Welcome to our weekly mailbag edition of The Bleeding Edge. All week, you submitted your questions about the biggest trends in technology. Today, I’ll do my best to answer them.
If you have a question you’d like answered next week, be sure you submit it right here.
Get paid to surf the web…
First up is a reader who is interested in receiving a “data dividend.”
I recently received [an essay] from Jeff Brown’s The Bleeding Edge, which by the way I just love reading. Anyway, it was titled “Would You Accept a Data Dividend?”
My question is, can you send me more information on the browser Brave and how I would go about collecting a “data dividend” on that browser?
– Sandy S.
Thanks for writing in, Sandy. Happy to hear you’re enjoying The Bleeding Edge. I remember precisely the issue you mentioned (catch up here).
For readers who missed that issue, here is a view of the future. Consumers are going to share in the advertising revenue generated from the information we produce.
It simply won’t be enough for Google or Facebook to offer up a “free” search engine or social media platform. We should always remember that if a service is “free,” then we’re the product.
Google, Facebook, and so many others collect behavioral data on everything we do on our phones, laptops, tablets, and home computers, and then they sell that information to advertisers. And they get to keep 100% of the advertising revenues while we produce the “product” – our data.
There are many bleeding-edge technology companies racing to put a better model in place… one that allows consumers to opt in and share whatever data they want to. In exchange, you receive a percentage of any advertising revenues generated using your data.
An early example is the Brave Browser. It allows users to opt into viewing advertisements. Here’s a picture of the “Brave Rewards” screen to give you some idea.
You Can Earn Brave Rewards
As you can see, we have turned “Brave Rewards” on. That means we’ve agreed to view five ads every hour. In exchange, we receive a regular payment of Brave’s native digital asset, the Basic Attention Token (BAT).
On the right-hand side, you can see a breakdown of how much BAT we have received in exchange for viewing ads. And because BAT is completely fungible, it can easily be converted into other digital assets or back into a fiat currency, like the U.S. dollar, via a cryptocurrency exchange.
Right now, the amounts that users receive are relatively small – around 10 BAT, or roughly three dollars – every month. But this is just the beginning. After all, Brave is building a new marketplace, just as Google did in the early days. As more users realize that they can get paid by using Brave’s browser, more data will be generated on the platform. Then more advertisers will want to advertise using Brave. It’s a reinforcing cycle.
I don’t believe it will be long before consumers will generate more than $100 of monthly income through companies like Brave simply by opting in. And eventually, companies like Google and Facebook will have to adopt a similar model.
Quality technology stocks will always be in demand…
I understand that individual investment advice is not given. This question is about the condition of the economy. With your recommendations – How do you feel about the current state of the economy, and how will your investments play out during a recession? I am curious about which economic markers [you look] out for.
– Matthew C.
Thanks for writing in, Matthew. My mission is to help my subscribers profit from the best technology stocks on the market. But I’m also paying close attention to the broader economic data as well as any policy issues that may impact technology companies in good or bad ways. I want us to be aware of any changes that affect or create opportunities for technology companies.
As I showed readers on Thursday, I’ve been particularly interested in the action from the Federal Reserve. On Wednesday, the Fed lowered its key lending rate by 25 basis points to a range between 2% and 2.25%.
From my view, this was long overdue. For two years, the Fed has been raising its key rate aggressively. And the economy has boomed despite this tightening cycle and pretty much the absence of inflation.
But with the ongoing trade negotiations with China, some easing was warranted. And if the ongoing trade negotiations with China extend beyond this summer, I suspect the Fed will cut an additional 25 basis points. And when a trade deal is agreed on, I predict we’ll see a market-wide rally. I remain very bullish on the American economy at least for the next couple of years.
In both The Near Future Report and Exponential Tech Investor, I go to great lengths to position investors to benefit from major technology trends in the very best companies. I also do my best to get investors in at reasonable or even cheap valuations in order to maximize our returns.
In the event of a recession, valuations tend to compress and, certainly, stock prices tend to drop. We always maintain our risk management strategy to have a clear entry and exit point for each investment position. This allows us to protect our profits and limit any downside risk.
But a recession doesn’t mean that there aren’t great investment opportunities available. There will always be technology companies whose products or services are still needed regardless of economic conditions.
And there will always be new small-capitalization companies that are bringing entirely new technologies to the market… things that have never existed before. Those companies are going to grow no matter what is happening with the economy.
And one of the key data points that I monitor very closely is the amount of venture capital money that is being invested into early stage technology companies – and, specifically, into which sectors. I also track the pipeline of technology companies that are getting close to an IPO.
These data points provide insights into future investment opportunities as well as how rapid innovation is happening in particular areas of technology. If the investment dries up in these early stage companies, I will definitely start to be concerned about worsening economic conditions. Right now, we are at record highs with the likelihood of an even stronger year in 2019.
In short, we’ll always have our risk management strategy. We’ll invest in the biggest trends and the very best companies at compelling valuations. And I’ll always update my readers if or when I see conditions that might warrant caution or a shift in investment strategy.
Speculate with the right position size…
Finally, I received this message in my inbox recently. It’s not our usual question for The Bleeding Edge mailbag. But I wanted to take a moment to address it.
Dear Jeff, I’m sure that what I’m about to tell you is something you would advise someone never to do. But in fact, since it’s already done, we just wanted to mention it to you because, well, we thought it worth mentioning, and we felt it was a great compliment to you…
Somehow, luckily, we began reading you some years ago and ended up thinking, “This is the most brilliant mind we’ve ever read in this field…”
We already well-knew what level you were at (from scholar to executive to venture capitalist/investor to writer to… ) when Early Stage Trader enabled us to be with the one person we truly believed in and felt had real integrity, brain, and insight… We are, so far, putting $1,000 into each trade recommendation. [It’s] the last of our hard-earned, bottom-of-the-barrel money, [but] we have never felt so good about the level of risk we are undertaking with a not-insignificant piece of what was originally, and now is the relative end of, our nest egg…
We know you would NEVER advise anyone to take the last of their liquid cash and invest it. Well, too late for that…
Thank you again, and best regards…
Thank you for your kind words and for placing your trust in me. Comments like these are truly motivating to me. They are why I take my work so seriously and also why I put so much time and effort into everything that I publish.
And yes, there are two things that I cannot do in my capacity. I can’t invest in anything that I recommend, and I can’t give individualized investment advice. It’s critical that I remain objective in all of my analysis and remain free of any of the conflicts of interest that are so common on Wall Street.
Early Stage Trader is a system-based trading service. We are speculating on early stage companies with the potential for explosive upside in much shorter periods of time. Generally speaking, this kind of trading style should only account for a small percentage of any investor’s broader portfolio. That’s why I emphasize proper position sizing to all subscribers.
I’m well aware that real people are reading my research and putting real money to work based on my recommendations. I think about each recommendation as if I were investing or trading my own capital.
For any investor, asset allocation, or portfolio, diversification is recommended. You might allocate a certain amount in fixed income, some in large caps, some in small caps, and a portion in trading (this would be the smallest part). And that’s a discussion you can have with a good financial planner who can fully understand your entire financial health and recommend specific allocations.
But since you are a reader of my work, I hope you’re also taking advantage of the research in my other investing services: The Near Future Report and Exponential Tech Investor. There, you will find high-quality large- and small-cap technology recommendations, respectively, which are complementary in an overall investment allocation model. As an example, well-established, large-capitalization stocks that are still in growth mode and have limited downside are some of the safest investments to make and therefore would typically take up a larger percentage of an investor’s portfolio.
That’s all the questions we have time for this week. If you have a question you’d like me to tackle next week, write to me here. I’ll do my best to answer it.
Editor, The Bleeding Edge