A bizarre headline – has this one got you thinking? Well, while many investors spend hundreds if not thousands of hours looking for the next Google, the next Microsoft and the next Facebook, why not just invest in these giants today? If we look at Amazon, this is now seen as an established company with a reputation and influence other companies could never achieve. So, why would you continue to look for the next big thing when the old dinosaurs still have some life left in them?
Brand and reputation
It is true what they say, you can build a brand and reputation over many years but you can lose it in just a few hours. If we look at companies such as Google, Microsoft, Facebook and Amazon, these are all recognised brand names with reputations the likes of which we have never seen before. They dominate their markets, they crush the opposition and are constantly looking for new income streams – so why look elsewhere?
We can give you a perfect example. Sporting giant Nike spent many years fighting the lure of Amazon, refusing to sell their products on the site but now the company has given way. In a deal which will see fake Nike equipment taken off the Amazon website the company has now agreed to a retail deal which could be a game changer. Rather than fight the tide, why not just go with the flow?
Smaller companies equal greater risk
While there is nothing wrong in spotting the next big thing, getting in at the bottom rung of the ladder but you need to understand the increased risk. There is no doubt that there is big money to be made but 99% of the “big things of tomorrow” never hit their forecast heights. Competitors can crush them, investors can put them through the mill and unfortunately many of them do not return. So, if you are looking for the next big thing then it is best to spread your risk across a number of potentially giant companies of the future. If one was to make it, which will be down to the quality of your research, then it would likely make up any losses on your other investments and more.
Even those companies which are on track to do well in the future will likely be snapped up by the competition in their relatively early days at a relatively modest price. Sometimes large companies can afford to pay a significant premium to buy up smaller competitors of the future. In effect they are protecting their brand, their market and their future.
You can teach an old dog new tricks
While many people believe you can’t teach an old dog new tricks, this is not necessarily the case on the stock market. We have seen companies totally revamp their offerings, take different directions and use their power, branding and influence to increase their chances of success. It may take longer to learn these new tricks but do not write off the old dinosaurs of yesteryear when looking at the new kids on the block.
There will always be a space for innovative forwardthinking companies of tomorrow but as companies such as Amazon, Microsoft, Facebook and Google continue to grow in size, their influence is enormous. So, why not put at least some of your investment faith in these dinosaurs?