Editor’s Note: As the market recovers, we’re seeing more and more winners and losers. We’ve been telling you about the economy’s two-track recovery for a while. And we expect sectors like artificial intelligence (AI) to be some of the winners.
Below, in an article originally published in April, Wall Street veteran Charles Mizrahi talks about why this industry is so powerful. And he shows you how you can profit. — Annie Stevenson, Managing Editor, American Investor Today
Most of the time, Mr. Market gets it right and prices stocks efficiently.
But during times of panic and fear, Mr. Market gets it wrong. And that’s when you can pick up dollar bills trading for $0.50.
If you’re a long-term investor, this should have you tap dancing all the way to the bank.
Because when stock prices bounce around based on people’s emotions and not business fundamentals, great companies get severely mispriced.
That’s the time to back the truck up and load it with great companies.
Especially when you can buy stocks that are at the forefront of huge trends measured in terms of decades — not months. Meaning the volatility that happens over the short term is nothing more than noise.
One of these trends that I’ve followed for years is artificial intelligence (AI).
The AI market is huge — and it’s growing bigger every year. In fact, research shows that AI could add $15.7 trillion to the world’s global supply over the next decade.
Today, I show you two stocks that will continue to outperform as this trend takes off.
If you want to broadly diversify into AI, I also share with you an exchange-traded fund that’s at the forefront of this mega trend.
Keep in mind, we’re only in the early innings. The best is yet to come.
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Every month, I tell my readers about a growing business that’s trading at a bargain price — and that takes advantage of these long-term trends.
By looking at stocks as pieces of a business, I can ignore the news headlines and daily market gyrations. Instead, I simply focus on what the business is worth and how much I want to pay for it.
Thanks to the recent market sell-off, many companies are still trading at bargain prices compared to their underlying worth.
So, now’s the time to take advantage of these mispricings.
Market Bounce Back
The market already bounced from the bottom it made in mid-March — when it was down 34% in one of the sharpest drops in history, the quickest bear market ever.
The market dropped 34% because of COVID-19, the government shutdown and a whole bunch of stuff going on.
And the reason it’s all over the place in just a short time span is because Wall Street is confused. Usually, it overshoots on the news, which it did back in February and March.
Back then, COVID-19 was starting to rage. The epicenter of it was in New York — New York City, specifically. The government forced a shutdown and business came to a complete halt.
And what the market does is shoot first and ask questions later.
In this case, it threw the baby out with the bathwater — and the bathtub! Everything!
My AI Investing Advice to You
Avoid looking at the short term.
Because the big opportunities — the five-baggers and 10-baggers — happen over the long term.
No one knows what’s going to happen in the next three, six or nine months in the marketplace.
Leave it to the gamblers, the liars, the BS artists, the forecasters … Let them all try to figure that out. We don’t have to deal with that.
We can avoid all that noise and focus, instead, on the next five-year to 10-year trends. Because a few major trends are going to continue to dominate regardless of where the short term is going.
And every month in the Alpha Investor Report, I select stocks that take advantage of those long-term trends that are trading for bargain prices.
Now, one of these trends that I’ve been watching for the past several years — which is just enormous — is artificial intelligence (AI).
There are market forecasts on AI over the next decade to contribute close to $15.7 trillion to global output. That is enormous. And AI robotics is only in the early innings.
That’s why, if you’re looking for a great long-term play, there are two stocks that just jump to the top.
Watch These Stocks and This ETF
One is Nvidia Corporation (Nasdaq: NVDA). Nvidia designs chips for graphics, high-end gaming, data centers, AI…
Check out the stock performance.
Over the past five years, Nvidia was up 1,200% while the stock market — the S&P 500 — was only up 36%. That’s an enormous outperformance!
The second stock which has taken advantage of robotics is Intuitive Surgical Inc. (Nasdaq: ISRG).
Check out the past five years…
It’s up close to seven times what the S&P is up. That’s 203% versus 36%.
If you ever went in for surgery and you didn’t have a bad scar and your recovery time was short, thank Intuitive Surgical. They make the robotics systems for minimally invasive surgery.
If you don’t want to pick one or two stocks but you want a broad, diversified ETF to take advantage of this huge wave, I highly suggest Global X Robotics & Artificial Intelligence ETF (Nasdaq: BOTZ).
This ETF has Nvidia and Intuitive Surgical (which are in their top two or three holdings). They have close to 40% to 50% of their holdings in their top 10. So, it’s very concentrated.
Another thing I like about it: It’s diversified not only amongst 20 or so stocks, but also greatly diversified throughout the world. Sweden, Japan and the United States make up a large part of it.
What’s great about that is that anywhere the AI trend is happening, growing, taking shape or just starting out … this ETF will have those stocks represented.
This way, you don’t have to worry about picking one stock or two stocks and maybe picking a winner or loser … This is a one-stop shop — totally diversified!
Time In Beat Timing
That’s why you don’t need to focus on that. In fact, that’s not where the big money is made.
The big money is made in playing the big trends that are going to happen over the next five to 10 years.
You just basically buy a handful of great stocks that are at the forefront of this technology, or buy an ETF which is just one-stop shopping. This way, you won’t miss out on these huge trends.
Because bottom line: The big money is made by sitting — not by trading every day.
Editor, Alpha Investor Report