When we spoke back on Aug, 19, I reached out to see if you had any tech investing questions.
Turns out that many of you want to know even more about how to make money off of the greatest wealth machine ever created – Silicon Valley.
Today, I want to answer several of your questions covering everything from taxes and to investing tips to some specific tech stocks I’ve suggested.
But before I do that, I’d like to say how much I enjoy hearing from you readers. Without readers like you engaged in our topics, this site would not be nearly as successful as it is.
After all, I’m all about helping you folks use tech investments to create lasting wealth.
Most Investors Don’t Know About This
Ordinarily, I answer questions in chronological order but this time I want to get right back to that Aug. 19 chat.
Q: I would like more advice on ETFs (exchange-traded funds). The market has been too choppy to do well with individual stocks.
A: Thanks for that question, Lee. It’s a good one and reflects an area that I think more investors should know about. Just the other night I spoke with an old friend who has written about business for years, and even he lacked basic details on this lucrative field of investing.
I like tech ETFs because they give you both specialization by sector and instant diversification. And if you choose, you also can take a very broad approach by investing in a fund that tracks the tech-centric Nasdaq Composite Index.
There are three things you can do to become more informed about ETFs. First, keep reading this column. I don’t have a set schedule, but I try to write about at least six of them a year.
Second, for faster access you can go to the iShares website and get lots of information about their funds. This is a great family of ETFs with generally good ratings and low overhead. You can find funds by sector, region or by strategic approach.
However you go about it, follow my ETF rules. I try to invest in those funds that have at least a three-star rating by Morningstar and that have overhead of less than 0.6%, though I prefer below 0.5%.
Q: When you begin, you have no idea how uninformed you are. Now I at least know where to focus. I have about five mentors. You are one. You’re the tech guy, telling me which stocks are the drivers with the most cash in tech.
A: I appreciate the kind words, Rhea. I love making as much money as I can for my readers, both here at this free e-letter and for members of my paid services. I try to put my 32 years of experience around Silicon Valley to good use by finding what I think will be big winners in breakout fields.
Then again, I come by my passion for technology and investing naturally. I grew up in a high-tech military household. I’m sure I was one of the few guys in high school chatting with a renowned expert, my Dad, about such areas as missile guidance systems, laser tech, and exotic materials like gallium arsenide.
In addition, I have served as a senior advisor to a Valley venture capital firm and as a consultant to a dozen tech startups. I believe this gives me a leg up on other tech analysts.
Q: My husband and I are retired with a small portfolio. All the talk about a “crash” is very unsettling. I want to know more about NXP Semiconductors NV (Nasdaq: NXPI), Facebook Inc. (Nasdaq: FB), Skyworks Solutions Inc. (Nasdaq: SWKS), and Apple Inc. (Nasdaq: AAPL).
A: I suggest you ignore all the naysayers out there. At this point, I don’t see a crash in the making. Yes, at some point we will have a correction. That’s actually a healthy part of long-term investing, akin to culling the brush from a forest to prevent an inferno.
As for specific stocks, I can’t address all four in this column. So let me tackle the two that I have written about extensively and that I still have as good long-term buys.
Apple and Facebook are both bona fide cash machines. And both have huge installed customer bases that are very loyal repeat buyers. Facebook has some 1.5 billion active users. Apple just released its updated Watch. I wanted to buy one for my birthday on Tuesday – but it will take at least three weeks to arrive… and maybe as long as five weeks.
Back on July 29, I addressed the subject of capital gains taxes. That brought a comment on the complexity of our tax structure.
Q: The U.S. tax system is illogical if not stupid. Gains from investments should all be treated the same. Why is it of importance for the government if I hold stock short or long term? If they want to engineer something, why not make straight rules? Or is it about loop holes so that some sneaky operators and their lawyers can make some extra profits?
A: I usually try to stay out of politics – I’m here to make you money no matter what they’re doing in Washington – but this is an area about which I am deeply passionate. That’s because I learned a lot about the tax system one summer when I served a legislative intern for the late Jack Kemp, a New York congressman who was Bob Dole’s 1996 vice-presidential pick.
Let me cut right to the chase. I hate our tax system. I am now and have been for decades a big believer in a flat income tax with no deductions. When you go buy a hamburger, they don’t make you show your W2 before quoting a price, and you don’t get a discount for the mileage you put in getting there.
Under my “dream” system, everyone would pay the same rate whether that’s from a job, self-employment, or investment income. I believe this would reduce billions in money wasted on accountants and lawyers and unnecessary red tape.
My Sept. 2 column on investing in a tech ETF as “Beltway Bandit Insurance” against Washington’s gridlock brought a question about my investment outlook.
Q: I’m concerned that you, who have been a strong optimist over the years, suddenly are sounding very negative. Is there some new development that has turned you from bull to bear? I haven’t noticed any drastically negative economic developments in the last month.
A: I’m so glad I got this question. Given that the election is just weeks ago, the timing is great. While I may be pessimistic about the goings-on in Congress and the White House, I remain a bull on tech investing. And I have to say that, at times, it’s been a bit lonely. I’ve lost count of the times someone in the national financial media has asked me about the so-called “tech bubble.”
That’s been going on for nearly three years now, and during that time my readers – you folks – have just crushed the overall market. However, I do believe that all the easy post-recession money has already been made and this is clearly a stock’s pickers market.
Take the cybersecurity play I recently suggested for readers of Nova-X Report. It’s up nearly 25% since Aug. 24, during which the overall market is at breakeven.
And a small-cap mobile play for premium members at Radical Technology Profits is up more than 60% since June 4. That service has a 90% win rate on all open positions.
Add it all up and I think you can see that I really am right when I say that the Road to Wealth is Paved With Tech.
With that in mind, I hope you’ll keep coming back to check in with me as I share the tips and strategies – and investment ideas – you need to consistently crush the market.
But I wonder, are you one of the voters in up to 20 states who will also make a decision on the most controversial issue in modern history?
This divisive issue has caused protests to erupt in major cities as well as small towns across the country. I know it’s a huge deal in my city and state.
Most Americans have no idea what’s unfolding. Yet the stakes couldn’t be higher.
These voters will decide the fate of potentially $200 billion of the U.S. economy, and half a million jobs could hang in the balance.
Powerful battle lines have been drawn around this issue. But it has also created some strange alliances.
That’s why I think it’s critical you get all the details on this developing story so you can make up your own mind.
Because even if you do not live in one of the states set to vote on it, this issue will affect you.
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- Strategic Tech Investor: Decision 2016: This Choice Will Create Wealth… No Matter Who Wins the White House.