By: Bill and Cindi Porter, AILERON INVESTMENT ADVISORS
Q: How long should I wait to see if a new product or service will be a financial success, before I invest?
A: Much less than in the past.
A challenge that we face today as investors is that the time frame cycle for new investments keeps getting shorter and shorter. For example, let’s consider the historical timeline for nine common products. The measure will be the number of years it took from its introduction to the point where 80% of U.S. households owned or used the item or service :
• 1878 – telephone – 91 years
• 1902 – air-conditioning – 86 years
• 1880 – electricity – 69 years
• 1903 – automobiles – 67 years
• 1941 – television – 46 years
• 1982 – computer – 29 years
• 1984 – cell phone – 25 years
• 1990 – internet – 21 years
• 2007 – smart phones – 10 years (1)
The speed of innovation and the speed at which it is adapted by consumers are both accelerating rapidly. As a result, the time for identifying new investment opportunities, before their prices reflect widespread popularity, is shrinking. For example, Netflix, which seemingly replaced Blockbuster overnight, became a staple in American households in just seven years. In 2012, Netflix stock sold for as low as $7.70 a share. In 2018 – just 6 years later – the stock sold for as high as $408.25 a share. As is so often the case, investing sooner was clearly better than later.
However, the shorter assessment window can potentially make investing more stressful and riskier. Not all, or even most, new ventures are a big success. The Small Business Administration reports that approximately 20% of new businesses fail in the first year. 3 Buying stocks involves calculated risk taking – not sure thing taking. New opportunities and their inherent risks provide a good topic of conversation for you and your trusted advisor.
This is for education only. Before using this information in any way discuss it with a financial professional. There are many risks associated with stock trading. You may lose some or all of your financial investment. Securities offered through Dempsey Lord Smith, LLC Member FINRA/SIPC. Securities offered through Integrated Financial Planning Member FINRA/SIPC. Advisory services offered through Dempsey Lord Smith, LLC. All the information in this letter is published in good faith and for general information purposes only. We do not make any warranties about the completeness, reliability and accuracy of this information. Any action you take upon the information is strictly at your own risk.
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All the information in this letter is published in good faith and for general information purposes only. We do not make any warranties about the completeness, reliability and accuracy of this information. Any action you take upon the information is strictly at your own risk.