• Technology will improve our lives…
  • Why market volatility doesn’t make us panic…
  • “I am now using the technology that I have read about”…

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 before we turn to today’s questions, I want to remind readers about America’s Last Digital Leap.

This is an event I’ve been preparing… because we’re on the cusp of a huge shift in an $11.9 trillion industry. This industry is about to make a “digital leap.”

Some readers have heard me use this term recently. It describes the moment when an entire industry goes from analog to digital.

We’ve witnessed digital leaps over the past couple of decades… like when Amazon changed retail by making it possible to buy the things we need with the click of a button. Or when we ditched CDs and cassette tapes in favor of streaming music through services like Spotify and Apple Music.

These are life-changing events… and they also give investors a unique chance to profit if they can get in at the start of the trend.

That’s why this new digital leap is so critical. After being held back by red tape for years, this industry is finally going digital. And now’s the time to get in position.

This could be the last digital leap we see. And that’s why I want all my readers to be prepared. So please go right here to make sure your spot is reserved. And then mark April 7 at 8 p.m. ET on your calendar.

I look forward to seeing you there.

Now let’s turn to our mailbag…

Can the AI tell me what it sees?

Let’s begin with a question on Facebook’s latest endeavors:

Dear Jeff,

After reading your Facebook piece about their augmented reality (AR) and virtual research, I was wondering if that technology will or does work for blind and visually handicapped people? Can the AI tell me what it sees? That would sure be helpful! Thank you,

– Paula B.

Hey there, Paula, and thanks for writing in. The ability to improve people’s lives is actually a very important aspect of technology, so I’m happy to address this question.

I wrote recently about Facebook’s AR ambitions and its partnership with Ray-Ban. Facebook’s product is going to be not only attractive but innovative.

The prototype AR glasses they’re developing will track eye movements and pick up audio, and they could even make use of facial recognition technology.

As I wrote then, Facebook’s AR glasses could ensure that users always know the names of everyone they encounter. When we look at someone, the glasses could display that person’s name right in our field of vision. And the glasses could even display pertinent information such as when we last saw that person, whether they have kids, and what their hobbies are.

And to your point, Paula, these kinds of functions could be extremely useful to someone with impaired vision as well, especially when combined with something like Google’s speech segregation tech.

And while we haven’t heard any specific plans from Facebook, there’s actually been quite a bit of research in this field.

After all, the World Health Organization reports that there are as many as 2.2 billion people with some form of vision impairment worldwide. So there’s clearly a space for assistive AR devices.

A 2019 study from the University of Southern California found that augmented reality could play a big role for people with retinitis pigmentosa, a degenerative eye disease resulting in low vision. In that study, the adapted augmented reality glasses they used improved participants’ mobility by 50% and grasp performance by 70%.

That’s huge. And the researchers reported that the technology they used could work on commercially available devices.

And some scientists at Caltech have modified Microsoft’s HoloLens AR device to try to help blind users navigate. Software maps the objects around wearers and then converts that information into audio cues.

Objects on the left side of the wearer would sound from the left side of the AR headset, and objects on the right would come from the right. And the pitch of the voice indicates how near or far away the object is.

In early trials, users testing this technology were able to successfully navigate a lobby, stairs, and hallway corners without any issues on their very first attempt.

Again, this is life-changing work.

So while this technology is still new and in development, I am confident that we will see some amazing options for blind and visually handicapped people going forward as AR goes mainstream.

And my logic is simple. All of the technology to enable this exists today.

We have the depth sensing and mapping technology to “see” everything in our view. 

We have the artificial intelligence (AI) to understand and label every object in view, and we also have the AI to contextualize and infer the correct actions from an environment. 

And lastly, we have the natural language processing to both understand and communicate language. All that is left is to integrate these technological components together, and we’ll have the capability that you have envisioned.

Don’t let them shake you loose…

Next, a reader responds to the recent market volatility:

I hold a portfolio with quite a few biotech, tech, and other small-cap stocks. The volatility of them has been gut-wrenching the last week or so. I double- and triple-checked my stocks. None had even approached my mental stop-loss markers, yet the “overall portfolio” appeared to be in dire straits.

DON’T PANIC! is all I could shout to myself. I designed this portfolio for volatility, for the upside appreciation. These last 10 days or so have tested my resolve on enduring the downside of volatility.

Difficult, yes. Get grumpy and yell at loved ones? Yes. Explaining to non-investor loved ones why I was so grumpy calmed me down, and I was able to NOT PANIC. The market is trying to shake out the weak-willed investors, while we pick up shares at a discount. Don’t let them shake you loose! Just my satoshi’s worth.

– Gerald F.

Hi, Gerald, and thanks for writing in with your words of wisdom. You’re absolutely right that this isn’t the time to panic.

A handful of readers have written in lately to express concern about the recent volatility we’ve seen in the stock market. As I write, the Nasdaq Composite is still down roughly 5% from its February high.

Naturally, this has led many positions in our portfolios to pull back along with it.

But it’s important to keep our strategy in mind when we see volatility like this. As long as the market volatility isn’t related to our investment theses for our portfolio companies, we shouldn’t worry.

And small-cap stocks in particular tend to swing a bit more than large-cap stocks in moments like this, but it’s important for us to maintain our composure and not allow paper losses to scare us out of our positions in solid companies. That simply turns our paper losses into realized losses.

Subscribers may have heard something similar from our fellow Brownstone analyst Jason Bodner this week on the subject:

This current batch of volatility is just par for the course. I have seen it a hundred times and will see it a hundred more.

The best reaction is twofold. One, don’t get thrusted out of great positions at the wrong time. And two, be ready to spot opportunity when it arrives. Rocky roads, like we’re seeing now, usually bring us one or more such opportunities.

And he’s absolutely right. Right now, rather than panicking, we’re on the hunt for great companies that this dip has brought back to reasonable valuations.

So I encourage all readers to stay the course and not allow the big money that is shuffling stocks around to push us out of great investment opportunities.

And one more thing…

It is very normal to see higher volatility toward the end of each quarter, and especially at the end of the year. Why?

Well, all of the hedge funds and institutional funds that are incentivized on quarterly performance tend to rebalance portfolios to their advantage.

This creates what I call some artificial volatility, in other words. If it weren’t the end of the quarter, much of the trading wouldn’t have happened.

To the extent that we can, we should always try to keep in perspective the difference between what is happening with the underlying stock that we own versus general market volatility. 

If there is a problem with the stock itself – if something has fundamentally changed with our investment thesis – then it is time to sell. But if this hasn’t happened, and the broad industry and economy are healthy and/or getting stronger, then we hold on.

Another way to weather volatility like this is to put the time frame in perspective. After all, most investments are made with the intention of capturing long-term capital gains. Long-term capital gains allow us to enjoy a much lower tax rate on those gains, and all it requires us to do is hold for 12 months or longer. 

Therefore, we’re really not worried much about some short-term volatility in those first twelve months. We’re just working toward our long-term capital gains.

One final point. When there is any fundamental change in my investment thesis in any company that I have recommended, I will let subscribers know.

And if I feel that the overall economy is in trouble and there is a systemic concern that will affect all sectors of the market, readers can be sure that they will hear from me directly with guidance on how we should position ourselves.

The real value of technology…

Let’s conclude with a personal bit of reader feedback:

Dear Jeff, I want to thank you for your programs. I am 63 years old, and I was diagnosed with ALS (Lou Gehrig’s disease) in October 2019. The disease has progressed rapidly.

I have worked my whole life and have always handled the investments to take care of my family. I want to ensure my wife, kids, and grandkids are financially ok and understand how best to invest for their retirements.

I have been using your programs to teach my wife and kids since I subscribed nine months ago. It was the best thing I ever did and has kept me going. It is never too late to subscribe. I am now using the technology that I have read about through you, as I have an eye-gaze computer that I use to speak, drive my wheelchair, and use my computer.

I am excited about [this biotech company]. I have the genetic form of ALS, and this gene editing approach will help my family and others… I want to thank you for everything you have taught me.

– Ron P.

Ron, thank you for writing in and sharing your story with me. I respect your mindset, love the fact that you’re using technology to adjust, and the example that you’re setting for your family is an inspiration. 

I too am sick. And I’m working hard to get better. I can’t imagine leaving this world without things in place for my family to be taken care of. I could not go in peace. Positive actions and forward motion always make me feel better, even if they come with some sort of sacrifice.

It is for reasons just like this that I am so passionate about the technological progress we are seeing, especially in areas like biotechnology. As I wrote in response to our first question above, technology really can improve people’s lives.

Genetic editing in particular has such powerful potential. And I believe genetic editing technology like CRISPR and base editing will help us cure every disease of genetic origin.

There are so many incredible companies working in this space, including the one you mentioned (which I redacted out of respect for paid subscribers). It’s amazing to see the rapid progress being made, especially with the tailwinds of the pandemic behind this trend.

And I’m very glad my research has helped you and your family learn more about investing. It is truly messages like these that motivate me to do what I do.

And the good news is that we have more gains on the way in our portfolios. We have a lot to look forward to in the coming months.

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 great weekend.

Regards,

Jeff Brown
Editor, The Bleeding Edge

P.S. If you haven’t already, please make sure you’re signed up for my upcoming presentation on American’s Last Digital Leap. I can’t stress enough that this might be the very last digital leap we see… and because it’s happening in a massive $11.9 trillion industry, the gains could be record-breaking.

Go right here to make sure your spot is reserved.


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