The power of a “BDT” … historical illustrations of the return potential… how to identify them … today’s biggest BDT
The goal of today’s Digest is simple…
Help you make more money, with more peace of mind.
We’re going to do this by featuring a guest essay from our CEO, Brian Hunt.
Brian presents a simple yet incredibly powerful concept that cuts through much of the fog and confusion of investing.
When you understand this principle and make it a pillar of your market approach, it can radically transform your wealth.
I’ll pick back up after Brian is done. We’ll discuss the rubber-meets-road implementation of the concept.
Before we jump in, for newer Digest readers, Brian is our CEO, as I just mentioned. But he’s also he’s a highly-successful investor, trader, and teacher.
He’s written a series of classic wealth-building essays in the InvestorPlace Education Center, which read like a master’s course in investing. I encourage you to read them. Best of all, they’re totally free.
Today’s essay is sure to find a home in that series too, given its ability to help move the needle in your portfolio.
So, I’ll turn it over to Brian, and will pick back up afterward.
***How to make big investment returns without working very hard or taking big risks
The investment world is full of acronyms.
I’m sure you’ve heard dozens of them. There are IPOs… ETFs… IRAs… the NYSE… and they go on and on.
If you’re thinking about investing money, expanding your vocabulary and learning the money world’s acronyms is a smart move. There are dozens of investment websites that can teach you them
But if you want to make big investment returns without working hard or taking much risk, you should learn about an acronym that you won’t find on any conventional finance website. However…
It’s one of the most important acronyms in the world of money and business.
You won’t learn about it in any official study course because it’s something I made up myself.
I call it the BDT.
The Big Dominant Trend.
At any given time, there’s at least one giant “megatrend” shaping world events and human behavior that is so monumental… so impactful… and so powerful…
… that all other trends and concerns don’t matter at all when it comes to influencing business trends and stock prices.
The only thing that really matters is the BDT.
The Big Dominant Trend.
You can forget about everything else and focus on it. Nothing else really matters.
BDTs typically come in one of two flavors.
One flavor is related to big long-term business cycles… like the long period of economic prosperity we saw after World War II. (More on this in a moment.)
The other flavor is related to historic technological revolutions, like when cars and electricity were widely adopted in the 1920s and helped create huge booms in those industries. (More on this topic in a moment as well.)
At any point in your investment career, there will be at least one BDT in play that is so important that if you know onlyabout the BDT – and get on the right side of it – almost nothing else matters.
You can ignore all the bluster and commotion in the mainstream media and simply focus on the BDT.
***Getting on the right side of the BDT is all you need to know in order to make big returns while doing little work.
For example…
You probably know the 1980s and 1990s were amazing years to be an investor. But did you know the period from 1945 to 1966 was also amazing?
From 1946 to 1966, the United States experienced a historic economic boom. The Dow Jones Industrial average skyrocketed 480%. Top companies soared more than 10-fold. The price of desirable real estate soared. The river of prosperity flowed so strongly during that time that you could jump in and float your way to success.
There’s a simple reason why this period was such an amazing time to be an investor… and it won’t surprise you. It was the years after World War II ended. We transitioned from a time of widespread destructive conflict to a time of peace.
WWII suffocated the dreams and productive capacity of people all over the world. When the war ended, tsunamis of productive capacity and ambition were unleashed all across the world.
Millions of soldiers returned home and started families. The new households bought the innovations of the day, like refrigerators, televisions, and dishwashers.
Unleashing all that pent-up demand and activity produced a worldwide boom that benefited American industry in a huge way for a long time. Investors went along for the ride.
That is a BDT.
The rising tide of post-WWII prosperity was so powerful that every other factor affecting stock prices was pitifully small by comparison.
It didn’t matter what interest rates were doing, what the dollar was doing, who was president, or any of the other common factors that can affect stock prices.
All that mattered was the BDT.
That’s all you had to pay attention to. That’s all you had to get right in order to make big investment returns.
Or, take the 1990s, which I mentioned earlier.
In the 1990s, three revolutionary technologies – computers, the internet, and cellular phones – achieved widespread adoption and “converged” to reshape the world and create a historic economic boom. These technologies allowed us to make quantum leaps in productivity and efficiency.
The 1990s were an incredible time for entrepreneurs, investors, and employees. Gale-force tailwinds of wealth creation were blowing.
The benchmark technology stock index – the Nasdaq Composite – gained 40% in 1995…
… then 22.7% in 1996…
… then 21.6% in 1997…
… then 39.8% in 1998…
… and then an incredible 85.6% in in 1999.
During these boom years, the market values of top technology firms like Microsoft, Cisco, and Qualcomm climbed by thousands of percent. Annual returns of 50% and 100% were commonplace.
Company founders made billions of dollars. “Regular” employees made millions of dollars. They did so by floating on giant rivers of wealth creation.
If ALL you knew about business and investing in the 1990s was that computers, the internet, and cell phones would make us WAY more productive and efficient, you could have made a fortune in stocks.
Who the president was or what kind of laws were passed didn’t matter at all. All that mattered was the BDT.
Next, let’s look at the BDT in stocks from 2015 to 2021. If you understood this BDT and invested accordingly, it was essentially the only thing you needed to know. Everything else reported on by the media during that time – politics, pandemic, trade wars – was pitifully small in importance compared to the BDT.
This BDT was the mind-blowing advancements in computing power… the bedrock of our digital world. Our 21st century economy – our software, our smartphones, our apps, our websites, our email – rests on a foundation of computing power.
After advancing in power at relatively modest rates in the 1990s and 2000s, computing power began advancing at incredible rates. Computers grew much faster and much more powerful… while at the same time becoming much cheaper and much smaller. The introduction of the smartphone in 2008 poured rocket fuel on this megatrend… which produced massive changes in our world.
This epic BDT made it so huge new industries sprang up at the fastest rates in history… while old, established companies got demolished at the fastest rates in history.
This BDT allowed Facebook, Google, Apple, Microsoft, and Amazon to reach trillion-dollar-plus market values. It sent the market values of innovative firms like Digital Turbine, Shopify, Square, Tesla, NVIDIA, and Chegg up more than 1,000%. Investments in tech-focused ETFs like the ARK Innovation ETF soared more than 600%. It sent the market values of many cryptocurrencies up hundreds and thousands of percent higher. Thousands upon thousands upon thousands of people grew wealthy from this megatrend.
Keep in mind that there were many seemingly important distractions an investor could have focused on during this time. You had extremely contentious political battles. You had a trade war between the U.S. and China. You had the Covid-19 pandemic. The list goes on and on and on. But at the end of the day, all those things paled in comparison to the BDT when it came to generating big investment returns.
When you “nail” the BDT of a given time period, it’s relatively easy to make a lot of money in stocks without trying or thinking very hard or taking big risks. As we’ve seen, investments in simple mutual funds or ETFs can soar hundreds of percent. Best-of-breed individual stocks can soar thousands of percent.
Classifying BDTs is a subjective thing. I believe the BDTs listed above were of epic importance. But for every belief out there – no matter how rooted in common sense and data analysis – someone out there believes the opposite.
Also keep in mind there can be several BDTs at play in the markets at any given time. The 2015-2021 period of amazing technological advancement and wealth creation occurred inside a very long period of declining interest rates, which in itself was a BDT.
Don’t become an extremist and insist there is only one BDT in play at any given time. Sometimes there is just one. Sometimes there are two or three. It’s a dynamic phenomenon that changes with the passage of time.
***How to Identify BDTs
Let’s say you understand the importance of nailing BDTs. You get the idea of making sure huge tailwinds of prosperity are at the back of your investments.
The next logical question is “How do I figure out what the BDT is at any given time?”
This is where I encourage you to seek professional help.
While the BDT of a particular era shapes many areas of life, most folks aren’t trained to spot them. Our analysts at InvestorPlace have trained to spot them for decades. They have incredible track records of spotting them and helping people invest accordingly. They’ll keep you informed of the BDT (or BDTs) at any given time.
Also important is that most people aren’t trained to spot where BDTs are in their respective lifecycles. This is important because all good things must come to an end.
The post-WWII boom was an extraordinary time to be an investor, but the good times came to an end during the highly inflationary 1970s.
The decade of the 1990s was an extraordinary time to be a stock market investor, but the huge bear market that started in 2000 and lasted until early 2003 killed the good times. That BDT had run its course.
We’ll keep you informed on this crucial part of BDT analysis as well.
Whatever the BDT or BDTs are at any given time, I encourage you to keep an eye out for them at all times. Become aware of their power. They are often so powerful and so large that they dwarf all other investment factors.
They can allow virtually anyone to make big investment returns without working or thinking all that hard.
***The single greatest BDT of our era
Jeff here again.
Before we wrap up, let’s talk about today’s primary BDT and how to act on it in your portfolio.
So, what is the most influential trend impacting our world today?
Cutting-edge technology.
Now, the specific manifestations of cutting-edge technology vary per sector – from electric vehicles, to artificial intelligence, to biotechnology, and far more – but the unifying characteristic is simple…
Extraordinary technological advancement.
Below is a visual of how this BDT translates into wealth creation.
We compare the S&P 500 with IGV, which is the iShares Tech-Software ETF. It’s a proxy for technology.
As you can see, over the last 10 years, tech has outgunned the market by more than 2.5X, returning 756% compared to the S&P’s 287%.
***This tech domination will only increase as the 2020s roll on
Here at InvestorPlace, all of our analysts recognize the power of technology and use it to generate outperformance with their recommendations. However, we’re proud to feature one particular analyst who makes technological disruption the focal point of his market approach.
I’m referencing our hypergrowth specialist, Luke Lango.
Last week, Luke held a special, live event called the “1 to 30 Wealth Summit” which was all about cutting-edge technology and how to harness it in your portfolio.
The name “1 to 30” comes from Luke’s conviction that today, the BDT of technology is creating the opportunity for investors to make 30-times their money in specific, high-growth stocks.
Luke detailed many of the leading tech sub-sectors: quantum computing, the space economy, distributed energy storage, artificial intelligence, virtual/augmented reality and 3D imaging, automated warehouse technology, and 3D printing.
Best of all, Luke even gave away the name and ticker of a stock he believes will be a 30X tech winner. If you missed the event, you can click here to watch a free replay.
I bring this up because yesterday after market-close, Luke released a new recommendation in his 1 to 30 portfolio. This is the eighth holding.
The portfolio is off to a strong start, up more than 5% on average since its launch one week ago today. And as I write, all of the positions are showing gains. To learn more, and watch the free replay of the event, click here.
Bottom line – technology is the defining Big Dominant Trend of our era. When it comes to massive wealth-creation this decade, this is your horse.
Have a good evening,
Jeff Remsburg
