Investing in adTech and applicable investment principles

“It’s funny how time fly, I’m just having fun, just watching it fly by.”

Dr. Dre – The Watcher

High returns with low risk is the key in any stock pick or investment.  One should at least understand this much.

I thoroughly enjoy the stock market and would consider myself as close to proficient as the Dreyfus model will let me be.  Friends and colleagues ask me all the time what they should be investing in. Before the barrage of questions ensue, I try my best to collect as much information as possible about the person to help prepare for a future discussion. Things like what they do professionally, talk about, interests or even what they enjoy doing on their iPhone. When the question comes, I always lead with the following questions.

Me:  What tech products or services do you routinely use or could not live without?  

Person:  I love Facebook, Netflix and Amazon.  

Me:  Do you own any of these stocks?

Person:  No.

Not much to it, right?  I didn’t talk P/E ratios or valuations and confuse the hell out of the person, all I did was ask the person what they liked.  The KISS principle also gave me an opportunity to hear about companies for the first time which I may have missed out on previously.  Year-to-date across the three stocks mentioned, there have been upward spikes of 127% in Netflix, 75% in Amazon and 18% in Facebook and over the past three years 571% in Netflix, 124% in Amazon and 381% in Facebook.  If you don’t have Kevin O’Leary’s voice from Shark Tank in the back of your brain saying “I like making money” then this article won’t do it for you.

So what prevented an investment for many in some of these obvious breadwinners?  I’ve heard it all.  I have a family, recently married, too old for risk, don’t understand or would rather spend it in Vegas.  Vegas, really?  All it takes is a little dedication to due diligence into companies you are passionate about, trust me.  Here are my key starting points for first time investors.

  1. Will the demand continue to climb exponentially for the product?
  2. Is the CEO’s middle name execution and last name Darwin?
    • Think Jobs, Musk, Zuckerberg, Bezos
  3. Can you remain patient enough to achieve big returns?

So my point to you is like the song – don’t be a watcher, be a do’er.  We experienced a month in the stock market, late August through September, where a really great buying opportunity was presented.  Technology stocks were not the only great buying opportunity as every sector was hit hard.  Even stocks with exponential growth and continually beating earnings were hit 30%.  This allowed investors another great time to buy more in positions that follow the above principles.

Even though Google and Facebook aren’t publicly know as “adTech” companies, they are. The revenue from their advertising technologies is absolutely the engine running all of their other projects, exclusive company parties and futuristic ideas. Continue to stick with FB and Google and ignore the field.  Competitors to the stocks above like Cable, Twitter and eBay will most likely be playing catch up for another three years and at that point too late.   We currently are watching an adtech phenomenon, where Google and FB dominate like Tiger Woods did when the field of 240 other golfers were just that far behind him.  All I’m saying is open an online brokerage account start putting money to work.  Pick some obvious winners and try using some of my principles.  The hardest part is first buying stock and then holding for a couple years.

Disclosure:  I hold positions in Netflix and Facebook.

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Investing in adTech and applicable investment principles

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