthusiasts lapped them up. That’s a classic sign of an investment mania. Manias begin as a mass attraction to a specific investment or area of investment. They go on to include a wide range of related investments that have an ever-fainter resemblance to the spark that got things rolling.

When successful investors discuss developments such as the cryptocurrency situation, you may hear somebody say, “We’ve seen this movie before.” This means they’ve lived through this financial-drama situation before. They know the outcome is unpredictable. They do know it will end badly for latecomers, and has probably already gone beyond the point where it offers great opportunity to outsiders.

So, stay away from cryptocurrencies. As for the blockchain itself, outside of cryptocurrencies, it will likely play a role in building future transaction systems for banks, stock exchanges and others. In addition, there are companies that will profit from cryptocurrencies and blockchain, but without the high risk of holding the cryptocurrencies themselves.

These companies will also have the diverse operations needed to mitigate risk. For example, Nvidia makes complex computer chips used to verify cryptocurrency transactions. Intel is catching up with its own specialized chips. In partnership with several banks, Microsoft offers a blockchain service, while IBM continues to work on cross-border blockchain payment systems.

What would or did convince you to invest in cryptocurrencies? How has your investment performed?

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