It’s Friday… That means it’s mailbag day here at The Daily Cut.
This is where you send in your most pressing questions about the market megatrends we track for you. And we publish responses from our team of analysts at Legacy Research.
It’s the publishing alliance behind Jeff Brown, Teeka Tiwari, Dave Forest, and Jason Bodner.
So if you have a question for the team, email us at [email protected].
Today, we’re turning the spotlight on our tech investing expert, Jeff Brown.
If you don’t already know him, Jeff worked as an executive at high-tech companies in the U.S. and Japan.
He’s also been a private investor in early-stage tech companies for more than two decades.
Since joining the team at Legacy, he’s been on a mission to use his tech, finance, and investing expertise to help everyday investors pinpoint companies on the verge of exponential growth.
At his free daily e-letter, The Bleeding Edge, Jeff tracks the tech that’s reshaping the world.
And at his research advisories, paid-up subscribers have had the chance to make market-beating returns on his stock picks.
For example, at Jeff’s small-cap tech investing advisory, Exponential Tech Investor, subscribers have had the chance at a 300% gain on a gene-editing company at the forefront of the biotech revolution.
And at his large-cap tech investing advisory, The Near Future Report, subscribers have had the chance at a 544% gain on chipmaker Nvidia (NVDA).
On Wednesday, Jeff revealed the No. 1 profit play on his radar right now. It’s an opportunity connected with the iPhone 13 launch. He says the knock-on effects of this tech could put more than $12 trillion in profits at stake.
If you missed it, there’s still time for you to catch the free replay of Jeff’s event here.
Coming up, Jeff tackles a topic we explored in last week’s mailbag edition: the possibility of a stock market crash… and what to do about it.
First, as I’ve been showing you, humanity’s fourth great energy transition is underway. We’re moving from a world powered by oil, coal, and natural gas… to one powered by fuels that don’t drive climate change.
We’re also shifting away from cars and trucks powered by internal combustion engines… to electric vehicles (EVs).
But one of your fellow readers sees a few obstacles in the way…
Reader question: I enjoy reading The Bleeding Edge every weeknight. Thanks for your insight.
I see more EVs on the road every day and know there is a big push to move away from gas-powered vehicles by 2030. Even ExxonMobil is now projecting it will be net-zero carbon by 2050. I’m having a real problem believing any of this since the world is built around petroleum.
It’s difficult to look around and find something that is not made using petroleum or natural gas. If we do away with gasoline, what are all the EVs going to drive on?
Asphalt is pretty much the bottom of crude oil refining. Concrete is made from firing limestone with natural gas. Steel is made by reducing iron ore with natural gas. The list goes on.
Some areas are already feeling the switch away from crude oil. The city I live in is delaying or canceling paving projects that were scheduled for this year due to the short supply of asphalt. I would like to hear some discussion on the movement to eliminate the petroleum industry and how it will affect society.
– Charles B.
Jeff’s response: Hello, Charles. Thank you for your kind words. This is an interesting question.
The technological advancements in the energy industry, combined with the rapid shift toward EVs, will ultimately send the demand for crude oil off a cliff.
The implications will be profound for the oil industry and the countries whose economies are primarily built on oil production.
But you’re right… As we move toward our carbon-reduction goals for 2030, there’s almost no discussion about where the electricity will come from.
After all, most of the power we use today is from natural gas, coal, and nuclear fission. Nuclear fission produces radioactive waste. If the electricity that fuels our EVs comes from these sources, the EVs are not “clean” at all.
Most people don’t grasp how wasteful our energy grid infrastructure is. Between 7% and 20% of the electricity we send over distribution lines is lost between the power plant and our homes.
My point is we can’t have clean-energy-based EVs if we don’t have clean energy to fuel them. Driving an EV fueled by natural gas and coal simply displaces where the carbon is emitted.
I believe nuclear fusion, not the fission technology we use today, is the key to producing limitless clean energy that can power our base load electricity requirements. Nuclear fusion can release four times as much energy as nuclear fission.
If Washington can spend more than $1 trillion on COVID-related matters, why not spend a fraction of that to push clean energy over the line with nuclear fusion?
Assuming I’m right about this tech, it’ll be one of the largest societal disruptions we see during the next 20 years.
But to get back to the point about how we make materials such as concrete, new technologies will help with the transition away from petroleum-based products.
Concrete requires fossil fuels to make. It also costs a lot to transport to remote locations. And it doesn’t last forever. Those are just a few of the reasons scientists are currently working on alternatives to this and other traditional materials.
For instance, the U.S. Department of Defense has funded a project making “living” concrete. It has the potential to cut construction costs tremendously for two reasons.
First, it’s far cheaper to make than regular concrete. All you need are sand, water, gelatin, bacteria, and some nutrients for the bacteria to grow. Simply pour the mixture into a mold, and the building materials will be ready in a few days.
Second, you can do this right at the building site. So there’s no need to transport heavy concrete.
A group from UCLA is taking another interesting approach. It’s created a system that uses carbon dioxide waste from industrial plants to make concrete blocks. The team uses 3D printing to craft the gas into new building material. This, too, is much cheaper and will reduce pollution.
There are also developments with algae. When algae absorb carbon dioxide, they can convert into something called algae oil. We can burn this as a source of energy. We can use it as a cooking oil. And we can use it to create cheap carbon fibers.
We could, in theory, use these algae-based carbon fibers to create materials for everyday products like tennis shoes or shampoo bottles. We could even use them to create an alternative to steel.
These are just a few examples. But I think they show the incredible work shaking up our legacy ways of producing things.
While it might not be easy to see right now, the future will look radically different. That’s why I’m so dedicated to showing my readers the immense potential in front of us.
As investors, if we can tune out the noise and focus on the big picture, we’ll do extremely well in the years to come.
We wrap up today with Jeff’s take on the threat of a stock market crash.
We’re in a record-breaking bull market. So it’s sometimes easy to forget markets are cyclical. And that – eventually – the tide will turn.
But there are some simple steps you can take to protect what you have while the gains keep rolling in.
And below, Jeff explains why there’s no sign a downturn is coming anytime soon…
Reader question: Jeff, I value your opinion and would like to know your view on all the negative comments on, “Get out of the stock market. A crash is coming any day.”
I am a retiree and can’t afford for my stock investments to disappear. I know you have predicted things accurately before. Should I stop buying and consider selling? Thank you for your expertise.
– Nadia B.
Jeff’s response: Hi, Nadia. This is a concern of many readers right now. It’s also a concern of mine.
But unlike with the 2008 financial crisis, we’re not sitting on a house of cards this time. We don’t have the same kind of absurd levels of leverage in the banking system we did back then.
We can be fairly sure money-printing will continue for the next two years, at least into the 2024 elections. We can also be sure the Fed will keep interest rates low.
This tells us U.S. dollar inflation is likely to continue to rise. So if we just leave our dollars in the bank or buy bonds, we’ll lose buying power.
As investors, we can protect ourselves in an environment like this in two ways…
We can invest in shares of stocks delivering returns that beat the rate of inflation.
We can also invest in stocks selling at attractive – or at least reasonable – valuations. That helps us increase our returns and cushion the blow if there’s another stock market downturn.
With all that said, there are some other reasons I’m bullish on stocks right now.
It may not feel like it. But the pandemic is nearly over. More than 182 million people in the U.S. are fully vaccinated. That’s about 55% of the population. And we’ve fully vaccinated about 2.5 billion people worldwide. That’s just under 1 in 3 people alive today.
As a result, we’re getting back to life as usual. Unemployment benefits have ended in the U.S. So more people will be heading back to work. Consumption and spending should rise as a result.
And we can already see that the demand for many products is far greater than the current supplies. That tells me we’re still in the same economic-growth mode we were in before the pandemic.
We’re also seeing a confluence of tech breakthroughs that should help tame consumer price inflation. Many goods and services will improve and get cheaper and/or more convenient.
And private investors are funding the most promising early stage companies on the planet to the tune of about $3 trillion. The most exciting areas are in tech and biotech.
I’m spending a lot more time than usual monitoring the macroeconomic environment. My team and I are watching for signs we’re entering a downturn.
I don’t expect that anytime soon. But if we do start to get reliable signals, Legacy Research readers will be among the first to know.
That’s all for this week’s mailbag.
We’ll be back with more questions from your fellow readers next Friday.
Do you have a question for Jeff or anyone else on the Legacy team?
Send it to [email protected], and I (Chris Lowe) will get you an answer.
And don’t forget… if you missed Jeff’s special briefing on Wednesday night, there’s still time for you to catch the free replay here.
Have a great weekend.
Regards,
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Chris Lowe
September 24, 2021
Barcelona, Spain