I think you should invest in Google soon, because of this. It's all over the web, and looks like it's something coming soon. Let me know what you think.
An interesting idea...however the stock market is an "efficient machine" that constantly evaluates all known information about a company. If anyone knows about this -- and apparently millions of people do -- then it will already be priced into the current stock valuation of the company. If you were somehow the only one to have access to this privileged information then this might serve as the basis to invest in a company that you thought was undervalued or about to "pop" on some new news (but alas, that is what the felony of insider trading is usually all about).
However, if like the iPhone, a great new product is "known" but after its release it exceeds expectations (this is the unknowable part) then the stock price can jump on this new information.
There has certainly been speculation about the gPhone since who knows how long, just as people have proposed they're making an OS. But I think the difference here is it's relatively verifiable that SOMETHING is going on RIGHT NOW. The stock market seems to be the great hype machine, which isn't really great sometimes, but if you can read the crowd...I don't know. I don't see any reason why people wouldn't jump the way they did with iPhone. Buy it now, sell it the morning after they announce. I know it isn't all that easy, but seems so tempting.
Austin -- you've actually stumbled upon one of the most interesting issues in finance and investing. Scope out the first two paragraphs on Wikipedia under "Efficient market hypothesis" for a primer.
There are actually armies of people with PhD's in math, finance, and physics that tweak computer models to outsmart the average investor (they're call "black box quant shops" among other names). These shops are actually luring the top professors away from universities to help them refine their computer models. I'm told some of these algorithms factor in data on positive and negative words associated with company names on the internet to try and take the real time pulse on the markets. Add to that mix millions of day traders around the world scouring the internet all day, ready to pounce on any extraordinary opportunities. these people move the INSTANT new information becomes available. By the time and average Joe reads about something new it is ancient, ancient history to the markets.
My advice, buy an index fund with low fees and hold it for a long time. Get rich quick = rare. Get rich slow = easily attainable.
6 comments:
An interesting idea...however the stock market is an "efficient machine" that constantly evaluates all known information about a company. If anyone knows about this -- and apparently millions of people do -- then it will already be priced into the current stock valuation of the company. If you were somehow the only one to have access to this privileged information then this might serve as the basis to invest in a company that you thought was undervalued or about to "pop" on some new news (but alas, that is what the felony of insider trading is usually all about).
However, if like the iPhone, a great new product is "known" but after its release it exceeds expectations (this is the unknowable part) then the stock price can jump on this new information.
I'm personally not a fan of single stocks. However, I do give you credit for calling XM Radio.
I remember now that I had read something along these lines in the January 2006 (yes '06) issue of Business 2.0.
Here's the link if you are interested:
http://money.cnn.com/magazines/business2/business2_archive/2006/01/01/8368125/index.htm
Austin, you might find the last section about Google's computers becoming self-aware particularly amusing.
P.S. With sadness I have also just learned that one of my favorite magazines, Business 2.0, has issued its last issue and is closing up shop.
There has certainly been speculation about the gPhone since who knows how long, just as people have proposed they're making an OS. But I think the difference here is it's relatively verifiable that SOMETHING is going on RIGHT NOW. The stock market seems to be the great hype machine, which isn't really great sometimes, but if you can read the crowd...I don't know. I don't see any reason why people wouldn't jump the way they did with iPhone. Buy it now, sell it the morning after they announce. I know it isn't all that easy, but seems so tempting.
Austin -- you've actually stumbled upon one of the most interesting issues in finance and investing. Scope out the first two paragraphs on Wikipedia under "Efficient market hypothesis" for a primer.
There are actually armies of people with PhD's in math, finance, and physics that tweak computer models to outsmart the average investor (they're call "black box quant shops" among other names). These shops are actually luring the top professors away from universities to help them refine their computer models. I'm told some of these algorithms factor in data on positive and negative words associated with company names on the internet to try and take the real time pulse on the markets. Add to that mix millions of day traders around the world scouring the internet all day, ready to pounce on any extraordinary opportunities. these people move the INSTANT new information becomes available. By the time and average Joe reads about something new it is ancient, ancient history to the markets.
My advice, buy an index fund with low fees and hold it for a long time. Get rich quick = rare. Get rich slow = easily attainable.
I'm a believer in the get rich slow methodology. Well said.
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