‘One company has the key to it all’

Thursday, 5 September 2019
Adelaide, Australia
By Bernd Struben

  • An $85 billion growth story
  • In the mailbag

There is a lot of value in the small-cap space within technology and technology components. I’m a big believer in the continued growth of remote and virtual technologies.’

Michael Burry, Scion Asset Management

We continue today with our focus on technology. Alongside the massive potential gains on offer when revolutionary tech stocks make good.

Hence the opening quote, lifted from an interview with Bloomberg News on Tuesday.

If you’re like me, you probably associate Michael Burry with Christian Bale, who portrayed him in The Big Short. It’s a great film. It shows how Burry made his clients (and himself) millions by betting against collateralised debt obligations (CDOs) in the leadup to the US housing meltdown in 2008.

These days Burry says he’s ‘100% focused on stock-picking’. He doesn’t limit his investments to tech stocks. But, in my view, his emphasis on the small-cap space of technology companies is spot on.

Now small-cap stocks are inherently riskier than the big players like Facebook or Alphabet (Google). But when a small company’s new technology cracks into mass market adoption, their potential is explosive.

Let me give you a real life example.

Here’s a snippet by Sam Volkering, from Revolutionary Tech Investor back in December 2013.

It’s a future of interaction and immersive technology. And one company has the key to it all…

‘[W]ith this company’s innovations and tech, humanity can move forward faster than ever before. It will open up medical and scientific discovery. It will help the world be smarter. It will make the immersive world a reality.

That company, folks, was NVIDIA Corporation [NASDAQ:NVDA]. Now granted, NVIDIA wasn’t exactly a small-cap, even at the time. But it was still dwarfed by the likes of Netflix and Amazon.

So how did Sam’s recommendation fare?



chart image
Source: Port Phillip Publishing
Click to enlarge

You’re reading that correctly.

By the time Sam recommended readers sell NVIDIA last year, the share price had gained a whopping 1,431%.

In case you’re wondering, Sam’s sell recommendation was also timely. In intraday trading today, NVIDIA shares are worth US$168.76.

Of course, not all of Sam’s stock tips will deliver these kinds of gains. When a company’s tech doesn’t pan out or a competitor beats them to the punch, its share price can fall hard. Which is why we like to remind you never to invest money you can’t afford to lose.

Still, it only takes a few outsized gains to make up for the stocks that don’t cut it.

If you haven’t already, you can get the full scoop on the newly expanded Revolutionary Tech Investor by clicking here.

As I explained yesterday, Revolutionary Tech Investor recently absorbed Sam’s three other premium investment services: Sam Volkering’s Crypto Tech Investor, Microcap Trader, and Microcap Global Trader. But for a short time — until midnight on Monday, 9 September — you can still subscribe at the old price.

That price, by the way, was set when the service launched in June 2013. And if you sign up now you’ll never pay more than that, so long as you maintain your subscription.

But at the stroke of midnight on Monday, James Woodburn is upping the cost by $2,000 per year. And it won’t be coming back down.

So what are you waiting for? Click here for all the details, including a generous money back trial period, on what we consider the best tech stock trading service in Australia.

More, after a look at the markets…

Markets

Overnight, the Dow Jones Industrial Average closed up 237.45 points, or 0.91%.

The S&P 500 closed up 31.51 points, or 1.08%.

In Europe the Euro Stoxx 50 index finished up 30.09 points, or 0.88%. Meanwhile, the FTSE 100 gained 0.59% and Germany’s DAX closed up 114.18 points, or 0.96%.

In Asian markets Japan’s Nikkei 225 is up 483.92 points, or 2.34%. China’s CSI 300 is up 1.66%.

In Australia, the S&P/ASX 200 is up 66.60 points, or 1.02%.

West Texas Intermediate crude oil is US$56.01 per barrel. Brent crude is US$60.51 per barrel.

Turning to gold, the yellow metal is trading for US$1,548.22 (AU$2,277.46) per troy ounce. Silver is US$19.52 (AU$28.71) per troy ounce.

We’ve been keeping close track of the soaring gold price over the past six months. As well as the rocketing share price of many gold stocks. Meanwhile, in the background, gold’s poor cousin has been having a stellar run of its own.

How stellar? Have a look at the six month chart below:



chart image
Source: Bloomberg
Click to enlarge

The orange line is the ASX 200. It’s up a respectable 6.3% since 6 March. The black line represents silver. It’s gained more than four times as much…up 28.5%. With many of the same forces driving gold higher also buoying the price of silver, this trend could have a long way to run yet.

If you’re thinking about increasing your precious metals holdings, don’t forget about silver.

In the world of cryptocurrencies, one bitcoin is worth US$10,510.22.

The Aussie dollar is worth 67.98 US cents.

An $85 billion growth story

Staying with the phenomenal growth potential of technology stocks, a new report estimates the Aussie tech sector will grow by 70% over the coming decade.

From The Australian Financial Review:

The tech sector has armed itself with a new report showing it could contribute up to $207 billion a year to the economy by 2030, as it battles for a more favourable policy approach from the government.

That figure would represent a 70 per cent mark-up from what the industry contributed in 2018 – $122 billion, according to the report…

The caveat to this estimate is the government needs to get off its keister and push through some overdue reforms. Chiefly in the realm of research and development (R&D) incentives.

With the Aussie economy in need of every bit of help it can get, let’s hope Morrison takes heed.

In the mailbag

We’ve seen some big changes at Port Phillip Publishing over the past few months.

As you likely know, James Woodburn took over the mantle of publisher from Kris Sayce. And a number of our newsletters have been consolidated into single publications, giving the editors more time to focus on bringing you their best ideas.

In Sam Volkering’s case this means that Sam Volkering’s Crypto Tech Investor, Microcap Trader, and Microcap Global Trader are all now part of Revolutionary Tech Investor.

Which has led to some questions. Like this one, from Alliance member Kate:

Dear Bernd

I am an Alliance member at Port Phillip and have been enjoying Sam’s work for some time.

I am not sure whether your new subscriber system is outside the Alliance membership. Hopefully I am still included.

With Kind Regards

Glad to hear you’ve been enjoying Sam’s work.

And rest assured, the newly expanded Revolutionary Tech Investor is still very much a part of our Alliance membership.

If you’re not an Alliance member (who receive everything we publish for life) or already a Revolutionary Tech Investor subscriber, don’t forget to check out this remarkable offer on the expanded service.

And remember, that offer expires at midnight next Monday.

Cheers,
Bernd