Beating the Market With “Wealth Zones”

Given today’s July 4th holiday, we’re going to feature a special essay from Eric Fry.

Eric is InvestorPlace‘s “Global Macro Specialist.” For those unfamiliar with the term, the meaning is pretty simple. Instead of examining stocks one by one, Eric identifies investment opportunities from a broad, global perspective. Some refer to this as “top-down” investing (whereas starting with individual stocks would be “bottom-up” investing).

Neither process is superior. Nor are they mutually exclusive. That’s why all of our experts use a combination of both when they find recommendations for you. Eric just tends to lean more heavily on the “top-down” approach.

Eric’s experience with macro trends has helped him call nearly every significant market move of the past 25 years … and he’s made more stock recommendations that resulted in 1,000%+ gains than anyone we know in the financial newsletter industry.

Today, Eric is showing you how he uses global macro strategies to dig up the big winners that have resulted in his nickname, “Mr. 1,000%.”

Perhaps his latest recommendation — which he shares at the end of this piece — will be one of those 10-baggers. (To make sure you get all of Eric’s potential 1,000% gainers, click here.)

Enjoy, and have a wonderful July 4th!

Jeff Remsburg

Find Your Fortune in These 3 Wealth Zones — and This 1 Unstoppable Trend

Money, like water, flows along the path of least resistance.

So when, for example, governments toss tariffs into the middle of trade flows, like boulders into a stream, money will simply make a new path.

To beat the market, you have to figure out where these new paths are — where the money is flowing.

With global macro analysis, I look for big-picture trends that drive these “flows” — huge, multiyear moves in entire sectors of the market.

I’ve been using my trading strategy to identify and profit from many of the world’s biggest, most unstoppable trends for nearly 30 years.

To find these trends, my members and I “fish” what I call “Wealth Zones.”

These Wealth Zones are permanent. I’m talking about investing themes or sectors that are so deeply, globally ingrained that nothing can undermine them.

Among them are healthcare and medicine … and oil and energy.

And then there are these three Wealth Zones that I’m following in particular right now …

Wealth Zone No. 1: Technology

“I do not believe the introduction of motorcars will ever affect the riding of horses.”

That’s what John Douglas-Scott-Montagu, a member of the British Parliament, declared in 1903. That may sound absurd now, but it was the accepted wisdom of the time.

Just five years later, Henry Ford was mass-producing Model T’s. And within one decade, 10 million Americans were puttering around in motorcars.

Automobiles aren’t alone. Breakthrough technologies often become commonplace necessities more rapidly than anyone can imagine at the outset.

The story of breakthrough technological success has repeated itself over and over in history, especially here in the United States during the last century. Technological marvels like radios, televisions, washing machines, microwave ovens, and personal computers gained widespread acceptance at a lightning-fast pace.

 

Now I’m monitoring two new technological marvels in particular.

Together, they are probably revolutionary enough to replace internal combustion vehicles — and I believe it will happen a lot faster than you think.

Wealth Zone No. 2: Demographics

In 1900, the world’s population stood at just over 1.5 billion people.

Today, more than 7.7 billion of us live on Earth.

While population growth is obvious, the aging of that population isn’t.

Here’s the thing. For the first time in history, according to population scientists, the number of people aged 65 and older will outnumber children younger than 5 worldwide by 2020. That’s next year.

One out of every five Americans — approximately 72 million people — will be 65 years or older by 2030. That’s nearly double the number of older Americans in 2000.

Naturally, as a population ages, the workforce becomes smaller and produces less. That’s especially true in places where fertility rates aren’t enough to replace the outgoing workers.

Meanwhile, the younger generations that are here have much different consuming patterns than their parents — and that’s causing huge swings for thousands of companies … both on the up- and downside.

From a moneymaking perspective, this phenomenon possesses extraordinary power — both to catapult certain stocks toward the heavens and to condemn certain stocks to the dustbin of history.

Wealth Zone No. 3: Crisis and Chaos

Economic recessions … real estate busts … stock market crashes … wars … financial shocks.

These aren’t aberrations.

In fact, they are not only constant possibilities … but also quite common occurrences. A quick tour of American history shows how this is the case.

During the 110 years from 1900 to 2010, we had the Great Depression, two world wars, the runaway inflation of the 1970s, the savings and loan crisis of the 1980s, the 2000-’02 dot-com crash, and the 2007-’08 financial crisis. That’s not even mentioning the more than 30 other “run of the mill” bear markets and recessions that cropped up along the way.

Any student of economic and stock market history will tell you that massive financial shocks happen a lot more often than most people think. In fact, you should expect to see at least one economic shock and bear market per decade.

While we fear these crises, they are also Wealth Zones — if you know how to play them.

Crisis and chaos can spell opportunity for vigilant investors … opportunity to bet against vulnerable companies — and for their more successful competitors.

Remember, trillions of dollars flow through these Wealth Zones. And trends coming out of them will spin off dozens of triple- and even quadruple-digit gains in a span of a few years.

Only one in 100 investors knows this — but putting your money into companies that tap into these unstoppable trends will pay off huge.

That means making money consistently is absolutely within your grasp.

Next, let’s take a look at an unstoppable trend at the intersection of two of these Wealth Zones.

And at a specific recommendation that I think could double your money thanks to this trend …

The Curse of Being Right … but Early

In 1990, Apple Inc. (AAPL) spun off a company called General Magic — and four years later, this secretive firm shipped a handheld, wireless personal computer.

A smartphone, essentially.

But we weren’t ready for it. Heck, most of us didn’t even have email yet.

Not surprisingly, the product flopped — and so did General Magic.

It was right … but early.

This “Right … but Early Curse” is a pretty common story.

Consider e-commerce.

According to legend, the first online transaction, via the Arpanet, took place nearly 50 years ago, in 1972. I was around back then, and so it doesn’t surprise me that this historic moment was reportedly a small-time marijuana deal between Stanford University and Massachusetts Institute of Technology students.

Online transactions got going consistently in the early 1980s via the pre-world wide web internet. And the first official transaction on the newly opened world wide web occurred on Aug. 12, 1994, when one friend sold a Sting CD to another friend.

Things really got cooking, of course, when Amazon.com launched as an online bookstore.

But as innovative and revolutionary as e-commerce was during those years, hardly anyone made any real money with it … for decades.

Amazon.com Inc. (AMZN), which went public in 1997, made just $5 billion in net profit in its first 20 years. And half of that came in its 20th year.

And now look at it: Team Bezos made $10.07 billion in net income in 2018.

E-commerce is no longer a profitless innovation. It is a robust, fast-growing industry that is attracting global demand. It is an idea whose time has come … especially for investors.

Your job now is to find a way to profit from this explosion (besides Amazon itself).

That’s why I want to show you a unique investment that won’t only get you into e-commerce but will also give you big exposure to foreign stocks that most individuals cannot easily buy.

As such, they can act as a partial hedge against volatility here in the U.S. market.

Even during a bear market, a few select sectors of the market can perform well. Often, these outperformers work their magic by generating extraordinary profit growth, even when many other sectors are struggling.

In other words, we’re getting into e-commerce at exactly the “right” time.

The Everything ETF

The Amplify International Online Retail ETF (XBUY) invests in companies that its managers expect to benefit from the increased adoption of e-commerce around the world.

Three years ago, Amplify launched a U.S.-focused version of this ETF called the Amplify Online Retail ETF (IBUY). That fund has doubled since then and now has a market cap of $264 million. Thanks to the success of that ETF, Amplify launched XBUY in early 2019 to focus on international e-commerce companies.

Amplify ETF’s CEO Christian Magoon explains:

Many of the fastest growing e-commerce markets reside outside of the U.S., primarily in developing countries where mobile devices are stoking demand. XBUY presents a compelling opportunity for investors to capitalize on this international growth, a segment where 80% of total online retail sales in 2018 were from countries outside the U.S.

E-commerce is growing rapidly worldwide. That’s hardly a secret.

According to Statista, retail e-commerce sales worldwide totaled $2.8 trillion last year — nearly double the 2015 tally.

As online retailing gains momentum, it is taking a very visible bite out of traditional brick-and-mortar retailing. That’s no secret either.

 

Still, e-commerce represents less than 15% of total U.S. retail sales. The percentages are similar worldwide.

But e-commerce isn’t just about destroying the old ways of retailing and taking market share. It is about establishing an entirely new mode of commerce.

We can thank Amazon for spearheading this retailing revolution.

In lieu of operating brick-and-mortar establishments, Amazon created a brand-new paradigm. It brought the bricks and mortar to our doorsteps.

Thanks to Amazon’s game-changing efficiency, a growing number of folks prefer to purchase their sweaters, boxer shorts, perfumes, and whatnots online, rather than hop in a car and drive to a mall that may or may not have their desired items in stock.

With a click of a mouse, we can purchase almost any product under the sun — and then expect it to arrive within a day or less.

That’s a major reason why “big box” retailers have been struggling for many years. Wave after wave of formerly successful retailers have been shutting their doors for good. Sears, Blockbuster, RadioShack, Circuit City, Borders, Sports Authority, and Toys “R” Us have all gone to retailing heaven (or are almost there).

Even many “best of breed” retailers are struggling to compete. During the last three years, revenues at Walmart Inc. (WMT) have grown a meager 7%, while Amazon’s have soared more than 113%.

Online shopping is the new normal. Nearly 80% of Americans have shopped online, with 43% purchasing at least a few times a month, according to a survey by the Pew Research Center.

That trend is all but certain to gain momentum as generations Y and Z become a larger percentage of the total shopping public. Already, more than three-quarters of shoppers under the age of 30 make their purchases on a smartphone, rather than a tablet or computer. That means these buyers are “purchase-ready” every waking minute of their day.

As you can see, e-commerce is making major waves in both the technology and demographics Wealth Zones.

The expanding scope of e-commerce will also drive growth. Online retailers are working hard to break into several hard-to-crack product categories like groceries and beauty products.

The grocery industry, for example, is a massive $750 billion opportunity with extremely low online penetration (less than 2%). So it’s no surprise that, in 2017, Amazon made a full-frontal assault into this category by purchasing Whole Foods Market and its nationwide network of 400-plus stores. As this venture proceeds, online grocery shopping is likely to become a fast-growing category of online shopping.

Bottom line: As e-commerce captures a growing share of total retail sales, and expands into additional markets, its growth trajectory could go parabolic.

Amazon created a new way of conducting retail. Every major retailer in the world understands that it must develop an effective online sales channel if it is to prosper in the modern era.

In particular, companies that develop a robust direct-to-consumer (DTC) sales channel will flourish. They’re flourishing already.

The clothing sector illustrates this phenomenon. Clothing companies that have developed a robust DTC sales channel are growing rapidly. For example …

• Lululemon Athletica Inc. (LULU) has created a vibrant DTC sales channel. It was one of the first retailers to emphasize online sales, and the company is reaping the rewards of that forward-looking strategy. DTC sales account for about one-quarter of the company’s revenue, and about one-third of its operating income.

• Nike Inc. (NKE) is reaping massive sales volumes and growth from its DTC division, “Nike Direct.” Last year, almost a third of Nike’s global sales came through Direct, and the Oregon-based company expects to boost DTC sales by at least 50% over the next two years.

• VF Corp. (VFC), owner of Vans and North Face, has not yet achieved the same level of DTC sales as Lululemon and Nike, but it has been growing that channel very rapidly. In 2012, DTC sales accounted for just 3% of the company’s total. But VF expects that number to grow to 16% by 2021.

Unfortunately, some companies haven’t “gotten the memo” about the value of DTC sales. Perhaps their fax machines are out of toner.

Companies like Capri Holdings Ltd. (CPRI), owner of Michael Kors, andL Brands Inc. (LB), owner of Victoria’s Secret, have failed to develop winning DTC strategies.

Investors have taken notice. During the last two years, shares of Lululemon, Nike, and VF have produced sizable gains, while shares of Capri and L Brands have produced big losses.

 

 

Importantly, DTC is not simply an additional sales channel.

It is a dynamic point of contact with customers. It enables companies to learn customer preferences and thereby tailor marketing efforts precisely. And it helps companies develop brand loyalty with their customers.

Not surprisingly, an effective DTC sales channel has become critical for most brands. According to research by J.D. Power, two-thirds of all U.S. consumers expect the option to connect directly with their preferred brands.

There’s no going back to the old ways of retailing. Amazon destroyed that world forever.

But in the process, it created a new megatrend of DTC commerce.

The companies that adapt and embrace this new paradigm will prosper. Those that don’t, won’t.

That’s why I like XBUY. It offers a great way to participate in the long-term, global e-commerce boom.

Of course, e-commerce is not the only cutting-edge technology that is on the verge of explosive — and profitable — growth. I’ve identified two other industries that are growing so rapidly and profitably that they also deserve the attention of every investor.

In a special report available only to my paid-up members, I explain exactly how to invest in each of these industries through ETFs that I believe every investor should own. Find out how to join us by clicking here.

These industries are growing much faster than any individual country or region.

But that fast growth won’t last forever.

So click here now to find out how to get that special report.

Regards,

Eric Fry


Article printed from InvestorPlace Media, https://investorplace.com/2019/07/beating-the-market-with-wealth-zones/.

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