Why I only buy stocks of the new economy

November 30, 2015 11:03
Many of us work five days a week, but we use Facebook and other websites at the office, at home and even before we go to sleep. Photo: Bloomberg

Famous American investor Peter Lynch got the inspiration to buy Wal-Mart, whose price rose 10 times in the following years, while shopping with his wife.

That happened more than 30 years ago, and investors don’t have to shop with their wives to discover investment opportunities in daily life.

Most people have only one job. Have you tried using Facebook at work? No? How about Instagram or WhatsApp? I believe you have, out of habit perhaps. Your body is in the office, but your heart belongs to Facebook, right?

For your work, are you using Gmail, Google Calendar and other services? Two decades ago, people watched television while having dinner. Now, it’s YouTube videos that are streaming on an office clerk’s computer screen during lunch time.

There are usually five working days. But Google and Facebook services are 24/7 in people’s lives.

Google and Facebook, whose founders are in their 40s and 30s, are now valued at US$520 billion and US$300 billion respectively.

Apple has a market cap of about US$660 billion while Microsoft is about US$430 billion. Amazon, now valued at US$320 billion, may surpass them in five years.

The new economy is not directly competing with the old one. The new is overtaking the old by using disruptive business models which change people’s behavior.

It is broadly welcomed because it brings people convenience and cut the overall social cost. Trains replacing horses, telephone replacing the telegraph, and fax is replaced by e-mail -- the wheels of change go on and on.

The new economy is taking people to a new era.

Investors should not only enjoy the convenience brought about by the new economy but understand the underlying principles to profit from trends.

Ten years ago, China’s economy took off. State-owned companies had had a great time. But as the economy matured, how do you expect those dumb entities to continue fueling the country's growth?

Isn’t it cool to bet on a company that may change the world? It is the internet that enables everyone to buy stocks in any country in the world and for Hongkongers to enjoy Black Friday sales at Wal-Mart.

How about shopping now in the global stock markets?

This article appeared in the Hong Kong Economic Journal on Nov. 27.

Translation by Myssie You

[Chinese version中文版]

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Columnist at the Hong Kong Economic Journal