Today we’re talking about pivotal step changes in technology and investment history.
Because another one is coming. Far sooner than you may realise…
I have been researching this coming step-change for well over three months. Because I had a hunch — and now I am absolutely convinced — it’s going to make early investors seriously wealthy in 2018.
I mean…SERIOUSLY wealthy.
The smart money is already moving on this. And certain stocks — almost certainly ones you’ve never heard of — have started to take flight in just the last three months.
We’ll cover them later this week.
But what do I mean by pivotal ‘step change’?
What most people don’t realise is the rate of change, full stop, is now increasing at an exponential rate. It’s getting faster every year.
This process creates losers as well as winners.
For example, look at how the top five companies in the world have changed over the last two decades:
Source: Visual Capitalist
[Click to open new window]
The rise of Silicon Valley is clear to see.
Big oil, big finance and traditional retail are the losers being shoved aside.
Ruthless capitalism in action.
But it’s not just technology that creates these waves of change.
There are always several big trends sweeping powerfully through the economy. It could be demographics, or lifestyle habits, or even just general economic conditions.
You’ve heard about the face melting gains.
1,456% returns in weeks, even just days.
Hundreds of millions of dollars raised on a nine-page business plan.
So, is this just a period of euphoric madness? A time we’ll look back on as yet another example of mass delusion?
Or is it instead a pivotal moment?
Something savvy investors will make their fortunes from?
My answer is that it’s a bit of both.
Or…to be more precise…
People focussing ONLY on cryptocurrencies are missing a bigger — and potentially FAR more profitable — picture
It’s hard to spot a pivotal step change moment when you’re right at the start of it.
Or it’s very easy to get distracted by a small part of that step change.
People didn’t get, at all, how big microchips were when they were introduced in the early 1960s.
When the internet came along, people knew it was something special. But in the early days, what got people really jazzed about the internet seems positively quaint today. The following images showing how we tried to get our head around the early internet exemplify this…
That’s just a fact of investment life.
At the start of big, world-changing trends, people tend to get the scope of them all wrong.
Or, at least, they focus on the wrong elements.
It’s my contention that this is precisely the case with bitcoin and cryptocurrencies
See, we invest and trade at the hard, right-hand edge of the chart. A place where no one knows what will happen next.
Take virtual reality for instance.
This was big news back in the 1980s.
And in the early 1990s technology firms, especially video games companies, fell over themselves in a rush to capitalize on the VR buzz.
They brought out products, and investors plunged in. But it was too early for the technology, and it failed to take off.
We’re talking pre-iPhone days here. The products definitely lacked a ‘cool’ factor!
Check out the ‘hand staring’ competition going on here:
This is a photo from NASA, who were actually early innovators in VR.
Amazingly, NASA actually got it right, but with the wrong technology.
Some 30 years later, people do indeed stare at their hands every day, but only while holding a smartphone.
And they’re usually looking at themselves, too!
Who’d have guessed that?
At the time you may have thought the invention of VR was an important moment. But it turned out not to be.
The technology was simply too early to be of practical use. That’s changing now, and you will see a host of VR 2.0 companies coming soon.
Timing is everything.
The stars need to align. Or even the best ideas can fall by the wayside.
How about a more recent example? One that was pivotal.
As you’ll very well know…
The release of Apple’s iPhone took place on 29 June 2007. And with it, the smartphone revolution took off.
This turned out to be a very important moment.
For investors of course.
But it’s not just about the huge profits made. It’s also about the direct impact on the very way you and I live today. And everybody else in the world.
As Wired magazine recently stated:
‘When Apple released the iPhone in 2007, the world understood it as a gadget, a novelty, a cool thing you plunked down a handful of cash for if you were lucky enough to have the money. Then you just needed to figure out what to do with it. At first the answer was: play games and take pictures of things, text and talk.
‘A decade later, the smartphone has become the lifeblood of social interaction and upward mobility.’
For people with the least money, the smartphone takes on even greater importance.
If you can’t afford a computer or an at-home broadband connection, the smartphone becomes your primary way of getting online.
You can apply for jobs via your phone, arrange childcare, or trade shifts with your co-workers.
For homeless people who need to use the internet to find beds at shelters or apply for jobs, a smartphone can be a literal lifesaver.
And, of course, investors have cleaned up.
Apple [NASDAQ:AAPL] was up 1,112% on the 10th anniversary of the original iPhone release in June this year.
Compare that to 60% increase in the general market, the S&P 500 index.
Or how about these gargantuan returns.
An obscure Finnish smartphone games developer company, Supercell, went from a $0, four-man start-up to a $10.2 billion company.
In just five years!
That’s exponential growth.
And Chinese app developer Tencent — who bought 87% of Supercell — has seen its shares grow a whopping 5,596% in the last decade.
App development wasn’t even an industry 10 years ago.
The growth in Chinese smartphone related companies has been particularly astronomical as it coincided with an economic boom.
When two trends like this exist at the same time, the gains can be particularly huge.
You see, the growth rates reinforce each other and create an exponentially large outcome.
But let’s get back to what I said at the start was the single biggest investing theme out there at the moment — cryptocurrencies. It’s a huge trend, make no mistake. But is it one of those pivotal, historical ‘step change’ moments?
I would say it’s PART of one…
I’m a big fan of cryptocurrencies.
From an economic point of view, I see them as a great leveller. Ready to counter the crony capitalist outcomes created by corrupt central banks.
As former Vice President of the US, Al Gore stated:
‘I think the fact that within the bitcoin universe an algorithm replaces the function of the government…[that] is actually pretty cool.’
A literal disruptor of governments.
That seems like a pivotal invention, doesn’t it?
I think it’s a very big deal.
And I’ve been busy as lead analyst of Port Phillip’s The Secret Crypto Network, getting people into cryptos that are making them double and triple digit gains.
But here’s the thing…
I think cryptocurrencies themselves are only the beginning. The tip of the investing iceberg, so to speak. Not quite a sideshow, but certainly not the star attraction.
Don’t get me wrong, I’m still a long term crypto bull.
But for investors, I think there could be far, FAR more compelling opportunities in the stock market in 2018.
They are an offshoot of cryptocurrencies.
They are what happens next.
Unlike cryptocurrencies, this area isn’t anywhere near full swing yet.
Not in the short term. And definitely not in the long term.
Which means huge returns are still on the table.
I’m talking about a world ‘Beyond Bitcoin’.
And this is the central theme of a bumper investment research report which I’ll be releasing next Tuesday.
More details tomorrow…
Editor, Money Morning