From the development of money to the revolution in the stock market caused by mobile phones, the history of investment has always been centered on technology. As the pace of development gets faster and faster it’s important not just to have the latest gadgets but also to understand why they matter, in order to succeed.
The importance of technology in investment
Success in investment always depends on making better decisions than other people – and, often, on making them faster. Any technology that makes this easier is going to be eagerly taken up, but as everybody starts to get hold of it, the advantage it provides disappears and fresh technology is needed. For this reason, investment is a strong driver of new technology, a guaranteed market for anyone able to develop a new form of technological assistance. Smart investors constantly keep track of developing technology and ensure they are ready to seize the advantage as soon as it emerges.
Ultimately, investment is centered on the exchange of information, and technologies changing the way we communicate have had a bigger impact on the markets than anything else. This started with the mail and the telegram, speeded up with the invention of the telephone, and moved into the modern age with the appearance of the mobile phone. Meanwhile, as these technologies have improved communication between individuals, the Internet has made it easier and easier for large quantities of information, such as company financial reports, to be made generally available. Looking at Fisher Investments on Flickr, for instance, illustrates an example of an information channel for investors. This speeds up the research process and democratizes investment as it makes it possible for small investors with a talent for analysis to keep up with big investment companies. It also helps investment consultants connect with the small investors they are in a position to help.
Investors changing processes
Many financial firms are increasing their use of passive funds managed by computers rather than active, individually managed funds, and this is one of several factors behind an overall fall in fees. It has shifted the focus of human asset management to monitoring, analysis and contrarian strategizing, and away from numbers-based research. Automation of many aspects of the investment process has freed up managers to concentrate on human factors such as working out how two company heads are likely to relate to one another as they consider a possible merger – intuitive work that relies on experience but also on insight.
There are several specific areas where technology can help investors to succeed in the markets, including the following:
Market monitoring software: this makes it easier to assess the overall health of different national markets or market sectors, follow trends and track the progress of individuals stocks and shares.
Broker apps: these make it possible to buy and sell stock from anywhere, at any time, with the brokers’ standard rates applying. The better ones include basic research tools for easy checking of companies’ past performance and they may let users deposit checks.
Specialist investment apps: these are designed to do things like helping investors balance their investments more effectively or find the right passive investment packages to sign up to, enabling them to engage with online dealing in a lower risk way. There are usually monthly fees plus interest charged for these apps, which can be significant when gains are low.
Practice apps: these are great tools for beginners, involving the investment of imaginary capital with competitions to keep it interesting, and small rewards for success. They offer a chance to get used to how the markets work before taking real life financial risks.
Making the most of investment technology
There’s a lot to be gained from staying abreast of investment technology but experts caution that there are also risks. Because many of these tools make it much easier to invest, there’s a danger that people will do so too impulsively or too often. It’s important to remember that technology is only a tool and ultimately the investor must stay in control and make reasoned choices. With this in mind, it can be put to use in a measured, sensible way to significantly increase the chance of good returns.