Economics Investing

Industrial Automation, Gene Editing, Electric Cars, Cryptocurrency and Marijuana Stocks

I’m excited about a couple of sectors right now…I think that a couple of them are going to change our world before we even notice that our world has changed. I’m not sure which of these will hit – if any – but I’m putting the little bit of speculative investment money I have on these bets.

1) Industrial Automation. These two words sound simple but they represent some of the most complex changes in the history of human civilization. The industrial revolution changed the face of the globe. This was a massive shift in human civilization as humans went from hand produced items in the late 1700s to items produced by chemical, mechanical, machine, and factory production about sixty years later in the 1830s and 1840s. Everything changed and it changed because the way we make things changed. And then the second industrial revolution took place from the 1870s to the 1910s bringing railroads, electrification, telegraphs, sewage systems, and road systems. The Third Industrial Revolution was the digital wave. Now, I believe we are on the cusp of a Fourth Industrial Revolution – which can be summed up with the two words I started with – Industrial Automation. Artificial Intelligence combined with advanced robotics and machine learning are eliminating human beings from the production process. Not only the production of goods, but also the production of food, the driving of trucks and cars, legal work, medicine, and more. All the industry that has been created in the past 250 years is on the edge of running itself. In ten years, we won’t recognize most of the jobs that the labor force will choose from because most of the old jobs will be gone. Three companies that I have my eyes on are Brookstone Automation $BRKS Hollysys Automation $HOLI and ABB Ltd $ABB.

2) Gene Editing. There are already parents paying to have genetic disorders corrected in unborn children or even picking the sex of their future child – that’s old news. The near future of gene editing is much more sci-fi and it’s coming very quickly. Gene editing and splicing allows for the repair or replacement of faulty genes – and on a purely crazy note – might even allow for defeating the debilitating effects of aging. I’m not saying people will be able to live forever – but they may soon be able to live their lifespan without their bodies falling apart on them. Not to mention genetic disorders will be able to be fixed in living patients. They might even be able to turn a switch that would turn off the hair that grows on my back and turn on the switch for hair on the top of my head. There are a lot of companies working in these areas but I’m watching CRISPR Therapeutics AG $CRSP, Editas Medicine $EDIT, Intellia Therapeutics $NTLA and Sangamo Therapeutics $SGMO

3) Electric Cars. The world is going to go electric. Elon Musk saw it and unfortunately, he may have fucked himself and Tesla Motors for a while – but I still believe his company will pull through – still, I’m not putting my money there. Instead, I’m looking at Volkswagon$VWAGY, GM $GM, and Chinese upstart NIO $NIO. While the electric cars themselves are going to be taking the world by storm – the components and materials they require are also worth looking at – lithium and cobalt for batteries, new poly and nanofiber materials for bodies and tires. These are not going to be your grandfather’s Oldsmobile…and going back to industrial automation – they aren’t going to be produced on human assembly lines. Also, they will have self driving technology – Tesla already has it, VW isn’t far behind and GM is spending huge amounts to get there. Google and UBER are already running their cars – and it won’t be long before Amazon jumps in the game. Amazon is definitely going to make a car – they’ve just announced an auto enabled Alexa – the cars are next.

4) Cryptocurrency is coming back. If you haven’t already BUY BITCOIN – you won’t regret it. You may have to wait a couple of years – but it will become the defacto reserve currency if not the official reserve. Tokenization of major industries may or may not happen but block chain finance is happening and there is no going back. Overstock $OSTK and Square $SQ are the two main crypto plays I see in the stock market. IBM $IBM is the number one blockchain play that I see – not to mention a company that is rapidly developing artificial intelligence solutions, cloud computing and storage, and quantum computing.

5) Marijuana stocks (speaking of Elon Musk…)These are pure speculation at this point. There are some interesting prospects but the wild bubbles are too hard to pin down. Personally, I like Cronos Group ($CRON) and Neptune Wellness ($NEPT) but this is anyone’s guess…I’ve stayed away from Tilray and bought a little bit of Canopy Growth but these are like putting money on zero and double zero on a roulette wheel….nice payout if they hit. No payout for Elon’s hit though….

So there you have it…that’s the future I see. If a friend asked me which three companies to invest in out of the whole market my advice would be Amazon, IBM, and AliBaba – Everything else is a gamble but I feel like those three are the literal future of everything – but for you, dear reader, I suggest that you recognize that past results do not guarantee future returns and that this is not financial advice but only an opportunity for me to suggest where you might find some value if you do your own research.

Good luck. Always bet on black.

Cryptocurrency Economics Investing

These Markets Make Me Nervous – But I Still Don’t Want to Miss Them

I read something the other day that was very interesting. It was talking about how the trade war and tariffs and political scandals that should be rocking the market daily – simply aren’t. The reason, this article said, was that the money in the market which was scared or nervous had already left.

Think about that for a second.

It means that the money that is still in the market is either sure that the markets will recover from negative news or that it is not concerned with negative news and holding on with a longer term perspective. I’d like to offer a different and much more dangerous perspective: the violent rises and falls of the stock markets since Spring of 2018 have made many investors more gun-shy about losing out on gains following dips, than on losing out on dips. It means that the risk tolerance for the market as a whole has gone much higher. Personally, I think that the Robinhood App and the violent rise and fall of Bitcoin have a lot to do with it.

Robinhood and Bitcoin in tandem have brought an entire new generation of investors into the markets. I remember hearing a seasoned trader in January say something like “I don’t know where this volume is coming from, but these traders are absolutely stupid” because the conventional rules were being broken by a large number of traders.

Let me break it down. Bitcoin bubbling in late 2017 and early 2018 brought millions of mom and pops, college kids, mechanics, builders, waiters, house cleaners, and other non-traditional investing types into an ultra-high-risk trading environment where dreams of becoming debt free, financially independent, or filthy rich were born and crushed. For those who took part in the 80% rise and 90% fall of Bitcoin over the past year – seeing a stock swing 7% is nothing. Seeing a stock swing 20% is almost nothing.

Those same bitcoin losers (and I’m a bitcoin loser as well, but time will tell if that stays the case) probably found the Robinhood App the same way I did – through the fact that Robinhood opened up to trading cryptocurrency AND stocks on the same phone app. So, where is the money the Robinhood traders are trading with coming from…there are a few possibilities.

1) From their bitcoin gains

2) It’s what is left after their bitcoin losses

3) They have borrowed, used student loans, taken out mortgages

4) They have closed down other broker accounts, 401ks, IRAs, or are using savings

Any way you look at it – this is not the same conservative money that looks to build 6% annually and sells a loser after 7%. Because they are in the market (along with trading bots) those strategies are no longer as effective as they once were. The massive market swings trigger buy and sell orders, sweep through stop losses, and leave traders who aren’t paying attention with overpriced shit on their hands or with selling at a loss and then watching a 250% wild upward swing…which brings me to the bots.

The vast majority of trades on all of the markets today are conducted by trading bots which conduct millions of trades each minute (or faster). There is no human way to beat the bots except through playing it safe and getting lucky.

So, with all of that, what scares me about these markets?

It’s the human traders using the app with their finger on the trigger. They may be exhibiting a strong risk tolerance, but they are human and eventually…somethinig is going to collectively set them off…when it does, the bots will take over and the losses will be massive and nearly instant. Yes, the markets will shut down…but as we saw with Tilray yesterday…that doesn’t necessarily solve things. Imagine what happened there, happeneing on a market wide scale.

These markets are terrifying…but honestly, there are huge gains to be made – despite that.

I’ve shifted my investing strategy. I’m not day-trading or trying to lock in short term gains. I look at a company and try to imagine where it will be in twenty years. I look at what it offers in growth between then and now and what it currently offers in dividend and yield. That’s where my money goes. At the moment there are three very exciting places I have my money parked.

1) IBM – big blue has become a world class innovator while the innovators like Google and Facebook have become boring and conservative. IBM offers one of the best dividends out there and is constantly innovating in new areas of growth.

2) Gene editing. There are three companies leading the charge here. Crispr Therapeutics, Editas Medicine, and Intellia Therapeutics. This is the area where disease gets solved, aging gets set aside, and humans potentially take the next step in evolution

3) Industrial Automation. The workplace is being automated. There is nothing that can be done about that. Brookstone, Holisys Automation, and ABB Group are the three companies currently leading the charge on this world changing shift.

I also believe that Amazon will continue to dominate and grow like the Borg and that electric cars with self driving technology will take over the automotive industry. Tesla may be a dead man walking but GM, Volkswagon, and Toyota are stepping up and newcomer NIO out of China is one to watch closely.

I’m putting my money in these areas now and in twenty years, I expect that I won’t be disappointed.

Now, a word about Bitcoin and blockchain. I still believe in Bitcoin. I think any money put into it before 2020 will see massive returns. I also believe that there are a number of great use cases for blockchain technology – but the more I’ve learned about the current run of projects – the more I believe that there is better coming and the money I’ve put into them may never be recovered. The hype got me…now, whether I get lucky from that – that’s just a matter of luck and fortitude. I’m not going anywhere with my losses…and it would be nice to see them turn into winners. Only time will tell.