- A market anomaly not seen since 1980… and it’s back
- The generational wealth from “superconvergence”
- Imaginary trade war progress, real gains in U.S. industry
- Marty McFly shoes — for real this time
- Readers write: Ocasio-Cortez and the ethics of progressive taxation
It was Dec. 12, 1980. Ronald Reagan was weeks away from becoming the 40th president. Robert De Niro was tops at the box office with Raging Bull. And Apple Computer began trading as a public company.
If you’d bought 100 shares at $22 each, you could have doubled your money in three years and had $4,400. Or you could have held on for the long haul and ended up a millionaire — $1.3 million actually, a gain of 59,328%.
(Just for giggles, dig this magazine ad featuring Ben Franklin designing a kite on an Apple II — “downright affordable” at under $2,500, it says. That’s $7,600 today!)
We offer this blast from the past by way of teeing up a bold new forecast from James Altucher, our hedge fund and venture capital veteran.
Shortly after New Year’s Day, we told you James believes the United States will steer clear of a recession in 2019. Mildly contrarian, perhaps, but he’s not exactly sticking his neck out there.
But that was just an appetizer. James now says a market anomaly that last showed up around 1980… is once again emerging. Play it right and it could hand you generational wealth — just as did for many people back then.
What exactly happened around 1980, you ask?
Two things, says James. First was the emergence of the home computer. Apple blazed the trail in the late ’70s. Then in 1981, IBM introduced its first PC — using an architecture that quickly became the industry standard.
The other thing that happened was the Reagan administration’s early efforts at tax cuts and deregulation — which had the effect of flooding the markets with cash.
When these two trends came together — James calls it “superconvergence” — remarkable things started to happen.
Apple was hardly the only beneficiary of this superconvergence. You could have doubled your money inside of a year with Warren Buffett’s Berkshire Hathaway. And over the long term, 10 shares of BRK would have given you $1.4 million and a gain of 53,344%.
Nor was it just household names: 100 shares of the regional bank M&T would have set you back $470. You could have doubled your money in a year… or held on long-term for $244,460 — a 51,912% gain.
Heck, look at the broad stock market. In the very early ’80s, there was still damage to repair from the horror show of the ’70s. But the Dow industrials put in a bottom at 776 in August 1982 — a level never seen since.
August 1982 marked the start of a spectacular bull market that lasted until the dot-com bubble finally burst in January 2000.
“Superconvergence” moments don’t come along often… but when they do, the gains can be life-changing.
Before 1980, the last occurrence was at the end of World War II. The early days of mainframe computing, put together with all the government’s wartime spending, ignited an epic bull market from 1949–-1966. The Dow grew more than sixfold during that 17-year span.
You can reach even back further in history, James says — pointing to the construction of railroad and telegraph lines in the 19th century, at a moment the government was flooding the economy with what amounted to free land.
Each time, there are big technological innovations that alter consumer habits… all fueled by a big financial catalyst.
It’s James’ conviction that we’ve arrived at another superconvergence moment.
This year alone, he says innovations in artificial intelligence and blockchain technology will bring about the biggest increases in productivity since the web came along in the early ’90s. To say nothing of developments in gene editing, autonomous driving, cybersecurity…
Meanwhile, the Trump administration has implemented its own version of the Reagan tax-cuts-and-deregulation playbook.
In the finance sector, the regional banks have already seen major regulatory relief. And James says it’s coming soon for the biggest banks, too. We’ll leave aside the wisdom of that move for another day — our point here is that James believes that will add up to another $1 trillion adrenaline shot for the U.S. economy as banks lend more freely to businesses and consumers alike.
Given James’ background, there’s no one better to identify the companies best positioned to benefit from superconvergence.
He knows the tech industry inside out. He’s started and run 20 businesses. He’s managed a $33 million hedge fund. He’s run a $115 million venture capital firm. Between his own savvy and an exhaustive network of contacts, he’s already positioned some of his readers to pull in gains like…
- 1,473% on Las Vegas Sands (LVS)
- 1,153% on Herbalife (HLF)
- 702% on Autoliv (ALV).
And that’s before the “superconvergence” ball starts rolling and gathering speed. Imagine the possibilities ahead now.
James is hosting a special event next Thursday, Jan. 24, at 1:00 p.m. EST. At that time he’ll reveal how superconvergence could make you 10 times your money this year alone. He’ll also reveal how superconvergence plays that took decades to play out in the past… could deliver a generation of profits in just the next 12 months.
Signup is free, but we expect the available slots to fill up fast. So we urge you to follow this link and secure your spot right away.
Wall Street is rallying on rumors — baseless speculation, really — that there’s a break in the stalemated U.S.-China trade talks.
Late yesterday, The Wall Street Journal reported that Treasury Secretary Steve Mnuchin wants to lift some of the existing U.S. tariffs in hopes that Beijing will offer more concessions. This morning, CNBC reported Beijing is offering a six-year boost in its imports from the United States, with an aim of zeroing out the trade gap between the two countries.
We’ll believe it when we see it, but traders believe it now — bidding up the Dow by 400 points since midafternoon yesterday. The Big Board stands just above 24,600.
Hot money flooding into stocks is flooding out of Treasuries and gold. The yield on a 10-year T-note stands at 2.78%. Gold has pulled back to $1,283.
The big economic number of the day was a pleasant surprise: Industrial production as measured by the Federal Reserve rose 0.3% in December, led by a big 1.1% jump in manufacturing.
At the same time, capacity utilization — the percentage of the nation’s industrial capacity presently in use — rose to 78.7%, the highest in nearly four years.
OK, now Nike is delivering on the self-lacing shoes promised in Back to the Future Part II — even if it’s more than three years late.
You’ll recall Oct. 21, 2015, was the “destination” Marty McFly and Doc Brown traveled to in the film. We noted at the time that Nike planned to release actual Marty McFly-type shoes the following spring. But they were a limited issue, sold only at auction with proceeds benefiting Michael J. Fox’s Parkinson’s charity.
Now comes the real deal for retail — Nike’s “Adapt BB.” Using your smartphone, you activate a small motor that tightens a cord and delivers a perfect custom fit.
For the moment, this model targets the specialized market of people who play basketball… but we can safely say the future is finally here.
Here’s the mind-bending part. Back when we brought up the topic in 2015, we noted that in the time period covering Oct. 26, 1985 (when Doc Brown implored Marty to join him on his journey) through Oct. 21, 2015 (the destination)… the best-performing stock was none other than Nike.
Yup, a total return — assuming reinvested dividends — of 46,922%.
1985 was still early days for that “superconvergence” we were talking about a short time ago. So there you go — another way to look at the phenomenon and the potential gains. (Didn’t sign up for James Altucher’s superconvergence event next Thursday? Here’s another chance.)
“New scary thing,” a reader writes after we explored the phenomenon that is Rep. Alexandria Ocasio-Cortez (D-New York) — and asked if she was a flash in the pan or the Next Big Scary Thing.
“You can only ‘tax’ the working so much to cover the ‘nontaxpayers’ before the ‘taxpayers’ stop paying taxes because they shut down.”
“‘Democratic socialist’ is a stupid label,” chimes in another. “There is nothing democratic about her politics.”
“Dave, I too am beyond cynical,” writes one of our regulars. “I don’t care about the income tax rate on gazillionaires or how the rich sidestep it. Or how the establishment gerrymandered a snot-nosed bartender named Sandy Ocasio (from affluent Yorktown, New York, in northern Westchester County) into the congressional parasite AOC (from working-class Bronx).
“Yes, she has a cavalier attitude toward the truth. But those who are ‘morally right’ rarely concern themselves with being factually correct. The regressivism agenda can’t be held up with quaint ideas like honesty.
“So AOC now represents the wealthy? Our tax code is structured so they will always be able to protect their income — and the burden will fall on the middle class, regardless of who holds any office.
“We have a bigger problem! As long as our gubment keeps spending like profligate lunatics, raising income tax rates on ‘the rich’ will be mendacious.”
“I understand The 5 generally supports less regulation and lower taxes and capably points out the absurdity of grand proposals such as that of AOC,” a reader writes.
“But maybe it is time to steer the discussion of taxation and the role of government from the perspective of ethics. How is it ethical for the AOC proposal to tax honestly earned money from any level of progressive taxation?
“If our federal government were truly limited, it would operate court systems and the military and not much else. All would benefit equally — from the pauper to the tycoon, as there would be little to lobby for from any socioeconomic class.
“But I understand that the cat is already out of the bag. Whether Republican or Democrat, most people have an excuse to support their version of Big Government. I am afraid interest in the Founders’ experiment of limited government and the respect for individual rights is waning.
“The future from my armchair does indeed look bleak. Keep up the good work, though.”
The 5: As long as you brought up the Founders and the whole limited government thing…
There was a mildly interesting interview this week with Robert Francis “Beto” O’Rourke. Near as we can tell, he’s the current flavor of the month among centrist Democrat pundits for the 2020 presidential race.
He posed this question to The Washington Post: “Can an empire like ours with military presence in over 170 countries around the globe, with trading relationships… and security agreements in every continent, can it still be managed by the same principles that were set down 230-plus years ago?”
O’Rourke was studiously agnostic on the answer; he’s mastered the art of sounding profound without actually taking a stand.
To us, the answer is obvious: Hell no.
Time was America would go to war, and then the war would end and we demobilized. Then came the Cold War scare and we’ve been in a permanent state of mobilization for war ever since passage of the National Security Act of 1947.
We had a chance to turn back after the Cold War was over — to be “a normal country in a normal time,” as Reagan’s U.N. ambassador Jeane Kirkpatrick put it — but the military-industrial complex had other ideas and had grown too powerful.
And when that massive overseas military presence blew back in the form of the Sept. 11 attacks (Bin Laden’s main beef with Washington was the presence of U.S. troops near Islam’s two holiest cities), we got an overweening surveillance state to boot.
Which brings us back to one our favorite founders’ quotes — James Madison, 1795.
“Of all the enemies to public liberty war is, perhaps, the most to be dreaded, because it comprises and develops the germ of every other.
“War is the parent of armies; from these proceed debts and taxes; and armies, and debts, and taxes are the known instruments for bringing the many under the domination of the few.
“In war, too, the discretionary power of the Executive is extended; its influence in dealing out offices, honors, and emoluments is multiplied; and all the means of seducing the minds, are added to those of subduing the force, of the people. The same malignant aspect in republicanism may be traced in the inequality of fortunes, and the opportunities of fraud, growing out of a state of war, and in the degeneracy of manners and of morals, engendered by both.
“No nation could preserve its freedom in the midst of continual warfare.”
Have a good weekend,
Dave Gonigam
The 5 Min. Forecast
P.S. And yet… we can’t help circling back to where we started today.
As depressing as the trajectory of America’s post-WWII history has been… there were still two instances of what James Altucher calls “superconvergence.” And both times it was possible to create generational wealth.
James says a new “superconvergence” is upon us right now — with opportunities to make 10 times your money this year alone. That’s why he’s organizing a special briefing for Agora Financial readers next Thursday, Jan. 24, at 1:00 p.m. EST.
In the past, James has charged $525 for access to an online event like this. But because James is part of our team, you get to look in on this one free. But we expect the available slots to go fast, so best sign up now.
