The pandemic has raised the importance of new technologies even more to the social foreground, causing, more and more savers to want to include dedicated tech companies in their investment portfolios.
New technologies have become one of the preferred subject areas for investors in recent years, as an option to make profitable savings inequities in the context of low-interest rates. In this sense, the business models offered by many companies in this sector are attractive for investors thinking in the long term, not only with the objective of obtaining profitability, but also to diversify their portfolios and reduce potential risks, since some of these securities behave counter-cyclically to the general evolution of the markets. When David Solomont, founder of Common Angels, and active investor in early-stage technology companies, talks about new technology companies, he is referring to an amalgam of segments that include hardware for computer equipment, social networks, peripherals and components, development of applications and programs, or use of blockchain, Internet of Things (IoT), big data or Artificial Intelligence (AI) to improve the efficiency and productivity of a given industry. Many of these companies have two common denominators: they tend to be recently created, and due to their cash generation and their business profits, future expectations around them are what causes investors to notice them. Hence, they tend to have a higher price oscillation on the Stock Market (and in the analysts’ valuations) than in other cases, so, by definition, they are designed to bet on them in the long term and not to operate in the short term, since the risk of doing the latter is very high, especially for the retail saver.
High-tech companies tend to have a greater fluctuation in the Stock Market, so David Solomont advises investing in them thinking in the long term. In any case, before a person, especially with a conservative investment portfolio, invests in this type of company, it is advisable to seek professional advice, act with caution, and conceive their presence in the portfolio with a small percentage (around 10%), precisely as a complement to other less fluctuating products that form the fundamental base of the asset portfolio.
According to David Solomont, an experienced investor and advisor of technology companies on business development, “this type of thematic investment breaks the traditional framework of thinking about indices at a regional or sector level and focuses directly on structural macro trends, a fact that can help us invest in a much more efficient way and, above all, with a purpose ”.