The only thing with big returns in 2023 is AI/tech … how big might it be? … what we can learn by looking back at the 1990s … a special event with Luke Lango tomorrow
To make money in this market, there’s basically one game in town…Tech.Specifically, artificial intelligence.The numbers bear this out in one of the clearest pictures of lopsided market returns that I can remember.For these details, let’s turn to our hypergrowth expert Luke Lango:
You may have noticed. Stocks are up this year, but the rally has been very narrow.In fact, tech and AI stocks are essentially the only stocks participating. They are soaring. Pretty much everything else is down!The Global X Artificial Intelligence ETF (AIQ) is up 30% this year.Meanwhile, consumer staples stocks are down 3%. Healthcare stocks slid 6%. Financial stocks fell 7%. Utility stocks are down 8%, and energy stocks have been clobbered by 12%.
AI stocks are soaring. Everything else is dropping.
More importantly, Luke believes this isn’t an aberration – it’s a true paradigm shift, and we’re just getting started.
A repeat of the 1990s
Looking at today’s market and seeing the shocking outperformance of AI/tech compared with, well, everything else, there are two main interpretations we can adopt…This stampede into AI stocks is just another market fad that will eventually fizzle.Or…This is the beginning of an AI-fueled wave of wealth-generation that could span the decade.To help us get a bead on which conclusion to draw, let’s turn to market history. Do we have a past market environment roughly comparable to today’s market that might offer clues about where we’re headed?Yep – the 1990s.Back to Luke:
The last time we saw a shift this big was in the early 1990s with the emergence of the internet.Back then, internet stocks started outperforming all other sectors in the market – and they didn’t stop outperforming for a whole decade. Throughout the 1990s, tech stocks soared more than 1,100%. Meanwhile, consumer staples stocks rose just 200%. Energy stocks gained less than 140%, and utility stocks added just 50%.
I don’t mean to scoff at a 50% gain. But over the course of a decade?That’s not too impressive – especially when investors had the chance at more than 20X greater returns with tech stocks. Well, let’s just say investors who didn’t buy internet stocks in the early 1990s are still kicking themselves today.
As usual, Luke dives into the historical data to prove his points
Luke goes back and crunches the numbers on some investment gains from the 90s. You know what’s coming, but still, the size of these returns is eye-popping.For example, Luke points out that a $10,000 investment into internet leader Oracle (ORCL) in 1991 would’ve turned into over $900,000 by 1999.A $10,000 stake in Cisco (CSCO) would’ve turned into $1.4 million.Topping them all is a $10,000 stake in Qualcomm (QCOM). That would’ve grown to over $1.5 million. Again, all of this is from just $10,000 in each.But while most of us are familiar with these windfall stories from certain tech stocks in the 90s, what’s less reported are the returns of “safer” investments over the same period.Back to Luke with those details:
Now, let’s say you ignored the internet boom of the early 1990s. You called it a bubble. You said it was overrated.Instead of investing $10,000 into Qualcomm, you put that money into a safe utility stock like Dominion Energy (D). By 1999, you would’ve had a whopping $10,500. Or, let’s say you played it really safe and bought gold.By 1999, that $10,000 would’ve turned into… wait for it… $7,831.
You get the point, right?Investors who bet on the right internet stocks at the dawn of the internet in the early 1990s turned thousands into millions. Investors who called the internet a bubble in the early ‘90s and bought safe utility stocks or gold just broke even, at best. We find ourselves in a similar situation today.
Of course, part of walking away from the Dot Com bubble with millions (rather than possibly losing thousands) required getting out before the bubble burst. We could eventually see an AI crash in the same way we saw a Dot Com crash.
And that points us toward AI valuations today
Regular Digest readers know that I’ve pointed toward Nvidia as a great example of an AI-darling that’s horrendously overvalued.It’s trading at nearly 40X-revenues. Not profits, but revenues. We put this into perspective in the Digest last week.In short, at 40 times revenues, to give an investor a 40-year payback, A CEO has to pay investors 100% of revenues for 40 straight years in dividends.That assumes the CEO has zero cost of goods sold (impossible) … That assumes zero expenses (impossible) … That assumes he/she pay no taxes (impossible without loopholes) … And that assumes with zero R&D for the next 40 years, the CEO can maintain the current revenue run rate (impossible).Now, having said that, do you really want to buy a stock at 40X-revenues?Perhaps you do for a short-term trade in bullish market conditions, but not necessarily for a long-term buy-and-hold.But this is part of the reason why rather than buying Nvidia today, Luke just recommended his subscribers sell some of their position – for returns of nearly 1,000%.Even with a game-changing technology like AI, it’s still critical that investors be selective and perform their due diligence with their AI investments. Not every company claiming to be an AI leader will live up to that promise. But assuming you’ve done your homework and found one of tomorrow’s true winners, the return potential is off-the-charts.Back to Luke on this:
Investors who bet on the right AI stocks now – at the dawn of AI in the early 2020s – are giving themselves the chance to turn thousands into millions.Investors who call this a bubble and buy safe utility stocks instead likely won’t make much (if any) money over the next decade. Of course, the choice is yours. But we think the right choice is obvious.
Join Luke tomorrow at 7 PM for a special live event that dives into the enormous opportunity in front of investors today with AI
Here’s Luke with more details:
I believe if you make the wrong move in the next few days, it could be what makes or breaks your financial future.All I’m asking for right now is a few minutes of your time so I can reveal the cold hard facts…Then you can decide for yourself what steps you want to take. Because I believe if you follow my blueprint for this coming tech melt, you won’t only have the chance to be a winner…But have the opportunity to build an entire nest egg with just a few calculated moves.
To Luke’s point about the cold, hard facts, even if you’re nervous about investing in this market, I encourage you to attend the event purely to arm yourself with Luke’s analysis. The more informed we are as investors, the more likely we are to make wise investment decisions.Bottom line: Technology/AI stocks are soaring today. Join Luke tomorrow at 7 PM ET to better understand why, for how long, and what to do about it today.Have a good evening,Jeff Remsburg
