Investing in Everything with Google
Nanalyze came about when we first read about nanotechnology 12 years ago and wanted to invest in it. In fact, the first thing that crossed our minds when we read about nanotechnology was, how can we invest in this incredible sounding opportunity? As the emergence of new and exciting disruptive technologies accelerates, we’re constantly asking ourselves, how can we invest in these new technologies?
To answer these questions, we often turn to Google (NASDAQ:GOOG) as a first point of reference. What we usually find on the first page of search results are a bunch of mainstream media articles that supposedly tell us how to invest in any given technology by investing in either companies that have little or no pure play exposure to said technology, or even in some cases, companies that are complete scams. Here are three themes we see often when doing research on Google that are just bad investing advice.
Investing in Everything with Google
One common fallacy we see repeated time and time again is that of suggesting investments in large-cap stocks because these companies are dabbling in certain areas of research. Google (NASDAQ:GOOG) might be the best example we’ve seen to date. It appears that if you buy shares in Google, you can pretty much invest in every single disruptive technology out there. According to Forbes, Google is one of the “12 Stocks To Buy If You Believe In Driverless Cars”. A Motley Fool article lists GOOG as one of their “Cloud Stocks to Watch“. According to CNN Money, Google is one of the “Robot revolution: 22 stocks to buy”. The Street lists Google as one of “3 Stocks to Buy as Virtual Reality Takes Off”. The Street also cites Google in another article titled “How to Invest in Artificial Intelligence — 3 Companies to Watch“. Did any of these authors consider the fact that Google does not provide meaningful investment exposure to any of these themes? We’re longtime GOOG shareholders, but it’s not because we think they’re a play on any one of these disruptive technologies. It’s because we believe that they are making the world’s information universally accessible and useful.
Applying Legitimacy to OTC Stocks
While it is entirely irresponsible to point investors to large-cap stocks claiming they have meaningful exposure to disruptive technology investing themes, it is far worse to point investors towards stocks that appear to be blatant scams. We are in the process of writing an article on Virtual Reality in Healthcare when we came across an interesting article from Fortune on our first page of Google search results titled “Here’s why hospitals are using virtual reality to train staff“.
Now Fortune is hardly a fly-by-night media outlet. Founded by Time Inc. in 1929, Fortune has been around for 87 years bringing us the Fortune 500 and a website that had 16 million visitors a month as of late last year. If Fortune talks about a company, it must be legitimate right? Not necessarily. Here’s what happened to the company called Next Galaxy which they highlighted in that article:
Read the Fortune article on Next Galaxy. It’s compelling, isn’t it? It all looks good on paper but if you bought shares in Next Galaxy after reading that article your shares would be worth nothing today with the Company’s market cap today at less than $43,000 and shares no longer trading. Of course, you can say “well Fortune talked about the company but didn’t say anything about investing in it”. That’s true, but how many shareholders in Next Galaxy at the time used that article by Fortune to validate the legitimacy of their investment while they sat holding the bag until the share price approached zero? Mainstream media outlets should have an obligation to vet OTC companies before writing articles touting their vaporware. In our opinion, the incompetent management team that masterminded the Next Galaxy debacle should be locked up for squandering investors’ money but they won’t be. They’re most likely working on their next “venture”.
Finding the Next Microsoft
This is the idea that many technology investors have which is if they can just find that 100 bagger stock which is the next Microsoft, then they can sail off into the sunset on their new yacht. There’s one company that’s most guilty of promoting this notion and it rhymes with Potly Stool. In almost every article published by this giant mainstream multimedia financial-services company, you’re likely to see gems like this one at the end of every article:
So they’re using these taglines to try and get your email address and there is nothing wrong with that. What we do find wrong with this, is that they are reinforcing this notion among retail investors (many of which who are inexperienced investors) that if they could only find that one stock to invest in, they’ll be successful investors. This is a horrible thing to promote. The only way you will be successful as an investor is if you understand risk versus reward which helps you differentiate between speculating and investing. Investing all your money into a single stock, no matter what stock that might be, is called speculating. Don’t do it! Build yourself a motif instead and invest across many stocks in the same theme to avoid company-specific risk.
If you really want to invest in disruptive technologies, you have to do your own diligence and beware of these three pitfalls. If you don’t have the time to sort through all the drivel out there, we’ve got you covered here at Nanalyze. We’ll always engage our readers with interesting articles that highlight opportunities and pitfalls that abound in various disruptive technology themes. We’ll steer you clear of the tripe you’ll see on the OTC markets, even in the face of threats to our own well being. In turn, we ask that you engage us in debate, share your own due diligence, and sign up to the Nanalyze weekly newsletter so you don’t miss out on any of our articles that point you in the right direction while steering you away from the irresponsible investment advice that is rife in Google search results.
Here at Nanalyze, we complement our tech investments with a portfolio of 30 dividend growth stocks that pay us increasing income every year. Learn how to build your own dividend growth stock portfolio in our report on Quantigence - A Dividend Growth Investing Strategy - freely available to Nanalyze Premium subscribers.