It's Good to Be 'Trump Lucky'
Dear subscriber,
Goldman Sachs (GS) CEO David Solomon is on his way to a big payday.
Naturally, we want CEOs to have their incentives aligned with shareholders. Companies will deliver payouts to management when revenue or earnings surpass a certain level... or shares reach a certain price.
According to an incentive plan set in 2021, if Solomon could get Goldman's share price above $602 – and keep it there – he'd collect a $50 million payout. (There are some additional performance goals he'd need to meet as well. But this is a big one.)
As you can see, Solomon is in the money. Goldman's share price just rocketed from $510 to $600 (briefly reaching $602 earlier this month)...
But it wasn't Solomon who got it there. It was Donald Trump.
Investors think that with Trump at the helm – and different staff in the U.S. Federal Trade Commission – we'll see a huge wave of mergers and acquisitions (M&A) due to lighter regulation. In turn, firms like Goldman that derive fees from M&A will profit.
And it's not just Goldman's stock that's rising on these expectations... Shares of all the big investment banks are up across the board.
Sometimes, it's better to be lucky than good.
You can do all your homework, find the right investment... and in the end, it could be some surprise that comes along and makes you a bundle.
The "Trump trade" is indeed driving up all kinds of assets today. And as an investor, it's great to be on the receiving end of a lucky trade from time to time.
Yes, Trump will open the door to M&A. He will also open the door to crypto... and open it wide.
So far in the crypto Trump trade, luck has outpaced the good again. But we think that will shift over the next year...
Yesterday, I spoke with our crypto expert here at Stansberry Research, Eric Wade. He's undoubtedly the best crypto analyst working in the business.
Eric told me this market rally is a weird one: "It's all bitcoin and meme coins."
To my thinking, you can divide the crypto market into three parts...
- The big cryptos like bitcoin
- Weird junk like Dogecoin (there's a name for these kinds of coins that we won't print in our pages, but it rhymes with "hitcoins")
- And other coins attached to interesting projects that use the blockchain to build real products and businesses
Right now, bitcoin is soaring...
And meme coins like Dogecoin are also rising...
Most of the real crypto projects have been left behind, though we think they're going to follow and produce real gains for investors soon.
As we briefly touched on last week, current regulators have made the crypto market a nightmare. And that's especially true for the useful crypto projects.
It all depends on what counts as a "security"...
To be considered a security, an asset has to meet four criteria: 1) It is an investment of money, 2) it comes with an expectation of profits, 3) it's part of a common enterprise, and 4) it relies on the efforts of a promoter or third party to make money. (This is known as the Howey Test.)
If the U.S. Securities and Exchange Commission ("SEC") considers your token a security, you have to register it as a security, follow lots of rules, and take on lots of extra costs.
The SEC has declared that bitcoin and Ethereum aren't securities. They're closer to currencies, since no one is building them up as businesses.
Meme coins fall into the same category. Dogecoin is just a joke based on a dog. No one is promising profits based on a common enterprise, so meme coins don't get regulated as securities.
But if you're building a real business on the blockchain... well, that's a security. So you need to register.
Unfortunately, when these kinds of businesses have taken the high road and tried to register as a security, the SEC has made it nearly impossible.
For instance, the largest crypto exchange in the U.S., Coinbase Global (COIN), has spent the past several years practically begging for a way to register itself as an exchange with the SEC. It has even offered to follow any rules the SEC wants.
Instead, the SEC charged Coinbase with operating as an unlicensed securities exchange.
In response to the allegation, Coinbase explained that it had undertaken "exhaustive and fruitless attempts – dozens of meetings and hundreds of hours of communications – to register a securities trading platform with the Commission since at least 2018."
The SEC just won't let it.
It's the same for many smaller projects. Paradigm, for example, is a research-driven crypto investment firm. It invests in early-stage crypto projects and companies, helping them get their feet off the ground. As Paradigm's policy wing explains...
Recounting the history of crypto projects that have tried to register their tokens with the SEC is like taking a walk through a cemetery. As we have shown in [our case studies], the projects that attempted to come into compliance with the SEC's registration requirements expended great effort and resources yet ultimately most of them failed, and those that persist do so in a state of uncertainty and comparative disadvantage.
We love legitimate crypto innovation.
Bitcoin is an interesting store of value and common currency. The meme coins... we can mostly take or leave.
But Eric is constantly finding real projects that are turning the blockchain into real businesses and services.
One that's enjoying some very public success today... Polymarket.
Polymarket is the world's largest prediction market. And it got millions of dollars in free publicity as folks tracked election-market odds based on its betting platform... It even got the election outcome right.
Its prediction market is built on the Polygon crypto network. And prices of Polygon's native token – POL – were rising following the election.
Then, they fell this week, when the FBI arrived at the home of Polymarket's CEO, Shayne Coplan, to confiscate his phone and other electronics...
This will end soon. With new incoming leadership at the SEC, clear rules will be implemented.
And they don't even have to be crypto friendly. They just have to be crypto possible.
In this month's issue of Stansberry Innovations Report (which we'll get to below), Eric says...
Over the next year or two, we anticipate AI advances that integrate cryptos for customer payments and transaction tracking... the creation of a truly private and secure digital dollar... a greater willingness of traditional banks to process crypto payments and deposits... and blockchain-based identity verification to reduce identity theft.
Bitcoin and meme coins have ridden the Trump trade. Like David Solomon, they're lucky.
But as the new regulatory environment for crypto develops, the real projects will flourish.
This won't be a momentum trade... or a bubble. This will be the innovations that crypto has promised for more than a decade finally getting off the ground and building wealth.
And Eric Wade and Stansberry Research will be here to track this shift for you.
What Our Experts Are Reading and Sharing...
AI progress may be reaching its limit. So far, progress has been driven by "scaling" – in other words, bigger models come out smarter than the smaller ones. Experts have argued over how long that simple equation will hold, with some thinking we'll hit the limit soon. Bloomberg reports that OpenAI, Google, and Anthropic are all having trouble hitting goals for the next generation of AI.
A few months ago, we told you that inflation was no longer a hot topic. And as our colleague Corey McLaughlin reported in the Stansberry Digest, the market gave the latest inflation report a shrug. The big economic data to watch will be the next jobs report, due out on December 6.
How tough will Trump be on China? Looks like very tough. He has appointed Florida Senator Marco Rubio as our next secretary of state. Business Insider notes that Rubio is a "China hawk"... and that China has sanctioned him twice in the past. He has even labeled China as the "gravest threat facing America today."
New Research in The Stansberry Investor Suite...
If you bought a car in 2022, John Engel and the Stansberry Innovations Report team say you may have a surprising piece of technology working behind your dashboard...
See, they watch the technology supply chain closely. And the pandemic led to manufacturing shutdowns across the globe. Even as late as 2022, the semiconductor industry was still in complete disarray.
But people still wanted to buy cars. And automakers wanted to produce them. So some went as far as to rip the semiconductors out of washing machines and repurpose them for cars instead.
In other words... you may be driving a washing machine on wheels.
The good news: The industry is getting past its supply-chain woes – no longer needing to resort to using chips from washing-machine parts. Not only that, but auto manufacturers are using more chips per vehicle today, as electric cars get smarter, AI gets integrated, and self-driving cars creep closer to a technological reality.
In this month's issue of Stansberry Innovations Report, the team highlights a company behind a family of processors making big advances in the auto sector.
This company is at the forefront of three major technological and global trends... and it's trading at a huge discount to its peers.
Stansberry Investor Suite subscribers can read the entire report here.
(This issue also includes more of Eric's analysis of today's crypto market. So be sure to check it out.)
If you don't already subscribe to The Stansberry Investor Suite – and want to learn more about our new special package of research – click here.
Until next week,
Matt Weinschenk
Director of Research
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