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Tech, the Market and the future
Old 04-04-2014, 01:26 PM   #1
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Tech, the Market and the future

Google "Tech Momentum" today, and find every financial entity with an article on the subject... mostly using words like overreach, or adjustment or pullback or correction...

Without going into the technicals of establishing value, I wonder if there may be a deeper reason to question the value of Tech over the long haul. For many years, market value came from building on a physical base, ie. the Industrial revolution, or the growth of commodities, like coal, steel, and oil. Factories, transportation (railroads, autos and airlines) and services... serving physical needs as clothing, food and housing. All of these "values" have in large part been people-and-structural dependent.

Jump ahead to "tech"... by and large, not physical entities, nor, at the end point of the product, even reliant on labor at all.

Build your own tech product, and then consider how it would stand up, absent the copyright process. At what point is it unique in a sense that it could withstand competition that could be initated at a lower cost?

The tech in question, is not solar or wind power... each of which is based with physical product, but the ethereal items that exist only in their use, and have little or no protections from future competition. Google, NetFlix, Priceline, Facebook and the recent Candy Crush, either already have competition, or can have clone-like competitors, without a physical base.

There is nothing new here. The only question about future value, rests in the ability to stay ahead of the game... and to constantly innovate OR to maintain a kind of monopoly, by buying up every new product to incorporate into the current monoliths.

The "Tech" part is not limited to the social media, or even the use of tech to streamline and improve the current mechanical operations of any business, but to totally invent new processes in areas of biotech and genetic research. No longer the vast laboratories of glass, metal and fluids that represent the older parts of the Pharmaceutical companies, but studies of theoretical and invisible mathematic probabilities. A quantum leap in tech that is still in its infancy.

Now, one more part of the subject of tech as we know it in the area of society... the social connectivity and the underlying basis that is needed to sustain the value. Is it advertising? An if so, is there a limit to this in terms of real dollars. Is it the cost of the social grid? The phones, the tablets and computers the provide the mesh of today's society. Is there a limit here?

Do you see technology as a continuum? A part of the business cycle to be played out over many... perhaps 20 years? Or are we on a downside curve, where the technology may expand (as it will) but the profitability will decrease.

I am in no way suggesting that today's downturn in tech stocks portend a bubble collapse. It's just taking a look at rapid growth and excitement that has driven up the price of Tech stocks and then trying to analyse the structure that is supporting this growth.

So, is this a rational concern, or just musings of one who is not close enough to undertand the business? I would be very interested in any theories that say we are not at a peak of Technology as a dollar value, but at the beginning of a continuing trend.
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Old 04-04-2014, 01:56 PM   #2
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Originally Posted by imoldernu View Post
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The "Tech" part is not limited to the social media, or even the use of tech to streamline and improve the current mechanical operations of any business, but to totally invent new processes in areas of biotech and genetic research. No longer the vast laboratories of glass, metal and fluids that represent the older parts of the Pharmaceutical companies, but studies of theoretical and invisible mathematic probabilities. A quantum leap in tech that is still in its infancy.

Now, one more part of the subject of tech as we know it in the area of society... the social connectivity and the underlying basis that is needed to sustain the value. Is it advertising? An if so, is there a limit to this in terms of real dollars. Is it the cost of the social grid? The phones, the tablets and computers the provide the mesh of today's society. Is there a limit here?

Do you see technology as a continuum? A part of the business cycle to be played out over many... perhaps 20 years? Or are we on a downside curve, where the technology may expand (as it will) but the profitability will decrease.
Having worked in the steel and non-ferrous industries in my early years, and now in oIl and gas development, I can say that "tech" will be around for a long time to come. I have seen the impact of "technical advancements" (i.e. tech) in those basic industries in manufacturing and materials science. Some examples include:

Computerizing sheet mill production equipment to gain productivity and accuracy,

Using 3D seismic technology to find oil deposits 15,000' below the sea,

Using advanced materials in processing crude oil in refining to a point where the fuels meets EPA contaminant rules,

Developing synthetic oils to replace conventional motor oils for engines (cars, trucks, etc).

And on and on......

Everyone seems to focus on "chip" and "genetic" things when we speak of tech. But, a lot of new "tech" is the result of advancements in materials science (and all "things" really come from the earth, so to say).
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Old 04-04-2014, 03:42 PM   #3
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Point well made, for the future use of technology. Not a day goes by but what we see the results of efficiency and gains that have positive effects for our lives, generated by improvements in the use energy for fuels, lighting, and almost anything that could benefit by advances in tech... compared to the tools of just 75 years ago... ie, the slide rule compared to the D-Wave 2....

What I was looking at, in terms of the Stock Market, was the individual companies as entities that can exist by themselves as profitable operations, generating a cash flow, apart from the innovative concepts, and IPO profits.

Perhaps there is a part of this that I don't see. This morning, I watched the CEO of an IPO that purports to be an international potential base for reducing the cost of energy by 20%, using the information from millions of energy users to generate an instructional framework to end users, with a computerized guide for maximizing the time and amount of energy use for businesses and the home. (can't remember the name)

Assuming that one wanted to invest in the future of tech... Are there companies that are separate and apart from current producers, that have business models that are tech based? I am thinking in terms of IBM, or Cisco, or is the use of tech internal to the companies mentioned... steel, oil and energy etc.

The come lately darlings of the market ie. Facebook or the newest, GrubHub are concepts that have taken hold with the public, and received much attention from the markets. As I see it, the concepts have done well in the innovative "wow" market sector. Is there any reason to believe that the revenue stream can continue, given the obvious fact that there are and will be competitors, diluting the singularity of the product.

Will the market be in companies that wake us up dress us, drive us to where we want to go, feed us, and keep us alive?

Sina will sell Weibo tomorrow... Is this what we can expect as the new face of tech investment... or will the market ever see the kinds of stocks that have been around for many decades? At the extremes, will we ever see a GrubHub as we see McDonalds? For some parts of the newer technologies, there are some indications that it can happen... Think Amazon and WalMart.
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