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A Story of Tech Bubbles

Tech Bubbles

How 24 hrs can change everything

A tale of tech investing

I jumped on the plane with my business plans and was so excited to get back to Sydney and start the internet business we had seen work so well in London, back in Sydney. It was called Easy internet and consisted of high street stores with hundreds of computers giving travellers access to the internet. Think internet cafes on steroids. Oh, and no one had the internet in their palm back then!

To fund the business, I had invested in tech stock which was a sure thing.

My hot stock had soared to $25k. I would sell as soon as I landed, and this would get me off the ground to start the venture. Everyone was making easy money and dreaming of being an internet millionaire.

By the time I landed in Sydney on QF1, the stock was $10k.The next day it was $3k

I sold at 3k, my dream shattered and I started applying for jobs.

We also worked out quickly that starting an internet store was going to cost a lot more than $25k. Oh to be young and naïve again.

I was 23 years old, and all was not lost. I finished off my last module of Chartered accounting exams, got back into playing rugby and within a few years was a partner of one of Australia’s largest accounting groups.

Why am I telling this story?

For many young investors, the past few years have shown them that it can be easy to make money in shares and crypto – and even easier to lose it!

There are not many overnight success stories that did not take 50 years!

Read any successful entrepreneurs bio and they have tried many business ventures, lost money at times, but stayed persistent and patient over many years.

The initial dot com crash was very similar and from that, I learned some valuable lessons

  • Investing is a science and not a potluck
  • Hot tips are worth as much as a cup of hot tea
  • Becoming successful in investing and in business takes a long time

I’ve been fascinated by the recent tech and crypto investors. The numerous reports of people making it big and how easy it is. Not wishing to fail, I was intrigued as to whether this time it was different and maybe we were being too conservative

And now we know that the old-fashioned investments still work and that the new get-rich scheme is just like so many before it – there have been many and most if not all end up crumbling down.

The issue with the current crypto market is that there is no “floor” in the price. As soon as there is a liquidity squeeze, which we are seeing now, and people start trying to sell, panic sets in and no one can sell. – so, what happens is the process crash. But there is no intrinsic value, no property values like in the GFC to fall back to or basic dividend value like in 1987. With crypto, there is zero, so it’s a race to the bottom

Now the technology will survive and just like the first dot come boom, there will be some massive winners – in time. Amazon, Google, Facebook etc. all emerged out of the dust of the first dot com boom. The Australian banks even survived the early 90s and became some of the most profitable companies in the world. It’s not over completely, but a lot of people will learn that investing fundamentals come back to the fore.

  • Understand what you are invested in
  • Check there is a long track record of returns, at least 10 years, but preferably 20 or 30
  • Diversify
  • Keep costs low
  • Have a plan
  • Be willing to be patient

Having provided independent advice for over 20 years, we have seen a few cycles now and as well as offering comprehensive advice, we offer education and low-cost funds via our digital platform, scientiam.com.au