Do you constantly log into your brokerage account to check your positions?
Or maybe you’re always turning on CNBC or visiting Yahoo Finance to see how the Dow is doing.
If that’s you, stop right now. Making changes to your portfolio based on short-term fluctuations could be hurting your returns.
You see, many people make investment decisions based on emotion, not on logic:
When the market’s down, they feel bad and stop buying stocks—or worse, they start selling. And when it reaches new highs, they’re back in there, buying.
These market movements have nothing to do with finding profitable investments—especially when it comes to finding technology investments.
Economic Cycles
Our economy tends to move in cycles.
Markets go up, then they come down...
Then they go back up again.
And then the cycle repeats.
In recent history, major market cycles have occurred every seven or eight years.
For example, the last major market crash was in 2008, nearly eight years ago.
The crash before that was in 2001, roughly seven years beforehand.
And before that was the crash of 1993—again, eight years prior.
I won’t bore you with my theory about why I believe this has been the case, but it appears to be a relatively consistent cycle.
But tech investors tend to ignore market cycles...
We’re too busy paying attention to something else.
Innovation Cycles
When it comes to investing in technology companies—especially early-stage tech companies—market cycles are nearly irrelevant to us.
When we invest in a company, we’re not looking for 5%, 10% or 20% returns...
We’re looking for investments that could yield 500%, 1,000%, even 10,000%.
In order to get these types of returns, we need to invest in major trends, and we need to invest in them early.
So, instead of paying attention to market cycles, we pay attention to something called the "innovation cycle."
Like the market cycle I described earlier, the innovation cycle ebbs and flows:
Some years we see a burst of innovation, and in other years, we see very little innovation at all.
As an investor, your goal is to catch a major trend right at the beginning of the innovation cycle. Here’s what I mean...
Our Last Three Major Innovation Cycles
Let’s go back to the mid-80s. That’s when a major technology innovation cycle first got started: the Personal Computing revolution.
Not only did this cycle give birth to some of the most successful personal computing companies in history, including Apple and Dell...
But it gave rise to a set of companies that “piggy-backed” off of this major innovation cycle—for example, giants like Microsoft.
You see, even though Microsoft didn’t produce computers, it built software that ran on those computers. So despite the fact that it wasn’t responsible for launching the innovation cycle, it was able to benefit from it... and so were thousands of other software and accessory makers.
Then, just ten years after the PC innovation cycle, the innovation cycle for the Internet began. This cycle created Internet connectivity and infrastructure behemoths like Cisco Systems and America Online, but it also created a foundation that other companies could build on top of—for example, search companies like Google, and content companies like Yahoo.
It was the same paradigm for the Mobile Computing innovation cycle: Apple and Blackberry pioneered the smart phone revolution, then thousands of other companies were able to build a business on top of them.
As you can see, certain themes repeat themselves with innovation cycles:
First, a few companies come along and develop a new technology. Their technology creates a foundation—a “platform”—for other companies to build on top of. And all this innovation leads to an explosion of activity.
But here’s where it gets interesting:
If you can spot one of these innovation cycles early, and you invest in the platforms as well as the companies that build on top of them, you can make a great deal of money.
The Next Innovation Cycle & Platform
This is why we’re constantly on the hunt for the next big “platform”...
And this is why we’ve been writing about a particular topic for the past few weeks.
You see, we believe we’re on the cusp of a major innovation cycle right now. We believe virtual reality will become the next platform.
The cycle has already started:
Two years ago, VR company Oculus was acquired by Facebook for $2 billion—and then dozens of firms promptly jumped into the space to build on top of VR.
This is why we’re hosting a special conference call tonight, just for Crowdability subscribers.
Not only will we share the details of our research into this sector, including why we believe it’s poised for explosive growth...
But we’ll also share a specific investment idea you can act on right now.
If you want to take advantage of this innovation cycle as early as possible, this is where you should start.
We hope to see you on tonight’s call.
Best Regards,
Founder
Crowdability.com
