We’ve got riots in the street … an ongoing pandemic … a presidential race that’s likely to get ugly … and rising tensions with China and Iran again.
Plus, whether you love him or hate him, you’ve got to admit that President Donald Trump is ready and willing to toss a hand grenade on any of that at any moment.
But still, the stock market is rising.
Sure, we got a good jobs report last Friday. Yes, the Federal Reserve is quantitative easing like it’s never quantitative eased before.
However, we’re still looking at the worst unemployment rate since the Great Depression. Dozens of industries just aren’t seeing revenue right now.
And it could all get even worse once the cold weather hits again later this year. We just don’t know. That’s why I recommend always keeping a hedge — like gold — in your portfolio.
Yet the S&P 500 is down just 6% year to date.
So today, let’s do three things.
Let’s take a look at one of the reasons why the stock market keeps rising. Let’s see how you and your gains played a part in that rise. And let’s uncover a way you could amplify your gains even more.
In This Case Everyone Is Right About Stocks to Buy
The stock market keeps rising because investors — hedge funds, institutional investors and especially individuals — keep buying stocks.
According to Goldman Sachs, the number of user positions in S&P 500 stocks on the trading app Robinhood doubled between mid-March and mid-May.
They’re betting on the future.
They’re pouring their money into the tech stocks that are fueling the market’s rise — big stocks like Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT) and smaller ones like Shopify (NYSE:SHOP) and Zoom Video Communications (NASDAQ:ZM).
We’re doing pretty much the same thing here.
Over the past few months, I’ve showed you technology stocks to buy like chipmaker Nvidia (NASDAQ:NVDA) and video game developer Activision Blizzard (NASDAQ:ATVI). We’ve also taken a look at retailers and travel companies that are doing tech right, like Lululemon (NASDAQ:LULU) and Trip.com (NASDAQ:TCOM).
Many of those stocks have reached double-digit gains — and some have even reached all-time highs.
Everyone’s investing in tech stocks because they believe those companies will keep on growing, no matter the pandemic.
In this case, everyone is right about stocks to buy. That’s a rarity.
The Triumph of Technology
Technology is destroying the old economy.
The destruction of seemingly strong and dominant businesses by innovative technology-focused upstarts is a story we see over and over and over again…
- In 2009, Travis Kalanick and Garrett Camp founded the ride-hailing company Uber (NYSE:UBER). In less than seven years, Uber demolished the “old” taxi industry while making its founders billionaires.
- During the 10-year period from mid-2009 to mid-2019, shares of tech-focused Amazon soared more than 2,000%, making Jeff Bezos the world’s richest man. Meanwhile, dozens of old-school brick-and-mortar retailers fell into bankruptcy.
- A study of the newspaper industry conducted by the University of North Carolina reported that 1,810 newspapers ceased publication from 2004 to 2018. Vast amounts of cheap online content killed many newspapers that followed the “old” media business model.
Year after year, we watch established businesses get utterly destroyed by upstarts.
This phenomenon is creating an enormous gap between tech stocks to buy and the rest of the market. Take a look at this chart showing the growth of tech stocks, as represented by the tech-heavy Nasdaq 100, in the 10 years following the financial crisis.
That’s what we’ve been calling the “Technochasm.”
A Covid-19 Kicker
The novel coronavirus has supercharged the Technochasm.
While brick-and-mortar retailers, restaurants, tourism, travel and energy are getting wrecked, the coronavirus is amplifying the need or desire for technologies like remote-work apps, video games, cloud computing, streaming video and digital payments.
These kinds of trends aren’t going to end once the Covid-19 crisis passes.
Silicon Valley is going to keep “disrupting” the status quo … and it’s going to keep destroying established businesses and entire industries by creating game-changing new technologies.
That will keep widening the Technochasm between those who are caught up in this disruption … and those who know how to profit from it grow wider every year.
Now you could simply buy into Amazon and the other FAANG stocks. It’s a fine strategy.
But I bet you want to do better than fine.
That’s why I recently filmed a special video presentation where I reveal everything I’ve learned about this phenomenon — and about several smaller tech stocks that I believe will grow much faster than the established tech titans.
The Technochasm can be a frightening story — but once you come to understand it, this concept can help investors make a lot of money.
P.S. I took a recent trip to visit America’s richest ZIP code. It’s a place you’ve probably never heard of — far from Manhattan or Los Angeles. My team and I were visiting America’s richest ZIP code to film the details on what I believe is the biggest moneymaking opportunity in the world today — a situation that could help investors make massive gains over the long term.
On Day 1 of our trip, something remarkable happened. While having dinner, someone smashed the windows of our SUV and stole thousands of dollars’ worth of well-hidden video equipment on a busy, well-lit street. Why did this happen? It’s part of a remarkable story, which could result in my next 1,000% investment winner.
Eric Fry is an award-winning stock picker with numerous “10-bagger” calls — in good markets AND bad. How? By finding potent global megatrends … before they take off. And when it comes to bear markets, you’ll want to have his “blueprint” in hand before stocks go south. Eric does not own the aforementioned securities.