- Am I biased? One reader thinks so…
- The third-generation blockchain is live
- An important lesson for investing in early stage tech
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.
But before we get to today’s question, I wanted to issue a reminder. Yesterday, I sent you a brief video message. I told you about a unique event taking place on December 11th. It involves a former billion-dollar fund manager named Larry Benedict.
You might have seen Larry profiled in the book Hedge Fund Market Wizards. I had a chance to review Larry’s track record and his trading strategy. As somebody who actively traded for years, I can tell you that Larry’s performance is impressive.
Now Larry wants to bring short-term trading to everyday traders. Bleeding Edge readers should take two minutes to get all the details for themselves right here.
Now let’s turn to today’s mailbag.
I only have one “bias”…
First up, am I “biased” with my research? A reader wonders…
Hello, Jeff. With all due respect, I think that your bias against certain companies and in favor of others is very off-putting. For example, you *always* write nice things about Tesla and disregard that much of what it has done has been funded by government subsidies.
You also say nice things about Apple and hold Intel in low esteem due to flaws in its chips (and other things). Yet if I’m not mistaken, many Apple desktop and laptop products use Intel chips. […] The bias evident makes your investment recommendations less credible in my honest opinion.
– Joe A.
Hi, Joe. Even though you seem upset with me, I still want to thank you for being a reader. I know our time is valuable. So I appreciate that you take the time to read my research and provide feedback.
The recommendations I provide for readers are 100% unbiased. No companies pay me to write favorable research for them. I never publish research for the benefit of external advertisers. Neither I nor my publisher receive any advertising revenues, marketing fees, or commissions for any research that we publish about any company. And I never recommend publicly traded companies that I personally own.
In other words, there are no conflicts of interest. It’s completely the opposite of Wall Street. This is how I can remain completely objective and act only in the best interests of my subscribers. That’s my priority.
My only “bias” is for technology companies that have strong investment return potential. My bias is for companies that have their best years ahead of them, not those that continue to struggle, can’t innovate, have lost their edge, or are systematically broken.
And my investment research is obviously focused on technology companies, technology trends, and actionable investment advice, not on government subsidy programs.
Yes, there has been a federal electric vehicle (EV) tax credit. This is a program that gives buyers a tax credit up to $7,500 if they purchase an EV. The tax credit goes to the consumer, not to Tesla. And consumers who buy an EV from any EV manufacturer can benefit from this tax credit. Consumers who buy a Ford, Toyota, or Chevrolet also take part in this program.
States provide tax incentives to both technology companies and non-technology companies alike for moving operations in state. For example, Tesla received tax incentives for building its Gigafactory in Nevada. New York provided incentives for it to build a solar plant there.
Does any of this information require a disclaimer when I write about companies in The Bleeding Edge? Definitely not.
The whole point is to curate the most interesting things that I see happening in the world of technology each day and share those things with readers for free… I think it’s a pretty good deal.
The more detailed analysis takes place in my investment research products, where I have the “space” to dig deeper into companies.
If a government subsidy or tax incentive were central to an investment thesis, it would certainly make it into my investment research. But the focus is almost always on things like new product innovations, competitive positioning, intellectual property, and the mispricing of assets not well understood by Wall Street.
Also, I have no grudge against Intel. It has been a pioneer in the industry for many decades. But recently, the company continues to disappoint me.
And what concerns me is the breadth of its failures… everything from management’s inappropriate relationships with subordinates, lack of product innovation, bad acquisitions, missing new product deadlines (by years), failure to correct architectural flaws in its products, and so on.
And that’s on top of the fact that Intel has completely missed the smartphone revolution. Apple has almost entirely shifted away from Intel products.
And as a final note, Apple is transitioning away from using Intel chips even in its Mac computers. Just as Apple did with its smartphones, it is designing its own semiconductors for its Macs. That’s obviously bad news for Intel.
I just can’t be bullish on Intel right now, especially when there are great companies like AMD that are eating Intel’s lunch. (Subscribers to my large-cap investing service The Near Future Report are currently up more than 260% on AMD.)
The same thing goes for a company like General Motors. It is currently trading at the same level as the end of 2014… five years ago. Of course I prefer Tesla when comparing the company’s prospects to a firm like General Motors.
Joe, you may disagree with my conclusions. I understand. But that’s the beauty of this business model. I publish conflict-free investment research I believe in. And readers like you are free to decide for yourselves.
My goal is to give valuable information and perspectives on technology companies so that those who read my work are empowered to make their own decisions.
This is a promising project, but don’t buy it yet…
Next up is a great question about a blockchain project…
Hello, Jeff, I’ve only recently become a member of your Near Future Report and Bleeding Edge letters, but I can tell you I look forward to them almost more than any other newsletter I get. I love giving my young children insight into the new technological advances that will influence their lives – especially to see their eyes widened and lit up with the opportunities they envision!
My question to you is about the blockchain world. Hedera Hashgraph seems to have the perfect blend of security, safety, and speed (especially when combined with apps using 5G) that can really make a difference in our lives.
I haven’t seen you cover blockchain much, so I’d love to hear your thoughts on the future of Hedera versus old-school blockchain and its real merits. Do you think it’s as powerful and disruptive as I do? Thanks for all the great work you do!
– David D.
Hi, David. I’m glad to hear you’re enjoying your subscription to The Near Future Report and The Bleeding Edge. Thanks for being a reader.
And it’s great to hear you’re sharing these insights with your children. As parents, educating our children on bleeding-edge technologies that will impact their lives is such an important task. As I mentioned in my last mailbag edition, providing our children with an education is the No. 1 “investment” we should all make.
As for your question on Hedera Hashgraph, it’s a very promising technology.
Hedera Hashgraph is thought of as a more advanced blockchain technology. It’s like a third-generation blockchain. It went live in September.
Of course, Bitcoin was the first generation. Ethereum was the second generation. And now we have Hedera Hashgraph. It can do everything Bitcoin and Ethereum do… And it can do it faster.
Hedera Hashgraph uses a technology called directed acyclic graphs (DAGs). DAG technology allows Hedera to confirm transactions individually in a matter of seconds.
It doesn’t need to lump transactions into blocks and then confirm those blocks, which is what most other blockchain technologies do.
And this allows Hedera Hashgraph to process more than 10,000 transactions per second. That’s fast enough to handle all credit card transactions globally every day.
By comparison, Bitcoin can process up to seven transactions per second. And Ethereum can process up to 20 transactions per second. It’s a big difference in throughput.
I like the technology. I think it has great promise. That’s why I have followed Hedera Hashgraph from the beginning. I even attended the exclusive launch party in New York City.
But here’s the important part… I didn’t like its valuation.
I had a chance to invest in Hedera Hashgraph early on. My first window was at a $3 billion valuation. My second window was at a $6 billion valuation. I passed on both.
Those are just absurd levels for a project that didn’t even have functional tech at the time. And it turns out I was correct in my analysis…
The token (HBAR) just hit the market in September at a $5 billion valuation. And it tanked. HBAR lost 77% of its value in just over 24 hours.
And guess where HBAR is trading today… at a mere $22.5 million market capitalization. Anyone – and I mean anyone – who invested in HBAR prior to the project going live lost their shorts.
And you’re right, I haven’t been writing too much about blockchain technology and digital tokens very much during the last couple of years. It is not because I don’t see the promise. I’m actually still bullish over the long term. But the regulatory environment for digital assets in the U.S. right now is appallingly bad. Investment in blockchain technology and capital formation has moved offshore.
My focus has been much more on the “picks and shovels” investments that enable blockchain technology to work as well as on the moves that large technology companies are making in the blockchain space. These are far better, safer, and simpler investments to make for most investors while still offering strong exposure to blockchain technology.
And one final note, David…
I’ve been heavily involved in researching artificial intelligence and 5G wireless technology this year. But I’m very involved in the blockchain industry. I’m an active member of the Chamber of Digital Commerce. I help advocate for a light regulatory touch on the blockchain industry, and I visit D.C. often.
Since you’re a paid-up subscriber of The Near Future Report, I encourage you to access one of my latest research briefings on blockchain technology. It’s called The Private Money Revolution.
In it, I show readers why digital currencies, like Facebook’s Libra cryptocurrency, will quickly replace today’s fiat money system. I also outline the companies that will profit from this transition. Access that right here, David.
And for other readers, you can join me with The Near Future Report and access this report today by going here.
How to be successful as an Early Stage Trader member…
Let’s conclude with a great question about portfolio maintenance…
Hi, Jeff. I’m a member of your Early Stage Trader. As a new member, I decided to invest small, cautious amounts of money into each of the stocks you’ve recommended. Since then, I’ve been very impressed by your emailed updates and The Bleeding Edge articles. Your advice and information have been very thorough. I’ve decided I’d like to invest more. Would you be able to give me your advice on which of the several stocks you recommended may be the best to invest in at this time?
– Scott S.
I’m glad to hear you’re enjoying your research subscription, Scott. And I’m happy to hear you’re finding value in my research. We have our weekly update for Early Stage Trader due out later this afternoon. Be sure you don’t miss it.
As a publisher of investment research, I can’t give personalized investment advice. But I can speak to you about the general guidance I give to all subscribers.
When investing in early stage companies, like the ones in Early Stage Trader, it’s important not to pick and choose. This is especially important when investing in early stage companies. While we may have strong convictions about one company compared to another, there are many variables that impact the potential investment returns in any one company.
Some of our trades will produce solid, double-digit returns quickly. And others will climb by triple digits. Making three, four, even five times our money on these trades is very possible by following our system.
But the only way to ensure traders get exposure to all this upside is to build a complete portfolio of these early stage companies. So that’s why I recommend not picking and choosing. There will always be a few outliers that deliver extraordinary returns, and we need to make sure that we have exposure to those companies in our portfolio. They have an outsized impact on overall portfolio performance.
That’s all the time we have this week. If I didn’t get to your question this week, write to me here. I’ll do my best to get to it next week.
Regards,
Jeff Brown
Editor, The Bleeding Edge
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