Make Money by Swimming With the Tide
Today’s Take: “To swim a fast 100 meters, it’s better to swim with the tide than to work on your stroke.” — Warren Buffett
His father was a snake oil salesman and philanderer who wasn’t home much.
So, he was raised in a single-parent home by his mother. And to help his mom make ends meet, this young man raised turkeys and sold potatoes. He also did his share of chores to help around the house.
When he finally entered the workforce, he started at the bottom … as a clerk at a Cleveland shipping company.
A few decades later, John D. Rockefeller would become the wealthiest American of all time and the richest person in modern history.
In today’s dollars, he amassed nearly half a trillion dollars. At the peak of his wealth, his fortune was worth nearly 2% of the national economy.
In the business world, Rockefeller is considered one of the greatest of all time.
As founder of the Standard Oil Company, he drastically reduced the production cost of oil. At its peak, the company controlled 90% of all oil in the U.S.
Rockefeller was able to revolutionize the petroleum industry because he saw what few others did: global demand for oil would soar as the world entered the industrial age.
In other words, he took advantage of an industry with a massive tailwind behind it. And it’s a very consistent way to make profits…
The Approach Behind the Greatest of All Time
Jeff Bezos is currently the world’s richest person, with a net worth of more than $200 billion. Even investing legend Warren Buffett said that Bezos is “the most remarkable business person of our age.”
Like Rockefeller, Bezos is another one of the greatest of all time in the business world. Despite making their fortunes more than a century apart, they used the same approach to get there…
They created businesses that were in industries with huge tailwinds.
Bezos did this with the internet instead of oil. He saw a statistic that web usage was growing at 2,300% a year. Based on that amazing growth, Bezos was in search of a product to ride that tailwind.
So, he started selling books. And that’s how Amazon got its start, before riding the internet industry’s strong tailwinds to dominate online retailing. And Bezos went on to dominate another industry as well, cloud computing.
Both men saw how picking the right industry can have tremendous effects on creating generational wealth. Finding the right industry with a strong tailwind can make all the difference.
And when it comes to investing, the best shortcut I can give you is to invest in businesses that are in industries with strong tailwinds…
The First Thing to Look for When Investing
Having a strong tailwind is the key to making outstanding gains in the stock market.
That’s why, throughout my nearly 40 years of Wall Street investing experience, the first thing I look at when researching a business is the industry it’s in.
Because I don’t want to own the best-run newspaper business. The same goes for DVD and video game rentals and brick-and-mortar retail.
No matter how good the CEO is or how hard they try … in the long run, they’re businesses that are in industries that continue to get smaller. They’re swimming upstream and fighting headwinds that are next to impossible to overcome.
That’s why I spend my time trying to understand the factors that drive the business and, more importantly, what can destroy it. I ask myself: Does the business have a strong tailwind pushing it forward?
Because, just as Rockefeller and Bezos saw firsthand, it’s much easier to grow a business that has a strong tailwind.
I look for industries that have growing demographic and secular trends … such as health care, 5G technology and cloud computing.
|Health Care||The huge baby boomer population will increasingly need more health care services as they continue to age.|
|5G Technology||5G is the next step in keeping all of our many devices connected and running smoothly.|
|Cloud Computing and Networking||Data generation is growing by leaps and bounds each year, making data management through the cloud more important than ever.|
These industries have everything moving in their favor. That’s why, to take advantage of them, I’ve recommended companies such as HCA Healthcare (NYSE: HCA), Marvell Technology (Nasdaq: MRVL) and Arista Networks (NYSE: ANET) to my Alpha Investor readers.
HCA is the largest non-governmental operator of hospitals in the U.S. Marvell makes the semiconductor chips necessary in many 5G devices. And Arista is the leader in cloud networking equipment and software.
Today, these three stocks have shot up well above my recommended buy-up-to prices. They’re seeing gains of about 118% in eleven months, 195% in two and a half years and 128% in a year and a half, respectively.
Now, they’re great wins for Alpha Investors. If you’ve profited from these companies, congratulations!
But I found a way to turbocharge these returns to make quicker and higher gains.
And over the next week, I want to show you how. I’m seeing one particular industry with huge tailwinds pushing it higher over the next several years.
I’ll be sharing it with you, so be sure to keep an eye on your inbox for my upcoming deep dive.
Founder, Alpha Investor