AAPL vs. DDD: Invest in the 2021 Mainstreet Market
You might as well compare a dinosaur to an ant…
$2.2 trillion Apple (AAPL) may have impressively ruled in a different time. Dinosaur.
Now, the tiny America 2.0 companies — like $6 billion 3D Systems (DDD) — are ready to carry the growth of the market. Ant.
Small but mighty.
I believe these America 2.0 stocks will lead the new Mainstreet bull market. Smaller means more room for gains!
If you’ve got money in stocks — or bitcoin — you should check out today’s Market Talk.
I’ll tell you:
- The key time to buy to make the big gains in today’s market.
- The best way to hedge against volatility.
- If the government can outright ban bitcoin?
Watch now for all these answers and more:
The Tech Stock “Crash” and Market Volatility
Amber Lancaster: Today, Paul is joining us to give his insights on current market activity and tell us why he is still very bullish on America 2.0 and Fourth Industrial Revolution stocks. Plus, we have a treat for you. He will answer some great questions we received on Twitter and our email inbox.
Also, please stay tuned and I’ll share three major reasons why our America 2.0 forecast is strong with upward gains ahead.
Paul Mampilly: Thanks Amber. Thank you for having me on. Market Talk is incredible. You have done an amazing job. Thank you do much. We have to thank Alex back there for being on. Just to talk about what’s going on, you know there’s been a “crash.”
Our colleague Ian Dyer and I covered this on the IanCast on Friday. Go watch that. We covered all the reasons out there. However, let’s talk a little about what we see likely to happen in 2021 and what is going to unfold in our judgement. Nothing happens in a straight line, but when you look at what happened after the crash in March 2020, essentially it has been a straight line up.
There have been maybe one or two small interruptions. Many stocks have gone up hundreds of percent, even thousands of percent. It’s completely normal for some amount of profit taking to happen. When that happens, it includes people at large asset management companies with hundreds of millions of dollars to take profits and to raise cash.
I can say that I believe some of this is actually going to help us. They are selling stocks like Apple, Microsoft and big multi-trillion-dollar companies. Where are they putting it? Into America 2.0 companies, Fourth Industrial Revolution companies.
We have been bringing up this example again and again: Apple on the high side is a $2.2 trillion company. Then we have stocks like 3D Systems, which is our signature America 2.0 company because we believe so much in the capability of 3D printing to revolutionize the world.
This company has a stock market value of $6 billion. Many people would think $6 billion is a large number, but it’s a small number when you compare it to $2.2 trillion. It’s the equivalent of an ant relative to a dinosaur. In that lies the promise of what you can get by being invested in America 2.0 and the Fourth Industrial Revolution.
These companies can go up and keep going up for years and years because they are starting so small in a world where they can generate extraordinary value. So that’s point number one for people who are concerned about the volatility and the fact that many Fourth Industrial Revolution stocks have dropped a great deal.
That’s because they are small. In the stock market, they are illiquid. The big money simply cannot put $20 billion into a $6 billion company. Right now, this is almost exclusively for Main Street Investors. Regular Americans can buy in. If they take their $5,000 or $10,000 and go in, they make no impression on the price.
However, if a very large company, asset management company, mutual fund or hedge fund wanted to put money in, they would have to bid it up. The key is to be in before those folks come in. I would tell you what is going on is par for the course. It’s very normal.
I believe there are still incredible returns ahead for these companies. They are so small and they can grow so big. From a macro perspective, you report on it all the time. There is no systemic problem of any kind. Households and families have cash, companies have cash, the banking system has cash.
People are still confident. We can determine that by the fact people are still buying houses and consumer spending is so high. It is still compressed from the pandemic and the fact we’ve been staying in. The current environment where people are fearful, I understand.
Every time there is volatility people are afraid. Nonetheless, we believe there is amazing upside left in America 2.0 stocks, Fourth Industrial Revolution stocks. However, there is genuine risk in the other side, America 1.0 stocks and old world stocks. We would tell you the better bet is to be in America 2.0 and Fourth Industrial Revolution stocks.
The Best Way to Hedge Against Volatility
Amber: We received some great questions for you today, Paul. The first one is from Doug. Doug is writing in on behalf of his mom, Donna.
“My mom Donna and her trusty golden retriever, Bubba, have been using a combination of your Profits Unlimited and our investment picks. She was left a 401(k) and we have been using it to generate her income.
Your picks have been stellar. My question is, what’s the best way to hedge against volatility? Is it put options on the S&P 500 and individual stocks? Or is it inverse ETFs?”
Paul: Truthfully, the answer from our perspective is none of the above. Before I go into the answer I want to thank you for your email and your kind comments. We guide our folks to Rules of the Game. We tell our folks if they are afraid of volatility, then only own enough stock that you are willing to endure that volatility.
Keep cash in your account for your needs. Versus putting that all in the market and riding the roller coaster up and down, feeling the fear and the nerves. In Rules of the Game we tell people to leave cash in their brokerage account or investment account.
In other words, in your Fidelity account, TD Ameritrade account, E*Trade account — pick your broker and in that account keep that cash in there. You experience less volatility when markets do what they do. There are down periods in any market.
You want to endure through them to get the big gains from these phenomenal stocks. That is what we tell our subscribers and our readers. That’s one of the central things in what we call Rules of the Game. I tweeted recently and said to make money in the stock market you have to have some money management rules and way of operating.
This is one way that addresses the central reason why people sell, which is fear. If you keep that little buffer and emotional security blanket of cash in your account, on days when everything is going down you are experiencing a lot less volatility.
I know that is different than the options you presented me, but it’s what we feel is a simple effective way in terms of the actual numbers and you have to take care of yourself emotionally. Otherwise, there is no shot of experiencing success in the market or having any shot of making money in the market.
The Fed Issuing a Digital Dollar?
Amber: Our next question is from Aris. He would like to know your thoughts regarding the Fed looking at issuing a digital dollar and how this would affect Bitcoin (BTC) and Ethereum (ETH).
Paul: There’s been a lot of talk of this. Central banks around the world are looking at digitizing currency. That’s because digital money is so much more convenient. It’s faster, safer, trackable and cheaper. If you have tried to send a wire you know it can be expensive.
It also takes all day to get there, instead of seconds with digital money. And many banks still require you to come into their branch to actually initiate it. Versus picking up your phone and sending it to someone on their phone. It’s no surprise it’s there.
From my perspective, it would mean there would be more adoption of crypto to improve our lives and make our lives easier and better. I believe it would actually drive more people to start to save in BTC. It’s a universal savings account for people around the world.
I believe it’s ultimately bullish and positive for BTC that the central banks around the world are thinking of doing this. There are a number of cryptos that might benefit from this because the central banks have no ability to create their own blockchain, so they are going to use one that exists.
Our amazing colleague Ian Dyer and I are looking to start a new crypto service. If you are interested in that, make sure to follow us on our free e-letter, Bold Profits Daily, and subscribe to this channel so you will be up to date on the latest on that. Let’s go to the next question.
Can Governments Ban BTC?
Amber: Our next question is from Howard on Twitter. Howard has a question regarding BTC and your tweet from Friday that BTC is coming from the world’s profligate currencies. Howard asks,
“Is the only major risk that governments will ban it? Can they actually do that?”
Paul: It’s impossible to ban. In a way, all BTC is is a series of numbers. You can ban people from holding it, but it’s simply a series of numbers. You can write it on a piece of paper. No one would know if you owned it or not. If people around the world recognize it has value, it would be impossible to ban.
They could ban the trading of it. They could ban people exchanging it. It would be impossible to ban because it exists in no single place, it has no issuer, it has no controlling authority. That’s its elegance and beauty. It would be impossible to do it.
That tweet was a Pacman character swallowing up all these emojis was the basis for what I have been telling people about why I believe BTC is going to be successful. I have a price target of $250,000 over the next one to three years. Our colleague Ian Dyer has a target even higher at $350,000.
That’s because we believe the vast majority of the world’s currencies are non-currencies. The governments inflate the value down to zero in five or seven years, sometimes faster. People around the world are adopting BTC. All the value in that is going toward BTC.
BTC is also absorbing a significant amount of the value people used to place in precious metals like gold and silver. BTC is superior to that in our judgment. It’s more divisible and more portable. It’s more finite. Only 21 million BTC can ever exist. It’s taking share from gold and silver and I believe that is going to continue.
Those are two places that have trillions of dollars of value that I believe can go into BTC and other cryptos. I believe the number of negative cases to build for BTC are hard to make the case for versus the positive case.
The Quantum Financial System and Buying Gold
Amber: Thanks for that. Our last question for today is from Jorge. He wrote us through our mailbag. He says,
“There is a lot of talk about quantum financial system in the works. Financial advisors are telling us we need to get out of stocks, bonds, options and cash because they will become worthless soon and put our money in gold. What is your take on that? Do we need to do anything right now?”
Paul: There is always a group of people who believes the world is going to end, doom and gloom is inevitable, zero is the only outcome, sell everything, hold nothing. We disagree with that.
We are bullish, optimistic, positive — BOP — on America 2.0 stocks and Fourth Industrial Revolution stocks, BTC, crypto, the technological megatrends of Internet of Things, artificial intelligence, blockchain and precision medicine. We have a complete transition from unsustainable energy to sustainable energy.
Then there’s 3D printing. There are so many extraordinary things to be BOP on. I have no idea what the basis of these pessimistic thoughts are. We can only represent our viewpoint. We are BOP. I believe that stocks associated with America 2.0 and the Fourth Industrial Revolution are investments that belong to a new world.
They are going to do phenomenally well. I have already told you what I believe is going on with gold. Hopefully that was an answer.
Amber: Yes, that was an excellent answer. Paul, thank you for joining us today. We learn so much from you all the time. I’m so glad you take the time to talk to us on these Market Talks. I hope everyone gleans some nuggets of information from you.
Just to wrap up our thoughts for today, check out these three charts that show how the fundamentals of our America 2.0 forecast is strong with upward gains coming to fruition. The first chart comes from the Federal Reserve of Atlanta’s GDPNow forecast model.
As seen with the upward green arrow, the GDPNow predicts U.S. GDP growth for the fourth quarter will be an impressive 8.8%. This is encouraging news for the growth of the U.S. economy. It gets even better than that for fiscal year 2021.
The GDPNow forecast shows a 7% annual jump in nominal GDP for this year. This is potentially “the fastest annual advance by U.S. nominal GDP since 1989.” Chart two shows how the Dow Jones Transportation Average has room for further gains.
Per Bloomberg, fresh off its best performance in three months, this index tracks companies that are truly moving the two R’s in Paul’s three R’s: restocking and reinventorying. For anyone who doesn’t recall, Paul’s three R’s are restocking, reinventorying, reshoring. These may still have another gear to shift.
“The 20-component index of airlines, rail operators, truckers and package delivery stocks seen by many investors as a barometer of economic activity is trading at the highest level against its benchmark since September 2018. Growing optimism over a $1.9 trillion stimulus plan and continued vaccine rollouts should provide the necessary fuel to keep the ratio going higher as the economy opens further.”
All I can say it fasten your seatbelts. The third chart showing America 2.0 fundamentals are strong, shines a bright light on our Main Street stock investors just like you. Last week, during the market rout, strong hands and fearless investors proved undaunted by the recent volatility.
This chart shows how investors scooped up equity ETFs during the recent market pullback. Per Bloomberg Data, ETFs saw consistent inflow, including $2.7 billion just last Thursday. In February, ETFs added a cool $80 billion to its coffers, four times the average.
Simply put, these are huge numbers. It just shows what Paul just said: The BOP sentiment reigns supreme among equity investors with more strength to come. If you want to trade in this market like these fearless investors, coupled with the expert guidance of Paul Mampilly, check out his Secret Portfolio stock trading service.
This service is all about finding diamonds in the rough. Paul’s Secret Portfolio offers lesser-known investment opportunities available in the market. Think about this: Each recommendation in this service is made with one goal in mind, which is to start with a $10,000 portfolio and turning it into a potential multi-million-dollar windfall. Click here to learn more.
Finally, turning to the U.S. economic calendar week ahead, there will be six major releases. On Wednesday, February’s employment change will post at 8:30 am. On Thursday, January’s final durable goods orders and factory orders will post at 10 am.
On Friday, February’s jobs report, January’s trade balance and January’s final number for wholesale month-over-month will post at 8:30 am and 10 am. Remember, you can follow Paul and me on Twitter: @MampillyGuru and @ALancasterGuru.
Until next time, take care.
Editor, Profits Unlimited