Now that we’re at the year’s midpoint, I thought we’d do something special today.
You see, I talk to Money Map Press Executive Editor William Patalon III at least a few times a month by phone.
And then you often see the ideas we come up with together in the reports I bring you here – and in the bulletins I put together for the paid-up members of my premium services, Nova-X Report and Radical Technology Profits. (For newer investors not quite ready to dive into high-speed trading – but ready for faster action and bigger profits than what you usually find here – Nova-X is the next step you want to take. To join us, just take a look here.)
But this week, I wanted to “pull back the curtain” some so you can see some of the brainstorming Bill and I do on a regular basis. Not only that – but in this conversation, I give Bill (and now you) my best predictions and ideas for the second half of 2018.
Of course, one thing remains true.
I still strongly believe Silicon Valley technology stocks – and their “cousins,” legal marijuana and cryptocurrencies – remain the best way to build wealth that crushes the market. That’s a belief that has long fueled our mantra here: “The Road to Wealth Is Paved by Tech.”
I also still believe that – despite all the uncertainty scaring lots of investors right now – this may be one of the greatest times to stake your claim.
I detail all of this in this Q&A with Bill.
And I offer up several of my best stock picks for the back half of 2018.
The Bull Market That’s “Hidden in Plain Sight”
William Patalon III: Michael, you and I have talked many times about the fact that investors really only seem to “take stock” of their investments at three specific points – at the end of the year (as a “New Year’s resolution”), at the midpoint of each year (it’s almost like a “do-over” or “mulligan” from the resolution) and when the stock market is crashing.
Well, we’re at the midpoint – embarking on 2018’s second half. What do you see? What are you expecting? What’s foremost on your mind?
Michael A. Robinson: You know, Bill, it’s an interesting reality I’m looking at here. By that I mean, while the headlines are dominated with gloom and doom – trade wars, North Korea, political gridlock… I could keep going here – while all that is going on, I still believe there’s an enormous amount of money still to be made in the market these days.
MAR: [nodding] Enormous. You and I have talked about this before. And every time we do, I underscore that I really and truly believe we’re in a “Generational Bull Market.”
And we’re merely at the midpoint of that.
WPIII: Meaning there’s a long way still to go. You know, the way you’re talking about this, Michael, it’s almost as if there’s a “Tech Bull Market Hidden in Plain Sight.”
MAR: You’re exactly right, Bill. I believe this because I still see many, many driving factors that can serve as catalysts to keep investment gains going for a long time to come.
And one of those catalysts is the fact that we’ve enjoyed all sorts of tech breakthroughs – which, in turn, are driving top-line sales growth and helping expand corporate profit margins.
WPIII: Give folks a quick example – so they can “picture” what you’re talking about.
MAR: Sure thing. Let’s look at cloud computing.
Here you have an innovation that’s been a tremendous driver of stock-market wealth – and I mean tremendous. You and I have each recommended Microsoft Corp. (Nasdaq: MSFT) at different points. Here you have a company that dominated one “tech era” – and has leaped the chasm to be one of the heavyweights in this “New Tech Era” defined by the cloud.
That stock has soared.
Yet, we still have several years left in the total conversion for desktop PCs and related software and applications to be moved to the cloud.
And now we’re just getting started with artificial intelligence, AI, which is destined to transform just about everything in its path – from medicine and self-driving cars to e-commerce and search.
WPIII: And, ironically enough, Microsoft is poised to a big beneficiary there.
MAR: [excited] That’s right, Bill. Microsoft illustrates the power of transformative technologies. I mean, here you have a once-great company that’s wheezing its way to obsolescence – and suddenly, thanks to these inventions, it’s again a market leader – an innovator itself with a $750 billion market cap.
And this is just one company capitalizing on just two of these breakthrough/transformational technologies we’re watching. The reality is that we haven’t even scratched the surface here. There are other technologies, some of them combining in incredible ways, and there are companies of all sizes just waiting to cash in on these inventions.
This is why – to borrow one of your favorite phrases, Bill – this is why I get so doggone jazzed about covering tech. And finding ways for subscribers to cash in.
Actually, not just cash in.
Finding ways for them to build wealth.
WPIII: You sound like a man on a mission.
MAR: [pauses to think for a few seconds] I am on a mission.
If you look at all the research, more than half of America has little to no net worth.
It shouldn’t be that way.
And it doesn’t have to be.
The mantra of my advisory services is that “The Road to Wealth Is Paved by Tech.” That’s actually more like a “mission statement.”
WPIII: Better yet, it’s an investment strategy.
MAR: Actually, Bill, that’s right.
Going back to that “net-worth deficit” I just mentioned?
Well, playing “catch-up” as an investor is an inherently dangerous thing. But tech can play the central role. It’s the one sector that’s growing much, much faster than the general economy. And that’s just on average. Some of the “breakthrough markets” are growing at staggering rates.
The bottom line is that the “right” tech investments – just in stocks, not even in anything as complex or revved up as options – can let you eradicate that net-worth deficit and get back to where you should be.
My mission is to help folks find those “right” tech plays.
WPIII: Let’s talk about the broad U.S. economy – and see what you anticipate for the year’s second half.
MAR: Simply stated, the economy is on fire, as strong as I have seen it in my lifetime. And that’s saying a lot. I was a young auto analyst in Detroit covering the auto industry in the early 1980s when President Ronald Reagan’s stock-market boom began.
Today’s boom is happening against a much better background. Unemployment is the lowest we have seen since I was in middle school. We now have more jobs being posted than we have unemployed.
And that’s before we see the full impact of President Donald Trump’s corporate tax cuts, not to mention tech and other giants bringing back as much as $2.7 trillion from overseas to the U.S. market.
Firms across the board now have more cash flow to pay higher salaries and invest in the next round of technology systems that will grow sales and cut costs. They also have more money to spend on R&D for the next rounds of innovations.
WPIII: Given this philosophical underpinning, what’s your view for the stock market?
MAR: Simply stated, the market rebound is well underway and – barring a few “wild cards,” which I know we’ll get to momentarily – I expect it to continue for the rest of the year. After the most recent dip, the market hit bottom on April 2. Since then, the Standard & Poor’s 500 Index has bounced back by 4.7%.
Of course, tech is doing much better. During that same period, the tech-centric Nasdaq Composite Index has rebounded by 9.3%. And that’s just if you owned an ETF tied to the Nasdaq.
Members of my paid services who benefit from my handpicked recommendations have done much better. On Monday, June 11, members of my premium Nova-X Report service took a free trade on an e-commerce play that I suggested in May 2017 – a double in just over a year.
At Radical Tech Profits, my elite service, we have a 96% win rate on all open positions, along with several free trades. And one of our fintech plays is up 523% in roughly two years.
So, I expect tech to continue to lead the market higher, and this is the one area right now that is consistently crushing the market. To avoid tech is to leave money on the table – a lot of it.
That brings me to a point I feel I need to reiterate here.
Lots of folks talk about their fears that “the stock market” will get hit by this or by that. They’re talking about the overall market – the average.
What I’m talking about is a strategy that keys in on the companies cashing in on specific breakthrough technologies. The reality is that with any breakthrough there are multiple beneficiaries.
My system finds the breakthrough technologies, identifies the beneficiaries – and then spotlights the one play that’s reaping the biggest windfall of all.
WPIII: That’s how you beat the market. That’s how you erase that “net-worth deficit.”
MAR: Couldn’t have said it any better myself, Bill.
WPIII: Okay, let’s circle back to the “doom-and-gloomers,” and the potential “wild cards” you mentioned just a couple of moments ago.
Exactly what are the biggest threats/biggest “wild cards” that you’re watching, Michael?
MAR: There are several. There are things like North Korea and the South China Sea. Any type of skirmish with China would deal the American economy – and the stock market – a serious blow.
WPIII: And by “any type of skirmish,” you’re also including the potential for a trade war, too, as I know from our talks.
MAR: Yes, I am. And it’s a worry. The fact is that any kind of tussle with Beijing will be bad news. Even the potential for a trade war – the mere idea of a trade war – has created a rocky backdrop for investors and traders.
I mean, the two economies have become so interdependent, any disruption will be bad. We’re China’s largest trade market. And China is our biggest debtholder.
So we need to watch this situation carefully. With every new round of rhetoric about trade sanctions and crimping Chinese investments in U.S. tech firms, investors and institutional players overreact… and embark on panic selling.
WPIII: So your call here is that – we’re watching.
MAR: Yes, we’re watching. And it’s a worry.
WPIII: But it’s not the only worry, is it? There are also some things to watch here at home, correct?
MAR: Absolutely, Bill. There’s the U.S. Federal Reserve – the central bank – which is now in a credit-tightening cycle. There’s a chance the Fed overreacts and raises rates too quickly. That’s risky…
All these “wild cards” could lead to a Wall Street freak-out.
WPIII: [nodding] A freak-out… but one that’s not necessarily terrible. The fact is, Michael, that you and I both view this the same way.
MAR: Exactly, we both believe that a sell-off offers massive long-term benefits to any investors who have the foresight to take advantage of it.
WPIII: [nodding] I couldn’t agree with you more: A sell-off – even a bear market – is nothing more than a buying opportunity for investors with long-term vision.
So let’s talk about opportunity – or opportunities. Where do you see them?
MAR: Technology and the life sciences. We’re all in on both. We have exposure to as much tech as we can get our hands on right now. Even a supposedly weak sector like chips has lots of big winners to offer investors.
I love the Cloud and all the high-margin services that just keep rolling along. You mentioned Microsoft – and the huge windfall your subscribers have pulled down – well, that’s been a massive Cloud beneficiary.
Bill, we both love biotech. Certain biotech stocks are doing well right now. In my Radical Technology Profits advisory, I have biotech gains of 136%, 147% and 167%.
WPIII: You and I have been talking about fintech – the intersection of financial services and high technology. What’s the story there?
MAR: Fintech is a great place to be right now. We talking about what the pros refer to as a “total addressable market” (TAM) of $23 trillion – but that’s just based on its stock-market cap, a mere fraction of global transaction volume.
Fintech is a market that’s getting supercharged by things like Big Data, e-commerce, the blockchain, and cybersecurity. As the worldwide financial-services market escalates in complexity, tech can solve the new challenges and can create wholly new opportunities. There’s plenty of money to be made here – plenty.
WPIII: Let’s talk specifics, Michael. What do you like, right now? Is there a big-money opportunity? Is there a near-term safety play that can help folks navigate some of the “wild cards” you mentioned?
MAR: Truth be told, Bill, I’m as excited about stocks right now as I have been in some time. Now I know that probably sounds surprising to lots of folks – given some of the wild cards I’ve been referencing here.
But the fact is that there’s a whole group of these exciting plays that I’m zeroing in on. Remember, technical analysis is a big part of my stock-selection process. And a growing number of stocks now meet the rigorous demands of my Real Demand Tracking System.
If the market were captured in a time-lapse series of photos, the “takeaway” would vary – depending upon the frame of reference.
WPIII: The “time frame” frame of reference.
MAR: [pointing for emphasis] That’s exactly right. Most investors look at stocks – and their prospects – in a very short-term time frame. So if they shot a photo of the market, their picture would look like a roller coaster – up, down… up, down… up, down… It’s enough to make you nauseous – and scared. That whipsawing image is a disincentive to invest.
My picture, though, would show an escalator – more specifically, an “up” escalator, with multiple flights. There’s one flight… and then a small landing, from which you step onto the next “up” flight. And you just keep climbing higher.
Long term, stocks will keep moving higher. Money will keep pouring in. Converging trends will keep powering companies with good business plans. And those same trends will open the door on new opportunities.
Indeed – and we’ll get back to this momentarily – the sell-offs work to our advantage because they give us “second chances” at great stocks we may have missed initially.
WPIII: So, tell us about the stocks you believe will be beneficiaries of these powerful forces.
MAR: For starters, there’s HealthEquity Inc. (Nasdaq: HQY), the nation’s largest custodian of health-savings accounts. HealthEquity is part of a growing gaggle of fintech firms that have chosen Utah as their home base.
Another fintech play I like right now is Bottomline Technologies Inc. (Nasdaq: EPAY), a firm that allows companies to take their payment systems – for instance, with vendors – into the digital realm. This is transformational stuff for companies, which are looking for any way possible to improve their cycle times, cut costs and slash errors. Technology makes this possible. And that, really, is the essence of fintech – using innovation to solve problems, cut costs and boost efficiency.
One last play that a like is a cybersecurity firm called Varonis Systems Inc. (Nasdaq: VRNS) – a pioneer in data security. With all the talk these days about Big Data and data analytics and data storage in the cloud, it’s clear that data is hyper-valuable in today’s digital realm-defined market. Varonis focuses on keeping this data secure – even “locked down.” I like that thinking.
The fact is that all three of these companies have great charts, offer great growth and promise lots of upside.
WPIII: And a “safety play” – since I know you have one.
MAR: Assuming a long-term investment horizon, I really like the iShares North American Tech ETF (NYSE: IGM), which tracks the S&P North American Technology Sector Index. This is a slice of the economy that, long term, remains unstoppable. It invests in the companies behind our belief that technology will outrun the overall economy. This ETF holds a “Who’s Who” of tech. And, with an expense ratio that’s a mere 0.5%, it’s cheap. That’s a great combination for long-term wealth building.
WPIII: We’ve talked outlook, we’ve talked predictions, we’ve talked mindset and we’ve talked specific recommendations. Let’s round this out by talking strategy. What strategic approach – what moves – should investors maintain in the year’s second half?
MAR: First and foremost, be invested – no doubt about it. Don’t run for the sideline. And don’t leave a big slug of money on the sidelines hoping for a sell-off. If you did that this spring, the bulls just trampled you in their stampede to higher ground.
Now, there is an exception: It’s okay to have some cash on the sideline if you have a specific plan to put it to use. And here’s how you do that.
We can’t get perfect timing on the purchase, but if you use my Cowboy Split staggered-entry system, you can turn sell-offs to your personal advantage. You double down when the stock is off, say, 20% – and then ride the rebound into the “winner’s circle.” In other words, identify the big potential winners, buy a starting stake, and then add to it at specific, prep-determined price points if or when the stocks trade down.
Second, always keep in mind our mantra – that “The Road to Wealth Is Paved by Tech.” Tech and life sciences (biotech being part of that) are faster-than-the-economy wealth builders. This is a great time to be a tech investor – one of the best opportunities I’ve seen. It can help you retire in style.
One of the brand-new opportunities here is medical marijuana.
Not only does this figure to be the fastest-growing subsector in biotech – because of all the new treatments cannabis compounds can be used to create – new legalization in Canada and numerous U.S. states means you’re getting in, literally, on the ground floor.
WPIII: Thanks, Michael – and have a great post-Independence Day weekend.
MAR: You, too, Bill. Talk to you real soon.