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You Asked About Our “Slumbering Giant” Pick – And Michael Responds

9 | By Michael A. Robinson

I’m always on the lookout for profitable tech investing ideas. And twice a week in this column, I share my discoveries with you.   

One of the things I really enjoy about this “job” is hearing that you are using our advice, recommendations, and strategies to build meaningful wealth.

I jokingly call this a “job” because it’s really more of a mission. More than half of America’s households have little or no net worth. And I know that technology stocks offer the single best solution to that problem.

Therefore, I simply want to help you build your retirement savings and overall wealth – through tech. I want to help you understand everything about investing in technology stocks, from my five-part strategy for spotting winners to my rules for navigating choppy markets.

So today, I’m doing that by answering your questions and addressing your concerns. After all, knowledge equals power… and profits…

Bringing You “Spot On” Winners

Let’s start with our May 2 conversation about Windstream Holdings Inc. (NasdaqGS: WIN), a high-yielding $9 stock that we told you was poised for a big jump.

Q: This is about as good as it gets because this man “gets” it. He is spot on, and every trade I have made based on his recs has been a good one. Not sure HOW he does it for free, but I wont look this gift horse in the mouth.
Deborah G.

A: Thanks so much for the nice compliment. I very much appreciate it and am glad to see that your investments are going well. That’s why I founded Strategic Tech Investor in the first place – to tap the power of high tech to help people achieve life-changing gains.

By the way, WIN is up more than 10% since May, more than doubling the Standard & Poor’s 500‘s return over the same period. And that doesn’t count the nearly 10% dividend yield you’re getting.

In our May 23 conversation, I told you about a “special situation” opportunity involving Applied Materials Inc. (NasdaqGS: AMAT). I suggested this former “slumbering giant” could be a great way to play the semiconductor boom.

The piece drew this question about investing tactics…

Q: I have up to $10,000 to invest. Do you suggest putting it all in AMAT or a proportionate amount?
Joe B.

A: Joe, I’m glad you asked this question. It cuts right to the heart of a key investing principle – portfolio management. The short answer is “absolutely not.”

Let me explain. I’m a niche investor focused on the wealth-creating tech sector. So, unlike many investment experts, I don’t recommend holding a very broad portfolio – over-diversification can lead to mediocre returns.

On the other hand, under no circumstances would I put all my investment capital into one position, particularly not a “special situation.” By definition, these are high-reward opportunities that come with higher risk.

To build their portfolio, I suggest investors start with “foundational plays,” such as exchange-traded funds (ETFs) and low-risk big-cap stocks. Then, add strategic growth stocks that offer higher returns.

After getting these parts of your portfolio under control, then you can start making some riskier moves. If you follow this three-step process, you will beat the market and greatly improve your net worth.

On June 13, I told you that now is a great time to cash in on the high-margin software sector. That prompted an interesting question about hardware.

Q: What are your thoughts on microelectromechanical systems, aka MEMS? Seems it should be a very strong category for some time to come.
Chuck P.

A: MEMS is a category about which I am extremely excited. These tiny mechanical devices – mostly sensors but also valves, gears, mirrors, and actuators embedded in semiconductor chips – are going to play a big role in our lives. And I was involved with a Silicon Valley startup that pioneered their use and that later sold for $126 million.

When I write about MEMS, I’m usually talking about tiny specialized sensors that integrate circuits and sensors on a single chip to both sense and control an environment. They contain a central processor that collects data and measures sound, motion, temperature changes, and more. MEMS are integral to the operations of smartphones and tablets.

They’re also at the heart of medical monitoring systems, smart cars, connected homes and cities, and oil and gas exploration. To date, more than 6 billion MEMS have been installed around the world.

By the way, I’ve recommended several MEMS-related plays to readers of my Radical Technology Profits service. One of those plays is up 130%.

My June 27 column, which predicted a generational bull market that could last up to two decades, drew quite a response. I want to answer one question in particular.

Q: Do you have a comment on Harry Dents projection of a severe crash caused by baby boomers retiring and a massive federal stimulus causing a false “bubble” stock market?
-Tim H.

I have not studied Dent’s work in heavy detail. However, I agree with him on the importance of demographics and statistical analysis.

I’m also a big believer in empirical data. But to date, I haven’t seen any data to support the type of “severe crash” you mentioned.

Bear in mind that for years now, “experts” have predicted a major selloff in housing because boomers will want to downsize. It just hasn’t happened.

According to a recent piece in The Wall Street Journal, two new studies have debunked that housing myth. And in a 2010 survey, AARP found that 84% of boomers prefer to live in their current house for as long as possible.

Moreover, the aggregate amount of retirement accounts is rising, according to the Investment Company Institute. The amount hit $21 trillion last year, up 17% from 2011.

In other words, boomers are working longer, staying in their homes, and sticking with the stock market to make sure they don’t outlive their nest eggs.

My two early July columns on why you should avoid investing in General Motors Co. (NYSE: GM) drew dozens of comments. Many of them were passionate complaints about the quality of the company’s cars.

But one question in particular stood out.

Q: You say GM should no longer be bought. If this is true, then why is there no suggestion to short the company?
-Jan

That’s a fair question, and I can understand why you’d ask it. However, these days I short very few stocks, because we’re still in a major bull market.

Plus, I don’t want to profit from GM’s decline and its recalls, which have involved several deaths.

More to the point, my main focus here is bringing you tech investments that offer life-changing gains. That means going long in such areas as mobile, biotech, cloud computing, and Big Data.

Remember, the road to wealth is paved with tech…

Once again, I’d like to acknowledge the many readers who use their valuable time to follow this service and post their insightful thoughts. Strategic Tech Investor would not be a success without your support.

So, thank you for posting your comments and questions and joining our conversations. I hope you’ll continue to join me here twice a week – and that you’ll keep using our tips and strategies to get you on that road to wealth.

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9 Responses to You Asked About Our “Slumbering Giant” Pick – And Michael Responds

  1. Chuck Wertalik says:

    Michael, your recommended stock AMAT was doing really well, but it has dropped like a rock the past week or so, and I’ve dumped it to save my sanity. What gives? I can’t find any reason for this significant drop. Thanx!

  2. Deborah kurylo says:

    I have been caught at a very bad time to invest money. You see, in since July of 2013, I had three accidents been taken to the hospital twice, by ambulance, stay for three months at a recovery clinic, am cracked my shoulder last June. I have had to pay to see many kinds of Dr.’s as well as for many kinds of medicine’s. I am a retired 71 year old woman, living off my social security. Believe me I hardly have any thing left for myself after I pay all my bills. There is nothing that I would like more is to have money to invest for my grandchildren, but I simply don’t have it. Thank you for all your information. My uncle lived in NY, NEW YORK, and he was buying and selling stocks everyday. He too was a wealthy man.
    Maybe when I stop having these accidents I’ll be able to do what I’d like to do. Thank you.

  3. Brian says:

    I am a greenhorn novice to all this, a late bloomer and was excited about the tech stocks you recommended. Unfortunately as a do-it-yourself guy with Scottrade I failed to put trailing stops on the four
    stocks I bought –FTR, INVN, KTOS, ORBC. I noticed that their is a service called tradestops that monitor your accounts, would this be a wise decision since I’ve made the first mistake not putting trailing stops on these stocks?

  4. Ira says:

    Mike, thx for all your input. Specifically, $WIN. Looking at the chart, both the MACD and RSI are showing it as “overbought” and the “momentum indicator” looks like it is losing a lot of steam (i guess because “volume” has definitely decreased over the last 3 months, probably because it is summertime).

    At $10.45, and still yielding 9.5%, are you still bullish on the stock.

    Again, thx for all your great info

  5. Russ Ramey says:

    When the new status symbol is not a high end Beemer but owning your mortgage, the boomers are not dumping their homes or their retirement portfolios. We are watching these regulatory idiots on the Hill and 1600 Pennsylvania Ave, Hoping to vacate the position soonest.

  6. Anthony Cacciottolo says:

    I would like to know if any of your (recent) past recommendations are still worth investing in. I am new to this and apprehensive of making the wrong move. I am retired and have saved all my life, but I cannot say I am so well off.

  7. Richard Waldren says:

    Michael, thank you as always. We have made a nice little fortune for the last year in AMBA, INVN and we still are.

  8. Juan Zapata says:

    Greetings! I also invested in AMAT, earnings are coming up, along with dividends and stock due to the M&A. Will we see a sudden surge to the upside? Ate there too many shorts? Thanks

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