I was talking to a friend the other day and he told me “I don’t know why you pay attention to all those different investment concepts, trading software stock is where it’s at!” I believe I understand the appeal in focusing on one sector. One can become an expert, learn the patterns, and feel comfortable after a few big hits. However, my concern is the over simplification and not understanding how another market may totally change your “normal” routine in your area of expertise.
First of all most of you probably think trading software stock means young up and coming companies. However, Microsoft is still a software stock and it is a blue chip DOW stock with dividends and large piles of cash. Do you trade these the same? Do they influence each other?
The other problem I mentioned was the impact of other areas. Currency changes could make companies from other countries more attractive, commodity price increases could take extra cash from consumers which may have been spent on software, etc.
I know I push on this point in a lot of my post, but I feel it’s really important. You must have a more rounded knowledge base to be successful for the long term. You don’t want it to just be luck because every one’s luck runs out eventually. Don’t just be trading software stock, trade software stocks because the growth is being underestimated and Microsoft has too much cash and is likely looking for a bailout, and your other sectors of interest aren’t hitting any of your key trigger points, while you’re flush with cash.
Related posts: