Daniel Yomtobian Explores the Pros and Cons of Investing in New Technology

Daniel Yomtobian from Los Angeles, California, on Investing in Technology

The Pros of Investing in New Technology

Special Market Niches

One of the biggest advantages of investing in new technology is that each company has its own market niche, which may solve a new market problem. Forward-thinking innovation can create a market niche where one did not exist in the past.

High Profitability

When a new company’s work catches on in the market, it quickly attracts attention from investors. Increased investor interest can drive up stock prices, making your portfolio worth more. In addition, getting media attention can draw in more public interest.

Ideas Create Money

Technology depends on new concepts. Consider the example of Amazon, a company that started as a small online bookseller. They eventually grew to challenge the concept of retail throughout the world and to take on an amazing market share compared to other websites and brick-and-mortar stores.

Rapid Growth

When a company hits its IPO, the cash infusion will often help develop its products in record time. A small investment made pre-IPO can become huge if the investor is smart. Established companies may turn a more consistent profit from year to year, but new companies frequently beat the curve when making money right away.

Doing Good for the World

When you invest in a biotech stock, for example, you may be helping to provide a new treatment for a serious disease. Your investment will help the company fulfill its mission of advancing medical care.

The Cons of Investing in New Technology

Higher Potential for Risk

Unfortunately, new technology has a higher potential for risk than companies making an established product. Companies making new technology are often new themselves, and they may be subject to many of the same market pressures that affect new companies of any kind.

New Tech May Be Difficult to Understand

A tech IPO can be difficult to comprehend at times. A quick tip to follow is that you shouldn’t invest in it if you don’t understand what the company does. Before you fall for the splashy advertisements, ask some hard questions about this technology.

Their Methods of Making Money May Be Questionable

Daniel Yomtobian from Los Angeles, California, Discusses the Pitfalls of Investing

Products Fail

Not every tech company will be successful. Sometimes, they misjudge their markets or create a product that does not work in the real world. Early-stage investors in tech companies, especially angel investors, are accustomed to this type of risk because they have significant personal reserves of cash. The small-time investor should probably avoid early-stage investing.

Finding the Right Investments

Daniel Yomtobian believes that prospective investors should thoroughly vet the companies they want to fund, pick out any executive team problems in the conception of the product and its eventual production.

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Daniel Yomtobian

Daniel Yomtobian

Daniel Yomtobian from Los Angeles, California, is an innovator and leader in the online advertising industry.