Some thoughts on investing as technology races forward

Posted By on August 20, 2021

TheRoadNotTakenMost aging entrepreneurs and investors canin hindsight” spot their mistakes and missed opportunities, but with age and experience, also comes wisdom. The pace of change is rapidly accelerating and decisions seem to be made much faster and happen quicker nowadays’; I suspect even millennials are learning this faster?


As a more cautious trader and investor (most of the time), I tend not to jump into the untested trades, non-profitable companies or the latest trends … therefore, I often miss opportunities. Owning mature established companies also comes with legacy risk and lethargic decision making by management. I find myself knowing about the “next thing” but not participating … and I often kick myself for being risk-averse. As everyone knows, most “hot” companies and start-ups are just too unknown and therefore risky. I missed picking the Dotcom survivors and finding right ecommerce companies when brick and mortar retailers struggled (like picking $AMZN at a few bucks a share), or support companies like $SHOP. More recently I have not been able to stomach the ups and downs of the crazy Meme stocks, blockchain companies or owning cryptocurrencies like Bitcoin, Ethereum or Doge Coin or even a company like Tesla with stellar products, but a ridiculously high valuation. $TSLA


BUT I also think of myself as a “contrarian” and dislike following the herd. It is something in my genes. I can even still recite lines to my favorite elementary school poem: “The Road Not Taken” by Robert Frost (click arrow for audio). I’m not sure how to apply this to investing, but read something from the investment contrarian Brett Owens and contemplated “what’s next” when it comes to not necessarily buying the next HOT stock, but the technology and backbone companies that makes it grow (see a segment from his newsletter and end of day chart 8/18 from Kiplinger below).

Brett’s “pick and shovel” thinking is my preference and I like identifying companies that can both grow AND make money supporting whatever the herd is following. I currently do the same with cryptocurrency and prefer not owning a particular “crypto asset” (but have a little that I sell when they jump higher) but prefer owning those blockchain companies that make it possible … like the exchanges- Coinbase $COIN for example.

Brett Owens, Investment Strategist:

We contrarians like to call these “pick and shovel” companies. The phrase “pick and shovel” dates to the gold rush of the 1840s, when hordes flocked to California to get rich mining for the metal. The guys who made the real money didn’t mine anything. They were the entrepreneurs who sold the “picks and shovels” as well as booze, “entertainment,” and lodging to the hapless speculators.

Here’s an example of a pick-and-shovel play that is benefiting from The Great Reset. Everyone knows that 5G cell networks are rolling out. But the obvious stocks that will capitalize on these trends, such as the “FAANG+M” technology stocks, are usually expensive.

American Tower (AMT) has been a bargain way to play 5G. This company is a cell phone tower landlord that provides the infrastructure for cell phone traffic. It is a capital-intensive business to start from scratch, but once AMT builds its towers, it can scale quite easily.



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