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Deep domain knowledge in global large-cap tech stocks is one of the two main reasons the North Tech Capital Global Technology Growth Index outperforms the market.
A high-quality portfolio management strategy is another reason – how much stock to buy, when to buy, and when to sell.
In today’s post, you will learn how to obtain deep domain knowledge in the global large-cap tech space as a precursor to outperforming the market.
1. Create your own tech-stock algorithm
As a global human species, we are not short of information.
According to Earthweb.com, 7.5 million blog posts were published every single day in 2024.
Press Gazette tracked the content published to the RSS feeds of eight major UK news sites over a week between 13 and 19 September to get a snapshot of their content.
It found that Mail Online published nearly 1,500 articles per day.
Its closest competitor was the Mirror, which published an average of 898 articles over the entire week.
It makes control over the quality and quantity of financial market news inflow a necessity.
For one thing, you will escape the mindless, often AI-generated content from Wall Street.
For example, I use the app Feedly to create my own large-cap tech stock-related news feed from the best finance reporters and news sites on the internet.
I call this first-stage pruning.
Without control over news inflow, you will get overwhelmed by conflicting arguments, data, and sentiment as to why the market is going in one direction or the other.
A free news aggregator like Feedly solves this problem by allowing you to choose dozens of news feeds to present you in their app.
Any feeds that don’t cut it, simply delete them.
2. Second stage pruning
Once you have pruned your feed for the most accurate tech stock news sources from the web, it will be time to do the work of consuming the content from your personalised algorithm.
If you are new to financial markets, the jargon, data, acronyms, charts, and commentary will at first seem like learning a foreign language.
The good news is that once again, careful pruning is your friend if you spend time putting it into practice.
For example, I’m a tech stock guy, so news articles about bonds and their value as investments is not as important as what the CEO of Nvidia, Jensen Huang, is indicating about the firm’s current and future earnings.
Bond yields, interest rates, and the price of debt does have an impact on financial markets so I will read about these related topics, but large-cap tech is my chosen area of expertise.
Second-stage pruning involves narrowing your news inflow to concentrate your attention to where it matters.
Commodities, small-caps, bonds, futures – they all form part of the global financial markets, but to achieve deep domain knowledge, you should choose just one area of the market.
Trying to be everywhere will get you nowhere.
I still read the odd article outside large-cap tech stocks if it has a direct effect on the direction of the NASDAQ 100 or S&P 500, but 90% of my attention is in large-cap tech.
3. Be a fearless jargon buster
This is the third and final stage of pruning.
Instead of news inflow, your efforts will now focus on dispensing with jargon.
Return on invested capital?
Google it (ROIC).
Compound annual growth rate?
Google it (CAGR).
Payroll numbers lower than expected?
You get the idea.
This process of pruning the type of Wall Street jargon that makes you roll your eyes can last anywhere between a few weeks to a few months depending on your level of commitment and time constraints.
It is this last stage that most investors give up on because of the learning curve, which is not steep, simply time-consuming.
There is no other way to obtain deep domain knowledge without being in the trenches and becoming part of conversations about global financial markets.
The real kicker though is that when you reach a level of competence that gives you deep domain knowledge in your chosen area of the market, you will no longer care what Wall Street thinks.
You’ll simply rely on your own cultivated and developed deep domain knowledge.
The ask: make the conscious decision to commit to cultivating deep domain knowledge by choosing a financial market niche, setting up your news inflow, pruning, and jargon-busting.
At first, it will feel like trying to swallow a frog.
But once that greasy little sucker has been dealt with, you’ll be well on your way towards outperforming the market.