You sit down, and the croupier says something strange …
I guarantee you that in my next spin, the ball is going to land on a number between 20 and 25. Trust me — it will happen. So, put your bets in that range.
You’re understandably hesitant. But upon your suspicious cross-examination, the croupier insists this will be the result. So, you put down a cautious $5 bet on each number between 20 and 25 and hold your breath.
“23”
You’re a winner! Given the way roulette payouts work, hitting a single number carries great odds, so you just enjoyed a nice payday even though only one of your bets paid off.
Of course, now you’re kicking yourself for not having bet far bigger — after all, you’d been given the outcome ahead of time. Had you put down a huge wager, you could have minted a fortune.
Right now, we know the outcome of a different bet that’s playing out before us — 5G.
Just as the croupier could guarantee that the ball was going to land between 20 and 25, we can guarantee that a handful of 5G-related sectors are going to experience massive growth, creating long-term investment wealth for proactive investors.
Matt McCall, editor of Investment Opportunities, recently described the magnitude of this opportunity to subscribers:
For early investors, 5G presents the kind of wealth-building opportunity that could turn a modest one-time investment into an absolute fortune over time. It’s expected to bring in $12.3 trillion in revenue across multiple industries …
And even if the bears and talking heads are somehow right — which I don’t believe they are — and we do have a recession … 5G isn’t going anywhere. That’s the type of investment you want to be in long term.
***So, when exactly is 5G going to “get here” and what does that mean for investors?
After all, you’ve probably seen the marketing …
“5G is here!”
If that’s true, why is everything still the same? And why aren’t we gazillionaires yet?
Because, okay, sure, 5G technically is here, but it’s not really here yet … but that’s a good thing for you and me.
The Global System for Mobile Communications (GSMA) predicts it will be 2025 before 5G accounts for 46% of global connections. Right now, we’re 1%. Next year, we’re only looking at 4%.
The biggest growth rate for 5G connections is likely 2020-2021, and then 2021-2022. Estimates peg growth rates during those years at 14% and 24%, respectively.
Bottom line, nearly all of the adoption and growth curves are still ahead of us. But here’s why that’s good …
***Placing our bets ahead of time
If you polled the average U.S. citizen about the impact of 5G, you’d likely get some response that points toward one thing — “faster download speeds for my phone and computer.”
And that’s true. As Matt wrote to subscribers some months back …
The current 4G network clocks in at around 100 megabits per second, which is extremely fast compared to 3G. But once 5G rolls out, that number jumps to 10,000 megabits per second — or 100 times faster than the current speed!
But focusing on faster download speeds for your phone and computer is woefully incomplete.
The real 5G story is how this lightning-fast speed is going to enable and create an avalanche of breakthroughs and entirely new industries.
But here’s the thing — most people can’t envision this, so they’re not investing in it.
Peter Lynch famously said “invest in what you know.” Now, that’s generally great investment advice. But there’s a problem with that relative to 5G. For an investment to “become known,” the related company has to grow and develop, make a visible impact on our overall society, and basically, be around long enough for most investors to “know” it.
That takes time and lots of public awareness.
Of course, what happens while public awareness catches up?
It experiences massive growth … and the various component makers that helped this new venture succeed experienced massive growth.
Think about Microsoft. It went public in 1986. But when did it really cross your radar? Maybe 1994? ’95?
Let’s say you found it even earlier — 1993, when it’s split-adjusted price was $2.97.
By that point, the stock had already climbed more than 3,100% from 1986.
This makes sense …
After all, it’s the very growth and success of a small, unknown investment that puts it on the radar of the average investor. But by the time this happens, those explosive, early gains are already over.
We’re still very much in the shadowy “what will 5G really do?” phase of this technology’s life cycle. But that gives us a chance to establish investment positions now so that we capture the early gains that will be coming.
But frankly, we don’t necessarily need the tiny companies behind the technologies of tomorrow to make major investment wealth. Why? Because in order to succeed, those companies will be buying components, parts, and services from the tech leaders of today that are enabling 5G’s development.
For example, by the time, say, 5G holographic smartphones are all the rage, you’ll have long-since been invested in the microprocessor company that helps enable the technology.
I think of it this way — the croupier has spun the roulette wheel … we know the range in which the ball is going to land … but it’s going to take a couple more years before the wheel stops spinning — and in that time, we can thoughtfully place our bets.
***So, what’s the “range” of 5G winners?
Matt recently wrote about this to his subscribers. Broadly speaking, we have autonomous vehicles, the internet of things, augmented and virtual reality, smart cities, and health care, to name a few.
Of course, those are broad categories. Within them, we can dig deeper into “function.” As just a few examples:
– The infrastructure providers
– The chip-set makers
– The device makers
– The data storage companies
So, how might an investor approach this?
Well, in our roulette comparison, you put $5 on each of the numbers between 20 and 25. For your 5G portfolio, you could adopt a similar “spread your bets” approach.
You could start with the broad industries to be affected and created by 5G, then dig down into its constituents (like the device makers, infrastructure providers, etc.). You could then pick the top names in each area.
For instance, Xilinx or Marvell in semiconductors. Broadcom or Intel for chip vendors. Perhaps Nokia for gear makers. Then American Tower as an infrastructure cell tower play. And so on …
Let’s get crazy here — say you identify as many as 50 companies you like. You put $1,000 in each for a total $50K “5G” basket.
Now, let’s say all of them are miserable failures except just one … which turns out to be the next “EMC.” EMC was one of the top-performing data storage stocks of the 1990s. From its closing stock price on the last trading day of 1989 through the end of 2000, a $1,000 investment in EMC would have ended up being worth roughly $700,000.
If your 5G basket followed that trajectory, that would mean your $50K initial investment turned into $700K for a return of nearly 14X. Of course, the odds of your other 49 top-5G-names going to zero is about zero itself.
Today — while 5G is still largely “invisible” — is the time to place your bets. If you have the time and interest in doing the research and building the portfolio yourself, great, go for it. If you’d like some help, Matt has a diversified basket of 5G stocks in his Investment Opportunities portfolio. To learn more, click here.
Either way, 5G might technically be here, but getting in before you feel its impact over the next few years is what’s important.
