Historical Analysis

Most of the stocks that we bought up to this point, as mentioned in our previous blog entry, are involved in the technology industry. This industry mostly provides consumer goods, and is generally considered very safe to invest in the stock market. The technology industry is constantly producing new goods, and the demand for utilities that make everyday mundane tasks easier is always increasing. For this reason, most stocks that are involved in the technological industry do well.

One of these companies is Apple, where the current stock value is $538.33, an immense amount of money for a stock, especially when compared to its price in 1984, which was $2.91. Apple constantly provides new and improved forms of technology since its founding in 1976. During March, since no new significant items were produced, its stock was doing very poorly. However, many people are predicting a revival during the month of April, because of many new products that are expected to be released (Kelley and Jegadeesh). One of the products many people are desperately waiting for is known as the iWatch or the iTV, which is promised to come out soon.

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After observing the NASDAQ stock market, which is known for mainly having stocks of technological and computer-based companies, such as Google, Dell, and Cisco, it shows that within a year, from April 2013 to April 2014, the price of the market has increased from $32.57 to $36.43. Over six months, the price has increased from its initial cost of $31.79. However, within a time span of one month, the price had a sharp decrease from its initial cost of $40.04, and has even dropped from its initial cost the preceding week from $37.07. Although the industry has faced a slight decline recently, these prices are relatively consistent with one another, meaning that investing in any NASDAQ stock will not be a risk. As stated previously, new innovations in technology are consistently being made, keeping the technology industry high in demand. In fact, over the year the percentage change in NASDAQ stocks of 30.94% supersedes that of the S&P 500, and is more than double the percentage change of the Dow Jones, 12.98%. (source)

Based on our research we would recommend investing in stocks of Verizon Communications Inc., AT&T, and Cisco Systems to an investor interested in the technology industry. All three of these companies specialize in delivering the best, most updated access to data services to people. The three companies branch out in many areas and do not produce only one product. This allows them to have a wider range of success and attract different people to use their products and services. Recently, all three companies have released new products into the market showing guaranteed satisfaction and their stock values have showed an increase. However, we would also recommend to the investor to be cautious of these companies. One piece of advice would be that it is important to track the each company’s progress and research if they are planning to release any new products, updates, etc. If they are, then it is highly likely that the stock value will increase, but if the company is dormant and not releasing anything new, its value will decrease. Hence, technological companies do not always show a steady increase in value. Nevertheless, the demand for mobile phones, which can be bought through Verizon and AT&T, is predicted to increase dramatically in the upcoming years. According to an article from Wall Street Daily, “Over the next five years, mobile device subscriptions are expected to hit 7.1 billion, according to Cisco” and “by 2020, Morgan Stanley (NYSE: MS) predicts that the number of mobile devices (smartphones, tablets, car electronics, etc.) could easily top 10 billion units” (Basenese). This goes on to show that the need for technology is only increasing and these three companies which provide best-selling products are worth investing in.

Verizon (source)

Because of the research that we have conducted, we can see that expectations can significantly either harm or benefit how well a stock is doing. In the future, before buying a stock that is involved with a technology company, we will be sure to extensively study what new products are expected to be released from that particular company. That way, we will be able to predict how the stock is going to behave, and adjust our plans accordingly in response to our research. We have also found that just because a technology stock is going down, it does not necessarily mean it will keep decreasing for a long time. Companies in this regard tend to compete for consumers, and releasing new and innovative products is a way that they each grab the attention of costumers willing to spend money.  

Additional Statistics on Technological Growth

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