Creative Technology (SGX: C76) at one time, was the most expensive stock in Singapore before year 2000 dot com bubble with over $60 per share. After the Sound Blaster technology faded way over the last 2 decades, share price dropped to $1 due to declining earning.
Recently there is an exciting new Super X-Fi technology introduced, potentially could be a reborn for Creative. As a result, share price soars to over $8 currently from low of $1 in just 1 week. Although this is a speculation of new technology which may potentially save the company (similar to the case of Hi-P, nearly bankrupt at one time, now share prices go up with good earning in the last few years), it may not be wise to short at Creative or any technology stock with strong uptrend, despite it is not yet supported by real earning yet.
Stock market is forward looking, besides looking at past results, the outlook for future products or services can be an important consideration. Creative has a good chance of getting positive cash flow and earning from year 2018 if this new product of Super X-Fi could be as attractive as the Sound Blaster 20 years ago. Creative has been losing less money each year over the last decade, therefore the recent exciting news brings back the old memory of Creative over $60 per share.
Another technology stock, AEM (SGX: AWX) share price goes up 30 times from $0.20 to over $6 since year 2015 after the turn around of business from losing to earning since 2015, riding the bullish economy wave. There are more technology stocks which are driven and supported by good earning in the last few years, eg. Venture, Micro-mechanics, Hi-P, etc.
Technology stocks are benefiting from the current global technology stock bubble V2.0 (version 1.0 was in year 2000), any significant positive news in business would become a driver for stock traders to buy high sell higher until the next global financial crisis. Technology stocks may be considered for short term trading but may not be suitable for long term investing as the business may not be sustainable after the economy becomes bearish one day. Align the strategies of technology stock bubble to one’s unique personality.
Learn from Dr Tee on riding the technology stock bubble.
