Is now the best time for technology investments?

Author:Cooley, Scott
Position:Cyberthoughts - Personal account

I tend to be a contrarian investor with all of my investments. In 2005, at the peak of the housing market, I predicted we'd see the worst housing downturn since the Great Depression and that it would lead to a national, if not global, recession. My investments included shorting (betting the stocks would drop) stocks of public builders, mortgage insurance (Ml) companies, consumer finance firms, mortgage firms and, most of all, the subprime lenders.

From what I've read, the great investor Warren Buffett also believes in buying when everyone else thinks of selling a given asset. I believe we are now entering a time that will be the best possible period for investing in mortgage technology. The foremost reason is because it's a contrarian play. But there are many other reasons as well.

Yes, most every lender seems to be dumping software projects and shedding licenses as employees are being laid off. Many lenders have gone out of business, leaving some technology vendors without a customer base. Witness Austin, Texas-based ARC Systems and its inability to even sell its well-known technology platform. Just a year ago, this firm was easily worth more than $10 million--and now it's gone. Millions have been poured into ARC System's automated underwriting engine, and all that investment certainly has value to some lender at some future date.

There are many other systems out there looking for a new owner, too. Many of these would be a bargain purchase to the right firm. Lenders can purchase some of the technology assets for pennies on the dollar. Of course, there are risks--but times like these don't come around very often.

In fact, I've talked with several venture-capital (VC) firms that have an interest in acquiring mortgage technology assets on the cheap. They know that we are getting into the best possible time to either buy technology assets or buy entire mortgage technology firms. They are also looking around at ways to bring multiple firms together to form a larger company. VC firms are very smart about knowing the right time to buy, and they are clearly stepping in.

So whether you are looking to buy a technology solution to build a business upon or you are looking to buy an entire mortgage technology firm, there are many other reasons why now is a great time to do so.

I've found that after 25 years the biggest risk to any technology implementation is not having the right people. During the boom times, it's almost impossible to find the right...

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