I’m going to tell you a story about a particular purchase I made several years ago which ended in teaching me one of the most valuable investment lessons.
Eight years ago, my wife wanted a digital camera, so I bought her one. It was a high-end, state of the art, digital pocket camera with a re-chargeable battery and other bells and whistles. She used it two or three times and after that it sat in a box in the study collecting dust. Now before you start making judgments, let me tell you why my poor choice of purchase turned out to be a great lesson in investing.
You see, the timing of the present was all wrong. Digital cameras were on the way out because every person (or nearly every person) had a mobile cell phone with an integrated camera. When cell phone manufacturers made the business decision to incorporate two well used items from everyday life into one product (the phone and camera), they achieved two key things. Firstly, they vastly increased the demand and appeal of their product which in turn would increase sales and secondly, they began the process of destroying the standalone camera market.
The lesson to learn was that my wife and I had failed to recognise a pattern that was already in formation; this was that consumers preferred cameras to be incorporated within their mobile cell phones and no longer saw stand-alone cameras as being convenient. And even though at the time of our purchase the cameras incorporated into mobile cell phones were not as good as the stand-alone cameras, it was only a matter of time that the quality of cameras in mobile cell phones would improve (and they have), because that is how technology develops (take PC’s for example).
Had we stopped and asked ourselves – will we continually use the camera for years to come? – then we would not have decided to buy the camera. The exact same question should be asked when buying shares of any company or product related investment. Will people be buying this in years to come?
So with the emergence of 3D printing, how many manufacturing companies will become redundant?! In my view, 3D printing could be the next step of the current technological revolution. Just imagine having the ability and materials to make anything you want or need – just like printing a letter from your computer or cell phone. Amazing!
(Image courtesy of cooldesign at FreeDigitalPhotos.net)