Tech stocks are seeing a lot of traction right now, and it’s easy to understand why. Tech is what’s keeping the world and markets from crumbling down, and we can expect tech stocks and companies to lead the way over the next few years.
The thing with tech stocks, however, is that everyone wants to invest, but very few understand them. Investing in tech can be dangerous when you don’t know what you’re getting into, which is why you need to at least have some sort of foundation. Let’s take a look at how to choose tech stocks to invest in.
Learn the Basics
You first have to make sure that you have your basics mastered first. First of all, are you actually looking to invest or do you want to earn a passive income and have something that will outperform inflation? In that case, you might not even be in the market for stocks. Something like index funds might be a better option for you. If individual stocks are all you’re interested in and you don’t have experience trading, you will have to learn.
You can’t rely on whatever some TV advisor says, or what you see in the news, though these are tools that can help. You will need to learn how to read a chart first and foremost and how to perform analysis. If you can’t read a candlestick chart or you don’t know how to use technical indicators, don’t even try.
Be Careful with Penny Stocks
Penny stocks can be attractive, and many penny stocks are in tech. They do have a few issues, however, and they can be risky. For one, don’t expect penny stocks to be as liquid. Also, keep in mind that many of these stocks are worth pennies for a reason. However, there are some great companies out there with solid teams and management that are worth pennies – they are just very tough to find.
If you want tips on getting started with penny stocks, we suggest you click here. WallStNow is one of the best websites if you want real-time information on global markets. They also have tons of tips on how to invest in commodities and valuable industry reports. It’s a great website if you need background information on obscure companies before investing in them.
Forget Traditional Valuation Methods
You can throw any valuation you had out the window when it comes to tech stocks. Things like price-to-earnings ratios and earnings per share do not really capture the potential of a tech stock. It’s not unusual for tech stocks to keep rising even with negative earnings.
Take stocks like Roku, for instance. The stock fell by about 38% back in 2018 amidst horrible earning reports. Now, the stock has jumped 500% since Roku has increased its earnings by a whopping 390%. Earnings don’t tell the full story with tech stocks – potential does. So, keep that in mind and look at how promising a product might be when evaluating how much stock should be worth.
These are all tips that you can apply to find winning tech stocks. Make sure that you do your research and get the basics mastered before applying these techniques to find hidden gems.
