Last issue, I explained that for the rest of the year, we’re going to take a trip down memory lane and revisit your most-liked Smart Moneys of 2022.
Not surprisingly, each of these four articles tie into a megatrend or the philosophy surrounding macro trading – because, as we’ve seen, zeroing-in on trends and going where the money leads has proven profitable, even in a historically unprofitable year. (Examples A, B, C, etc. can be found here.)
Today, we’re going to revisit a guest article from InvestorPlace CEO Brian Hunt, called The Only Acronym You Should Care About…
What Is the “BDT”?
The investment world is full of acronyms: IPOs, ETFs, IRAs, the NYSE… they go on and on.
So, if you’re thinking about investing, then it wouldn’t hurt to expand your vocabulary and learn some of the money world’s acronyms, especially one called “BDT.”
It may be one of the most important acronyms in the world of money and business. But you won’t find it on any conventional finance website… That’s because this particular acronym is one that our CEO at InvestorPlace, Brian Hunt, came up with himself.
“BDT,” says Brian, “stands for Big Dominant Trend.”
At any given time, there’s at least one wealth-creating “megatrend” that is so monumental… so impactful… and so powerful…
… that all other trends take a backseat when it comes to creating dominant businesses with soaring share prices.
The only thing that really matters is the BDT.
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The Right Side of the Equation
BDTs typically come in one of two flavors…
- One is related to big, long-term business cycles… like the long period of economic prosperity we saw after World War II.
- The other 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.
At any point in your investment career, there will be at least one BDT in play that is so important that if you know only about 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.
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 41% in 1995…
- Then 23% in 1996…
- 22% in 1997…
- 40% in 1998…
- And then an incredible 86% in 1999.
During these boom years, the market values of top technology firms like Microsoft Corp. (MSFT), Cisco Systems Inc. (CSCO), and QUALCOMM Inc. (QCOM) climbed by thousands of percent. Annual returns of 50% and 100% were commonplace.
Company founders made billions of dollars, and “regular” employees made millions. 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.
During those years, it didn’t matter whether interest rates were heading higher or lower. It didn’t matter who won the presidential elections or who won the Super Bowls. All that mattered was the BDT.
BDTs of the Present
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 fairly irrelevant 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, smartphones, apps, websites, 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. … 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 enabled huge new industries to spring up at the fastest rates in history… while simultaneously destroying old, established companies at the fastest rates in history.
This BDT allowed Meta Platforms Inc. (META), Alphabet Inc. (GOOGL), Apple Inc. (AAPL), Microsoft, and Amazon.com Inc. (AMZN) to reach trillion-dollar-plus market values.
It sent the market values of innovative firms like Digital Turbine Inc. (APPS), Shopify Inc. (SHOP), Block Inc. (SQ), Tesla Inc. (TSLA), NVIDIA Corp. (NVDA), and Chegg Inc. (CHGG) up more than 1,000%.
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.
Now 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, of course, is “What is the BDT right now?”
And the truth is, there isn’t only one right now – it ranges from the 5G rollout, green energy, the resurgence of global travel, and more.
It’s all about turning down the noise and tuning in to what the BDT is.
End-of-Year Thoughts: Brian’s examination of the “BDT” backs much of my investing philosophy.
If you’ve been with me for a while, you know that I’m a “macro” guy, and I don’t get hung on things many other traders do, like the Fed, media headlines, or what Elon Musk most definitely shouldn’t have tweeted.
I look at the big picture, and I follow where the money leads. Historically, this has given my readers the chance at some incredible gains, like…
- An unweighted return of 514.29% on the final one-third position in MU Jan. 2022 Calls over 22 months…
- A combined unweighted return of 230.03% on XOP Jun. 2022 Calls over six months (including multiple closeouts)…
- And 51.90% on TCOM Jan. 2023 Calls over about 11 months.
And right now, two of my colleagues and I have narrowed down our three of our top stock picks for 2023.
Thanks to the turbulent markets we’ve experienced this year…
My new stock pick is trading 50% below the high it hit earlier this year… and has become a great bargain once again.
Because this stock capitalizes on one of the most powerful megatrends in recent years, I firmly believe that once the market begins to recover, this will be one of the best performers.
Click here now to get the details – and to see the other two stocks you’ll definitely want to own for 2023.
On the date of publication, Eric Fry did not have (either directly or indirectly) any positions in the securities mentioned in this article.