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Investing in Information Technology

By maxwell edison ·
Warren Buffet, one of the most successful investors of all time, suggests that a person should not invest in a company or sector that he/she does not understand and/or whose products he/she would not buy. For example, a person who loves to shop at Target (NYSE: TGT), but hates Wal-Mart (NYSE: WMT) should consider the former over the latter. Warren Buffet, by the way, invests very little in technology, since he does not understand it. He has, however, made a couple of exceptions, at least that I'm aware of. He has purchased Microsoft (NASDAQ: MSFT) because of his personal friendship with Bill Gates (they play bridge together several times a year), and he has purchased a huge chunk ($100 million) of Level 3 communications (NASDAQ: LVLT) because strong financial backing and impressive liquid resources made the stock, which once demanded $100 per share, a very attractive speculation with a share price in the single digits. (Maybe I should buy some.)

I'm a pretty active investor/trader (aside from my 401(k) contributions), usually focusing on technology stocks, since that's the sector with which I'm most familiar. I'm sure there are many people out there who also invest in technology stocks, and/or may have some valuable insight into which companies might offer the best investment opportunities. What are some of the best technology companies today - best being defined as having a strong financial position (Microsoft, for example, is sitting on a pile of cash and assets close to $50 billion), great products, best long term outlook, the best potential, etc.

A few that I like:

Checkpoint (NASDAQ: CHKP)
Microsoft (NASDAQ: MSFT)
Red Hat (NASDAQ: RHAT)
Oracle (NASDAQ: ORCL)

Comments on my favorites are very welcomed.

Let's put the political differences and war talk aside, and perhaps discuss something we can all agree on - how to maximize the return on our investment. We all invest in technology, whether that investment is made with time or dollars, and getting the highest return is only a natural desired outcome.

(It looks like this is a combination on-topic and off-topic. Who can complain?)

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If you invested....

by GuruOfDos In reply to Investing in Information ...

$1000 in Enron 5 years ago, it would be worth $16.42 now.

$1000 in MCI/WorldCom 5 years ago, it would be worth 23 cents now.

Spend $1000 on Budweiser 5 years ago, and cashed the cans in today at 5 cents apiece, you'd have about $183! Plus got roaring drunk a few times.

The only IT investment I make is in myself. I do not play the stock market, and never have.

I figure it this way...if I spend ?199 on a course or training programme, and a year later what I have learned can net me more money or more business, then that was a worthwhile investment.

Yes, the value of knowledge can go down as well as up...three years of becoming adept in 68000 assembler programming for the Commodore Amiga (well, back in 1985 it was 'the' multimedia machine) counts for little now but I can apply the techniques to another processor and shorten the learning curve! And, as GuruOfDOS, my early 90's experience doesn't get used much these days, but when it is needed, boy am I in demand!

Learn something new every day and invest in yourself is my motto...the only person to blame if your investment goes down, is yourself!

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You can have the Budweiser and Enron and WorldCom

by maxwell edison In reply to If you invested....

...and the exceptions, but I'll take the rule.

That's a cute story, one that I've seen around before, but it doesn't really illustrate the real value of investing. Sure, investing is a risk (what isn't?), but taking responsibility for one's own future is something I believe in.

$1,000 invested in Microsoft the day it went public is worth $135,000 today. ($10,000 is worth well over one million dollars.)

$1,000 invested in Checkpoint 5 years ago (your timetable) is worth over $5,000 today. (If it would have been sold after only two years, it would have netted around $25,000).

$1,000 invested in Oracle 5 years ago would have been similar to Checkpoint.

I'm not sure who is "responsible", per se, for one's future retirement in England, the person or the government, but in the USA many (but not all) people consider themselves responsible. Many people look at it this way (or something similar). If a person accumulates about one million dollars in assets, and subsequently invests that million in a very safe investment with a guaranteed return, that person would receive about $50,000 return per year - for life - without reducing the principle balance of the million. Upon one's death, that million dollars could be passed on to one's children or whomever.

How could a person possibly save a million dollars, you might ask? And you might suggest that having the foresight to see the next Microsoft is something most people don't have. (I agree.) Well, personally speaking (and I've done the math), if I would have invested 15% of my income in the S&P 500 index when I started working (at 18 yrs. old.), and continued through my military days, through those lower paying jobs, all the way up to today, uninterrupted, I would have had WELL OVER that million dollars, and I'm not even 50 years old yet.

Investing in your own financial future IS investing in yourself.

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