- When is it time to take profits off the table?
- Is this a battery breakthrough?
- A reader joined my research service because of my karate background
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.
But before we get to our mailbag, I have to share one more insight with readers…
The media, some politicians, and even parts of the medical community would have us all believe that COVID-19 is a completely new airborne virus. After all, they call it a “novel” coronavirus. They suggest that the human race has no immunity against it at all.
Nothing could be further from the truth.
As I promised yesterday, I’m going to share some incredibly positive news concerning COVID-19. Today’s edition of The Bleeding Edge may be longer than usual, but this will be worth the read. And I’m almost certain that you won’t read about this anywhere else.
The information comes from three separate research papers, all published within the last six weeks. I wanted to build a complete picture of this research before sharing the details.
Seroprevalence testing indicates that areas like New York City have already seen COVID-19 infection levels around 24% of the population. Stockholm is at 20%.
But there is also a rapid decline in new cases. And daily deaths have dropped near zero in areas that were hit hard in the spring. This tells us we’ve likely reached a level of herd immunity.
That’s a desirable outcome. And this has happened irrespective of whether or not there were economic lockdowns or masks.
It is generally thought that herd immunity can be reached when about 50–60% of a population has been infected. So how is it possible for us to reach herd immunity when data shows only 10–24% of a population has been infected?
The answer is simple: T cell immunity.
Unlike antibodies, which can dissipate in a matter of months, T cell immunity can last for years or even decades.
Recent research was published that studied 23 people who survived the SARS virus in Hong Kong. Get this – every single one of them had memory T cells that recognized the SARS virus. That means that even after 17 years, those people still had immunity to SARS.
Here is where it gets even more interesting: All the blood samples from those individuals who had SARS demonstrated “robust cross-reactivity” against COVID-19. We can think of this cross-reactivity as a natural immunity to COVID-19.
Again, this is from being exposed to SARS 17 years ago. Wow.
But it gets better.
The same study also analyzed 37 people who were never infected with SARS or COVID-19. They never had exposure to either of the two airborne viruses. Over 50% of them had COVID-19-specific T cells. That means that they already had immunity to a virus they had never been exposed to.
How is this possible? There are four known strains of coronavirus that cause a common cold. And COVID-19, in one form or another, is thought to have been around potentially since 2016.
But it gets better. An article published just days ago confirmed what the previous study found. Analyzing 68 healthy blood donors never exposed to COVID-19, the research found that 34% already had T cells that provided the same cross-reactivity to COVID-19.
That means those T cells already know how to fight against COVID-19.
And a third recent study again found that 40–60% of unexposed individuals already had T cell cross-reactivity to COVID-19.
So what’s really going on here? What does it all mean?
It tells us that the coronavirus that caused common colds for decades actually helps our immune systems build T cell immunity that’s effective against COVID-19.
The more coronaviruses that we have been exposed to, the more likely our T cells will be effective at shutting down COVID-19.
But why does COVID-19 seem to “target” those who are 75 years or older and those who are immunocompromised?
Research has already shown that the population loses T cells due to their age. In other words, they lose their natural immunity to COVID-19.
We can now piece together why many areas like the New York City metro area, Sweden, London, and Italy have likely achieved herd immunity.
After all, if roughly 50% of the population already has natural T cell immunity and those areas have already experienced 10–24% of the population infected by COVID-19, we’re looking at 60–74% exposure rates of the population. That is the point of herd immunity.
From there, COVID-19 or any other airborne virus burns out. There is essentially nowhere for it to spread.
Why aren’t we hearing about this incredible research? It should be forming policy regarding how the world understands and deals with COVID-19. I think I know.
Some may want to sow discord in society to achieve higher levels of government control and the removal of more individual freedoms.
Others may want to create economic pain and social chaos in advance of major elections in an effort to “overthrow” an existing administration.
Large pharmaceutical companies also have their motives. After all, one billion doses of vaccines selling for $100 a dose is $100 billion in revenue. That’s a lot of business and profits.
Regardless of these shenanigans, we have good reason to be optimistic.
For countries and metropolitan areas that were hard hit this spring, the worst is likely over. In fact, there may not be much at all to worry about this winter. And other areas that were hit hard could achieve herd immunity in six to eight weeks.
I predict the largest outbreaks will be countries or regions that have not yet experienced a major spread of COVID-19.
Ironically, those are the places that have engaged in draconian economic lockdowns. It is possible to delay the spread with these lockdowns, but eventually, COVID-19 will make its rounds. You can run, but you can’t hide.
Now for our mailbag…
When to take profits…
Let’s start with a reader interested in our profit-taking strategy…
I’ve recently joined your subscription service and look forward to your insights into the future and your stock recommendations. I have taken your advice on [two of your stock picks] and was wondering if you have a strategy to take some off the table when they hit certain prices?… Thanks for taking my questions and for all the efforts you are making on my behalf.
– Walter M.
Hi, Walter, and thanks for being a subscriber. You’ve touched on an important topic. When do we decide to take profits when one of our portfolio companies rockets higher?
It is important to say that when an investor buys and sells is a personal decision. I’m not able to give individual investment advice, but I can provide some general comments.
In my research publications, I build model portfolios and provide general guidance for when to buy and sell individual positions. That is precisely that: guidance. It’s the only way that we can fairly build and track a model portfolio for all readers.
In general, with every recommendation that I make, I estimate what the investment return potential is. When we reach the valuation that I forecast originally, I might recommend selling a position if the investment thesis has played out. Or I might recommend holding if there have been some new developments.
Occasionally, I might recommend taking some profits off the table when a stock has really run up quickly. We had a perfect example of this in The Near Future Report back in July. We sold half our position in DocuSign (DOCU) for a 239% profit.
As I said in the sell alert then, there was nothing wrong with the company. In fact, it has been thriving due to the COVID-19 pandemic. People and companies have needed its electronic contract services more than ever before.
However, due to its dramatic run up in stock price, it was prudent to take some of our profits off the table. DocuSign had become one of our most expensive stocks in terms of valuation. At that time, it was trading at an astronomical enterprise value/sales ratio of 36.
For perspective, that means that the company’s valuation was equivalent to 36 years of sales – not 36 years of profits. A valuation at this level is simply not sustainable over long periods of time.
That’s why the smart move was to lock in some profits. By selling half our position, we were able to take out almost double our initial investment. Near Future subscribers can use “house money” to take advantage of any continued rise in the stock from here on out while still pocketing profits.
Understanding a stock’s valuation, not its nominal share price, is the best way to understand when to buy and sell an individual position.
What’s the story behind glass batteries?
I was just reading about the Quantum Glass Battery. A patent application on behalf of the National Laboratory of Energy and Geology (LNEG), the Porto University Portugal, and the University of Texas was filed last Sunday in Portugal for the Quantum Glass Battery. Any ideas about this battery?
I want to let you know that your write-ups on future technologies and biotechnology are fascinating. It is like reading passages of a science fiction novel. I especially like your short human stories before introducing us to the latest biotech breaks. Thanks for the care you put into it.
– Tess O.
Hey, Tess. Thanks for the interesting question and the kind words.
As I wrote on Monday, advancements in battery technology have lagged behind other technological advancements. We tend to experience small, incremental improvements each year. But I’m as anxious as you are for the next breakthrough.
I believe the research you’re referring to has come from John Goodenough. I’ve mentioned him before in The Bleeding Edge last year when he and two other colleagues received the Nobel Prize in Chemistry for their work with lithium-ion batteries. At 97 years old, Goodenough was the oldest Nobel laureate ever.
He was certainly worthy of the prize, and it’s perhaps even more impressive that he’s still inventing…
Back in 2017, Goodenough and Maria Helena Braga, a professor of engineering at the University of Porto in Portugal, developed a new glass battery that is heading into the commercialization stage.
He and his team claim that this battery possesses “a charge/discharge cycle life of over 23,000 cycles” and that it can charge in mere minutes instead of hours.
It manages this because the electrolyte, or material that lets a charge travel between the positive and negative electrodes, contains both glass and metals. Because of its materials, ions can move back and forth more readily between the electrodes. As a solid-state electrolyte, it has the potential for higher energy density.
And Goodenough believes this battery could be a game changer for the uptake of electric vehicles by lowering the cost. He says it could also help store solar and wind power for the electric grid, which would be a boon for clean energy.
Especially if this battery can do everything it claims, it could be an exciting move forward for battery technology. It would be lighter, faster, and nonflammable. And the team has previously projected that it could be ready in less than three years.
I’m excited about the potential for this “glass battery” and more generally about solid-state batteries. So is Canadian electric utility company Hydro-Quebec. Hydro-Quebec licensed this technology earlier this year and is currently developing it in-house. It may be ready for use in two or three years.
As investors, we should look for public or private companies that license this technology with the intent to commercialize and sell these new forms of solid-state batteries.
What would you do with your nest egg?
Let’s conclude with a fun contribution from a reader…
Hi, Jeff, I am an investor who retired last year from an IT job held at a major financial company in New York and became a member of Brownstone Unlimited last month. I truly enjoy reading your advisory reports that give us the latest high-tech trends and timely investment advice.
The primary reason I decided to follow your advice is not at all rational at first, but when I heard that you stayed in the orient for some time and have a black belt in Karate, it convinced me (I am a native Japanese U.S. citizen). And I’m very proud to say my judgment was correct.
On August 1, you asked me by text message, “What will you do with your potential nest egg?” The only desire I have now is to travel in orient with my family often – I enjoy going to the “onsen” hot spring resorts in Japan. I hope to have a long enjoyable and prosperous investment experience together.
– Art H.
Thanks for writing in, Art. There are a few things that I truly miss about Japan that I simply cannot get in the U.S.
My karate sensei, dojo, and friends that I trained with, bled with, and improved with over countless hours and so many years.
Sushi – real sushi
Friends and family
Japanese rice wine – known as nihonshu (日本酒), specifically raw （なま）, which is unpasteurized. Often misunderstood, sake is just a general Japanese word for alcohol.
Onsens and the traditional Japanese inns known as ryokans
I have traveled the entire country of Japan, from Okinawa up to Hokkaido and just about everywhere in between.
And so many of my trips throughout the countryside were built around visiting unique onsens/ryokans. My favorite time of the year was always fall through early spring when it is still cool outside.
There is nothing like relaxing in an open-air hot spring when the air is crisp, even when it is raining or snowing.
Thank you for placing your trust in me, Art. I truly believe that we are on the verge of seeing some of the most amazing technological developments of our lifetimes. And there’s certainly no more exciting place to invest.
Let me also thank you for being a member of Brownstone Unlimited – our highest level of membership. I’m confident the research we provide will help you grow your portfolio for years to come and provide you with the ability to continue to enjoy onsens now that you have the time to travel.
I’m truly looking forward to when I can spend more time doing the same, but with two young boys and a lot of schooling in front of us, time is always precious.
That’s all we have room for this week. If you have a question I didn’t get to, please send it to me here. I’ll do my best to address it next week.
Have a good weekend.
Editor, The Bleeding Edge
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