The First Rule for Spotting a High-Tech Winner

33 | By Michael A. Robinson

On Tuesday, I told you that the road to wealth was paved by tech.

I told you there was still hope for America – and for your retirement – because of the massive profits that the right high-tech stocks can generate.

And I promised to share with you my “blueprint” for high-tech wealth – the five-part strategy that I use to find these stocks … before they begin their rocketing surges.

Today I’m keeping that promise by sharing the very first component of that strategy.

And it’s a big one.

Just to be sure that I’m absolutely clear – and that you get the maximum benefit from today’s talk – I’m also going to tell you about a great company that fits this description perfectly.

Over the next several weeks, I’ll follow up with the rest of my blueprint – and with additional examples and recommendations, too.

So let’s start down this path to massive wealth … together.

Tech-Wealth System Rule No. 1: Great Companies Have Great Operations

It’s not enough to find an interesting company in a hot tech sector. To score the kind of life-changing profits I told you about on Tuesday, you have to invest in the truly exemplary high-tech winners … the companies that are changing the rules in computers, biotechnology, industrial materials, telecommunications, aerospace, and other cutting-edge sectors.

Those paradigm-changing ventures create markets where none existed, leapfrog existing technologies, and create products that their customers never even dreamed about … but then can’t live without.

Companies this innovative, this nimble and this explosive all share a common trait.

They all have great leadership.

Identifying such gifted leadership takes time. That’s why I’ve developed such a vast network of contacts, and I spend so much time rubbing shoulders with industry leaders – especially high-tech CEOs. This allows me to learn about their business plans, competitive strategies and bankable high-tech trends.

It’s because of this perpetual intelligence gathering that I know a man named Warren East is one of the most successful executives of the last 10 years – a period during which “disruptive technology” transformed countless longtime-tech leaders into perennial market laggards.

East and the hard-charging firm that he heads have created countless other winners. Apple wouldn’t be the company it is today without East’s contribution. Not by a long shot. Neither would Qualcomm Inc.

Nor would a slew of other firms that have ridden the mobile wave to industry prominence … and that created boatloads of profits for investors as they did so.

East serves as the CEO of ARM Holdings PLC (NasdaqGS: ARMH), which designs the chips and related devices used in many of the world’s leading smart phones and other digital products. ARM is part of the new breed of “fabless” semiconductor firms: It designs the microchips and lets other firms make them – a “factory-less” business model that has helped knock the once-invincible Intel Corp. off its monopolistic perch.

With my five tech-investing guidelines in hand, you could have spotted East as a guy to watch. Well, really as a guy you could trust with your hard-earned money.

And you would have been richly rewarded – I’m talking about huge gains here.

In my report on Tuesday, I mentioned a study that found that 57% of U.S. workers have less than $25,000 in savings.

Well, had you taken that $25,000 five years ago and invested it into East’s firm, you would be sitting on $196,000 right now (of course, that’s before Uncle Sam’s grasping hands grab his “share”).

That’s a return of more than 680%.

To my knowledge, there isn’t one “blue-chip” industrial stalwart that can deliver anything close to that level of profits.

That’s why I continue to insist that “the road to wealth is paved by tech.”

But don’t take my word for it. Just look at ARM Holding’s five-year stock gains compared to the so-called titans of tech:

  1. ARM Holdings, 680%
  2. Apple, 222%
  3. Google, 85%
  4. Intel Corp, 2.6%
  5. Microsoft, 1.2%

Of course, strictly speaking, ARM Holdings is no longer a small cap. It’s now worth about $19 billion. But just five years ago, it was a fraction of its current market size.

I was thinking about all this the other day when I read that East has decided to retire at the ripe old age of 51.

What a career he’s had…

He was originally hired to start the firm’s consulting business. Within three years, he made COO. He became CEO in just four more.

Over the next few years, as the history of the “mobile wave” is written, you can bet that East will be named to that sector’s Hall of Fame.

Heck, he might even be one of the inaugural inductees.

Clearly, I’m sad to see him stepping down after such an amazing run. But truth be told, his reason for leaving makes a lot of sense – and may, in fact, set the stage for ARM’s next growth surge.

East says he wants to step aside and let someone with more energy for the changing digital tech market take over.

Effective July 1, company president Simon Segars becomes CEO. He knows ARM – and the chip market – cold.

Segars joined the firm back in 1991 and has climbed steadily through the ranks. He is also a deep technologist who holds several patents. Since he has worked with East for nearly 20 years, he has learned from one of the best.

Segars takes over a company that basically has a license to print money. That’s what makes an intellectual property (“IP”) firm like ARM so valuable.

It designs the semiconductors for a wide range of digital devices – mobile phones, tablets, smart meters and DVD players.

And its strategy of letting other firms make the chips that it designs is so shrewd because it allows ARM to stay focused on inventing one “secret sauce” after another – and not on the challenge of manufacturing, which can add billions to the cost of products sold.

Given this approach, it’s no surprise at all that ARM makes so much money. It has operating margins of 37% and a recent quarterly earnings gain of 28%. It has $623 million in cash on hand and almost no debt.

Under East (and now Segars), ARM’s success doesn’t turn on the singular vision of a lone creative genius. The company’s technology is embedded in products sold by dozens of firms.

So no matter who wins or loses in the mobile-market wars, ARM will continue to gain.

Any way you look at it, that’s a great business model. ARM will continue to generate a huge profit for investors thanks to a strong business operation topped by one of the shrewdest leaders in that sector.

Next week, I’ll tell you all about Rule No. 2 of my list of Five High-Tech Wealth Creators. I can’t wait to show it to you.

It’ll blow your mind …

33 Responses to The First Rule for Spotting a High-Tech Winner

  1. Charles S. Wertalik says:

    I held a few (i.e. 20) shares of ARMH and sold them a few days ago, since it appeared the stock wasn’t going anywhere. But this seemed very strange, since the news concerning the company indicates that it really has its act together. Should I re-purchase these shares?

    • Michael Robinson says:

      Hi Charles,

      Thanks for your interest in my service and in taking the time to post a comment. I wish I could provide a simple yes or no answer. Here’s the thing. Since I’m not a registered broker dealer I cannot provide investment advice to single individuals. So, I can’s say whether you should repurchase or now.

      Having said that, generally with stocks I will exit a position if I’m satisfied with the gains I have made and feel it’s time to take money off the table. I try not to second guess that decision and get caught up in emotion rather than the reason that had me exit in the first place, or double my investment for that matter.

      It really all depends on your goals, investing experience, and what you intend to do with the gains you have already made. I hope that helps. Good luck with your investing.



  2. Roy Simmons says:

    Is ARM Holdings still a good investment I am RETIRED on a fixed income with an IRA and pension? I am interested but I don’t like FALSE HOPES!!

    • Michael Robinson says:

      Hi Roy,

      As I said in a previous reply, I’m not a registered broker dealer I cannot provide investment advice to single individuals. So, I can’t say whether you should buy now or not. Now then, when I launch my upcoming newsletter it will in fact have very specific buy and sell recommendations and will have plenty of details and facts so you can made a solid, informed decision.

      So, please be on the look out for that new service when it debuts in the next couple of months.

      Cheers and best wishes,


  3. fred shwom says:

    it appears that you are well armed armed to the teeth? good info any thoughts about BLFS.OB BIOLIFE ?? CURIOUS fred shwom

  4. Glen Gamble says:

    Thanks Michael…..your articles are an interesting read…..and both informative and educational. I have been stuck in the mining sector for nearly all of my adult life and have been in on the boom and bust cycles (mostly bust). I am one of the “those” older goats that all he has is about $25K to retire on….and that is not going to cut it.
    So for me to study and become informed in the world of stock trades in the tech sector is no easy matter. I keep getting lured back into silver, gold, and uranium mining stocks which has decimated my meager portfolio over the past months.
    I look forward to reading your material….Mr. G

    • Michael Robinson says:

      Hi Glen,

      I would be very cautious with metals investing at this point. By that I mean metals and mining stocks as opposed to physical gold and silver bought to protect your assets from a crash, should that ever occur.

      China is slowing its economic growth and that has put a real dent in many former high flying mining stocks. Molycorp has just gotten clobbered. Some of the stocks in the sector are off more than 70% in the past year.

      Having said that, I would only focus on special situations where say a junior miner has a unique advantage in a strategic location and a built-in customer base. With that you will be rewarded for getting through the downturn.

      As regards more knowledge about tech investing, please keep reading this e-letter and when my newsletter comes out give it a try. I think you will find my approach helpful and very cost-effective.

      I hope that helps,


  5. Cory D. Taylor says:

    Good Evening Mr. Robinson!

    Your data/Intel gathering skills are second to none and always on point! I truly appreciated the fact you allotted some time to “tip your hat” to Mr. Warren East, he is certainly worthy. I’m looking forward to where tis road takes me thanks for good read!


    • Michael Robinson says:

      Hi Cory,

      Well thank you in return. I very much appreciate your kind words. Yes, Warren East has done a great job in leading the Mobile Wave. Good luck with all your investments.



  6. Andrew Weiszmann says:

    You are right on target about ARMH- as one of the prime suppliers for Apple
    and some of the other high tech companies. In fact as you may know something totally new will be coming out of Apple and some others this year yet.
    I wish I knew what it is maybe you can find out .
    I see a total explosion of new products coming out even if the economy goes down again. I am really looking forward about development in reset stem cells. I had a Swiss company offer me to use their stem cell product but it was something derived from sheep so I said NAAAAAAAAAAAA. Thanks for you great insight on these issues.

  7. Dario C says:

    I believe someone in this organization said just a while ago to be very cautious when a CEO bails out from a company with unusual timing without some obvious reason. Best set your stops tight.

    Just as an aside, it would have been nice to have heard about this company here even one year ago. That would have been good for 100%. I would be quite happy with that.

    • Michael Robinson says:

      Hi Dario,

      I have written about a number of management changes at the top of major corporations over many years. What I worry about is an abrupt departure with no explanation of any kind or a statement that says the CEO left to “pursue other interests.”

      I don’t have a source at the top of ARM Holdings so I don’t have “inside” knowledge of this move. But I saw nothing that gave me any reason to suspect any thing other than what the company said. The CEO feels it’s time to move on.

      My gut tells me he pretty much accomplished about as much as he could at ARM and is looking to take a break from a very demanding job. Plus, he can’t be hurting for money at this point.

      Regarding stops, I use them regularly and set them based on my own investing rules. Please keep in mind that if they are too tight you can get stopped out only to have the stock bounce right back. I’ll have more to say about that in my upcoming newsletter.

      Thanks so much for your interest. Cheers and good luck with your investments,


  8. SHBOOM says:


    When do I see the Paid subscription offer…for a limited time normally $1,200 but now on special for $199.?

  9. Lola Mason says:


    I’m glad tech is and will continue to do well, however, are there any other sectors that have huge potentials of growth? To me, it seems a bit sad. Where are the new inventions of things, physical things one can feel, see touch? Are they any Edisons, Marconis, Fords out there?


  10. Dicken Hall says:


    I love your newsletter – I wish I had seen it a decade ago (If it was even in existence back then). I was just a dumb engineer then, working for someone else. I retired in the early spring of ’08 and put my $150k IRA into a trio of mutual funds (two of which did not do very well), one of which I have been fairly happy with, having lost (spent, in total) only about $50k, although I will admit to losing a lot more in that awful spring, before watching the fund grow up, up, up. But, my success has been NOTHING like yours, so I’m ready to start following your path – if I can.

    Obviously, I’m pretty new at this investment game, but numbers have always been “my thing”, so i’ve got a tentative “go” from my wife, so . . . I’ll be looking at your reports for the next few weeks, and then make a decision. Hope I don’t wait too long…


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