Growth Stocks & Crypto: Make Money in the Market
I think that people thought the market would keep going up forever. That didn’t happen, but that doesn’t mean there’s not room to make money.
We’re seeing signals that buyers are coming back into the market.
Demand is rising in new special purpose acquisition companies (SPACs), millennial stocks and so much more surrounding America 2.0.
We have big predictions for Ethereum and bitcoin this year.
I’m not seeing any signs of a top. That means there’s so much room for our favorite word — GROWTH!
We’ve got a few ways for you to invest in today’s market. Take a look:
The Stock Market’s Healthy Correction
Let’s start with the stock market. Then we’ll go to crypto, cannabis and Tesla in that order.
Ian: Obviously there were a bunch of stocks the past month that haven’t done too well. But now we are starting to see momentum come back in.
Paul: I feel like a lot of people misunderstood what happened in 2020 and early 2021. People genuinely, toward the end of the big rise up, seemed to believe it could go on forever.
Ian: Exactly. And a bunch of people who sold for a big loss in 2020 during that market crash missed out on the rally. A bunch of them came in toward the top. That usually happens when there’s a short-term top. Everything went parabolic from November through the early part of February.
We have seen a somewhat healthy correction, especially in growth stocks which were the big leaders during that rally. For a little bit, the Dow and S&P and older stocks like that were leading. But now we are starting to see volume come back into America 2.0 stocks and driving them higher.
Paul: One of the things I have been telling people in the Profits Unlimited weekly update is that I believe some of this is being put on for show to get people to dump out of their growth stocks at cheaper prices. They already missed out on the move, which is why they got in on growth stocks in February.
Now, many folks who were late have seen losses in their accounts are going to dump out of growth stocks and buy what? All those value stocks. You can imagine what is, in our opinion, likely to happen next.
Ian: Value stocks have been up and down, but mostly in a downtrend the past couple of years. I don’t think that’s going to be any different. It’s just another short-term rally for those. Long term, the money is still going into growth stocks. That’s where the demand is.
That’s where we want to keep looking. It was actually a really good dip to buy.
Paul: That’s where the demand is, that’s where the growth is and that’s where the demand is for the actual stocks themselves. Many folks struggle to understand our approach where we look at the demand and supply for the stock itself. Versus evaluating the company.
They struggle with this idea. You need a lot of people who are willing to come and bid something up to see it go higher persistently and consistently.
Ian: Right now that’s growth stocks. We are in a time where everything is being disrupted. There are new industries coming about. The market is trying to figure out how much those industries are going to be worth and where each company is going to be in terms of market share.
These new industries are extremely popular. Until recently there were almost no publicly traded companies in them. Now we are seeing companies go public, especially through SPACs. That’s a big trend recently.
A lot of America 2.0 are coming public that way and it’s driven so much demand for the sector. That’s a big reason we have seen these stocks go a lot higher last fall and early into this year.
Paul: You remember, Ian, you’ve been with me nearly four years. You remember when you started working on our first options service which was Rapid Profit Trader. Do you remember the kinds of stocks we used to put trades on? There were simply no Fourth Industrial Revolution stocks out there.
We did a lot of stocks just trying to find where the technology was actually embedded. It was hard to find. It’s becoming a little bit less hard to find. Nonetheless, the big money I doubt is in any of these stocks in any quantity. What do you think?
Ian: I agree. A lot of these stocks are smaller. Back then the most cutting-edge innovation was Salesforce, Adobe and Intuit. Which are still good, but there are way better opportunity stocks in terms of growth at this point. There are companies growing 50% a year rather than 10% or 20%.
That’s where a lot of the money is being put now. Like you said, these companies are too small for a huge investment firm to put a lot of money into. A lot of them are still in the mid-cap range, which is $2 billion to $10 billion market caps.
Once the door is really open for these bigger investment companies, that’s going to drive even more demand and it’s going to drive the prices even higher.
Paul: That’s one element of the demand. The second element is something people rarely think about. The average new investor coming in is someone generally younger. What are they going to buy? I know some millennials and some gen Z are fanatical about Warren Buffett and Coca Cola.
Millennials Are Making Investing More Mainstream
I get it. I lurk on Reddit and stuff like that. What do you think, Ian? Are they all in for America 1.0 stocks? Are they all in on Macy’s? What do you think?
Ian: I hope not. Maybe for a dead cat bounce you find someone doing some crazy trade on Reddit. But overall, no. I would say most of the people I know who are around my age are interested in brands they know. These are the companies that have just been started within the past 10 years.
A lot of them just recently went public in the past couple years. That’s where the demand is. I would say it’s brands that younger people know. These are usually the ones that are most successful, which is why everybody knows them. They are the ones with the big sales growth.
They have the big customer growth and things like that. That’s where I would say a lot of the people around my age are investing.
Paul: Bottom line, we have also seen that demand is likely to increase because more and more millennials and gen Z are seeing rising income. Unemployment from the pandemic is starting to pass and more of that money is going to come into the market. I believe they are going to come into America 2.0 and Fourth Industrial Revolution stocks.
Ian: Agreed. Buying stocks is way more accessible than it used to be. It’s cool. People actually talk about it in regular conversations. It’s interesting. It’s more prevalent than any other generation before. I think millennials are the first ones to have stock trading go mainstream.
Paul: Right. And we are totally for millennials and gen Z doing that. Some people think it’s terrible that everyone has equal information. The professionals think the stock market should be exclusive. No. We think the stock market is for everyone. We think it’s fantastic.
We have high school students who actually watch the IanCast and are interested in investing. There are high school investment clubs. We think that’s fantastic. I understand where some of the older folks who are experts in a different way think when a lot of people are interested it’s the sign of a top. What’s your view?
Ian: I would say maybe before that was the case, but since communication has been revolutionized the past 15 years it’s not so much anymore. It’s way easier for younger people to hear about this stuff because you have social media. That changed everything.
Whereas before if high schoolers were talking about stocks in the 60s that probably would have been bad. But now I don’t think it’s that bad. I think it’s good for the market because it brings more money into it.
Call Data Signals Predicted Demand Decline
Paul: You mentioned something about call data. You were right in sensing that in December or January you were seeing call data suggesting the demand was declining. Just explain that signal a little bit.
Ian: When people buy call options, if you aren’t aware, it’s a leveraged bet on a stock. You are buying the chance to own the stock at a certain price in the future. It takes a lot less money to do this. The bottom line is, it’s a lot more risky.
When people do it there’s a lot more volatility in their trade than they would see if they just bought the stock. When people buy calls it mean there is high conviction on a stock. People want to get into it because they think it’s going to go up soon.
I’ve seen it before as a leading indicator of stock trends. It went up a lot in November and December. Toward the end of December it dropped off around the holidays, which is normal. Then it went up again in early January. Earnings season is when a lot of people buy call options because they are betting on earnings reaction.
That was mid to late January and early February. During that time I actually started to see the call option dropping, which wasn’t a great sign in my opinion. Then after earnings season it went down a lot right before the decline in America 2.0 stocks.
That was an indicator that I saw Wednesday and Thursday of this week spike. I think that is a sign people are buying the dip big time. Not only in stocks, but also in call options, which to me is an even better sign because there is a higher rate of conviction there.
Next earnings season is mid-April to early May. I think there’s going to be a lot of buying into that, especially in options.
Paul: So bullish signs from call data. I can also say from the scans I do of all the stocks, the first signs in about five or six weeks of America 2.0 stocks in the 52-week high list. This is a big deal for me and something I track day to day. I am always looking to see what kinds of stocks are there.
Semiconductor stocks were there, some number of technology stocks and generally newer stocks starting to show up again. For a couple weeks they were on vacation and had gone missing. So that’s another good sign that we are starting to see buyers come back in and bid out stocks higher.
Ian: There are definitely a lot of things looking good. Actually, the first thing I saw was on Tuesday when the Dow and S&P were down and the ARK Invest ARKK ETF, which I see as the America 2.0 index, was up a couple percent. That was a turning point for me.
I think going forward we will see a lot of momentum shift in growth stocks.
Paul: We are still BOP — bullish, optimistic, positive — on our stocks, which are America 2.0 and Fourth Industrial Revolution stocks. If you want to know what that is, check into ProfitsUnlimited.com.
BTC and ETH Are Soaring This Year
Ian, the other place money is clearly going into is crypto. Bitcoin (BTC) has not made a new high in the last few weeks. However, the standard for BTC and crypto is so high. It’s up a crazy amount in 2021 already. There’s been crazy action going on in the main two coins we cover on the IanCast which are BTC and Ethereum (ETH).
Tell folks about how astonishing some of the gains have been in DeFi coins. These have been earth-shattering gains. Tell them about some of the gains you’ve seen in these areas.
Ian: First, BTC is near new highs. ETH was right below $2,000 last time I checked. I didn’t see if it cracked $2,000 overnight, but it wouldn’t surprise me if it did. I think the high is $2,040. Both of those are near all-time highs and that’s a good sign for the crypto market.
DeFi — decentralized finance — is a very new thing that didn’t exist until last June is when it started to gain traction. It’s this whole network built on ETH. I have explained ETH before as an Android or iOS type system where you can build apps. A lot of these apps have been financial.
That’s natural for crypto. On these apps you can borrow, lend or trade crypto. You can do all this without a bank intermediary. It’s way more freeing and a lot of money has gone into it. I think there is $42 billion in DeFi at last look, pretty much all on ETH.
DeFi coins are the projects that have come about and put these apps on ETH. Their coins have gone insane. Some of them have gone up thousands of percent. One of them is Aave. That was $20 — it’s hard to remember when it was because it was so recent but feels so long ago. I think it was just in December it was $20 a coin.
By mid-February it was at $500. That’s one example. Uniswap is another one. That’s the main crypto exchange on DeFi. There are billions of dollars traded on Uniswap every day. That’s huge in and of itself. The coin has gone from less than $2 a few months ago to around $30 right now.
There have been some huge gains in DeFi. That’s just in the past few months. I think it’s really just getting started.
Paul: Just circle back to what we usually cover, which is the effect of DeFi on ETH. I just checked and ETH is exactly at precisely $2,000 as we are recording this moment. All this is built on this layer of ETH, Ether is the currency.
It then drives a lot of this back into the currency itself for people to both own the coin, continue to store the coin for the future because if it keeps rising it helps to have lower cost ETH to use for gas fees, which is the price you have to pay to use the ETH blockchain.
There is now this massive snowball rolling together for ETH with DeFi. I forget where you felt ETH was going to be. What was your sense of where the price of ETH can be for the crypto?
Ian: I think it will be $8,000 by the end of the year.
Paul: I have a little bit more modest target of $4,000 by the end of this year. That would represent a 100% increase. However, $8,000, given the extraordinary amount of activity in DeFi, seems completely possible in my judgement.
With respect to BTC, which is the coin that set this entire world going, there has been no real stop in terms of companies talking about buying large amounts of BTC. We’re talking about a few hundred million now seems to be the minimum these companies are considering.
A few years ago, that was the entire market capitalization of BTC.
Ian: I know. It’s crazy. We have had Tesla, Square and MicroStrategy buy billions of dollars in BTC. I would bet a lot they are not done. More are going to come in. Tesla and Square are two of the most cutting-edge companies out there. MicroStrategy’s CEO is a wild person.
He does speculative things. In this case, I think he’s right on the money. He keeps buying more BTC himself and for MicroStrategy. From big people there is huge demand for BTC.
Paul: It’s interesting that Micahel Saylor is the CEO of MicroStrategy and Jack Dorsey runs Square and is also CEO of Twitter are believers in BTC personally. I know Jack Dorsey has been buying — I believe it was a couple years ago as BTC was bottoming out he said he was buying $10,000 worth of BTC a day.
He must own a lot of BTC all by himself.
Ian: For sure. And he’s probably still buying as much as he can.
Paul: That’s one of the amazing things. BTC has had a move from $3,800. The three-year anniversary will be in November of this year of $3,500 to $58,000. Nearly $59,000.
Many folks with no emotion or craziness being displayed that you usually see at tops are just logically continuing to accumulate and buy BTC. What do you make of that?
Ian: That’s a great sign. I haven’t seen anything that would suggest a sign of the top. People are excited about it, but it’s not even in the mainstream yet. Most people aren’t talking about it except those who bought in the bear market and have made a lot of money.
I think there are still a ton of people coming in and a ton that are going to come in within the next year. Not only that, but big institutions. I have heard of college endowments and pension funds being interested in this. That’s billions of dollars that could come in in the short term.
There’s no end in sight for retail or institutional investors.
Paul: We will wrap up the crypto by once again reiterating our predictions for BTC. We gave you ETH. Ian, you go first.
Ian: My prediction is $115,000 per coin by August. Then, $350,000 total I think will be the top in this rally.
Paul: I have a prediction for BTC to hit $250,000 in the next one to three years. Also, Bold Profits is our publisher. We are working on a crypto trading service. We are still working on it. We’ve gotten a lot of inquiries about it. I believe our social media team has created a link where if you want to sign up you will get updates on it.
New York Makes Cannabis Legal
I believe the legislation has been passed. In preparing for the IanCast, New Mexico is also on its way to passing legislation. That makes it very close to half the states in the United States officially legalized cannabis. What do you think is going to happen with cannabis stocks as a result?
Ian: That’s obviously a really good thing for cannabis stocks. That’s one of the areas that has dipped recently in the market, along with another America 2.0 stocks. I think right now is a great time to buy. I have suggested before the ETFMG Alternative Harvest ETF (NYSEArca: MJ) is a great way to do that.
My target for that ETF I have mentioned before is $40 by the end of the year. Overall, I think this news is good. I think especially for U.S. based stocks it opens up a huge market. New York is going to be a big market for cannabis. Last year it was almost $20 billion in sales in this county for cannabis.
New York is going to add a lot to that. I have seen a couple companies make pretty big acquisitions recently. Canopy just closed on a $200 million investment. Cresco Labs, another big one here in the U.S., announced they are going to make a $130 million investment.
Obviously these companies are seeing the trend here in the stocks and also in the industry as a whole. They are saying, “We have to grow in the way that will give us the biggest market share the fastest.” So they are buying these companies. It’s the most activity I have seen in a couple years.
Paul: I have been watching a lot of these platforms that allow for private investing. As you might know, private investing has also been opened up to a lot of people. I can tell you the amount of activity there has increased a great deal. There are more startups that are starting to enter in the cannabis space.
There are so many different aspects of it where there are small businesses starting. It’s a great sign that the money continues to move in. In the interest of keeping this short, we are still BOP on cannabis stocks. As Ian said, he has a price target of $40 on MJ.
Tesla’s Stock Correction
Tesla, along with other growth stocks, seems to have gone through a correction, reaction, or whatever you want to call it. Where do you think it’s going for 2021? Where do you see it?
This is one of the most asked questions on Twitter. On the Profits Unlimited update it never fails that I get a question on Tesla. So go ahead. Let’s see what you say.
Ian: I think from here at least doubling is conservative by the end of the year. They have so much still going for them. They have their energy industry, which is really starting to blow up. They just had a big deal in Texas where they are making a huge battery system.
They are also going to be supplying Apple with batteries. That’s a big customer. That’s just happened yesterday. There’s Cybertruck, Model Y and their Semi in a couple years. Then of course there’s the solar roof and the Autobidder system.
They have project after project that’s going to start being a big occurrence every few months where they have something new. That’s going to keep driving their business. That’s excluding their software for autonomous vehicles. They have so many things going for them.
$1,500 I would say is pretty conservative for the stock.
Paul: You are in good company, Ian. Cathie Wood, who is amazing and runs ARK Invest, has put out a revised target for Tesla of $4,000. Everybody thought Cathie was a joke and made fun of her. She’s taken more seriously these days.
Ian: She’s a big investor in Tesla. I have noticed Tesla is an America 2.0 stock gauge. Apple was the tech stock gauge for a while. When Apple wasn’t doing well it was a sign there might be a correction in the market. Now I think Tesla is that indicator.
They have established themselves as a legitimate company. They are one of the biggest in the S&P 500. I think there’s going to be a lot more demand for their stock.
We are still, even after that amazing run in 2020, BOP on Tesla.
Editor, Rapid Profit Trader