Finding the Next Ebay

Business Money
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Jlick posted comments a while back about some financial guru who published a book on investing in the stock market that had a picture of a bullseye on the cover. I’ve forgotten the name of the book and the author, but I saw it in Eslite one day, browsed through it and realized I lacked time or brainpower to make it through such technical advice. But one comment the author made stuck with me. He noted that when duck hunting one shouldn’t aim at the ducks, but should instead aim where the ducks are going to be. The same holds true for investing. The wise investor will calculate what companies are likely to do well down the road and invest in them.

In that vein, I’ve been trying to figure lately what might be a hot technology that will sell massive quantities in the near future and which is reliant on a product or component that is made mostly by one company (preferably a fairly small company) that holds the patents or otherwise has some strategic advantage over potential competitors.

I titled this finding the next Ebay, because if one had invested in that company in the Fall of 1999, ones investment would have multiplied by more than 20 in less than a year:

http://finance.yahoo.com/q/bc?s=EBAY&t=my&l=on&z=m&q=l&c=

But I’m not interested in online auction sites per se. I’m interested in predicting the next Amazon.com, the next google, the next i-pod before it happens. I’m nowhere near placing my bet yet, but the following are the types of potential areas where I could imagine massive sales in the future and if I feel confident enough I’d like to bet on that one key company, as described above:

3G and next generation cell phones
wireless lan
next generation DVD (BlueRay v. HD-DVD)
on the latter see finance.yahoo.com/q/bc?s=EBAY&t= … z=m&q=l&c=

So what do you think? What technology will be ubiquitous in 3 years and what company will manufacture 90% of that technology or a key component of it?

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nano technology in 5 to 10

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I’m sure you’re right, Fox, but your answer is only the first step of many. My understanding is that nanotechnology basically means designing and building things that are microscopically small. That could encompass a broad range of fields and uses. Below is a link to a website I just pulled up, which refers to the use of nanotech in semiconductors, medical, biotech, pharmacology, instrumentation, energy, materials science, etc.
nanotechnologyinvestment.com … search.asp

The way I see it, nanotech may be a good start, but then as an investor one needs to narrow it down to, say, medical uses of nanotech. Then narrow it further to discover, hypothetically, early trials being performed regarding a certain procedure in cataract surgeries that could revolutionize such surgeries and which have received extremely promising results but not yet widespread public notice, and a step further that procedure is dependent on a patent held not by a giant Fortune 500 company but by some small-cap that could multiply 100X if the procedure becomes widely adopted.

Another example is VOIP. I don’t know much about it but I understand that it’s about making long distance phone calls for free over the Internet. Fantastic. If it becomes cheap enough and simple enough that the average schmuck can use it that seems like a promising field. But I understand there are a number of different companies offering such services through different methods and there are various barriers to widespread acceptance of VOIP (I’m not sure what they are but maybe technological, regulatory, cost, etc.). For me to plunk down my money in VOIP, I’d need to be confident that one particular company has a solution that gives it a clear advantage over all the other solutions, and some day my parents and yours will make long distance calls with that company’s solution.

Or with next generation videos I’d like to know that BlueRay will clearly beat out HD DVD for the following reasons, the price will quickly drop from its present exorbitant levels to something realistic, there will be a widespread consumer drive to acquire BlueRay, and one small company holds a patent that is critical to manufacturing BlueRay recorders, players or discs. It may not be easy to find such situations, but that’s what I’m looking for: not a broad general trend, but a small company that holds the key to an extremely promising product or tech that is likely to sweep the market.

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Yeah, you and millions of other investors. :wink:

In all fairness, this is a good topic, but if it was so easy to think of these great ideas, we would all be rich and retired by now.

Nanotech looks good, but there are so many companies dabbling in it that it’s very difficult to choose a favorite.

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I don’t believe it’s easy to discover such companies, but I believe it’s possible to come up with some reasonable prospects. I believe the main reason we’re not all rich from investing in such companies is not because it can’t be done but because most people lack the ability, resources or motivation to perform serious research prior to investing. I’m no Buffett, but I’m interested in trying to find a few potential next big things before they’re big.

Perhaps I should have posted this thread in the tech forum, becasue the beginning of this research has nothing to do with stocks or financials – it’s pure tech and we’ve got lots of bright tech-minded people posting on this forum who know things the rest of us don’t. For example most common people may be completely unaware that one day BlueRay or HD-DVD may replace all DVD players, just as DVD replaced VCRs. When that happens, many millions of products will be sold. While laypeople and readers of Money Magazine may know little of such things, some techies may know a number of strong reasons why one such product is clearly superior and may be aware that a critical patent for that company’s blue laser projecting unit (or whatever) is held not by the typical giants (Phillips, Mitsubishi, Sony, etc), but by some little start-up in Santa Clara.

I do believe that some people on this forum have some such knowledge that could be parlayed into very profitable investments. I wouldn’t take someones word just because they claimed that X company is such a sure thing. But I’d love to hear a few such theories, in order to do further research myself.

Incidentally, another example that comes to mind is a company I read about some time back that supposedly holds the key to manufacturing of the next generation DVD discs that I keep referring to. I’ve forgotten the name of that company and the specifics, but I’ll see if I can find that out.

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This thread reminds me somehow of Felicity Foresight. The Economist once invented a fictional investor (called Felicity Foresight) and had her invest in the next big sector every year. She started with 10 pounds and ended up with billions after making one investment a year from 1900 to 2000. The really interesting thing was their second one Harry Hindsight. They had Harry invest once a year in the best performing sector of the previous year. He ended up with somethign like 50 pounds after 100 years. Not such a good investment.

I guess the lesson is that ‘the next best thing’ is going to be fiendishly difficult to spot, but avoid looking at waht looks good now. It’s more likely to be somethign completely different.

Brian

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Exactly Bu. The hordes have already invested in last year’s (or last month’s) big thing and the high prices reflect that. The goal is to buy the small company before it gets big. Speaking of which, I just discovered the disc manufacturer I was trying to recall. Turns out they were mentioned by the Motley Fools a few weeks back.

[quote]. . . just as you eventually tossed out your 8-track tapes and old vinyl recordings . . . your days with your standard DVD collection are numbered. . . Two competing technologies offering far more storage capacity than your garden-variety disc will be rolling out over the course of the next year and change, and they already have the blessings of major movie studio and video-game software houses. . .

Some have compared the upcoming battle between the two blue laser disc formats to the one waged between the Betamax and VHS platforms two decades ago for videocassette supremacy . . .

Earlier this month Seth Jayson suggested taking a look at Singulus Technologies (Nasdaq: SGTSF), a German company that makes the machines that create the next generation of media discs. . .[/quote]

fool.com/news/commentary/200 … 012403.htm

I don’t know much about Singulus yet, but that’s the kind of thing I’m talking about.

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[quote=“Mother Theresa”]Speaking of which, I just discovered the disc manufacturer I was trying to recall. Turns out they were mentioned by the Motley Fools a few weeks back.

[quote]…the upcoming battle between the two blue laser disc formats to the one waged between the Betamax and VHS platforms two decades ago for videocassette supremacy . . .
[/quote]
[/quote]

If it is really only a 2 horse race, and it is still early enough that the hordes have not invested, would it be wise to invest a small amount into each? the thought being 1 will fail resulting in a lost investment, but the other should blossom and presumably out-weigh the loss… :loco:

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Been wondering what do with my hard earned coins. Came accross this on a google search. fool.com/shop/newsletters/15 … tlnk655054

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save your sheckels, and buy their book on the subject.

It’s pretty good.

Kenneth

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[quote=“Connel”][quote=“Mother Theresa”]Speaking of which, I just discovered the disc manufacturer I was trying to recall. Turns out they were mentioned by the Motley Fools a few weeks back.

[quote]…the upcoming battle between the two blue laser disc formats to the one waged between the Betamax and VHS platforms two decades ago for videocassette supremacy . . .
[/quote]
[/quote]

If it is really only a 2 horse race, and it is still early enough that the hordes have not invested, would it be wise to invest a small amount into each? the thought being 1 will fail resulting in a lost investment, but the other should blossom and presumably out-weigh the loss… :loco:[/quote]

Good point. If it really were only a 2 horse race I think you’d be exactly right: if you bet on both and one tanked but the other multiplied times 10 you’d do well. But, while there are 2 competing technologies, I believe the patents underlying each of the 2 standards are owned by many different companies. For instance, the following 9 giants own patents essential to make Blu-Ray recorders/players: Hitachi, LG Electronics, Matsushita, Pioneer, Philips, Samsung, Sharp, Sony and Thomson.

See sony.net/SonyInfo/News/Press … /03-0213E/

Toshiba is usually mentioned as heading up the other standard – HD-DVD – but I believe the essential patents are actually owned by the DVD6C Licensing Group, which consists of Hitachi, IBM, Matsushita, Mitsubishi, Toshiba Corporation, Victor and Warner Home Video.

So, not only is it a lot more than 2 horses, but they’re big horses. I want to bet on a small horse that will take the race. As I mentioned before, if that’s not possible with regard to next-generation DVD player/recorders, maybe it’s possible with regard to a company that makes the new discs. Or maybe not. I don’t know and I hope jlick, who really knows such things will join this discussion soon to enlighten me. And if the strategy won’t work for next generation DVDs, maybe there’s a small horse that will win in 3G or Voip telephony or something else.

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The thing with nanotech is that much of the r and d is being done by huge blue chip companies, GE IBM, Honhai. I would imagine AFTER they make the breakthroughs necessary to set the field afire, THEN the nanoapplications will follow through and make some folks rich.

I know a guy in Taiwan who’s company makes nano sealed surgical gloves. An the windshiled of Lexus cars are treated with nano plastic or something to allow water to bead up. Neither the gloves nor the glass is going to dramatically alter the income of the companies. It’s just not there yet.

As for some small indy company changing the world in nano? If it did happen, I’m positive I wouldnt know about when it mattered.

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I’d keep you eyes on battery technology. It’s just my opinion that there’s going to be a breakthrough soon.