Importance of Technology Companies in Share Market

When we compare the technology companies with other companies we feel a great difference between them. It is very difficult to understand the functioning of these technology companies. These companies have huge price values.

GARP (Growth at Reasonable Price):

In some cases these technology companies have a price increase in a violent way. In the time of bull market, as the opportunity for investment, P/E ratio of many of these companies become disqualified. But the chance for calling as GARP (Growth at Reasonable Price) is increases when the market moves to another direction and the price lows down to moderate level. When we can buy the growth for the reasonable rate, it will be a best buying. It is true for any industries which aim at growth.

The Strongest Survives: 

You should understand that there are occasions in which we separate the succeeded persons from the men who had faced failure. Many companies proved that they can maintain a good development even in the time of economic depletion.

Many companies which included new technology could not make a good profit even in the bull market. An investor who aim at proper investment should not become worry about this lose and profit because one should not wish to make a huge profit in the early time.

But the share markets have a primary role in the protection of new and existing companies by providing capital for them. It is absolutely true that it is very important. But the matter is clear that there are so many share business men who are taking risk in this field.

Wanger - A Good Share Investor:

Ralf Wanger was an investor who made great success by investing in small companies. In 1970 he had only 10,000 dollars as investment. But his capital increased to 618,000 dollars in 1996. Wanger believed that it is better to invest in the company which makes huge profit from the existing product instead of the companies which make new products. For example, it is good to select the company which makes video game software than the company which makes video game instruments. Wanger owned the shares of electronic arts. Bill gates became very famous because his Microsoft was very essential for making computers. If its importance is very low in this field or there is another substitute for it the popularity of him might be less.

Wanger describes many historical examples in his book 'A Zebra In The Lion Country '. He told about the development of the Chicago city due to the introduction of rail road. The investors who bought shares of that property had achieved more profit. If they bought the shares of railroad it would be a great foolishness and they would lose their money.