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Two Technologies that Could Send Penny Stocks Soaring
On May 15, 2009, the internet changed forever. Did you miss it?
The widespread acceptance of the internet lead to a monumental shift in the way we do things. Communications now happen instantly across thousands of miles, e-commerce has generated billion of dollars for companies like Amazon.com and eBay, and, with the advent of search technologies like Google, the planets information is at our fingertips.
But in spite of all of those advances in technology, there was something missing.
After all, why should you have to scour pages and pages of Google results to find out which country is the world's 5th smallest exporter? How is it that that sort of factual information isn't readily available? In the past, search technologies had a big limitation - they required you to ask a question that's already been asked and answered. But on May 15, with the public release of Wolfram Alpha, that all changed.
Wolfram Alpha is a computational knowledge engine. What that means is that it answers factual questions based on structured databases that catalogue information. And it's creating quite a stir among technology experts. "[Wolfram Alpha] doesn't simply return documents that (might) contain the answers, like Google does, and it isn't just a giant database of knowledge, like the Wikipedia. It doesn't simply parse natural language and then use that to retrieve documents... Instead, Wolfram Alpha actually computes the answers to a wide range of questions," said Nova Spivak in an article posted on Twine, a social networking site.
So, if you really do want to know what the 5th smallest exporter nation is, or the average salary of a school bus driver, or what 20/200 vision looks like, with Wolfram Alpha the answer is truly only one click away... without having to rummage through search results.
Not a Search Engine
The most critical thing to remember about Wolfram Alpha is that it's not a search engine - it's an answer engine. While searching for "penny stocks" will yield you 5.7 million results on Google, Wolfram Alpha won't return a single web page. Where Wolfram shines is in answering factual questions (asking subjective questions like "which car is cooler" won't get you much success).
So, enter something like "What is the circulation of the Wall Street Journal?" or "What is the density of milk?" and you'll get your answer (2.012 million readers and 242 g/cup respectively).
The most important thing about Wolfram Alpha isn't what it's capable of right now, it's how the unique way it handles data makes big advances possible in the future. "Where Google is a system for finding things that we as a civilization collectively publish, Wolfram Alpha is for computing answers to questions about what we as a civilization collectively know. It's the next step in the distribution of knowledge and intelligence around the world -- a new leap in the intelligence of our collective 'Global Brain.' And like any big next-step, Wolfram Alpha works in a new way -- it computes answers instead of just looking them up," explains Spivak.
Putting Wolfram Alpha to Work for You
And as an investor, Wolfram Alpha has some abilities that transcend the potential of its technologies. With this platform, you can instantly get a slew of financial information on a stock just by typing its ticker into Wolfram's engine.
You can also make interesting computations on the fly, like this chart of GM revenues divided by Ford's revenues:
Revenues: GM/Ford
source: Wolfram Alpha
If you're interested in options, bonds, or currencies, Wolfram Alpha also has the ability to make complex calculations (like the value of a straddle option) instantly for you.
Keeping an Eye on the Future
There's little question that the work the folks at Wolfram Research are doing on Wolfram Alpha is going to change the way we interact with data. I think it's clear that those changes are going to trickle down to make data more available to investors - and they're also going to fuel huge growth for the handful of companies who are working on computational engine technologies. Visit wolframalpha.com to check out this amazing new technology for yourself.
Meanwhile, bigger, more recognizable companies are making technological innovations that could trickle down to smaller, more exciting stocks...
BusinessWeek calls it the "Apple Economy" - the flurry of new products, services, and companies that have sprung up over the last few years to cater to Apple customers. In recent years the Apple economy has become a multi-billion dollar business for scores of smaller companies who want a piece of the pie. And this summer could be a big catalyst for penny stock profits.
Over the last few months, the dozen or so Apple-obsessed websites published leaked photos, product specs, and speculation about the possibility of a new iPhone - one that was officially announced in mid-June. One of the reasons for the hysteria is Apple's culture of secrecy. The Cupertino, California-based technology company keeps new products closely guarded until the time is right for a big release.
That release came on Friday, June 19, with the announcement of Apple's iPhone 3G S - a newer, faster, and more advanced version of the iPhone 3G that was released last summer.
The Small-Cap Connection
All of those big releases have meant big money for Apple - the company took in $32 billion in revenues last year. They've also meant big money for the handful of small companies that makes money by selling peripherals, software, and support to Apple's customers.
One of the best examples is Zagg (OTC: ZAGG), a company that makes cases, headphones, and other accessories for the iPhone. While the company posted net losses in 2006 and 2007, since the iPhone's release it's managed to swing to a pretty substantial profit. ZAGG stock is up 420% since January as a result.
And some people are seeing even bigger returns from the Apple economy.
Look no further than Ethan Nicholas, a one-man team who watched his iShoot, a game sold on Apple's iPhone Application Store, climb to No. 1 on Apple's list of most popular paid applications.
In just two weeks, iShoot netted Nicholas almost $400,000 in profits... and the application is still selling as we type. That mountain of money has prompted Nicholas to quit his day job at Sun Microsystems to pursue game development full time.
Since the App Store was launched in July 2008, the company has sold more than 1 billion applications to iPhone and iPod Touch users. Clearly Nicholas hasn't been alone in his Apple windfall, and penny stock game developers are cashing in too.
Among them was an over-the-counter stock that small-cap analyst Greg Guenthner recently recommended to his readers over at Bulletin Board Elite. Since his recommendation, the company has grown its net income by 42% this year, removing any doubt that even the little guy can profit from what's going on right now.
"Hi, I'm a Mac"
Apple's come a long way from the computer company that almost went bankrupt in the mid 1990s. Since Steve Jobs returned to the helm of this prolific company fortunes have been great for Apple - and for the Ethan Nicholases and Zaggs of the world.
Keep your eyes open - the emerging technologies coming out today could mean money in your portfolio too.
Cheers,
Jonas Elmerraji
About the Author Jonas Elmerraji is the editor of the Rhino Stock Report and a contributor to The Penny Sleuth, which offers unbiased commentary from expert analysts and authors on penny stock trading.
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