- Why should we trust Plaid with our banking info?
- Looking at Apple’s road map…
- Can owning stocks be a hedge against inflation?
Dear Reader,
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.
And I’d also like to send one more thank you to those who showed up this past Wednesday to my Outlier Investments Summit. I’ve worked hard to bring readers not only the best technology investments… But also the best investments in any sector of the markets.
And I believe the stock market “glitch” I revealed is one of the best ways of earning more from our investments… And getting on track to an entire nest egg.
So if you weren’t able to watch on Wednesday night, I’m happy to say that a replay is available for just a limited time. Simply go right here to catch up.
If you have a question you’d like answered next week, be sure you submit it right here.
Have a wonderful weekend.
Is Plaid safe to use?
Let’s begin with a question on using apps for financial services…
Hi, Jeff. I really enjoy The Bleeding Edge and the wealth of information you share. In the last Q&A, you talked about a number of programs/apps you recommended for increased security (Brave, ProtonMail, etc.). I already use the ones you recommended except for the Cash App.
I’ve noticed a large number of financial services using Plaid to link a financial account to my bank. I have balked at that since I am not comfortable giving any app/company my bank login and password, particularly if they retain that information.
What is Plaid actually doing? How does it work? Why should I trust it? I can’t be the only one who is not comfortable with that. Thanks for your time.
– Scott N.
Hi, Scott – I’m glad that you’re enjoying The Bleeding Edge and some of the products that I’ve written about. It’s great that you are experimenting with services like these. And the point that you raise about Plaid is an interesting one.
Before Plaid, if we wanted to connect an online brokerage account with our bank account (for example), we would have to enter our bank account and routing number. Then the brokerage account would send two small deposits to our bank account within a few days. We’d have to log back into our bank account, confirm the deposit amounts, then log back into our brokerage account and enter those two deposit amounts.
It was a time-consuming and awkward process that usually took three or four days to complete. This was all just to enable an ACH transfer between one financial service account to a bank account. This process still exists today… In fact, I had to do it just two weeks ago to link two accounts.
Plaid completely solves this problem. If we want to open an account on Robinhood, or another financial services application that uses Plaid, we simply enter in our bank username and password, and in seconds our accounts are connected and ready to use. Brilliant.
This is enabled by Plaid’s application programming interface (API) technology. This is the technology that Plaid licenses to its customers to enable such a seamless experience.
But, to your point, we must provide our bank account login information to this third-party company – Plaid. Is it safe?
In general, yes, it is very safe. And the reasons are because of how Plaid facilitates this pipe between a financial services application and your bank account. We can think of this as a one-time transaction.
When a user types in their bank login information using the Plaid technology, Plaid is not creating an account about the user. The account validation process happens once, and we can think of it as creating a pipe between an application and our bank account. Once the pipe is open, it’s open. And it can be used at any time.
One thing that is cool about Plaid is that it allows us to create a Plaid account, which enables us to see and manage any connections made using Plaid’s technology. For those who are curious or concerned about what data is being collected, I recommend doing this by going to https://my.plaid.com to sign up to Plaid’s customer portal.
Once we do this, we can see all accounts that we have connected to using Plaid. We can understand the data that a company like Robinhood is collecting on us as a brokerage. We can turn off or on any connections that we like. Or we can ask Plaid to delete all data and connections entirely.
This is a very nice feature that sets Plaid apart. In this way, it is transparent, gives us a level of control, and allows us to remove data and connections entirely.
Plaid’s security is excellent, but that doesn’t mean that it can’t be hacked. So irrespective of whether or not we use Plaid, there is one thing that I can recommend with all financial services accounts.
It is critically important to use two-factor authentication (2FA), or even better, multi-factor authentication (MFA).
A simple example of 2FA is when a bank will send a code via text message to our phone and then we have to enter in our code before we can log in to our account. Having 2FA or MFA is so important, I won’t sign up for any financial services account that doesn’t use this technology. In this way, even if there were to be a data breach at Plaid, our accounts are still protected.
Thanks for writing in with such an interesting topic.
My thoughts on the iPhone 13…
Next, a reader wants to know more about the iPhone 13…
Does Jeff have any comments related to an announcement by Apple of the iPhone 13 in September and opportunities with investments in Apple’s supplier companies?
– Mike H.
Hi, Mike, and thanks for sending in your question. I know it feels like the iPhone 12 just arrived and the iPhone 13 is about to fly out of the gates. As we all know, due to the pandemic, the release of the iPhone 12 was two to three months later than planned, yet the iPhone 13 appears to be on schedule for a September announcement.
Taiwan Semiconductor Manufacturing Company (TSMC) has already started volume shipments of Apple’s next phone processor called the A15. It’s shipping the A15 to contract manufacturers like Foxconn, and then these manufacturers will produce the final iPhone 13 product.
And as we wrote earlier this month, Apple has asked its suppliers to increase production by 20% this year. That’s a huge bump. Apple’s new goal is to produce 90 million iPhone 13s before the end of the year.
So what will be different with this new version?
Well, TSMC is using the N5+ manufacturing process. It’s the same five nanometers (nm) process that was used for the iPhone 12, except it has some small improvements. That’s what the plus sign indicates.
As a result, we won’t see the kind of jump in performance improvements that we saw from the iPhone 11 to the iPhone 12, but we will see incremental improvements with the iPhone 13. However, there is one major and exciting change. New material will be used in conjunction with the high-quality OLED screens that are currently used in the iPhone 12.
The use of this special material almost certainly guarantees an upgrade to the iPhone’s screen refresh rate to 120 Hz. It may sound like a small detail, but it is actually a technological change that we’ll notice.
When we scroll through a website or a long email, sometimes the screen can delay or jitter. This is due to a lower refresh rate. At 120 Hz, these problems will go away. Essentially, with twice the refresh rate, the consumer experience will be seamless.
Also of note, every iPhone 13 model will be equipped with lidar. This is the 3D-sensing technology that enables depth perception, which is critical to augmented reality (AR) applications.
As a reminder, only the two high-end iPhone 12 models came with lidar. The fact that Apple is making it standard now shows that it’s laying the foundation for the widespread adoption of AR technology.
It will take another year or so before more than half of all iPhone users will have new devices equipped with lidar. But once that’s the case, we will see a rapid rollout of AR apps for the mass market.
So while the iPhone 13 likely won’t be much better than the 12, it will help shape the future of the industry.
And this will be just the beginning of the 5G iPhone. In addition to AR, I’m sure there will be many new 5G-application announcements around this new phone as well. Developers are gearing up to take advantage of 5G phones and networks being widely available.
TSMC is a beneficiary of this increase in business with Apple, but there are a handful of smaller suppliers that are perfectly positioned for the explosion in Apple 5G-enabled devices. I cover these companies in my small-cap investment research product, Exponential Tech Investor.
And if any readers would like to learn more about investing in this trend, especially as the 5G iPhone reaches a wide audience, I’ve recorded a presentation on some of the most exciting opportunities in this space. Simply go here to learn more.
Buying stocks as an inflation hedge…
Let’s conclude with a question about inflation and stocks…
Hi Jeff,
Let me first say that you’ve been in our prayers for continued good health, and it is so courageous that you choose to share something so personal with your readers. It has been so good for my wife and me, as we’ve subscribed to your service. Our selection of your 5G, biotech AI companies, etc. has boosted our portfolio earnings very much, and we anticipate more! Thank you.
Now to my question: As inflation hits, I’ve been of the opinion that less cash is good (except we still have the emergency fund). And while certain traditional investments like gold, copper, etc. certainly make sense in an inflationary environment, what about simply investing in stocks of very good companies?
Doesn’t it make sense that as the value of a currency decreases, it will simply take a lot more of that currency to purchase future shares of very good companies? So purchasing and owning stocks (of very good companies) staves off one’s losses due to inflation? Thank you, Jeff. I look forward to every update you send.
– John C.
Hi, John – thank you for sending your well-wishes. With each month that passes, I feel like my health is improving. I’m due for my next visit to the Health Nucleus in August to see if I am still making progress. I continue to work hard to beat the cancer, and I hope to share good news in the future.
And yes, your instincts are spot on. By investing in the best stocks in the highest growth sectors, we can outpace inflation by a wide margin. Even if our fiat money is being actively devalued, as long as we outpace that devaluation, we are going to come out ahead.
This is precisely why I focus most of my research on the technology and biotechnology sectors. They are growing faster than anything else and this is where I find the best growth opportunities for my subscribers.
That said, if something dramatically changed and suddenly municipal bonds became the highest growth sector (very unlikely – just an example), rest assured Brownstone Research would be providing coverage and recommendations to allow subscribers to benefit from this trend.
As a reminder, in an inflationary environment, too much cash is dangerous. That’s because inflation acts as a “stealth tax.” As our dollars (or other fiat currency) are debased, the value of our savings deteriorates. We might not even be aware that it’s happening right away, but our buying power is slowly shrinking.
And because we get virtually no return on our cash at present due to these artificially low-interest rates – whether it’s sitting in a bank or hidden under a mattress – we’re forced to seek other ways of earning enough on our money to combat inflation.
You and your wife are prudent to keep enough cash on hand for an emergency. That is always a smart idea. There is a long list of reasons why that makes a lot of sense.
But if we are still looking to grow our assets, we must look to growth sectors – especially in an inflationary environment like we have today.
I’ve written before about some of my suggested moves, including investing in real estate, collectibles, or even cryptocurrencies. Gold is a traditional hedge, though I’ve become less interested in it due to its lackluster performance, even during recent periods of extraordinarily irresponsible money printing.
It’s worth mentioning that in a perfect world, every investor will have their own individual asset allocation model. This model ideally will reflect where we are in our careers, lives, if we have kids in school, our risk profile, etc. Someone who is single and in their 30’s working on their career will obviously have different goals than a couple in their 70’s and simply wanting income for retirement. A good financial advisor can assist with developing a framework like this.
With all that said, the point that you raise is exactly my motivation and mission with Brownstone Research. Each of my research products is designed to widely outpace market index performance and the negative impact on our savings caused by the destructive monetary policies that we are seeing today.
Better yet, my goal is to deliver best-in-class hedge fund returns for my subscribers without the 2% management fee and sharing 20% of the profit. It’s your money, you earned it, and you should keep all the profits for yourself.
I’ve been successful in my mission since I started in 2015. It’s hard to believe that it has been seven years already. But the way I look at it is that each year is a new year. Past performance is precisely that… in the past. I’m going to do my best to keep winning in the years to come, irrespective of market conditions.
After all, there is always a bull market in at least one asset class.
That’s all we have time for this week. If you have a question for a future mailbag, you can send it to me right here.
Have a good weekend.
Regards,
Jeff Brown
Editor, The Bleeding Edge
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