The Paradigm Shift Has Begun
If you’ve been reading my Daily Prophecy emails for the last couple weeks, you have now reoriented your investment stance for the 21st century.
You no longer believe that only US stocks and bonds are safe.
You grasp that the number of public companies in the US has plummeted 50% in 20 years.
You see that US equity markets have become a rotten borough, with 80% of demand fueled by companies buying their own shares with zero-real-interest-rate loans ultimately from the government.
You’ve learned that Silicon Valley is now full of bloated “unicorns” — 88 at last count — with venture capitalists capturing most of the profits.
Ultimately, it seems like fortune will favor those willing to step beyond traditional US investment opportunities.
Luckily, I have two options for you…
Option #1: Focus on the Cryptocosm
We’ve experienced a billion data breaches on the net this year. And we’re seeing paranoia everywhere about “fake news,” spy chips, and fake hate.
The Cryptocosm (with the blockchain at its core) will provide a way out of this mess, as it opens the way to an internet architecture based on provable timestamped facts and immutable records.
The only problem?
For investors, blockchain companies offer a tantalizing mixed bag of initial coin offerings (ICOs) — many of which are already defunct or come packaged with huge (but elusive) promises.
But another option has opened up…
Joining the ICOs of the last two years are a new efflorescence of security token offerings (STOs). And STOs are contractually compliant with Security and Exchange Commission rules.
Under the JOBS Act of 2015, these next generation companies can now raise up to $75 million from ordinary investors. That means you, if you remain aware of these (which I will reveal in upcoming Prophecy issues).
Keep in mind that investments in this space are still new. So the Cryptocosm demands the kind of intense analysis that was previously given to internet companies such as Amazon, Google, and Apple.
That is our goal here.
Option #2: Invest Outside the US
For Americans with a global view, the range of investment opportunities is expanding massively.
Given the limited upside in Silicon Valley — with its soaring price earnings ratios, green goo, and crony capitalist creep — opportunities abroad are beginning to outpace innovative companies in the states.
Despite furies and uprisings, Israel’s startup riches remain unparalleled.
Japanese and Chinese investors are now massively funding Israeli innovation.
Sony has just created a new $100-million fund with an Israeli target. And CTech reports: “In the first half of 2019, Japanese investors backed 34 Israeli companies, up from 28 companies during the entire year 2018.”
It’s incredibly easy to invest in Israel, too. You have direct access to 70 Israeli companies already available on the NASDAQ. And there are many new Israeli IPOs in preparation.
Expanding even more dramatically today are opportunities in China, with world leading initial public offerings, vast new stock markets, and relatively low valuations.
Compensating for an only ritualistically communist Xi Jinping regime is Chinese monetary stability and Chinese capitalist culture (hey, they even published a beautiful new edition of Wealth & Poverty last month!). Also auspicious for tech investments is Xi’s ardent endorsement of tech innovation, venture capital, and initial public offerings.
While the US fulminates over Huawei’s allegedly communist machinations, the Chinese are opening their capital markets increasingly to the West.
In fact, visit China long, as I have in recent months, and you will discover that Marx is far less influential there than he is in American universities.
While I am banned from most US campuses, I speak freely before enthusiastic audiences in many of the most prestigious Universities in China. There may well be fewer real Marxists in China than in the US.
I’m curious to hear what you think on that topic. Email us here to share your opinions.
Better yet, if you’re interested in gaining exposure to China, there’s never been an easier way…
You can contemplate such exotic paths as the new Shanghai-London connection that renders China markets accessible to anyone with a broker with access to London.
Anticipating this new opening and inclusion of a thousand Chinese stocks on emerging market indexes, some $6.3 billion flowed into mainland Chinese equities in early June.
In a pithy and topical new 2019 book, Charles and Louis-Vincent Gave, the father-son team at Hong Kong’s GaveKal Research, observe: “Japan is a culturally socialist country on which capitalism was imposed, while China is a culturally capitalist country on which socialism was imposed.”
The Gaves now observe that both countries are reverting to earlier cultural tendencies — China to capitalism, Japan (with its aging population) to socialist gerontocracy.
We will see a 10-fold increase in investments in the Cryptocosm and international opportunities over the next five years.
Stay tuned for the best ways to profit in coming issues of Daily Prophecy.
Editor, Gilder’s Daily Prophecy