Apple is one of the world’s best known brands. Its founder Steve Jobs is one of the most famous men on earth. And each new product is greeted like the second coming by Apple’s faithful followers.
You probably think that as it conquers the world Apple should continue to be a great investment. Maybe it will be. At $315 each the shares have more than trebled in the last two years and show little sign of stopping. But here is my question.
How much did you know about Apple back in 2003 – when you could have picked up the shares for less than $10 each?
Why you are trapped by your horizon
My guess is that you new very little about Apple in 2003. And if you did it probably never occurred to you that today we would be walking around with iPods and iPads, calling up information and entertainment at the touch of a screen.
Here is my point. We are all victims of what we know and what we don’t know. We are trapped by our own sparse knowledge and limited horizons. And when it comes to investing we prefer to stick with the familiar, to those trusted names that we have seen for years on the high street and in the media.
But to make real money we have to break out of our comfort zone, use a little imagination and give some serious thought to what may seem no more than crazy fads. Consider this.
From online dating to profits
Last week I asked my new neighbours how they met. ‘Oh,’ he replied with a smile, ‘it was through a dating web-site.’ Not long ago no-one would have dared admit to such a thing. Heavens! How sad and desperate the two of you must have been! That would have been the reaction.
But not today. Finding the right partner is no longer a case of waiting for eyes to meet across a crowded room, but is a businesslike exchange of data across the internet. Fair enough. I am not knocking it. People lead busy lives and Miss Right does not necessarily live in the neighbourhood or hang around the office coffee machine.
This is just one way our lives are changing. What would have been considered odd in the past is now the norm. I doubt that my parents, who never went anywhere without a picnic basket and a thermos of tea, ever bought a packaged sandwich or bottle of water in their life. But today sandwich bars line the high street and we glug our way through $85bn of bottled water each year.
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Two sci-fi penny shares that look very exciting
New products and services emerge from a confluence of factors. Over the years there have been huge advances in materials technology, the global economy has allowed businesses to tap into expertise and cheap labour all over the world, and the way in which we choose to lead our lives has altered our needs and wants.
But without doubt the biggest driver of advance and innovation is technology. No business can exist without its effective use but as well as allowing for increases in overall business efficiency, technology is also delivering new products and services.
Take the smart plaster for example. Containing silicon chip sensors this can monitor heart activity, body temperature and breathing patterns. It can also communicate this information to doctors in remote locations who will then give you a call if they detect any abnormalities. This may seem sci-fi today but it is fast becoming a reality.
Things that seem strange or sci-fi today will be commonplace tomorrow. You can invest in the on-line dating phenomenon through Easydate (LON:EZD), while Toumaz Ltd (LON:TMZ) is developing the smart plaster. Perhaps one day they will become large enterprises. But my point is this.
Fifteen years ago Amazon and eBay were just gleams in their founders’ eye. Today they feel like permanent features of the business landscape. Technology in general and the internet in particular are allowing new, successful and potentially very large companies to be created.
• This article was first published in Tom Bulford’s twice-weekly small-cap investment email
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