- Here are my thoughts on the new space race
- I got a lot of pushback for this decision, but I’m glad I did it
- “Thank you, Lord Jesus, for good guidance via Jeff”
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.
Before I tackle the questions today, I’d like to share something pretty extraordinary with readers. Behold the one-year stock chart of Tesla.
Since July 11 of last year, Tesla has risen an incredible 500%… This has happened to the chagrin of Tesla haters and short sellers.
I recall getting into a polite argument with a professor at Yale last April. He was insisting that Tesla was just a car manufacturer trading at a ridiculous valuation and destined to go bankrupt. I told him that he was wrong and why.
I laid out my investment thesis to him and my classmates about why Tesla was an incredible buy. Aside from producing a fantastic product that consumers love, Tesla has several competitive advantages that other car manufacturers don’t have:
It designed the software and user experience for the car and built the hardware around it. This might sound like nuance, but it’s not. Tesla was the first company to enable over-the-air software downloads of its own automotive operating system directly to the car. We can think of a Tesla like an “iPhone on wheels” in that regard. The automotive industry has historically required us to bring our car to a dealer to get a software update to fix a bug – what an unnecessary inconvenience!
Tesla has developed lithium-ion battery technology that no one else has. Due to its unique approach, Tesla has been able to dramatically reduce the use of cobalt (and even eliminate the use of cobalt at its China factory) in its batteries. This has reduced the overall cost of the car.
Tesla is one of the largest and most successful artificial intelligence companies in the world. It was never acknowledged as such. And the reason its AI is so good is that Tesla cars are loaded with sensors that collect data when the cars are driving on Autopilot mode (self-driving mode). Because of this, Tesla has already collected roughly four billion miles of data. That’s not a typo. And by the end of the year, it will have more than five billion miles. This rich data set is why Tesla has the most advanced self-driving software on the planet.
And Tesla is gearing up for its masterstroke, enabling all Tesla owners to “opt-in” to a self-driving taxi service. Imagine going to work, parking your car, and clicking on a Tesla button on your smartphone. While you’re working and not using your car, your car will go out and earn money for you. It will be back in time for it to drive you back home. The car will essentially pay for itself. Will that help drive adoption? You bet it will.
In hindsight, it is now obvious who won the argument. I almost feel embarrassed for the “expert” at the head of the classroom. But I will say this…
With Tesla trading at more than $1,400 a share and an enterprise value-to-sales ratio of more than 10, now would be a good time to take profits. At these levels, Tesla is worth more than Toyota, General Motors, Ford, and Fiat Chrysler combined.
I’m still just as bullish about Tesla, but it’s time for a breather in the share price.
Now let’s turn to our mailbag…
The biggest benefit of the new space race isn’t what you’d imagine…
First up, a reader is curious about my thoughts on the “new space race.”
What do you think about this space race, Jeff? Why don’t we invest or look for ways to invest in these companies?
– Fredrik H.
Thanks for your question, Fredrik.
As somebody who studied aeronautical and astronautical engineering, I have a deep connection with the subject of space exploration. And as a private investor, I even invested in an early stage company called Axiom Space, which is building a “space hotel” for tourists.
And as you likely know, I’ve been closely following the progress of companies like SpaceX, Blue Origin, and Virgin Galactic.
Just last month, I profiled the incredible success of SpaceX’s Falcon 9 launch. It was the first time that a private company launched astronauts into Earth’s orbit. And 19 hours after the launch, the Crew Dragon spacecraft docked with the International Space Station (ISS). This was beyond inspiring.
From here, the next step is to return to the Moon and establish a permanent lunar habitat. The current administration has already stated its goal of getting astronauts back to the lunar surface by 2024.
From there, it’s on to Mars and beyond…
I believe the United States needs bold and ambitious goals like returning to the Moon and landing on Mars.
Nowadays, most kids want to be YouTube vloggers or play video games and stream on Twitch instead of becoming scientists, physicists, or engineers. Interest in STEM (science, technology, engineering, and mathematics) studies is at all-time lows. If this continues, it won’t end well.
This is a great time to have big, bold, ambitious goals that inspire the next generation of dreamers and technologists.
And to answer your question, yes. I’m actively looking for public space exploration companies. Almost all of the best companies are currently private. It is only a matter of time, however, before investors will gain access to the incredible advancements in this space.
In fact, I may have found something of a “backdoor” to gain exposure to an exciting early stage space exploration company. More on that next week.
This was an unpopular decision at the time…
Next up, a reader of my large-cap research service, The Near Future Report, has a question about how our portfolio has fared and how it will perform in the future…
Hey, Jeff. I started getting your Near Future info back in January. I was profiting approximately $380,000. The day they announced in March the news about the coronavirus being in the U.S., I immediately sold my technology stock. (Big mistake!) My question to you is this: How do you think your stock recommendations will perform during a commercial real estate disaster?
– Gerald L.
Hi, Gerald. Thanks for the question. And thanks for being a reader of The Near Future Report. I’m happy to hear you found success with my research.
As you know, the fear-induced selling we saw in early March represented one of the fastest stock market drops in recent history. The uncertainty around COVID-19 caused everybody to rush for the exit at once.
But I saw that as an extreme overreaction. It represented an incredible entry point for some of the greatest technology investments on the planet.
Gerald, I understand why you might have wanted to sell your investments. This is a very personal decision that each investor has to make by themselves depending on their circumstances. And there is certainly nothing wrong with taking a ton of profits off the table.
My recommended course of action was to sit tight, hold all positions, and remove all stop losses for our portfolio companies. Not only that, but I also continued to recommend new positions during the crisis.
This was a very unpopular decision among some of my colleagues. They asked me to reconsider. But I knew it was the right move. There were simply too many great technology companies trading at ridiculously low valuations.
And I knew two key things: This was a temporary situation that would pass, and large institutional money and hedge funds were taking the market down. We would have been selling into their panic, only to have them turn around and buy the market right back up to where it was trading.
That’s like putting our money right into their pockets.
Here’s how I described it to my managing editor at the time…
And as we know, this was the right decision. The rebound we’ve seen in our portfolio companies – especially our biotech, 5G, and cloud computing stocks – has been incredible.
I asked one of my analysts to run the numbers to find out how much investors made by following this guidance. He found that – assuming a $5,000 investment per position – our model portfolio for The Near Future Report as of late June had made $25,906 by removing stops.
Our “secret” was that we invest heavily in companies powering trends that are moving forward regardless of the pandemic conditions. By design, these companies have flourished.
With the COVID-19 lockdown, data traffic spiked dramatically. This was a boon for our 5G and cloud computing companies. And the increased attention to the biotechnology sector led to a flood of investment in our biotech holdings.
Gerald, I’m not 100% certain what you mean by a “commercial real estate disaster.” I assume you’re referring to companies shuttering their office buildings for good and retail outlets closing in the wake of the pandemic.
If that’s the case, then we have nothing to worry about. Our portfolio companies stand to profit from trends like remote work, online commerce, and increased cloud computing demand.
Thanks for the question.
This reader saw a 10x+ return from one of my favorite technology stocks…
This last comment was too good not to share…
Thought you might like to know that in 2016, I bought some [Square (SQ)] … since then 984% gain. Makes my head spin. Thank You, Lord Jesus, for good guidance via Jeff.
– Terry J.
Terry, congratulations on such a great win with an incredible technology company.
I remember when I first recommended Square to my small-cap research service Exponential Tech Investor. It was August 2016. At the time, Square had just come off a bad earnings announcement. And the company had pulled out of a bad deal with Starbucks. But I saw the potential in the company.
Here’s what I wrote at the time…
I believe that when the market starts to understand how powerful Square’s position is in the industry, and how much the company can leverage its customer base to sell new products and services, this innovator’s valuation multiples will shoot higher.
Assuming Square can stay independent, it has the potential to become the next PayPal. That could make it a 10-bagger over the next five to eight years.
At the time, SQ was trading for about $11. Today, the stock trades for about $130. I was right about Square’s potential. It did indeed become a “10-bagger” and then some.
But I was wrong about the timing. It didn’t take “five to eight years” to see that return. Square pulled it off in less than four.
That’s the power of investing in bleeding-edge companies with the potential for exponential growth.
Terry, thanks for your feedback and for putting your trust in my research. Enjoy your returns.
That’s all the questions we have time for this week. If you have a question that you’d like me to answer, write to me here. I’ll do my best to tackle it next Friday.
Have a good weekend.
Editor, The Bleeding Edge
P.S. And don’t forget to save this date: July 15 at 8 p.m. ET – next Wednesday. That’s when we will host my Timed Stocks Accelerated event.
There, we are going to talk about a little-known group of stocks that come with a “timer” attached to them. Once that timer hits zero, the stock price can rocket hundreds of percent in days or even hours.
It all comes down to a government process that impacts a select group of what I call “timed stocks.”
Should a government process have such a profound impact on publicly traded stocks?
I don’t know. But I developed a system for leveraging this process into monster gains in this little corner of the market. And I should mention, these “timers” are often seven months or less. It’s truly a recipe for big, fast gains.
And best of all, everyday investors are in the ideal position to take advantage of these types of stocks. They are too small for the institutions to get into… until after their timers hit zero and the stock price explodes.
I know this sounds sensational, but I assure you the opportunity is real. As I mentioned yesterday, some of my readers made 432% in just 41 days from one of these timed stocks. And we are set to book another triple-digit gain in the coming days – after holding for just seven months.
I’m prepared to share all the details about this opportunity with you next week. I will go over how these timed stocks work, and I will even reveal when my next timed stock is set to explode higher. Simply go right here to register for the event.
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