Technology Is Changing Quickly, But Big Returns Can Happen Slowly

Bucking conventional wisdom... Technology is changing quickly, but big returns can happen slowly... It pays to wait... 'Late' gains aren't too shabby... The trend is your friend... The scoop on Apple's next big product...

You don't need to take huge risks to generate massive returns...

Conventional wisdom says that you shouldn't get emotional about investing... that buying stock in a company doesn't have to be exciting. It just needs to generate an acceptable return on investment relative to the risk involved.

True. People aren't giddy after buying shares in Coca-Cola (KO) or Costco Wholesale (COST). These companies might be two of legendary investor Warren Buffett's favorite investments, yet he doesn't buy them for a thrill, but rather a good reason – they're boring and predictable companies that deliver results on a consistent basis.

But, on the other hand, investing can be an exhilarating experience, especially when it involves technology companies working on breakthrough products with potential for changing how the world works.

That kind of investing is also exhilarating because it can lead to thoughts of life-changing returns... the kind of returns that turn everyday shareholders into millionaires. You might think that this requires taking on a huge amount of risk...

But that's just not true.

In today's Digest, I (Brian Tycangco) will explain that when we look back in history, it reveals that the exhilaration that comes with investing in tech companies does not have to be paired with risk.

Said another way, investing in the next big tech companies can be more like investing in the Coca-Colas and Costcos of the world...

Today I will show how, with a little patience, investing in tech stocks can multiply your investment – safely.

Modern-day Rockefellers and Carnegies are wearing t-shirts and jeans...

There's no denying the wealth-creating power of technology companies.

In just 30 years, they've completely altered the landscape of the stock market... and the face of the benchmark S&P 500 Index.

Back in 1990, the five largest companies (by market cap) in the S&P 500 were oil company Exxon Mobil (XOM), cigarette maker Phillip Morris (PM), General Electric (GE), IBM (IBM), and Walmart (WMT).

Today, that same list has gone through a complete makeover. The five largest S&P 500 companies are all tech giants... Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Google/Alphabet (GOOGL), and Facebook (FB).

Apple, Microsoft, and Amazon are each valued at more than $1 trillion today, based on their share prices. And, except for Apple, the founders of each of these tech companies have an individual net worth running into 12 figures... that's triple-digit billions of dollars.

Amazon founder and longtime CEO Jeff Bezos alone has a net worth of nearly $200 billion. That's approaching the gross domestic product ("GDP") of Greece.

These are the success stories of startups turned into global icons.

But then there are tech companies – a lot of them – that never made it...

In fact, most companies with potentially world-changing technology never make it.

Indeed, about 90% of all startups fail. And most of them do so by the fifth year. That's a very high attrition rate.

Of the thousands of Internet companies that sprouted up during the dot-com boom in the late 1990s that were looking to turn traditional businesses into online successes, just a small percentage exist today.

People who excitedly invested in companies like Pets.com, eToys.com, or Flooz.com (an early mover in digital currency) have nothing left of their initial capital today...

These companies all had compelling products and enticing business plans, but just could not succeed in the marketplace... be it bad timing or products. In any case, they disappointed many investors who were banking on them being the "next big thing."

But there's a better way to reap the benefits of technology stocks that do take off. And I'm not talking about having a crystal ball or casting a wide net and investing in every tech startup that comes along so there's just no way you miss out on the few winners... (but offset them with a bunch of losses).

Here's what most people don't tell you, or realize, about successful tech investing...

You can wait for a new technology to mature and a trend to take shape...

Think of how you live your own life...

If a company develops a non-invasive way of removing an arterial blockage, you likely won't rush to the hospital looking to get the new treatment... You will likely wait until it's tested, proven, and reliable.

And if a company announces a smartphone that you can control using only your voice, most people will wait until it proves itself, and they hear good things, before replacing their existing and reliable iPhone.

New technology usually seeks to upend the existing norms – the way things are currently done. But that change quite often takes years, and in some cases, decades as people adapt and adopt it.

So, why would it make any more sense to buy shares in the change-making companies before their products have had a chance to fully catch on in the real world? It doesn't.

I'm here to tell you it pays to wait.

The results speak for themselves.

Sacrifice the early profits for a safer shot at the biggest gains...

Conventional wisdom says that the biggest profits to be made with technology stocks require getting in early before they explode in value.

But as we can see below, waiting for companies to prove themselves does not mean missing out on big gains.

If you waited until the start of 2009 – 15 years after its founding – to buy shares in Amazon, for instance, you would have missed the first 3,056% in gains, not an insignificant amount.

But if you waited until 2009 to buy Amazon shares, you could have still realized 6,035% of upside and with more confidence and evidence of how the company could dominate e-commerce and establish itself as an industry leader...

If you had waited for Tesla (TSLA) to start selling its Model 3 sedan in 2015, instead of buying shares when Elon Musk founded the electric-car company in 2003, you would have still gained 1,396%...

Compare that with leaving a 1,135% gain on the table during Tesla's riskier early years. It's a similar story with the largest companies in the S&P 500 that I mentioned... Huge gains were made "late"...

Computers were life changing during the 1990s, but it wasn't until Apple started producing its iPod music player that the company's biggest gains were realized.

The iPod, iPhone, iPad, and iMac revolution that followed Apple in the last 21 years handed investors the biggest gains yet in the stock's 42-year history. A whopping 67,301%...

And investing in Apple in 2000, and benefiting from that huge gain, did not come with the risk of buying into the company as a startup.

So, here's the point... The next time you see a company with a promising technology, there's no need to rush in all excited about how it will change the world... You can wait until it does because very often, the trend will go on longer than you think.

Once a company has established itself as a leader in its industry because of that technology – or not – the gains will still be as great as the gains you would have made at the early stages... And the risks you remove by waiting are substantial.

Today, for example, I believe Apple still has much more upside ahead...

The company continues to roll out new products... and I think Apple's next device will be the biggest not just in its company's history, but in your lifetime. Don't just take my word for it, though...

Apple CEO Tim Cook predicts that what I'm talking about will "change the way we use technology forever"... that we will one day "wonder how we live without it"... and he's so excited, "I just want to yell out and scream" about it.

But he hasn't just yet... And savvy investors who realize this – before Apple makes its official announcement – could make massive gains in the coming months in one of the world's largest companies.

I've been writing about stocks for more than 20 years. Since then, I've recommended more than 100 triple-digit winners. Yes, more than 100, including one that shot up an incredible 3,488%.

But my new recommendation could turn out to be an even more lucrative prediction than any of those calls... That's why I've put together a brand-new presentation with everything you need to know about this big prediction.

In it, you'll see the patents Apple has applied for and received – all potentially related to this new device... hidden lines in Apple's developer code... and the reports of a secretive tech analyst recognized as "the man who reveals all of Apple's secrets."

He predicts big news is coming from Apple within the next few months.

If this sounds interesting to you... and you want the chance to get ahead of Apple's next blockbuster device and potentially cash in on massive gains... click here for more details right now.

New 52-week highs (as of 8/2/21): AutoZone (AZO), Quest Diagnostics (DGX), Lynas Rare Earths (LYSDY), Lonza (LZAGY), Nuveen Municipal Value Fund (NUV), Novo Nordisk (NVO), ProShares Ultra Health Care Fund (RXL), and S&P Global (SPGI).

In today's mailbag, feedback on yesterday's Digest about the debt quagmire in Washington, D.C., and how to prepare for the fallout... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"[A] gold-backed U.S. dollar kept the banksters/politicos from overspending and creating excess debt. With decades of MMT and no-limit spending we're at the tipping point of massive inflation. DeFi, if it's allowed, may finally put the brakes on crony funding programs, and put the money into more thoughtful projects. But... the powerfully connected got gold backing decoupled into fiat currency... so will the powerful allow a pivot to decentralized finance and risk losing power/control of their lucrative system?

"GASP... would that mean DeFi would control spending/debt like the gold back currency did last century? Would that policy even be allowed if the Zombies faced a fatal demise?

"Seems to a lot of us the reckoning is coming one way or the other... be it voluntary or not." – Paid-up subscriber Rob C.

"Don't forget to add in the Employee Retention Credit (ERC) money they are promising...

"Up to $33,000 per employee x 126,296,145 full-time employees = $4.1 trillion credit back to businesses thru the end of 2021!

"And then add in the carry back tax refund to recover/refund taxes paid in the past three years to offset losses in 2020 for all the businesses that were shut down in 2020 and had massive losses like mine.

"Get ready for another quick jump in the money supply by $5 to $10 trillion to cover all the credits and refunds and infrastructure and free money they want to give out!

"$28 trillion going to $40 trillion debt by the end of 2021!" – Paid-up subscriber Travis G.

Good investing,

Brian Tycangco San Juan City, Philippines August 3, 2021