Tech Under Trump: Bet on The “Picks and Shovels”
American companies that are developing breakthrough technologies should get a big boost from President Trump’s tax and trade policies. To use one of our president’s favorite words, the investment possibilities will be… tremendous.
In a recent meeting with the technology sector’s top leaders, Trump proclaimed: “I’m here to help you folks do well.” One fast-growing field poised to enjoy tailwinds in the Trump Era is the Internet of Things (IoT).
Jim Fink, chief investment strategist of Options For Income and Velocity Trader, asserts: “The Internet of Things is a huge market opportunity.”
IoT devices exchange information with each other via a central server, without a human being as an intermediary. They use sensors to communicate actionable data, such as fuel levels, room temperatures or inventory capacities, through a wired or wireless network to a software application. IoT is giving birth to smart homes and utility meters, driverless cars, self-calibrating medical devices… you name it.
As Jim explains, the best way to profit from the IoT trend is to pinpoint the stocks of companies that provide the vital, proprietary technology necessary for IoT to work — in other words, invest in the makers of “picks and shovels.” Below I examine one of our favorite plays in this regard, and it will probably shock you.
The essential tools of the IoT gold rush…
Fink fleshes out the metaphor: “During the California Gold Rush of 1848-52, more than 250,000 people traveled to the Golden State in the quest for riches. All of these gold prospectors had to buy picks and shovels in order to search for gold, but few actually got rich.”
“Although few gold miners got rich, plenty of others did get rich from the gold rush — but it had nothing to do with finding gold. The key to wealth was in supplying the mining tools for all of the gold miners…
It is extremely difficult to predict in advance who the winners and losers are going to be in a business endeavor, but the one certain way to make money is to provide all of the competitors with the tools they need to participate in the quest for success. A modern-day analogy to picks and shovels is intellectual property.”
Jim Pearce, chief investment strategist of Personal Finance, elaborates on how Trump will benefit the tech companies that make the picks and shovels in hot areas such as IoT:
“Two seemingly disparate populist items on Trump’s agenda — protectionism and tax cuts — will result in a third measure designed to offset the potentially harmful effects of the other two. Namely, corporations that would like to repatriate offshore money at a much lower tax rate can do so provided some of it is spent immediately on tax-qualifying investments that benefit the companies while also stimulating the U.S. economy.
I expect many of those companies to spend that cash snapping up other businesses, which is why 2017 will likely see a surge in mergers and acquisitions in the tech sector, fueled by special tax incentives designed to mitigate the damage from the abandoned Trans-Pacific trade deal…
Meanwhile, a new generation of small, upstart tech companies owns intellectual property to exciting new developments that have the potential to open doors in high-growth markets such as… the Internet of Things.”
As Jim predicted, President Trump on Monday signed an executive order expressing his intent to pull the U.S. out of the Trans-Pacific Partnership.
Here’s a play that simultaneously leverages Trump’s policies and the rise of IoT: PF Growth Portfolio holding IBM (NYSE: IBM). Yep, you read right: the supposedly stodgy and boring IBM.
Tech’s latte-sipping elitists are wrong…
The Millennial hipsters in Silicon Valley habitually dismiss “Big Blue” as a doomed dinosaur, but these technology snobs are way off base.
The granddaddy of information technology is aggressively reinventing itself, by shedding its legacy mainframe business and pivoting into new growth areas, such as big data, health care information management, and in particular IoT.
The Armonk, N.Y.-based behemoth is using its enormous cash hoard to gobble up a slew of smaller, innovative tech companies that control proprietary know-how. These little guys make picks and shovels, which IBM is in turn wielding to mine technology gold. The new business environment under Trump will facilitate IBM’s acquisition-driven strategy of “intra-preneurship.”
When the naysayers were prematurely writing IBM’s obituary, Jim Pearce knew better and bought the stock at a bargain valuation back in December 4, 2015. Since then, IBM has rewarded the Growth Portfolio with a total return of nearly 30%.
IBM’s turnaround surprised Wall Street but not Mr. Pearce, who invariably displays a knack for spotting the madness of crowds… and making money by betting against it.
Mining Gold For Your Nest Egg
Speaking of picks and shovels…
Jim Fink has developed a proprietary technology of his own. And it’s your key to lasting wealth. He has used his special trading technique for almost 30 years… and amassed a multi-million dollar fortune doing it.
Jim’s system is so simple, thousands of regular folks are already using it. But you WON’T see it covered on CNBC or Bloomberg.
Now Jim wants to share his investment secret with you. Click here for his full presentation.