Why You Should Get Your Skates On To Invest In Technology

My favourite quote having to do with investing sprang to my mind last week while I scanned the news.

It’s not a line from some legendary hedge fund operator. Nor is it a citation from some tenured finance academic.

It’s a simple piece of sporting advice that comes from arguably the world’s greatest hockey player.

I’m talking about National Hockey League (NHL) legend Wayne Gretzky.

In his autobiography, Gretzky revealed a secret to his success. It’s a lesson his dad taught him when he was a young boy.

Here’s the Gretzky secret: ‘skate to where the puck is going, not where it’s been’.

Here’s how you should interpret that advice. If you want to dominate the stock market like Gretzky dominated the NHL, you have to balance intuition and analysis to make smart decisions faster than others.

And if you want to scoop big profits, you’ll need to take large, calculated risks.

Sometimes that means taking a chance on a technology that’s yet to be commercialised. Or speculating on a resource explorer striking it lucky.

Investing this way isn’t always easy. If it were, we’d all be billionaires. But there are many rewards if you’re persistent.

Funnily enough, billionaires seem to find it easier than most to invest the ‘Gretzky’ way.

Maybe when the stakes are higher, the mind focusses more sharply. Or maybe these guys are just too rich to waste time.

Either way, it’s clear that the richer you are, the more doors open to investment opportunitiesfrom which you can potentially make a killing.

I went into that theme in some detail in last month’s issue of Australian Small-Cap Investigator.

But it’s back in view with the news that James Packer and Lachlan Murdoch are considering a multi-million dollar investment in Australian peer-to-peer (P2P) lender SocietyOne.

I wrote about P2P lending a month ago in this eletter for Money Morning.

SocietyOne is Australia’s first fully compliant online platform that connects borrowers and lenders directly. It offers people on both sides of the transaction more attractive interest rates than banks.

It may not be profitable yet, but several Gretzky-esque investors have already skated into position in SocietyOne’s capital structure…amongst them Westpac’s venture capital fund Reinventure, Berlin tech incubator Rocket Internet and the Australian head of global private equity giant KKR & Co. L.P. [NYSE:KKR] Justin Reizes.

When I see investors of this stature circling a tiny start-up, I get excited.

I’m not trying to tell you that everything Packer and Murdoch think about touching turns to gold.

But the line that divides financial services and technology companies is becoming more and more blurred. Start-ups are working out new ways to solve old problems in finance. And slowly but surely, they will eat away at the billions in profit that the big banks record each year.

Read the rest of this article at Money Morning