Make A Fortune By Investing Through the “Back Door”

This post Make A Fortune By Investing Through the “Back Door” appeared first on Daily Reckoning.

Dear Reader,

I usually prefer focus on investments most people have never heard of. I do this with a strategy I like to call “backdoor” investing.

A “backdoor” investment is a publicly traded company that capitalizes on a “big idea” or trend sweeping Silicon Valley. At any given moment, the venture world is filled with thousands of companies at work in almost every sector of business.

For instance, why invest in Tesla when you can find the tiny company supplying batteries for the

Tesla cars and invest in that?

That tiny company won’t be tiny for long. So… it’s the back door. Almost always, there is a way to:

1. Play the idea directly in the stock market

2. Buy a stock whose business will directly benefit from a growing startup or a Silicon Valley trend.

The great thing about this is it allows everyday, average investors to profit from venture capital

investment trends without having to ever touch Silicon Valley (because most of us can’t get in on those deals anyway). It’s about using public companies that are available in the stock market to place bets on the latest trends.

And there’s an added advantage here.

For years, the only people who could invest in promising new technologies and non-public companies were accredited investors. That meant they were people with more than $1 million in net worth or an income north of $200,000 per year.

In other words, people who were already successful.

Investors who weren’t accredited (didn’t have the cash in the bank to qualify) were left out. Backdoor investing solves that problem, allowing everyone to get in on these major trends without necessarily having to invest in the private markets.

And that’s not all.

Title III of the Jumpstart Our Business Startups Act (aka the JOBS Act), finally enacted in 2015, officially opened the door to equity crowdfunding by allowing non-accredited investors to invest in startups and small businesses. Finally, all investors have access to the potential lucrative world of backdoor trend investing.

I should know. I’ve made my money betting on upcoming trends.

In 2007, I was the only person on CNBC and The Financial Times saying that Facebook was worth $100 billion. Six years later, they went public at a valuation of $104 billion. At the time that I went on CNBC, it was valued privately at around $1 billion.

People laughed at me (they really did). They said I was crazy. What did I do?

I invested in every marketing company I could find that was working on products related to Facebook marketing.

I made a killing.

There are 8,000-plus public companies out there in the public markets. Newspapers like the Wall Street Journal maybe focus on 10 of those companies. We’re talking the giants like Apple, Google, Tesla, etc.

But those aren’t where the big money is being made. It’s all about the other 8,000 companies. The backdoor plays.

What tiny company is supplying the metal for the circuits of the latest 3D printers? Go find it.

Who is working on control and security software for drones?

What about virtual reality? Google, Samsung and other big players are working on the technology, but what companies are creating the content and the software that we’ll all be using VR for in a few years.

Go invest in them.

Alternative energy. Synthetic biology. Biotechnology. These are the trends that will dominate the planet in the next 10 to 20 years.

Go here to learn about how to profit from one massive trend that Forbes is calling “biggest disruptor in technology since the 1990s,” that PriceWaterhouseCoopers calls a “once in a generation opportunity,” and about which The New York Times is saying “everyone is getting hilariously rich and you’re not.”

Awhile back I was chatting with Peter Thiel. If you haven’t heard of him, he’s one of the top hedge fund managers in the country. He was the first investor in Facebook. Oh, and he also founded a company you may have heard of by the name of PayPal.

His net worth of $3.3 billion landed him at #293 on Forbes’ list of the world’s richest people. I asked Peter which area of the stock market I should look at.

Biotech, he told me. “It’s the hardest to value, which means when the market goes up, biotech can move explosively upward.”

I had already known that. I noticed that one of my hedge fund contacts was buying in with a large position in a small biotech firm named Inhibitex. I looked into it. The stock met my due diligence.

So I followed him into the company… and the stock rose from $2 to $24 a share — a 1,100% gain.

These are the “backdoor” investments that the hedge fund managers I know are digging up. These are the companies we talk about with each other.

A backdoor into Big Data is a trend I’ve been following for years. This technology is changing the world as we know it. It’s being used to increase efficiency and productivity across every sector.

It’s being used by governments to stop terrorist attacks before they happen. And the biggest companies in the world are spending tens of billions of dollars on this technology in an effort to predict future patterns.

Everything we do online, on our mobile devices or anywhere in the digital world now leaves “trails” of data that are extremely valuable to almost any business. That’s why some of the biggest tech companies in the world are spending billions to capture and store this data.

Once this data is captured, algorithms are used to analyze and predict behavioral patterns in consumers. This use of technology is what we call Big Data, and it is the next frontier for innovation, competition, and productivity.

It’s already being used to predict the outcomes of sporting events like the World Cup and Super Bowl, it’s already being used to predict the outcomes of elections, and retail giant Target has even used this technology to predict which female customers were about to become pregnant.

Big Data is also being used to predict where outbreaks of viruses (Zika or Ebola) will most likely appear. This will result in a much better response rate and save lives. It is also being used to analyze traffic patterns (using GPS systems in cars). This will provide alternative routes, maintain smooth traffic flow and ultimately provide a safer environment for drivers.

But Big Data is providing even bigger changes for businesses. For example, consulting giant McKinsey Global says Big Data is “the next frontier for innovation, competition, and productivity.”

The firm estimates the retail sector could generate another $9.6 billion in sales thanks to Big Data. And the firm says the U.S. healthcare industry could save $300 billion each year by reducing unnecessary hospitalizations and creating nationwide electronic health care records, which will increase efficiency and reduce misdiagnosis.

There are many forecasts regarding the actual size of the Big Data market. These estimates range from $100 billion to $500 billion. To put this in perspective, the drug market for cancer treatments is about $100 billion.

The possibilities are nearly endless.

Truth is, backdoor trades like these are a great way to invest in new technologies and world-changing trends without having to have a billion-dollar brokerage account or a high-flying Silicon Valley network.

This is exactly what I’ve done for years; it’s how I’ve made my money. And now it’s a strategy that you too can put to use in your own investing.

Regards,

James Altucher
for The Daily Reckoning

The post Make A Fortune By Investing Through the “Back Door” appeared first on Daily Reckoning.

The True “Green Revolution”

This post The True “Green Revolution” appeared first on Daily Reckoning.

An increasing number of states that have legalized medical-use marijuana, adult-use marijuana, or some combination of the two. But many in the mainstream media, and on Wall Street, continue to believe investing in pot is about getting high.

It’s time to set the record straight because investing in cannabis has absolutely nothing to do with getting high!

Today I’ll be discussing my top three reasons why every investor should allocate at least a small portion of their investable assets to the cannabis industry.

The reasons I believe you should invest in the green revolution are as follows:

  1. The U.S. cannabis market is massive
  1. There are many known catalysts with unknown timelines (a good thing!)
  1. Positive sentiment will lead to a U.S. infrastructure buildout

So without further ado, let me show you why cannabis is where you should put your money…

According to the research firm Euromonitor – the American cannabis market will grow from an estimated $5.4 billion in 2015 to an impressive $20 billion by next year.

And Euromonitor’s optimistic views aren’t out of line with the views of other research firms.

Market research firm Cowen has gone on record with its view that the American market could reach $75 billion by 2030.

Now, while early investors will no doubt make enormous fortunes if the cannabis industry grows to $75 billion over 11 years, I believe the market could grow even larger.

You see, most industry observers are only considering the uses of cannabis that we know of today. But like the internet in the mid-1990s, it’s just too soon to know how the cannabis industry will mature and ultimately unfold.

It’s even possible that we haven’t even identified the most profitable use for cannabis.

While cannabis users may love the plant for its healing, therapeutic, or relaxing effects, investors should recognize it as an untapped gold mine!

The bottom line is we’re in the very early days of a new industry that has tens of millions of potential customers in the U.S. alone, and billions-of-dollars in sales just waiting to be scooped up.

While anyone who pays even a little attention to the stock market knows about the green revolution unfolding in the U.S, I’m laser-focused on identifying investment opportunities. That way I can share them with my readers before they’re highlighted in The Wall Street Journal or on CNBC.

You see, to maximize your investment returns, you must be adequately invested before the story is shared with the investing masses on the front-page of every newspaper in America. That means investors need to identify industry catalysts, and then put their money to work in select companies before those catalysts are made public.

Look, we know with near 100% certainty that the U.S. government will eventually decriminalize the use of cannabis. And we know that banking reform will liberalize existing rules against cannabis.

Now, when banking reform is passed, the floodgates will burst open with banks wanting to lend cannabis companies money, and institutional investors wishing to snap up stock as quickly as possible (more on this below).

The bottom line is the catalysts are coming.

Investors that wait for the dust to clear, legislation to pass, and CNBC to report on the enormous stakes that significant institutions have taken in the United States’ multistate cannabis operators will be forced to pay a sky-high price for shares.

By focusing on the most successful U.S. cannabis companies and investing ahead of the crowd that is waiting for the legislative all-clear signal, you will be pre-positioned when the masses are only beginning to invest.

When it comes to Wall Street, sentiment is enough to move markets. And while it may seem like there’s a world of difference between Wall Street and the Washington, D.C., beltway, there isn’t. Politicians, like Wall Street analysts, are heavily influenced by public sentiment.

In April, a new Hill-HarrisX poll was released showing that 84% of Americans now support some form of marijuana legalization. It doesn’t take a high-ranking political operative to figure out that when 84% of voters support something, you can bet politicians are paying attention.

The dramatic rise in public opinion surrounding cannabis also explains why virtually every serious Democratic candidate for the 2020 elections supports marijuana legalization. Many Republicans are also on board.

Yes, investing in cannabis is going to resemble the wild west over the next 1-2 years. But it’s that lack of certainty and regulation that actually provides marijuana investors with massive profit potential.

Below, I show you why you should invest in the “true” Green Revolution. And I’m not talking about green energy. Read on.

Invest in the True Green Revolution

Twenty years ago, the only people making money from marijuana were stone-cold criminals.

These guys smuggled narcotics across a national border, made deals with cartels and sold drugs on the street. And every dime they made had to be laundered through phony businesses to keep the heat off their backs.

Today, I can make quick and easy money from marijuana, sitting at my computer in my pajamas. And it’s all 100% legal. No drug mules, no police — just a click of a button.

Now, before you get the wrong idea, I’m not talking about selling pot, using it or even living in one of the growing number of pot-friendly states. You can do this from anywhere in the U.S. All you need is a laptop and access to a trading account. I’m talking about the growing sector of the stock market that’s dedicated to legal pot.

I’m talking about medical marijuana companies, legal growers and even gardening companies who are getting in on the marijuana-growing boom.

Yes, I believe cannabis — specifically U.S.-focused cannabis companies — are set to explode higher in 2019 and beyond. I don’t know if you were investing in the mid-1990s but I was and it was a magical time.

Companies like Netscape, AltaVista, CMGI, and WebMD captured the imaginations of investors, and Wall Street rewarded these companies and others like them with multi-billion-dollar valuations.

Now, there’s no denying that the internet revolution was a once-in-a-lifetime event. And when technology stocks came crashing to the ground in mid-2000, I assumed that was it. I’d never see an investment opportunity that massive ever again.

But I was wrong.

You see, we are facing the end of cannabis prohibition in the United States. And like the internet revolution, this too is a once-in-a-lifetime investment event.

Unfortunately, many investors hear the word marijuana and immediately shut down. They’ve grown up listening to how horrible cannabis is, and viewing it as a dangerous drug with no medical value. They can’t handle the idea of investing in a product that is both federally illegal and responsible for landing thousands of Americans in prison.

Simply put, many on Wall Street will miss out on this investment opportunity because they’re either incapable or unwilling to look beyond today’s federal cannabis policy which is tragically out of step with popular opinion and position their portfolio for where federal policy will be in the near future.

Now, I want you to try and wrap your head around a few numbers.

Legal U.S. recreational and medical cannabis generated $10.4 billion in 2018. However, that only represents sales made in state-legal cannabis enterprises. If we account for the estimated black market demand, that figure jumps up to an astounding number somewhere between $50 billion and $55 billion!

With bipartisan federal and state-level political support for cannabis legalization, public opinion that is already heavily in favor of reform, and support from the banking, alcohol and tobacco, professional sports, and banking industries — there’s no question that full-scale federal legalization is right around the corner.

Now, it’s no secret that the biggest challenge facing the legal U.S. cannabis industry today is access to banking services.

You see, because cannabis remains illegal under the Federal Controlled Substances Act, banks and credit unions are understandably scared to do business with or extend credit and banking services to state-licensed cannabis companies.

And without access to banking services, state-licensed cannabis companies are forced to operate on a cash-only basis.

While cannabis is illegal at the federal level, any bank providing traditional banking services to a legal cannabis company could be accused of money laundering and aiding and abetting federally-illegal operations.

The takeaway is that without a cannabis-related banking solution at the federal level, most U.S. cannabis companies will be forced to remain predominantly cash-only operations.

But that’s changing.

Senator Jeff Merkely (D-OR) and Rep. Ed Perlmutter (D-CO) introduced the Secure and Fair Enforcement (SAFE) Banking Act in May 2017 to both legitimize the burgeoning cannabis industry, and to establish a framework of banking rules for cannabis companies operating under state-legal guidelines.

Unfortunately, the 2017 version of the SAFE Banking Act failed to see the light of a committee hearing.

But on February 13, 2018, the House Financial Services’ Subcommittee on Consumer Protection and Financial Institutions held the first ever congressional hearing on the issue of cannabis banking.

And an underpublicized Congressional subcommittee held a hearing this March on providing safe harbor via the SAFE Banking Act of 2019 for banks wanting to work with legal cannabis businesses in the U.S.

A vote on the SAFE Banking Act of 2019 could happen by the end of June. The fact that it managed to get this critical piece of legislation in front of the House Financial Services subcommittee is a HUGE positive for the cannabis industry.

And with public opinion blowing heavily toward legalization at the federal level, our elected leaders in Congress finally realize they must come out from the shadows and do their job!

Just the fact that legislation is finally being discussed is a momentous step in the right direction.

Here’s what Rep. Denny Heck (D-WA) said following the hearing:

“We listened to hours of testimony today about the dangerous position we put store owners and employees in by forcing them to do all of their business in cash. We can fix this. We don’t have to force them to operate in a way that makes it difficult to secure and track their funds. Regardless of our views of marijuana use, the voters have decided in states all over this country that they want recreational and medicinal markets. To continue to do nothing to protect public safety would be negligence.”

I’ll continue to monitor any developments with the SAFE Banking Act. I’m very excited about any future developments in the legalization of cannabis at the federal level. Again, there could be a vote by the end of June.

Abraham Lincoln famously said,

“We the people are the rightful masters of both Congress and the courts.”

And I believe the day is finally coming when the views of most Americans will be heard, and the cannabis industry will be permitted to emerge from the shadows and dark alleyways and operate in full government-sponsored daylight.

The pieces are in place for cannabis to emerge as the next great growth sector. And the fact that marijuana is still illegal at the Federal level in the U.S. provides traders with a significant catalyst to invest around.

America’s budding pot market is the BEST way for an average American to get rich right now.

There is a so much momentum building, from the individual states to the halls of Washington, D.C.

Right now, most mainstream investors don’t know how to read the signals. But it won’t be long before they catch on — which is why I recommend you move on this opportunity right now.

Don’t miss out!

Regards,

James Altucher
for The Daily Reckoning

The post The True “Green Revolution” appeared first on Daily Reckoning.