How to invest in cutting-edge technology

TL;DR

  • Cutting-edge technology is ever-evolving by nature. New startups and old legacy companies both continue to disrupt traditional industries through technology innovation.
  • Space exploration is making a comeback, thanks to the government and private companies.
  • Identifying companies who have the potential to come up with the cutting-edge technology and investing in those companies tend to be riskier investments that come with greater, though not guaranteed, potential upside.

Not too long ago, when you wanted to buy something, you had to wait for a catalog to come in the mail. Then you would order it on paper, mail a check, and then wait a month or so before you could actually see the item in person. You would never know if the shirt you bought would fit you, if the color would look good on you, and if your package will arrive on time. The world of commerce was full of unknowns.

Now, with the help of cutting-edge technology, everything has changed. Think about the shopping process we just went through and consider how much cutting-edge technology has reshaped the modern-day shopping experience. Now, it’s likely that a machine algorithm decides which ads you saw today based on data about your purchase preferences; augmented reality enables us to “wear” clothes and “put on” lipsticks at home; payment processing technology made it possible to enjoy instant online payment without physically going into a store; chips and tracking system let us easily track our orders on every move until they hit our doorsteps.

Cutting-edge technology refers to technological devices, techniques, or achievements that employ the most current and high-level IT developments; in other words, the newest latest.

Because of how quickly we develop new technologies, one technology might sound impressive this year, but might be rendered obsolete without user adoption. The companies that are able to turn those cool ideas into workable, profitable products and services are considered to be cutting-edge technology companies.

There are many publicly-traded cutting-edge companies, with the majority of them priced above $100 per share. As these companies ask for a higher cost per share, many people with low investment budgets usually don’t have enough money to invest in these companies flexibly. This leads to the current public market status quo that only the wealthiest can capitalize on long-term investing.

Fractional shares, aka slices, change all of that. Thanks to slices, investors can buy stocks without having to purchase the whole share. Now, you can invest in your dream companies with whatever dollar amount you have. For example, if a company you like is trading at $100, but you have only $20 to invest, you could now buy 20% (or 1/5) of a share of the company. Should the price of that stock rise and you decide to sell, you would earn a return in proportion to your original slice.

This is great if you want to buy a stock that is more expensive than what you have budgeted. Buying slices of shares in different companies enables portfolio diversification, and can lower your portfolio risk exposure to one single stock. In other words, instead of having all your money tied up with one share of a pricey stock, you can now buy slices of one share in multiple stocks. Buying slices of shares in different stocks helps diversify your investments, potentially reducing your risk and maximizing potential returns.

What qualifies as a cutting-edge technology company?

There are a few classifications and they change every day, but generally, any company that creates something that solves a problem in a brand new way through technology innovation counts. Below are a few usage applications where cutting-edge technology made transformational improvement to the traditional industry:

Wearable technology. Trying to get 10,000 daily steps? Join the club. The wearables market has exploded over the past several years with the introduction of smartwatches, smart glasses, fitness trackers, and health monitors. Led by major tech players such as Apple, Alphabet, and Facebook, wearable tech is poised to transform the way we receive, use, and share data.

Space exploration. Ever thinking about going to the moon? Space exploration is back in the cultural zeitgeist, thanks to the recently announced Space Force, SpaceX, Virgin Galactic, and companies like Boeing, Intelsat, Lockheed Martin, and more.

Self-driving cars. Who’s driving you around? Despite widespread hype, autonomous vehicles remain in testing mode and have yet to formally reach the market. Even still, manufacturers like Ford, Tesla, and Toyota continue to roll out semi-autonomous features, hinting that it’s only a matter of time before this futuristic innovation becomes a reality.

Why do people seek investment in cutting-edge technology?

We’re always looking for the hot new thing and the next ground-breaking innovation. Thanks to major tech engineers, we are in the era of technology innovation. New technologies not only can create valuable competitive moat for companies, but they can also pass on the value to customers by saving them time and cost.

How do you find cutting-edge technology companies to invest in?

New names are popping up every day and tech unicorns are headed for IPO at record rates. On top of that, the old legacy companies are developing new products to stay competitive. As new tech companies create ground-breaking innovations every day, old legacy ones are having a difficult time to keep up!

It’s helpful to create a watchlist of stocks and ETFs in the cutting-edge tech sector and get used to the theme. On the Public app, you can start with any stocks and ETFs that interest you, marking them as favorites without investing and keeping an eye on them as part of your daily or weekly routine.

Following news and updates from companies and ETFs you are interested in can help you stay up to date. You can learn a lot about them every day by keeping an eye on relevant market news. For all of the same reasons that a big part of being a good writer involves reading, being a great investor means researching. Learning, tracking, and staying engaged is important to building your knowledge.

The bottom line

Investing in cutting-edge technology is appealing to investors who are drawn to innovation and entrepreneurial flair. Both new and legacy companies keep changing to stay relevant to customers. Consider Google, a company that makes 90% of its revenue from ads, and yet constantly develops machine learning technology to create curated ad content for customers. Consider 5G, AI, and AR: these are all areas of technology many companies are working on. By keeping your finger on the pulse of what’s next, you can discover new cutting-edge technology companies that you believe in for the longer-term.

The above content is provided is paid for by Public and is for general informational purposes only. It is not intended to constitute investment advice or any other kind of professional advice and should not be relied upon as such. Before taking action based on any such information, we encourage you to consult with the appropriate professionals. We do not endorse any third parties referenced within the article. Market and economic views are subject to change without notice and may be untimely when presented here. Do not infer or assume that any securities, sectors or markets described in this article were or will be profitable. Past performance is no guarantee of future results. There is a possibility of loss. Historical or hypothetical performance results are presented for illustrative purposes only.

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