Monday’s Mail: Albert Einstein, Vladimir Putin, and Gordon Gekko
The headline reads like the beginning of a “walk into a bar” joke, but my newsletter today actually touches upon all three people. Let’s start with Einstein, the scientific genius whose theory of relativity forever disrupted our notions of the universe.
Einstein once said: “Technological progress is like an axe in the hands of a pathological criminal.” That’s one of the best (and most colorful) descriptions I’ve encountered about the social and business ramifications of tech disruptors.
As the tech-heavy NASDAQ continues to reach new highs, now’s a good time to answer recent letters devoted to the tech sector. I’ve cherry picked the emails that should interest you the most.
Quick note: If I haven’t answered your letters in this newsletter or individually via email, please be patient. Due to the sheer volume of mail and the often detailed nature of your questions, I can’t immediately get around to everyone. Okay, let’s dive into the electronic mailbag.
Cleaner modes of transportation…
“I’m convinced that electric cars are the wave of the future. They run on lithium batteries, so do you think lithium stocks are a good idea right now?” — Alan G.
I wrote about lithium in the February 15 issue (Here’s Your Chance to Invest in “The New Gasoline”). The silver-white metal is used to create heat-resistant glass, ceramics and lubricants.
The biggest growth driver for lithium is the burgeoning demand for lithium-ion batteries used in electric vehicles.
Elon Musk, co-founder and CEO of Tesla (NSDQ: TSLA) has indicated that he seeks a lithium supply to fill enough batteries to power 500,000 of the company’s electric vehicles per year by 2020.
Demand from clean transportation is a powerful tailwind for lithium-related companies, especially mining operations. However, you should be wary of the thinly capitalized penny mining stocks that have been springing up to exploit the lithium bonanza. Stick to established, large-cap players or you could get burned.
Up, up and away…
“The aviation sector appears to be thriving, defense in particular. What about the avionics and electronics companies that supply the cockpits?” — Brian T.
Look no further than the Growth Portfolio of our flagship publication Personal Finance, which holds Honeywell International (NYSE: HON).
Honeywell is a major maker of avionics for commercial and military aerospace, as well as a host of electronics for homes and businesses.
Despite lower energy costs overall, one of the biggest expenditures for aviation operators is fuel. For these profit-starved operators, the equation is simple: the lighter the aircraft, the less fuel it burns. New-generation aircraft are placing greater demands on pilots, requiring avionics manufacturers to squeeze more capabilities into fewer and smaller components.
These economic imperatives are boosting sales of the ultra-sophisticated, miniaturized avionics provided by Honeywell. The company’s electronics can be found in cockpits everywhere.
With a market cap of $96.1 billion, Honeywell commands a vast geographical presence that benefits from rising military spending around the globe.
In his State of the Union Address on February 28, President Trump reiterated his vow to massively increase defense spending, a policy that’s certain to boost Honeywell.
Jim Pearce, chief investment strategist of Personal Finance, added Honeywell to the Growth Portfolio on May 11, 2011. Since then, the stock has generated a total return of 137.17%.
Jim also serves as chief investment strategist of Breakthrough Tech Profits. As such, he recognizes that Honeywell provides the best of both worlds: it’s a diversified industrial giant as well as a tech innovator.
Russian spies and the New Cold War…
“I keep reading about Russian cyber attacks against American politicians. There must be an investment play in all of this international espionage.” — Dan W.
The evidence is clear that hackers in Russia were behind cyber attacks against the Democrats in the 2016 presidential election. Less clear is whether this brazen cyber espionage was initiated at the behest of Russian President Vladimir Putin, to help Donald Trump. But signs point in Putin’s direction.
As hacking attacks of all types grow in frequency around the world, cyber security stocks are poised for market-beating growth and should weather the expected economic downturn in 2017 better than most investments.
One of my favorite cyber security stocks is Cisco Systems (NSDQ: CSCO), a leader in the field. The company’s networking equipment, routers and switches are found in public and private offices around the globe. End users are increasingly reliant on Cisco technology to foil cyber criminals.
In addition to continual innovation, one of Cisco’s biggest advantages in the cyber security space is the company’s pervasive client base, which has already installed the company’s equipment. That’s a ready-made “annuity” for the company of continual upgrades.
Good advice from a bad guy…
One final thought, courtesy of Gordon Gekko.
Oliver Stone’s 1987 movie Wall Street introduced the world to one of the most unforgettable heavies in cinema history: the corporate raider and financier, Gordon Gekko.
Michael Douglas won a Best Actor Oscar for his vivid performance as Gekko, the ruthless and cynical stock market manipulator whose reptilian nature is reflected in his name, which is a type of lizard.
And yet… some of the investment advice that Gekko imparts in the movie is pretty darned good. Stone, who wrote and directed the movie, says he learned about the markets by observing his father Louis, who worked as a stockbroker for more than 50 years. This knowledge shows in the script.
At one point in the movie, Gekko offers this quote from Sun-Tzu’s The Art of War: “Every battle is won before it’s ever fought.”
In other words, through preparation and doing your homework, you can guide the future outcome of your investment returns. Consider this newsletter as your preparation and homework, for winning life’s daily investing battles.
Got a question? Send me a letter: firstname.lastname@example.org — John Persinos
It’s time to rethink the old rules…
You’ve heard it from countless investment advisors: the smartest way to invest is to find quality stocks and hold them forever.
Well, sure, that works — as far as it goes. But it’s no way to get rich.
As the reader letters in today’s newsletter demonstrate, the world is beset by fast-moving change. Groundbreaking technologies are upending old ways of thinking and investing.
Jim Pearce and his team have put a trading system called Rapid Profits Matrix to the test and discovered that it outperforms “buy and hold” up to 4.9 times in head-to-head competition… all without risky day trading or options. Learn more by clicking here now.