• Should we be worried about a market pullback?
  • How will China and India’s bans affect crypto?
  • “The frenzy will be like nothing we’ve ever seen…”

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.

If you have a question you’d like answered next week, be sure you submit it right here.

Should we take more profits soon?

Let’s begin with a question on taking profits:

Dear Jeff, I followed your advice, and I bought 18 [shares of a recommended company] at $45.50 and sold them at $189. A very nice profit.

I hope we can take more profits by the end of the year as I am in 70 Brownstone Research positions. So I am running out of available cash. As a lifetime subscriber, I am very pleased with your outstanding services.

As I am turning 75 early next year, I am very concerned about a new pullback in the coming months. So my concerns are about taking profits or losses in due time. Thank you very much.

 – Hubert F.

Hi, Hubert, and thanks for being a lifetime subscriber. I’m glad you were able to profit from my recent Exponential Tech Investor sell alert. (Paid-up subscribers can catch up here.)

Unfortunately, I’m not able to give any personalized investment advice. It’s great, however, that you are proactively thinking about this with respect to your own situation.

Our approach to investing should change through our lives. The answer to your question can be different depending on your age, where you are in your career, if you are still working, if there are any immediate needs for cash, how much is needed for retirement, how long we expect to live, what our activities are, and many more factors.

It is impossible for anyone to give good advice without having a full picture of someone’s personal situation.

With that said, one factor I can provide some comments on is my outlook on the market.

I have to say, I’ve been shaking my head all week over this latest nonsense around the Omicron variant. Naturally, it is important that we understand what is happening with the pandemic as it directly impacts the economy and the markets.

During the week, the chair of the South African Medical Association was unabashedly calm, direct, and honest with her findings. She made some interesting comments, stating that the variant wasn’t in fact new, and they had known about it for months.

Even more interesting is she said that no one has been hospitalized in South Africa due to Omicron because the variant has proven to be very mild.

I loved the fact that she was up front enough to criticize the U.K., U.S., and other nations for their “extreme response” to Omicron. She says governments are over-reacting. Well done.

I’m looking at this small market pullback as a “breather” after reaching all-time highs. Irrespective of these ridiculous policies from public health officials, much of the country is already back to normal. And most people know that this mess is just about over no matter how hard the government and pharmaceutical companies try to keep it going.

As I look into 2022, this is obviously good news. A return to something that looks more normal, including the removal of masks on airplanes, will be good for the economy and markets.

One thing we can be sure of in 2022… Interest rates will stay at near zero levels and the current government will do everything in its power to print money and stimulate the economy.

Long term, that’s terrible. It’s stealing from the next generation. Short term, it makes for good market conditions.

I’m reviewing all positions and may issue some sell alerts between now and the end of the year. If I do, it won’t be because I see an imminent downturn, but it will be driven more specifically by whether or not I believe that a company is overvalued and there is more downside than upside in a single position.

Thanks again for writing in. Happy holidays!

Should we be concerned about crypto bans?

Next, a reader wants to know more about the effects of crypto bans:

Jeff, what is your stance on the various cryptos you have recommended in light of bans in the two largest countries, China and now India? The number of potential participants has been reduced from seven billion to five billion. Isn’t this concerning?

– Gordon E.

Hi, Gordon, you’ve brought up a big topic…

China’s government has issued a number of restrictions on cryptocurrencies in previous years, which led up to this year’s total crypto ban.

Not only has the central government outlawed cryptocurrency mining completely, but it has declared all cryptocurrency transactions illegal.

As a result, mining operations moved offshore practically overnight.

Yet China’s move was anything but a surprise. After all, China has been developing and testing its central bank-backed digital currency (CBDC) for years now. I suspect China is getting ready to launch it, and these latest edicts are intentionally designed to clear the field to prepare the country for a digital yuan.

China’s ban has actually been good for the industry. Prior to the ban, more than 53% of all bitcoin mining was performed by a small handful of companies in China. Theoretically, that could have led to collusion and control of the Bitcoin blockchain. That would not have been good.

Almost overnight, the Bitcoin blockchain network became more distributed – and as a result, more resilient. That’s a great development that was welcomed by the industry.

So while China’s ban may have limited cryptocurrency use within the country… I’d call it a net positive.

As for India, that country’s attitude toward crypto has been more nuanced. Similar to China, the Indian central bank has made it clear it wants private cryptocurrencies banned while it develops its own digital currency.

Yet the Indian government has a competing goal – it wants to promote blockchain technology. This has led to some flip-flopping decisions. In 2018, India banned crypto transactions, but its Supreme Court struck down the ban last year.

Now a bill is being worked on that proposes a ban on private cryptos… but it offers “certain exceptions to promote the underlying technology of cryptocurrency and its uses.”

And the finance minister offered this reassurance: “It is not as if we are going to… say we are not going to have any of this. There will be a very calibrated position.”

So while it’s unclear exactly what that “calibrated” position will be, it doesn’t sound like India’s growing crypto market will be quashed. After all, it grew 641% just from July 2020 to June this year.

There’s a strong interest in crypto adoption there… and plenty of money that the Indian government clearly doesn’t want to stifle. And I can tell you through my own networks that there is a lot of investment happening right now in India for India-based blockchain and cryptocurrency projects, which is very encouraging.

So to return to your question, I don’t see these developments as too concerning for the industry.

China’s stance is far more material than India’s. I believe India will be open for blockchain technology, as so much of the country’s economic growth has come from the information technology sector. I seriously doubt that the government would stifle economic growth in the software sector (blockchain tech is software/code).

China is a bit trickier, but I have a theory about how things will play out. I believe that the government needed to press the pause button on the domestic industry in order to prepare the country for its digital currency. It wasn’t to make sure that the digital renminbi is the country’s money…

It was seen as too risky to have other digital currencies in the country prior to the launch of its own. I believe that once the infrastructure is in place for the nation’s digital currency, and it has been deployed to its population, we’ll see an opening of restrictions in China for the blockchain industry.

The reality is that blockchain tech is setting the stage for a whole new generation of the internet (what I’ve called Web 3.0)… and soon we’ll see many more uses for blockchain technology in everyday life.

That’ll include things like fintech (financial technology) to simplify our transactions… decentralized social media platforms… smart contracts that execute automatically… non-fungible tokens (NFTs) and the metaverse… efficient supply chains… and so much more.

Any countries that don’t adopt blockchain technology that can do all of these things will inevitably suffer in the global markets. They simply won’t be able to compete.

The projects I recommend are the ones that are enabling this next generation of the internet. I’m not concerned about these bans. There is simply too much economic growth, value, and momentum for this technology to be stopped.

And if anyone wants to learn more about the latest ways to profit from this trend… then please go here.

Bigger than the iPhone…

Let’s conclude with a question about the Apple car:

Jeff Brown, recently I just read about the Apple car and how this will be bigger than the iPod, the iPad, the Apple Watch, or even the iPhone!

With over one billion devoted users, the frenzy to secure one of the first Apple cars off the assembly line will be like nothing we’ve ever seen…

My question: Is Brownstone Research recommending the companies that Apple will secure as its suppliers of cameras, radar units, LIDAR (light detection and ranging) sensors, and X-ray vision systems that have to go into each self-driving vehicle?

– Ed J.

Hi, Ed, and thanks for writing in. I’m glad to have you along as a lifetime subscriber. This is a story I’m very excited about…

For new readers, Apple’s electric vehicle (EV) ambitions are something of an “open secret.” The company code-named its EV initiative “Project Titan.”

Apple has kept this project quiet over the years, but we’ll occasionally see an autonomous car with lots of sensors – but no logo on it – traveling around Silicon Valley. That’s Apple working on its self-driving technology. I’ve seen it myself over the years.

Apple’s Self-Driving Prototype

Source: Mac Rumors

Apple may seem like an unlikely candidate to sell an electric vehicle. But let’s consider the company’s history.

In the late ’90s, Apple was mostly known for its personal computer business. That changed in October 2001. That’s when Apple released a surprising new product: the iPod.

The product became a sensation. Over the years, hundreds of millions of units were sold. At the height of its success – in 2008 – the iPod accounted for nearly 40% of Apple’s revenue.

Apple did it again in 2007. As I’m sure we know, that’s the year the company released its most important product to date: the iPhone.

At the time, the product was misunderstood. I remember Steve Ballmer – then CEO of Microsoft – said, “There’s no chance the iPhone is going to get any significant market share. No chance.” Ouch, that one didn’t age well…

Clearly, Ballmer was wrong, as were many others. Today, close to half of all American smartphone users have an iPhone. iPhone sales now represent more than half of Apple’s revenue.

Apple has surprised the world before. And I believe it will do so again with Project Titan.

That’s because electric vehicles today are more like large, consumer electronics products. And as Apple has shown for two decades, it knows how to make a consumer electronics product that people want.

Yet with a $2.46 trillion market cap, Apple’s best days of growth are behind it. That doesn’t mean there’s anything “wrong” with the business.

But its days of “multi-bagger” returns in just a few years are gone. So to really profit from the upcoming Apple car, we have to look elsewhere… at companies that are at a much earlier stage.

And yes, I have companies in my model portfolios in both The Near Future Report and Exponential Tech Investor that I believe will be key suppliers for the Apple Car that gets produced.

In fact, there’s one particular company in my Exponential Tech Investor portfolio that I believe will play a pivotal role in Apple’s EV ambitions. Based on my analysis, I believe there is 10X potential.

Paid-up subscribers can find my special report on this company here. And if any other readers would like to learn how to invest in this opportunity, then simply go right here for more information.

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

Like what you’re reading? Send your thoughts to [email protected].