One of the major problems that many of the portfolio managers have with investing in technology is the obsolescence factor: how is a long term investor supposed to invest a company when even their flagship product has the potential become obsolete? Ryan Jacob- whose portfolio management firm invests solely in internet related companies- talked to us about this:
TWST: What about the obsolescence factor in technology? Do you have to do research into the different technologies?
Mr. Jacob: Absolutely. It’s one of the challenges in the technology sector, in that product cycles seem to be getting shorter and shorter. It really makes it very dangerous, especially on the hardware side, to really make investments and stay with those investments. It’s probably one of the reasons why we tend to favor some of the larger players in areas where we think obsolescence could be an issue — those companies that want to tend to have the lowest costs and also the greatest economies of scale. It’s constantly something to consider, and it’s one of the reasons why we felt it’s really important to have a manager who is following this sector full-time.
For the full interview with Mr. Jacob, including a complete overview of his investment style, and stock picks, click here.
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