Realigning Around Technology and AI

Colin Tedards
|
Jun 30, 2023
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Bleeding Edge
|
7 min read

Dear Reader,

Welcome to the weekly mailbag edition of The Bleeding Edge. If you have a question you’d like me to answer in a future edition, write to me by clicking right here.

Hello Colin. One observation I can share is that I think the former editor of these publications made a mistake to jump on every bandwagon that rolled by – SPAC’s, NFT’s, etc.

My suggestion to you is focus on a more narrow band of what you excel, at and forget the rest or find someone who is expert in other opportunities to partner with. Good luck in your new position.

– Craig E.

Craig, thank you for reaching out. Very wise advice. This is exactly what I will be doing here at Brownstone Research. First, the opportunity around AI is so great, there’s no reason to try and look elsewhere. These are also all stocks I know intimately from a fundamental and product perspective. Additionally, I learned many years ago from investing my own money that being a “Jack of all trades and a master of none” applies to the stock market.

Hi, this message is for Colin.

Thank you for your video introduction. I’m excited to learn about your approach to your research and investing.

Second, are the recent recommendations to close positions basically to realign the portfolio? Does the selling mean that you don’t like the positions? One in particular is BioMarin, which has performed okay and is pending FDA approval at the end of this month for their drug for hemophilia. Many analysts have targets in the 120 range. I plan on holding through that decision with a stop loss on the downside in case the approval doesn’t happen. Do you have a different view on that stock?

Thank you again and looking forward to reading and prospering from your research and insight.

– Joseph S.

Joseph, thanks for the message. Yes, the selling recommendations are for two purposes. First, many of these positions were down so much that the path just to break even is a steep mountain to climb. This is why having a risk management strategy from the beginning is so important.

Second is I want to realign the portfolios around technology and AI. This is what I’ve spent my adult life working with and I have a deep understanding of how each company fits into the ecosystem of tech.

I truly believe specializing in one area of research is the way to profit in the stock market. Trying to cover areas like biotech, crypto, bonds, and currencies is a great way to spread yourself too thin. At this point in my life, I know my weaknesses and strengths, and will only cover stocks I have significant experience with.

I just listened to Tedard’s video recording on the remaining Exponential portfolio. The financial numbers for OKTA seem to be completely wrong. Check out the numbers on Finviz.com. Completely different. Thanks.

 – Gordon E.

Thanks for the message, Gordon. I double checked. What you’re seeing on a site like Finviz are trailing twelve-month (TTM) totals. The video covers the latest three-month period ending April 30, 2023. Sites like Finviz use webscrapers to pull data from SEC forms and it’s not uncommon to find errors. That’s why I’ll always show you the SEC form directly from the company’s investor relations page.

Colin,

When do you expect to be sending a new stock purchase recommendation or Recommendations? Please let me know, thanks.

– Krystyna B.

Thank you, Krystyna. Recommendations are coming in the next issues of Exponential Tech and Near Future Report. I’m really excited about these opportunities and can’t wait to bring them to you.

Dear Colin,

You recently wrote that we sell Bitcoin, Ethereum, and Litecoin. My coins are in a Roth IRA. I’m 69 years old and want to let it ride for a while. Do you recommend other crypto currencies to buy in the future for an IRA?

– S. V.

Hi S.V. I first started buying Bitcoin on 1/27/2015 at $266.05. I‘ve also dabbled with mining for crypto in the past. It’s a space that is interesting and one I have experience in, but it’s not an asset class I have a fundamental viewpoint on. I don’t anticipate making any crypto currency recommendations simply because I have far more experience recommending technology companies.

As a lifetime Brownstone Unlimited member, I realize that Colin is working hard on the transition – he’s providing lots of insights!

However, I’m a visual learner and senior citizen, so the combination of video format together with his rapid-fire delivery is a bit difficult for me.

Will you please provide transcript alternatives along with the videos?

– Ann G.

Ann, thanks for the message. Yes, I will make sure we start getting transcripts on the videos. My goal is to make them shorter, so that will help in that regard. I also tend to get a bit excited talking about companies, so I start going full speed. I’ll work on the cadence and make it clear. If you ever need clarification on anything just reach out and I’d be happy to respond.

My question is regarding risk management. Whilst this is very welcome and much needed, I notice that on the Near Future Report, the portfolio recommendations are to hold, with no buying range. As I haven’t yet purchased these companies, are they still buys, or should we only hold these if we have already bought them?

– Andy T.

Good question Andy. Many of these companies will be worth accumulating again in the future. When the stocks pull back to historical support levels – that will be the signal and I will send an alert. Right now, most of the tech sector is in rally mode and my recommendation is hold through these stretches. Rest assured, better buying opportunities always materialize.

The videos so far are good information about the fundamentals of the stocks you decided to keep in Exponential Tech Investor, but it’s really just running through the numbers. While it’s important to show the fundamentals and TA, I think I speak for most readers who are still trying to get their head wrapped around having to sell 20+ positions for a loss when I say tell us more of what YOU really think. What will be the direction moving forward for not just ETI, but for Brownstone Research?

You have taken over the life’s work of another person which had a clear vision and direction with him in charge. Jeff spent a lot of time explaining the thesis for each investment. Unfortunately, last year the Fed destroyed this portfolio so I understand the need to cut losses now. But what is your vision for it going forward? I just haven’t heard what your plans are yet. In fairness maybe you are getting to that, but it needs to be addressed. This sudden ousting of Jeff (maybe not for you but for the reader it was very sudden) is still likely sinking in for most of us who have put thousands of dollars into this service. Just keep that in mind.

Nate W.

Thank you, Nate. I really appreciate your insights and questions. Part of moving forward is letting go of the past. Many of the positions I recommended selling were down amounts that would take 500%+ rallies just to get back even. Regardless of a fundamental outlook, that’s a hard mountain to climb. The objective going forward is to not be in that position. I won’t be excited sending out an alert saying our stop-loss has been reached and we have to sell, but that’s the proper risk-management techniques my investing mentors taught me ages ago.

My vision is clear. AI and technology are about to go on a super cycle. AMD CEO said AI accelerated server demand is going to go from $30B to $150B in 5 years. $150B is more than what Intel, AMD, and Nvidia will earn in revenue combined today. That will usher in the next era of products and services just like cloud computing brought us Netflix, social media, and Uber.

The mistake would be to spread myself thin looking at sectors that aren’t going to benefit from AI growth.

Each stock I recommend will have a clear thesis. I look forward to bringing you this research in future issues. It will be based often with firsthand knowledge of how the technology actually works, the financials, and the technical charts. You will see this in my research reports and accompanying videos.

I found your article very interesting in my search for disruptive innovation. Any micro- and small caps you are recommending for retail investors like me?

 – Malcolm F.

Thank you Malcolm, yes I have a large watchlist of micro and small cap companies I follow. Several will be recommended in future issues including the upcoming Exponential Tech issue in July. With that said, we’ll have tight stop losses on these stocks to maximize our risk reward potential.

Regards,

Colin Tedards
Editor, The Bleeding Edge


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