Technology Stocks: The Never-Ending Bull Market

It’s no secret that one of the most surefire ways to bank double-, triple-, or even quadruple-digit gains in today’s market is to invest in technology.

Companies like Apple, Microsoft, Cisco, Netflix, and Amazon have all turned relatively small investments into absolute fortunes for countless investors over the last two decades.

With technology advancing as rapidly as it is today (think of how incredibly different the world looks right now from just 20 years ago), this pattern is bound not only to continue but to do so at an unprecedented pace.

This isn’t just some pie-in-the-sky idea, and these aren’t one-off events. The Law of Accelerating Change is real, and so are the fortunes that emerge from it.

I was having a conversation with my father at his Long Island home yesterday evening about the state of the economy and what the future holds. He, like many others out there, was expressing worry and concern.

He pointed out that he’s working harder today than he ever has before for the same amount of money, and this is certainly true. He also argued that the dollars he earns don’t go as far as they used to, which I obviously couldn’t contend with either.

I reminded him, though, that his investments have returned him over 1,000% over the last 10 years. I also pointed to the iPhone in his pocket — a $200 device with a level of computing power that would have literally cost him millions just a few years ago — and asked if he really feels worse off today (materially speaking) than he was when I was still just a kid.

My father then pointed to my generation, reminding me we’re going to deeper into debt, getting paid less for entry-level work, and living with our friends through our twenties. This is certainly something I can relate to, and to a large extent, he’s right.

I rebutted, though, by explaining that because many of today’s jobs are more technically driven, they simply require a higher initial investment in education. Yes, millennials are getting started later, but they’ll also live longer, healthier lives than any previous generation, and they’ll be privy to a level of wealth the world has never seen.

The reason? Technological progress.

You see, the crux of this debate we were having is seated in the idea that there are two economies out there: the monetary economy we hear about every day on the news and the real economy, which barely anyone ever talks about.

More than anything, this real economy is driven by technology and innovation.

A Better Perspective

If you look back just a few hundred years at the wealthiest people of their respective times, you’ll find their quality of life to be on par with or even below that of the modern lower class.

Even a king living in the 1700s didn’t have access to the real wealth we posses today. Reliable medical care, a life expectancy past 36, digital entertainment, rapid transportation, and instant access to virtually all human knowledge were all things even the wealthiest of men could not obtain.

But as the years have gone by, these things and countless other innovations have become commonplace. In this sense, and in terms of real wealth, humanity always has and always will continue to move forward.

Now, this isn’t to say the monetary economy doesn’t matter, because it certainly does. But it is to say that notions of economic collapse are misguided and misleading. Yes, there will be periods of monetary economic downturn, but the underlying machine that drives prosperity will keep on chugging along.

The reason I bring this all up (in case you were wondering) is because stocks right now are incredibly expensive, and everyone knows it. The market will likely soon correct, and when it does, the doom-and-gloom pundits are bound to come out of the woodwork in full force.

These people will attempt to scare you for their own personal gain. They’ll tell you to stock up on guns, ammo, and gold, but in the end, they will all be wrong.

They’ll take advantage of your fear and tell you to sell when you should buy. They’ll make you bitter and angry when you should remain optimistic and steadfast.

When they do this, remind yourself that in all of human history, there has never been an economic downturn strong enough to halt technological progress, and there never will be. The monetary economy may ebb and flow on the surface, but the underlying current of advancement will always be there too.

In the wake of the Great Depression, for instance, the many inventions of the 1920s and 1930s didn’t just go away. Automobiles, hair dryers, traffic lights, bulldozers, and air conditioners are all still technologies that thrive today, and those who remained stalwart in their growth became enormously wealthy.

Remember too that in the wake of the dot-com bubble, the Internet is more ubiquitous than it has ever been before. Not too long ago, so-called market “gurus” were screaming at you to stay away from tech, but if you took their advice, you’d have missed out on some of the most profitable investments over the last decade and a half.

In picking stocks, you’re not always going to hit a double, triple, or quadruple bagger. You’re also not always going to come out on top every year, either. But if you spread your investments out while truly committing to disruptive technology, you’re bound to win over the long run.

This I can guarantee.

Until next time,

Jason Stutman

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