Solid advice there from ‘Coach Finstock’ in that highbrow movie classic Teenwolf.

But, sorry Coach, we must persist with ‘playing cards with a guy who has the same first name as a city’.

You see, for five years now, I’ve been playing cards against ‘Washington Ben’ – though you may know him as Ben Bernanke, the Chairman of the Federal Reserve. ‘Washington Ben’ has been king of the casino, running the whole show – and sometimes in our favour. Anyone in the markets has had no choice but to play him.

He’s made damn sure many years of ‘poker nights’ with the boys turned out as useful as my formal financial qualifications. Because bluffs, double bluffs, and forced tells regarding the Fed’s next move have the power to bulldoze fundamentals and turn all global markets on a dime.

And the bulldozer is at a crossroads. Never have I seen the markets more anxious than they are today, waiting, and furtively twitching, in readiness for 4.30am AEST on Thursday morning.

This is when ‘Washington Ben’ delivers a press conference where he’s set to play his most important hand in years…

After starting quantitative easing almost half a decade ago in October 2008, Washington Ben has recently tested the water with talk about ‘tapering’ the current $85 billion in monthly asset purchases.

That’s all. He hasn’t said it’s definite.

And he hasn’t said ‘stop’ either, just ‘taper’.

The online dictionary defines ‘taper’ as ‘making gradually smaller at one end’. So this could imply dropping QE from $85 billion to $80 billion per month for all we know.

But even just a suggestion of a possible and gradual reduction in QE has sent markets worldwide into a hissy fit. If Washington Ben wanted to know how dependent the casino was on his QE, well now it’s clear as day that it’s totally addicted.

As soon as he mumbled the word taper, money flew out of emerging markets, pulling down their stock markets as it left. The Emerging Markets ETF, which covers stocks in the BRIC countries (Brazil, Russia, India and China) along with South Korea, Taiwan and South Africa, crashed 12% in a few weeks.

But the big market moves also hit the US Federal Reserve where it hurts too. Bond yields have spiked. The 10-year bond yield for example has jumped from 1.6% to 2.2% in the blink of an eye. That doesn’t sound like much I know, but it’s a serious move and takes the yield to a twelve month high.

What Will the US Federal Reserve Do?

The last thing the Federal Reserve wants is for yields to suddenly spike. Their whole recovery thesis is about low rates encouraging borrowing. Rising rates would knock the insipid US recovery on the head pretty fast; there would be no natural economic growth to seamlessly transition to as QE finished.

Frankly I don’t envy Washington Ben. There’s no way to gently wind down QE without the market throwing its teddy out of the pram, in the same way that there’s no way of nicely asking our dear Prime Minister to quietly move on and seek alternative employment.

So for what it’s worth, odds are Washington Ben will back-peddle on the tapering talk for now. The US economy is just too weak, and the Fed knows it.

At the end of last year their stated target for unemployment was 6.5%. At last count, the actual figure jumped from 7.5% to 7.6% as more job hunters came back into the market. So on the unemployment front alone (which has been Washington Ben’s main focus) the Fed has a reason to stop using the word ‘taper’.

The other focus is inflation. The low official inflation rate gives the Fed scope to keep QE going. The headline rate is 1.4%, when their informal target is 2%.

The inflation measure the Fed bang on about more is the ‘Personal Consumption Expenditures Index’. This is now down to just 1.1%. If they believe their own data, then domestic inflation gives them no reason to take their foot off the gas today.

I’d say there is good reason for Washington Ben and his cronies to keep juicing the casino for time being, but who knows what they’ll do. It’s not all up to Ben of course. It’s voted on by twelve people. Eight of them are pro-QE, and the rest are anti-QE or neutral. The vote should be a foregone conclusion.

But what happens behind closed doors isn’t half as important to the market as what Washington Ben says at the press conference afterwards. That matters more because sound-bites travel faster than the official minutes which the Fed won’t release for three weeks.

We can only hope that he articulates the Fed’s plans better than at last month’s press conference when he mixed his messages and left the market as confused as a goat on Astroturf.

So leading up to Thursday morning, expect a bumpy ride. Traders have been jumping at imaginary bogeymen in recent days. An article in the Financial Times on Monday suggesting tapering was enough to send the markets plunging.

Last week it was a story in the Wall Street Journal from a journo (with rumoured close ties to the Fed) who said tapering was off, sending the markets soaring. It’s a total farce.

Rumblings from the China Bears Grows Louder

That’s not the only reason to expect a bumpy ride on Thursday. The Bank of England has a press conference soon after, and just before lunch the monthly Purchasing Managers Index for China (HSBC flash) comes out. China in particular has the scope to hit our market if the news is bad.

My mate and colleague Greg Canavan, of Sound Money Sound Investments, has been banging the China-bear drum again recently. His view of the market was pretty chilling when we had a chat the other day.

It’s not all about China, but his overall view of global markets is that they’re about to crash. Look out for Greg’s new video on the subject tomorrow.

Maybe a negative, or plain unrevealing, press conference from Washington Ben tomorrow could be the trigger for what Greg sees coming?

After all, you got to know when to hold ‘em, and know when to fold ‘em…

Dr Alex Cowie
Editor, Diggers & Drillers

From the Port Phillip Publishing Library

Special Report: The Sixth Revolution Has Just Begun

Daily Reckoning: The Pressure is Building in China’s Economy

Money Morning: Why Thursday Could Be a Key Day for Silver…

Pursuit of Happiness: Calming a Property Market Storm

Diggers and Drillers:
Why You Should Invest in Junior Mining Stocks Now

Needless to say, this has been discomforting to the growing number of silver investors in the Western world. (To meet booming demand, silver coin production has surged at the world’s mints and global holdings in exchange-traded products remain near a record high exceeding 600 million ounces.)

With the [US] dollar recovering strength this year and an improving [US] stock market, you may ask ‘Should I continue to hold an investment in silver?’

Obviously, each person needs to make his or her own financial decisions. In my view, the answer remains yes and below I list the 13 main drivers I believe will drive the silver price higher in the years ahead.

1. Silver, a hybrid precious/industrial metal, is a commodity play on global technological advancement. Silver was once highly dependent on the film photography industry, which collapsed into insignificance with the rise of the digital camera, a major reason for the metal’s weak price in the 1990s.

Today silver’s industrial demand is driven by brazing alloys and solders, growing electronic demand (smart phones, tablets, plasma panels and increasingly by new applications like silk-screened circuit paths and radio frequency ID tags) photovoltaics (solar panels) and new medical applications: silver is both biocidal and highly conductive.

2. Silver moves with gold. Though the metal exhibits more price volatility than gold as an investment asset, silver has been correlated more closely with gold than with anything else for two generations. Despite sometimes violent market swings, silver has kept pace with gold and has even outperformed it over much of the past decade. This is a return to normality, in my opinion, as the sister metals moved in tandem for thousands of years, notwithstanding the historical interruption between the 1870s and the 1930s, caused by adoptions of the Gold Standard.

3. As an investment metal, silver is more precious, less industrial. Silver is significantly more correlated with gold than with industrial metals, like copper, which means that the market regards it as more of a safe-haven precious metal than an economically sensitive industrial one. This was seen during the 2008 crisis: though silver declined, it outperformed collapsing stock markets and commodities by a wide margin. The exception was gold, which rose in that year.

4. Silver is rarer than gold in the investment world today. Total aboveground silver in all forms is worth approximately $800 billion, about one-tenth the value of the world’s gold.

Although there are 5 times more ounces of silver in the world, because gold is more than 50 times more expensive than its sister metal per ounce, the silver market is effectively much smaller. Silver is becoming rarer each year due to annual unrecoverable loss of tons of silver in industrial activities. Throughout history, tens of billions of ounces of silver have been used up in industrial production. Compare this fact with gold, the vast majority of which remains with us today.

5. Silver is a premier real asset for inflationary times. Sister metals gold and silver often outperform other real assets during periods of significant monetary expansion (they each surged over 2,000 percent in the 1970s) because they have a relatively small fixed supply, are nonperishable, liquid (as investments), easily storable, and historically recognized as alternatives to government-issued cash.

Over the last decade, a time of dramatic monetary experimentation, silver has outperformed all real assets (real estate, commodities – even gold) by a wide margin, not to mention the stock and bond markets. It also surged during the inflationary 1960s and 1970s. However, all real assets (houses, commodities, precious metals) have investment trade-offs, and silver’s risks are important to consider.

6. Government today is silver’s friend: Amidst global fiscal excess, unprecedented and extreme use of monetary tools is the only major policy our leaders have. To help the economy recover from the 2008 economic downturn, the worst since the Great Depression, global leaders assumed more debt than ever to reignite the economy (with credit).

With bloated balance sheets, expansionary fiscal policy options at present are limited and increased central bank money-printing, which is already being used around the world as a major policy tool, will be vital when the next recession arrives.

7. Large investment fund ownership of silver is in its infancy. Although the metal has been one of the winning investments of this new century, pension funds, insurance companies, and other large institutions managing tens of trillions in assets have largely ignored silver as a viable investment. Gold very recently was reincorporated into the financial system as the viable, respected financial asset it once was. In the scramble for scarce global real assets, institutional investors are likely to begin considering the investment merits of silver, which is highly correlated with gold.

8. The gold-silver ratio, a 3,000-year-old exchange rate, is out of historical balance. While gold is 8 times scarcer than silver (in terms of total ounces produced annually), its price is more than 50 times higher than silver’s. For 3,000 years in which the exchange rate could be observed, gold was 9 to 16 times more expensive, making today’s level historically extreme.

Now that many of the factors distorting the ratio have disappeared, it seems logical that the market exchange rate between the two should begin to approximate the difference in scarcity of each metal, which points to silver being significantly undervalued.

9. Like gold, silver is an ‘anti-bond’ and ‘non-stock’ – meaning it’s one of the few investment vehicles allowing a person to completely remove wealth from the financial system. Traditional financial assets represent claims on other entities.

To preserve their value, bonds require that a government or company make interest and principal payments; stocks require dividend payments and/or that management deliver on earnings expectations; derivatives of many kinds can require financial faith at multiple levels; and ultimately, the financial system itself relies on trust that world economic leaders will keep markets functioning properly by meeting their ever-expanding financial commitments.

Gold and silver, inert metals recognized for thousands of years as stores of wealth whose nature cannot be altered by human error, have value outside the financial system.

10. Growing global scarcity of safe assets that are not someone else’s liability. According to the International Monetary Fund, of the world’s potentially safe investment assets, 89 percent are bonds of some kind – that is to say, someone else’s debt. For those believing that ultimate financial safety should not involve lending money to a company or government (buying a bond), there is only gold, the other 11 percent. But given the scarcity of gold and other real assets that are not economically sensitive (as real estate and major commodities are), silver is increasingly being regarded as a viable alternative to gold, which it was for most of human civilization.

11. Anyone anywhere can buy silver. Silver is an investment that can be made in any country by virtually any person – even in countries where there is no stock exchange, where even apple, the fruit, is hard to find. An ounce of gold, presently worth in excess of $1,350, is an investment unreachable to most people in the world, and represents a difficult financial decision even for middle class families in the United States.

A $20 silver coin is something that can be bought by a great many people almost on a whim, a minor investment decision that chips away at globally scarce supply. If expectations for future inflation begin to rise – a concept that virtually any working adult understands – silver’s well-known positive sensitivity to higher prices in the economy and its very accessibility could make it an important asset for many.

12. The 1980s and 1990s bear market for precious metals had powerful drivers that no longer exist. In the 80′s the world’s two richest families conspired to manipulate silver and inadvertently caused a crash – along with plenty of metal-fearing fallout. This was surely a singular moment in history.

Also contributing to an overall headwind for the metals, central banks dumped an average 10 million ounces of gold for each of 20 years ending in 2008. This likely-unrepeatable event pushed gold from being close to 50 percent of global central bank reserves in 1980 to an all-time low of 14 percent in 2012.

Heavily weighted in dollar, euro, and yen reserves and fixed income securities, a number of central banks are diversifying back into gold. The 1990′s saw increased pressure on silver prices due to the collapse of film photography, the largest source of demand for the metal. But film photography is in silver’s past, a very small part of demand today, and investment demand has become the key driver.

13. Silver is an important investment asset in Asia, where demand has remained strong over thousands of years. Throughout Asia, but mostly in populous India and China silver, like gold, is a key investment asset worn and stored as a wealth instrument by a great many people.

Every year, generally late in the summer and into the fall, the silver and gold markets are deeply influenced by a major financial event–the Indian wedding season, which draws a substantial portion of the world’s precious metals as part of an enduring millennial tradition.

Silver’s Bottom in Sight?

In spite of present market conditions, this list helps us focus on the essential drivers of silver for the years ahead that distinguish the metal from other investment options.

Silver has the highest price sensitivity to inflation of any commodity or sector in the stock market, by far – and it most certainly outperforms bonds when the price level is rising in the economy.

If you believe – as I do – that the world’s monetary authorities will never allow deflation to take hold and that the odds of inflation climbing to some degree in the years ahead are significant, it makes sense to own some silver to diversify your investment portfolio. (The right percentage to hold is something you should carefully consider with an investment advisor.)

Timing any investment correctly is always a challenge, but silver’s price has fallen by half in the last two years and is beginning to show tentative signs of bottoming. Perhaps the worst has passed for silver.

Shayne McGuire
Contributing Writer, Money Morning

Ed Note: Shayne McGuire is a Managing Director and Head of Global Research at Teacher Retirement System of Texas, one of the world’s largest pension funds. He also manages the GBI Gold Fund.

From the Archives…

Don’t Make Investing a Chore… Invest in an Innovative Business
14-06-2013 – Kris Sayce

The Technology Revolution Begins in Four Days…
13-06-2013 – Kris Sayce

Zero G for the Australian Dollar is a Shot in the Arm for Miners
12-06-2013 – Dr Alex Cowie

There’s More to Technology Than Facebook and Spying
11-06-2013 – Sam Volkering

Four Great Australian Technological Achievements
10-06-2013 – Sam Volkering

Answer: A root canal is more fun.

As a silver owner myself, I can vouch for this!

Silver has been falling for the last two years.

But the thing about silver is that when it moves, it can really move. As we saw in 2008, a 50% loss can very quickly turn into a 150% gain.

And if I’m reading the market right, it looks as though a major ‘whipsaw rally’ in silver could be just weeks away…

Three different signals warning of a whipsaw rally have gone off in the last few weeks.

Before I get to them though, ask yourself how much you’ve heard about silver recently. Silver’s really fallen off the radar, and ‘market buzz’ is as low as I can recall.

Alexa.com is a free website that lets you measure website traffic. And you can see here that silver website silverprice.org has fallen 90% over the last two years. I’m not singling out this website, which is in fact pretty good; it’s a similar story for all silver websites.

No One is Looking at Silver Websites Any More – a Signal to Buy?

Source: Alexa

The point is this: silver is simply not on punters’ radars any more. However, this is perfect, as that is usually the best time to buy something: before the speculative frenzy begins.

That’s assuming a speculative frenzy happens of course, so let me explain why I think one is on its way.

A Bullish Outlook

First of all, the positioning in the futures market has shifted.

You see, futures traders have to declare what they are up to, and this is then reported in the Commitment of Traders (COT) report. And this COT report has been a great way of picking major turning points in the past.

The thing that stands out right now is that commercial traders are net short just 5,000 contracts, the smallest net short position I can recall. Just six months ago it was a massive 60,000, but it has shrunk rapidly.

These commercial traders include the big banks and the big producers. No one has a better view of the market than them, and it’s hard to say why they’d be positioned like this - that is unless they are expecting higher prices.

Secondly, the technical charts are peppered with bullish signals as well.

First off, the silver price has now carved out a 55% fall since peaking in April 2011. This is comparable to silver’s fall during the 2008 crash. And as painful as that move was, it set silver up for a 2.5 year rally that saw the silver price increase five-fold. The chance of something similar happening again is increasing.

Silver – Technicals Looking Good for a Turnaround

Source: StockCharts

The recent fall in silver also brings it to the same moving average line (350 week, in blue) as during the 2008 crash. The other supporting technicals look good too.

The RSI (above the main chart) is extremely low, and you can see that in the past this has been a good signal for the next rally. The same thing goes for the MACD (below the main chart). Let’s just say the silver charts have got my full attention.

The third big reason to expect a new bull-market in silver is the ratio of the gold price to the silver price.

Another way to think of this ‘gold-silver ratio’ is that it is the number of ounces of silver it would take to buy an ounce of gold. So, when the ratio is high, it means silver is relatively cheap.

Right now, silver is so cheap that the ratio is at a three-year high.

It doesn’t tend to stay this cheap for long. For example, the last time the ratio was this high was in August 2010. And this was RIGHT before silver broke out and rallied 170%, from $18/ounce to peak at $49/ounce in just nine months.

With the mega-bullish futures positioning, the soaring gold silver ratio, and the red-hot technicals, as well as the sheer lack of interest in silver, in all, it’s a pretty compelling set up.

The last time I saw the stars line up like this I went out and bought my first silver. Funny thing is, over a beer I was telling a hedge fund buddy about my bet.

A year later I found out he had thought there was something in it, and after further research had taken a position. But whereas I bought a few grands worth of the metal, he took a multi-million dollar position for his fund. He made out like a bandit on that trade, and got a pretty tidy bonus!

Silver is a cruel mistress though, and likes to make a mockery of investment theories. Many people far smarter than me have been calling silver up for the last few years, only to see it continue to tumble.

Watch This Key Announcement

My message here is that if you buy silver today and expect it to be up next month, you’re more likely to be disappointed that not. But if you are still holding in 2-3 years time, then I think you will be sitting on a 100-200% gain from this level. This is why I’m still sitting on our ‘family silver’.

As for when exactly it could turn, it’s impossible to say. Market timing is a dark art, but in a market gruesomely distorted by major central bank policy, it is nigh on impossible.

It’s a big week for the central bankers too. The Fed meets tomorrow (Thursday morning for Australians). The prospect of the Fed tapering the QE program has got the markets super- twitchy.

So much so, that last night the markets swung wildly simply on the back of a Financial Times story about the Fed tapering. And last week, it was a story in the Wall Street Journal that did it.

If the Fed backs off from tapering talk, expect to see a jump in gold and silver. I think they have to back off. US data is still too weak to take the stabilisers off, and the Fed has witnessed the abject chaos they have caused globally by testing the water with Bernanke’s trial suggestion of tapering QE.

US bond yields have risen, emerging markets have crashed, and major currencies have moved more in a night than a typical month. Not happy Ben.

So keep an eye on markets on Thursday morning. It should be a decisive turning point one way or the other. And it should mark a decisive turning point for silver too.

Dr Alex Cowie
Editor, Diggers & Drillers

From the Port Phillip Publishing Library

Special Report: The Sixth Revolution Has Just Begun

Daily Reckoning: All Eyes on The US Federal Reserve

Money Morning: D-Day for Australian Investors

Pursuit of Happiness: Government Spies: I Warned of This Trend More Than a Year Ago…

Diggers and Drillers:
Why You Should Invest in Junior Mining Stocks Now

He looked like he was going to move left, so the defenders reacted. Then he looked like he’d move right, so they reacted to that. And in the end, he scored by simply running in a straight line down the middle of the pitch.

I’m sure someone who’s actually interested in football could give you a much more compelling rendition of that story, so my apologies to any fans out there.

But the outgoing Bank of England governor’s point is that a big part of a central banker’s job is to manage expectations. What the market thinks you’ll do is at least as important as what you actually do.

So the big question for this week is: what does Ben Bernanke want us all to think?

Ben Bernanke Tries to Do a Maradona

The big central bank story this week is the meeting of the Federal Reserve’s policy making team on Wednesday. Fed chief Bernanke will make a statement afterwards, and investors will be hanging on his every word.

Why does this matter so much? Well, in case you hadn’t noticed, the big slump in most stock and bond markets around the world is down to fears that the Federal Reserve is going to turn the money taps off by ending its quantitative easing (QE) programme.

At the start of this year, we’d hit a ‘Goldilocks’ moment. Growth wasn’t strong enough to justify stopping QE. But it was good enough to justify rising stock markets.

But then Bernanke and other Fed members opened their mouths and hinted that it might be time to start thinking about possibly winding things down, depending on how the economic data panned out.

It’s important to understand: all the Federal Reserve has done is suggested that it might pull back if the US economy looks like it’s recovering. It’s still manning the monetary pumps. There’s still $85bn being shoved into the markets every month.

Yet the suggestion it would end has been enough to inspire a correction in most markets (that’s a 10% fall), and send others into a bear market (a 20% or more fall).

So is Bernanke pulling a Maradona? Is he faking this move to tighten things up, just to keep markets on their toes?

The Federal Reserve Has Every Excuse to Keep the Money Flowing

The truth is, I find it hard to believe that the Federal Reserve will start tightening monetary policy as early as markets are worried that it will.

Bernanke is probably the most famous student of the Great Depression on the planet. It’s his view that the problem both back then and in Japan is that the central banks didn’t do enough. Any time it looked as though they were going to succeed, they pulled out too early.

He’s not going to take that risk, and he doesn’t have to. The Fed has all the excuses it needs to keep monetary policy slack.

Inflation – at least by official measures, which is all that counts for Fed policy – is really not a problem in the US. With commodity prices under pressure, you could even make an argument that deflation is a threat.

I don’t want to get into a debate over the merits or otherwise of deflation here (though I’d argue that falling commodity prices are a good thing, and not to be countered by monetary policy). The point is, Bernanke is under no pressure to withdraw QE.

So having given over-exuberant investors a sobering reminder of the abyss we are all tightrope-walking over, I suspect the Fed will extend some words of comfort at its meeting this week. And if that’s the case, then markets would probably bounce.

But we can’t be sure. This is the problem with expectations management. Maybe the Federal Reserve doesn’t think investors are scared enough yet. Or maybe now that investors have had a wake-up call, it’ll take more than a few soothing words to get them to stop fleeing risky assets.

So what can you do? Simple. Don’t get sucked into this central bank game-playing. Warren Buffett once said that the market is a voting machine in the short-term, and a weighing machine in the long run.

So from day to day, it’s all about how investor mood swings and fads affect where money is flowing to. But in the longer term, quality and value will out – buy decent companies and assets at relatively cheap prices, and you’ll make money.

John Stepek
Contributing Writer, Money Morning

From the Archives…

Don’t Make Investing a Chore… Invest in an Innovative Business
14-06-2013 – Kris Sayce

The Technology Revolution Begins in Four Days…
13-06-2013 – Kris Sayce

Zero G for the Australian Dollar is a Shot in the Arm for Miners
12-06-2013 – Dr Alex Cowie

There’s More to Technology Than Facebook and Spying
11-06-2013 – Sam Volkering

Four Great Australian Technological Achievements
10-06-2013 – Sam Volkering

This afternoon you’ll receive a personal invite to join a technological revolution.

And I don’t say that lightly. You’ll find out about the simple invention that could overthrow China as the cheap manufacturer of the world…how TVs, smart phones and laptops will become so powerful and so flexible, you’ll be able to roll them up and store them in your wallet…and also how energy – rather than getting more expensive – will actually become cheaper, cleaner and more abundant than ever.

I’m certain what you read will impress you. Check your email for full details around 2pm this afternoon.

Until then, on with today’s Money Morning…

When does a bull market not feel like a bull market?

When it has gone on for four years and yet barely a day has gone by without fear the market will crash.

Investing in a bull market is supposed to be easy. But you usually only hear those claims after a bull market has ended, with the help of rose-tinted hindsight glasses.

But really, that’s not how it is at all.

Below is a chart of the US S&P 500 index:

Source: Google Finance

The chart covers the last 10 years. It covers two huge bull market rallies. The first lasted from March 2003 until October 2007.

Then followed a bear market that lasted until March 2009…when the next bull market began. Four-and-a-bit years later and this current bull market is still going.

But look at the chart. You could hardly say that both bull markets have been a walk in the park for investors. The current bull market has been especially testing. Several months of gains followed by big falls that have doubtless shaken many investors out of the market…only to see it take off again.

That pattern has repeated at least five times on the US market since 2009.

Australia’s Missing Bull Market

But despite the volatility, the US market has recovered enough to go past the 2007 high.

The latest bull market hasn’t been quite so kind to Australian investors. In fact, when we look at the chart it’s hard to claim with any conviction that the Australian market has seen a bull market since 2009 at all:

Source: Google Finance

Since 2009 the Australian market has a completely different shape to the US market. Where the US market burst higher in 2010, the Aussie market sputtered. Then when the US market took off again in 2011, the Aussie market couldn’t even muster a false start…it just fell in a heap.

It stayed that way for the best part of a year.

Even though the Australian market enjoyed a similar run to the US market in 2012, it did so from a much lower base. So that while the US market hit a record high, the Aussie market is 2,000 points away from taking out the 2007 top.

But regardless of whether you invest in US stocks or Australian stocks, we need to get away from the idea that making money during a bull market is easy, because it isn’t.

Australian Market in No-Man’s Land

The buy-and-hold investors will point to the US index and say, ‘that’s what happens next, stock prices will go back up again.’ They’ll say you should put all your money in the stock market and never sell.

The naturally bearish investors will point to a chart we haven’t shown you today, the Japanese Nikkei225 stock index. They’ll say that’s what happens when a credit-fuelled market crashes and the central bank can no longer prop up the market.

That puts Aussie investors in a bind. Right now the Australian market is in no-man’s-land. It’s a long way from both the high and the low. It’s just stuck in the middle.

This is why we encourage you not to fall for the old buy-and-hold nonsense. In Money Morning we encourage you to take a more active involvement in your investments. And we’re not saying this with the benefit of hindsight either.

In late 2010 we started telling our Australian Small-Cap Investigator subscribers to take some money off the table because we believed the market had seen the end of the best gains.

Turns out we were right.

And then in late 2011 we suggested investors forget about blue-chip growth stocks and instead invest in cash, gold and most importantly, dividend stocks…a message we repeated often through 2012 and into 2013.

But the key question is what you should do next?

A View From the Other Side of the Market

By now you should know your editor’s view on this market. While it looks dangerous and volatile, we still say this is a great time for investors to build wealth.

We say you should use the current period of falling prices to top up your portfolio with a mix of income and growth stocks.

In fact, we’re confident the Aussie market will reach a new high in 2015. But not everyone here at our Albert Park office agrees with that view. In fact, your editor is in the minority on that score.

So, what do our other editors think? One person we suggest you listen to if you’re after another view is our old pal, Sound Money, Sound Investments editor, Greg Canavan.

A few weeks ago Greg sat down to discuss a crucial influence on the Aussie stock market and economy – China. Greg says a slowdown in China could have a major impact on Aussie stocks in the months and years ahead.

In fact, it could be the single biggest influence that determines whether the Aussie market takes off on a new bull market run like the US or sinks into a decade long slump like Japan.

As we say, your editor is optimistic about the future. We believe this is the best time in four years to buy stocks in particular sectors. And that investing in businesses is the single best way to build wealth.

But we also know you can only be a truly enlightened investor if you take into account more than one viewpoint. So we suggest you tune into
Greg’s video to check out his view on the markets, the economy and China.

Cheers,
Kris

From the Port Phillip Publishing Library

Special Report: Buy These Four Yen Dive Stocks Now

Daily Reckoning: How the Australian Dollar Stole Your Capital Gains

Money Morning: Money Weekend’s Technology FutureWatch 15 June 2013

Pursuit of Happiness: Government Spies: I Warned of This Trend More Than a Year Ago…

Australian Small-Cap Investigator:
How to Make Big Money from Small-Cap Stocks

This curiosity means we make things, create things and develop new technologies.

You can look back thousands of years for basic examples of technology pushing civilisation forward.

Stone Age: it might sound simple, but the development of stone and bone blades and tools was vital to the development of mankind. The earliest example of innovation and technology is a shovel that was fashioned from the shoulder blade of an Ox.

Iron Age: in the Iron Age, iron smelting was all the rage. It helped make better, more efficient tools. This helped construction, agriculture and civilisation continue to advance.

Industrial Revolution: the industrial revolution sparked a wave of new technology. Manufacturing went from being hand produced to machinery made. New efficiencies and tools helped to bring an era of unprecedented wealth.

Of course I’ve skipped a few different ages. Importantly though you can find examples in the Bronze Age, the Atomic Age and the Information Age too.

Over the journey, well at least the last hundred or so years, there have been companies that have been built on these advances in technology. All of them using some form of technology that was ground-breaking at the time.

Some of these companies started on the smell of an oily rag. Today they have transformed into multibillion dollar companies. And there are numerous examples of rags to riches stories across the tech world.

Of course many of these companies went from being just an idea, to a private company, and then to a listed company. For some they just toiled away for many years, the world blind to their potential.

But fundamentally these companies had breakthrough technology ready to be unleashed. And when they took off they made returns in excess of 1,000%. Some of them have returned over 10,000% over the years.

Investment World of Technology

The investment world of technology is thankfully large. Technology is quite a broad term and it spans across many industries. That means opportunities are ample.

It’s easy to think of technology as just computers, phones, tablets and gadgets. But in all reality technology and technology stocks cover a range of industries. These include medicine, resources, telecommunications, automotive and aerospace.

Look at Ford Motor Co. They make cars…so what? But remember, the first cars were revolutionary technology. The car literally changed the world. And Ford started with just $28,000 and one car in 1903. 110 years later they’re a $60bn company that sells over 2.25million cars a year.

Then there’s the Computing-Tabulating-Recording Company started in 1911 with 1,300 employees. They made weird (and large) machines that could calculate mathematics.

Later in 1924 they renamed to International Business Machines (IBM). They helped shape the world we live in today and were pioneers in computing. IBM’s now a $223bn business with over 434,000 employees.

These are two examples of companies started over 100 years ago that exist today because of continued innovation and cutting edge technology.

One final example is a company that started out as a simple radio repair shop in Tokyo in 1945. They went on to make Japan’s first transistor radio. They’re now a $20bn company that has dominated consumer technology for over 30 years. That’s the simplified story of Sony.

Over the years as these companies have grown into billion dollar businesses they’ve made a lot of investors very wealthy. But they started from humble beginnings with technology that not everyone really understood the full potential of.

The Biggest Mistake You Will Make As A Technology Investor

But how are you to know which technology is world changing and which one is all hype? What is it that separates those that make money from investing in tech stocks from those that don’t make any money investing in tech stocks?

Well there’s one big mistake technology investors make when investing in tech stocks. It’s important to know to make sure you don’t make it. I’ll get to it in a second…

One of the key things you need to know first is there’s a lot happening, a lot of new technology and a lot of companies promising the world.

The other is there are fundamentals that you need to know as an investor in tech stocks. In fact in any stocks these fundamentals apply. Good leadership, a good product or service, competitive advantage, a strong plan and the ability to remain solvent are all pretty important.

But what tech stocks eventually boil down to is will this technology change the world? And will enough people pay for whatever the company is selling?

If you get an answer to both of those questions, then you’re well on the way to finding a diamond in the rough.

But the one big mistake that too many technology investors make is ignoring technology breakthroughs by not understanding the technology.

Let me explain in a bit more detail.

When Google first listed in 2004 they were a search engine that sold advertising. Simply, they helped to find information on the internet. Now no one could have seriously predicted that less than 10 years later they’d be making wearable technology and have the dominant mobile operating system. But that’s irrelevant.

But those in the know realised Google’s technology wasn’t just a search engine. According to the company, they had the ability ‘to organize the world’s information and make it universally accessible and useful’.

And this was far more powerful than most people realised. The mechanics of it involved complex algorithms that sorted information on the internet. It made online life easy for billions of people.

By sorting that information Google could rank websites based on their content. Smart investors understood that e-commerce was taking off and having a ‘visible’ website was vital for business.

It made sense that businesses would pay Google to enhance their listing, and to advertise their websites.

More than just a search engine, Google was and still is an advertising behemoth. And that’s what their core business is and always will be. It’s resulted in 705% gains in just 9 years.

Then there’s a company like Illumina, involved in DNA sciences. To most people their understanding of DNA is the double helix image and that it somehow makes us the way we are.

But the work Illumina do is at the cutting edge of the Personalised Medicine trend. As the Human Genome project was underway, Illumina was gearing up their business to cash in on this.

Then in 2003 the entire human genome project was completed. And the potential for a DNA sciences companies was unleashed. Subsequently those that understood the technology Illumina had at their disposal were in for gains of 3,199%.

‘Crazy Talk’ Is Tomorrow’s Future

What this all means is that there are companies out there involved in cutting edge research and technology breakthroughs. And in the early stages many investors see tech breakthroughs as just a fad, or say, ‘It won’t take off.’

One thing is for certain, what might sound like ‘crazy talk’ now will be the future you live in tomorrow. No one thought man could achieve powered flight, walk on the moon, dive km’s under the sea, have a bionic eye or make calls on the go from a computer the size of your palm.

What’s clear is that technology advances civilisation, and those that ignore the inevitable do so to their own detriment. Those that seek to understand the potential are the ones that benefit financially.

The biggest mistake you can make is ignoring the technology breakthroughs happening every day.

Now I’m not saying you need a Doctorate in every new technology, but you need to be able to decipher and filter the real deal from the hype. And for that, you need expert information.

The best thing you can do is use this information to realise the potential revolutionary technology has.

Armed with the info you won’t be the person that looks back and says, ‘I had the chance to invest in Apple back in the 80′s.’

You’ll be the person that says, ‘I invested in Apple back in the 80′s, look at me now.’

Sam Volkering
Technology Analyst

From the Archives…

Don’t Make Investing a Chore… Invest in an Innovative Business
14-06-2013 – Kris Sayce

The Technology Revolution Begins in Four Days…
13-06-2013 – Kris Sayce

Zero G for the Australian Dollar is a Shot in the Arm for Miners
12-06-2013 – Dr Alex Cowie

There’s More to Technology Than Facebook and Spying
11-06-2013 – Sam Volkering

Four Great Australian Technological Achievements
10-06-2013 – Sam Volkering

• 1.1 billion people currently use smartphones and tablets, with a potential to reach two billion to three billion more.

• The processing power of the average smartphone has increased by about 25% per year over the last five years.

• By 2025, nearly 80% of all internet connections could be through mobile devices.

• Near field payments grew 400% in 2012 and are expected to increase 20 fold by 2016.

Take financial services here in Australia, for example. Consumers are moving to mobile banking at a ‘breakneck’ pace, according to The Age this week. The uptake is up to eight times as fast as the original shift to internet banking. Billions of dollars are transacting through the big four banks’ ‘apps’ like CBA’s Kaching or ANZ’s goMoney.

In the Australian Financial Review, Jason Yetton, Westpac’s head of retail and business banking, suggested than within five years mobile technology will have almost completely overtaken PCs for retail banking.

He argued this will give Westpac the opportunity to target consumers with other products like home loans via specialists that can use video conferencing to talk with the customer.  

But mobile technology is shaping up to be both an opportunity and a threat for the banks. Check out this from The Australian at the end of May: ‘Major banks are facing increasing competition from Apple, Google and Samsung — particularly from so-called "wallet" payment systems that allow consumers to pay for goods without credit cards from banks.’

Commonwealth Bank chief exec Ian Narev went on the record and said he was just as worried about the threat from major tech companies as he was about normal competition from the other big three banks.

No wonder the McKinsey Global Institute put mobile technology as the biggest disruptive technology that will impact the world until 2025. Of course, banking is not the only industry it will affect. There’s plenty more.

We asked our new technology analyst Sam Volkering here at Money Morning headquarters for his thoughts on the mobile technology trend. He told us:

‘The mindset people have at the moment is they carry around a phone capable of doing all these wonderful things with various apps and what-not. But they’ve got the wrong mindset. People are really carrying around computers with the ability to make phone calls.

‘So it’s not really an evolution in mobile devices so to speak, it’s just an acceleration of the evolution of computing. The trend means three things. Smaller, more powerful and immersive computing. And not in 10 or 15 years, but in the next two or three.’

Here’s a quick snapshot of that accelerating trend. The iPhone 4 has the same performance power as the fastest supercomputer in 1975.  The difference is the supercomputer cost $5 million in 1975 and the iPhone 4 is under five hundred bucks today.

Of course, following the trend is one thing. Trying to identify which computers stand to win and lose is the hard part. That’s where Kris Sayce and Sam come into the picture with their new technology service, Revolutionary Tech Investor.  The hunt is on. Going by the evidence, they’ve got the wind at their back on this part of the tech space. Stay tuned.

Don’t Miss This

Of course, Kris and Sam are excited by the opportunities in technology stocks and what they see as a transformational revolution that’s about to hit the global economy.

But over at Sound Money Sound Investments, editor Greg Canavan is more worried about China’s slowdown and what it means for the broader market and Aussie economy. He’s worried enough to want to show you a recent talk he recorded with fellow editor of The Daily Reckoning Dan Denning.  You can see it here. It’s under thirty minutes. Grab a drink and enjoy.

Until next week.

Callum Newman.
Editor, Money Weekend

PS. Don’t forget if you want to keep track of the latest things we’re reading and brief commentary on events that happen through the day, check out our Google+ page and Kris Sayce’s as well.

From the Port Phillip Publishing Library

Special Report: Buy These Four Yen Dive Stocks Now

Daily Reckoning: Why it’s Going to Get Ugly When Interest Rates Rise Again

Money Morning: Signs of Stress in the US Bond Markets

Pursuit of Happiness: Improving Your Life Through New Technology

At the time it was clear to see that although this was Microsoft’s crack at their new gaming console they had a bigger picture in mind. They wanted a say in how your entire home entertainment experience happens. That meant integrating TV and movies within the device.

This angered a lot of ‘gamers’. That is, the people who play video games. They felt the Xbox had lost its soul.

Well they need fear no more. This week the world’s biggest gaming expo (E3) was held in Los Angeles. At E3 Sony released the direct competitor to the Xbox One, the Sony PlayStation 4 (PS4).

Now there are 3 key things that Sony released with the PS4 that were direct shots right at Microsoft.

1. The PS4 is a gamer’s console. As such, PS4 users can trade, buy and sell any old games without restriction. This goes completely against Microsoft, who are putting strong restrictions on used games. Sony 1, Microsoft 0.

2. Sony will continue to have their basic online service free, but still have a premium service at a significantly lower cost than Microsoft’s Live service. Also you can play your PS4 games offline, but with the Xbox you must be online to play and authenticate your game every 24 hours. Sony 2, Microsoft 0.

3. The PS4 will launch to market at $399USD. The Xbox One will launch to market at $499USD. Sony 3, Microsoft 0.

Source: Sony

Sony has no doubt about the market that they’re trying to lock down. After all it’s a US$70 billion market for gamers right now, projected to reach over $100 billion in the next 4 years. This is a big money spinner for Microsoft and Sony both. But typically in the battle for gamers dollars one comes out on top.

In this case, Sony has got off to a flying start with a more powerful system, at a cheaper price, more suited to gamers. Microsoft has gone a bit off track and is now aiming at gamers and non-gamers.

It will play out later in the year when both systems hit the shelves in time for Christmas. Sony’s won the first battle, and it’s looking like they’ll win this war too. But either way both of these releases will add billions to the bottom line of both companies. In that situation, they’re both winning.

Energy: Why Your Next Smartphone Will Love The Sun

Sometimes we have those moments where we say to ourselves, ‘Gee, how did we not think of that before?’

It’s usually when we see a great new invention or technology that just seems so simple it’s hard to figure out why it’s so new. Usually it’s the most obvious solution to a problem.

And a small start-up company based in Aix-en-Provence, a lovely little town in the south of France, has come up with one of these moments.

Put yourself in the picture. You’re at a café, or restaurant, outside. Alfresco style. Something many of us enjoy doing when the sun is out and it’s a nice day.

Inevitably at some stage you’ll reach for your phone, check it, and probably leave it on the table face up so you can still see any messages or notifications. Now as you go about reading the paper or having a coffee your phone just sits there close by gathering some rays…and slowly but surely using battery power.

Now, what if the screen on your phone had little solar cells in it, so that when your phone is out in the open it uses solar power to recharge itself? See what I mean about a ‘how did we not think of that before’ moment.

The SunPartner group have devised a way to put little tiny solar cells into the screens of mobile phones. The beauty of it is the cells are invisible thanks to a tricky little (complicated) optical illusion.

The group hope to have their technology rolling out to smartphone manufacturers within the next 12 months.

The number of smartphones sold per year is about 700 million units. With this in mind you can see there’s a fair bit of upside for the SunPartner Group should their technology get widespread approval.

We think it’s a simple yet problem solving solution. Because if you use any kind of smartphone you’ll know that battery life is vital. With solar screens we can use and drain our batteries to our heart’s content knowing the sun will bring it back to life.

Health: Burn Your Ophthalmology Textbooks, They’re All Wrong

It’s a good assumption to make that science has a fairly good grasp of the human anatomy. A lot of research has gone into the human body over the years. We know how the nervous system works, the circulatory system, even the detail of our DNA and genome.

That makes it pretty unlikely that there’d be too much more scope for new discoveries of the organs in the human body.

Never say never. Just this week researchers at the University of Nottingham have discovered a new organ in the human body. That’s right, an actual organ!

Now it’s only a microscopic, thin layer of the cornea (in the eye) but nonetheless the researchers are officially calling it a new organ. Thanks to new technology and research techniques the researchers were able to manipulate the cornea and view the micron thin layers at a level unseen previously.

This might sound like something small, but it’s not. It’s huge.

Every ophthalmology textbook written about the structure of the eye is now wrong. If you’re a uni student studying ophthalmology, burn your existing textbook. You need a new one as they all need to be re-written.

The long term benefit of this breakthrough discovery is widespread. Eye doctors can diagnose cornea related eye disease and injury with greater accuracy and knowledge. Already doctors are relating certain eye disorders to this new layer and discovering new way of treating patients.

This kind of example illustrates the speed in which medical science advances. Because of curiosity and the application of technologies we are able to achieve things that were simply unknown or impossible before.

As we continue to say, it’s an exciting time to be alive. With discoveries like this and other key medical research projects underway there’s a lot going on.  The next few years are exciting as we continue to see leaps and bounds in the fields of Personalised and Regenerative Medicine.

Sam Volkering
Technology Analyst

From the Archives…

Bernankenstein’s Financial Monster
7-06-2013 – Vern Gowdie

Six Revolutionary Technology Trends for the Next 20 Years
6-06-2013 – Sam Volkering

The Incredible World of Graphene
5-06-2013 – Dr Alex Cowie

After the Correction: Gold Stocks Set for the Biggest Gains
4-06-2013 – Dr Alex Cowie

The Single Best Way to Build Wealth: Invest in Business…
3-06-2013 – Kris Sayce

That’s when I’ll send you part one of a three part video series where I interview our new technology analyst, Sam Volkering.

In part one of this three-part series, Sam and I discuss some of the key revolutionary (and profitable) trends of the next 20 years.

These trends will change the way we live, work and communicate. And it’s within these trends that you’ll find the most innovative businesses!

I can’t adequately explain how excited we are about this project. It could be the greatest opportunity of my almost 20-year investment career.

Most importantly, it’s something I’m convinced will radically change where you invest and the kind of returns you make in the years to come. In short, despite all the negative news, it’s a great time to be an investor.

Look out for the email this afternoon. Until then, on with today’s Money Morning…

In the middle of last year we compiled a list of five beaten-down Aussie blue-chip stocks.

We said it was ridiculous that these firms – market leaders in their field – were trading at a huge discount to their peak levels.

They were (and still are) sustainable businesses with strong cash flows that should weather the current financial storm.

One of those companies is Qantas Airways Ltd [ASX: QAN].

This is a company we put on the junk pile a couple of years previously. But like one of the other stocks (Harvey Norman Ltd [ASX: HVN]), when the stock price fell so low, we took it out of the junk pile to give it a second chance.

The price gained 60% from that point until the market peaked in May.

But now with the stock market shedding 10% since May and Qantas shares down even further (-25%) we see the same kind of value in Qantas and other stocks as we did 12 months ago…

Remember Why You Invest – To Grow Your Wealth

We know what you’re thinking. Didn’t we say to buy stocks two weeks ago when the S&P/ASX 200 index was at 5,000 points?

Yes, that’s right.

We said it was a great time to average in. We said you shouldn’t buy a full position because there was a chance the market could fall…but that there was also a chance the market could rise.

As it turns out the market has fallen. So now you should put the next part of your ‘averaging in’ strategy to work. That means adding to your position.

Of course, if you think there’s a chance the market could fall further, then you could hold off a while longer. If you do, that’s OK. If the market bounces and you missed the low point, at least you’ve already got some exposure.

Here’s our point – and we’ll keep making it until we’re blue in the face – you can’t afford to sit out this market completely.

Share prices always rise and fall. Sometimes they rise or fall for extended periods of time. What’s important is that you remember why you invest in the first place – to build wealth.

As we’ve said before, you can’t do that by keeping all your money in cash or gold. The best place to invest is in businesses, and especially innovative businesses…

No More Rushing to the Airport – Fly from Melbourne

to Sydney from Your Local Train Station

That’s why we mentioned Qantas. Not because Qantas is especially innovative, but because of the innovations happening in the aviation industry.

Two completely different aviation concepts caught our eye yesterday.

The first is the ‘Clip-Air’ project by the EPFL technical university in Lausanne. The simple idea is that cargo or passenger ‘pods’ could clip to a single wing structure, as in the diagram below:

Click to enlarge

These cargo or passenger ‘pods’ could be multi-use. For instance, let’s say you want to get from Melbourne to Sydney. You board a ‘pod’ train in South Yarra, it collects passengers on the way as it stops at Richmond, the CBD and Flemington. The ‘pod’ train continues to Melbourne Airport, where it goes straight to the runway and slips under the ‘Clip-Air’ wing.

Almost immediately (after receiving clearance by the automated air traffic control) the ‘Clip-Air’ plane takes off and lands at Sydney Airport an hour later.

Once there, the pod detaches from the wing straight on to rail tracks and takes passengers to their final destination.

Sound crazy? Maybe. But is it really any crazier than current modes of getting to and from an airport and flying between cities? This certainly strikes us as much more convenient and almost seamless.

The next concept is just as intriguing…

From Concept to Reality

This one is developed by Airbus Industries:

Source: BBC

Admittedly, the ability to see everything around you as you fly feels a little uncomfortable…especially if they take it one step further by having glass floors!

As the BBC technology website explains:

‘Inside the aircraft, Airbus engineers envisage new “zones” to replace the traditional seating, with “morphing” seats that are able to harvest energy from those sitting in them as well as change shape to fit the size of passengers.

‘At the front of the plane, the team suggested seating with integrated sensors that would be able to monitor health. And there could even be a gaming zone, where passengers could play virtual sports.

‘It was also suggested that instead of having small doors into the jet, as is currently the case, the planes of the future would have much wider entrances where people could leave their hand luggage.‘

But rather than us just telling you about it, you can check it out yourself by downloading for free ‘The Future by Airbus’ app from the iTunes Store.

Look, concepts are just that. They are a concept of what could happen in the future. But that isn’t always how things pan out. There’s a big distance between conceptual design and manufacturing reality.

Ideas dreamt up by a designer fiddling around with a software program may not be possible in the workshop. But that’s how innovations happen.

The innovators and entrepreneurs create the ideas, the engineers then create the reality.

But this is all part of the fun of forecasting future trends. You scour the market, study innovators and entrepreneurs, and then figure out which ideas and companies have the best chance of making it to the big time.

Like any investment, it comes with risks. Arguably the risks are the biggest when you’re trying to pick a trend and a company to profit from that trend.

But that’s why the returns can be so immense. The company that provides the market with the right product at the right time can make investors extraordinary returns.

It’s an exciting time to be in this market, and the technology sector in particular. That’s why we’re pouring so many resources into it. You’ll find out more in the first of the special three-part video series later this afternoon.

Cheers,
Kris

From the Port Phillip Publishing Library

Special Report: Buy These Four Yen Dive Stocks Now

Daily Reckoning: Are You One of the Market Elites?

Money Morning: The NSA May Know Your Hat Size, but They Can’t Take Your 3D Printer

Pursuit of Happiness: Government Spies: I Warned of This Trend More Than a Year Ago…

Australian Small-Cap Investigator: How to Make Big Money from Small-Cap Stocks

He mentioned four names. Dr Victor Chang, Sir Gustav Nossal, Fred Hollows and Professor Elizabeth Blackburn.

Victor Chang was a pioneer of the modern heart transplant. He was one of the most influential people in modern medicine. He was an Australian, born in Shanghai, China.

Sir Gustav Nossal is a research biologist knighted in 1977 for his groundbreaking work in immunology. He too is an Australian, born in Bad Ischal, Austria.

Fred Hollows was a pioneering ophthalmologist who worked tirelessly in restoring sight to the blind. Because of his work, over one million people can see who would have otherwise been blind. Fred was an Australian, born in Dunedin, New Zealand.

Professor Elizabeth Blackburn is a research biologist. She co-discovered telomerase, a vital function of chromosomes. In 2009 she won the Nobel Prize in Physiology or Medicine. Professor Blackburn is an American/Australia born in Hobart, Australia.

The basis of the keynote speaker’s point was every one of those four is Australian and has made a significant contribution to the world of medicine and health. They each advanced their field through research, innovation and breakthrough technology…

But only one of them was actually born in Australia.

This however was almost typical of what it meant to be an Australian. One way of looking at it is that to be an Australian is to be a global citizen.

There are examples of other Australian’s doing great things in various industries. And it’s a credit to this country that no matter what your point of origin, a typical Aussie usually has heritage from other parts of the globe.

And being a global citizen is particularly relevant in today’s age. The world is advancing at an amazing speed and it’s one of the most exciting times to be alive.

Technology and the connectedness of our world mean that borders are slowly fading away. Companies look globally for growth, because they can and because that’s where opportunity is.

However when it comes to investing, Australians tend to be very narrow with where they look for investment opportunity. It’s quite rare to see an Aussie investing in overseas companies.

Technology is Global, Meaning It’s Happening Outside of Australia

A fact that you might have heard a thousand times is the Australian market only accounts for about 2% of the world’s stock markets. That obviously means 98% of the world’s markets are still investable.

If you look at Dr. Chang, Sir Gustav Nossal, Fred Hollows and Professor Blackburn, between them all they span the globe from China, to Austria, New Zealand and America. Their families just chose to live in Australia. The impact they’ve had has also been global.

And when it comes to technology, it’s a global game too. As we push on through the 21st century we will only become more connected and the world will only (figuratively) get smaller.

When money is ready to invest into tech companies often the best place to look isn’t on the ASX. To find the best of the best when it comes to investable tech companies, more often than not you need to look abroad. That’s not to say there aren’t opportunities here, but they’re thin on the ground.

Look at some of the trends that are impacting the world today. Personalised Medicine, Regenerative Medicine, the Neurone Revolution, the Sensor Revolution, Energy Independence and the Commercialisation of Space.

None of these are exclusively Australian. There are many companies involved in each of these trends. Each one with a great technology or innovative approach that’s ready to change the world. But it’s New York, Tokyo, Shanghai or London where most of them list their stocks.

It’s Time to Capitalise on the Opportunities

The difficulty lies in separating the good tech from the not so good tech. And that’s where the new Revolutionary Tech Investor service comes into play.

See we’ve been working tirelessly on expanding our horizon in the world of Revolutionary Tech breakthroughs. This has opened us up to companies located all over the globe with breakthrough technologies.

The technology advances happening in robotics, biotechnology, consumer technology, space, manufacturing and finance are world changing. And it’s the most exciting time to be an investor as these companies are poised to take off.

Yes there will be some Aussie based opportunities. But like Chang, Nossal, Hollows and Blackburn, we’re all citizens of the world. And that means we should also be investors of the globe when it comes to investing in technology.

Sam Volkering
Technology Analyst

From the Archives…

Bernankenstein’s Financial Monster
7-06-2013 – Vern Gowdie

Six Revolutionary Technology Trends for the Next 20 Years
6-06-2013 – Sam Volkering

The Incredible World of Graphene
5-06-2013 – Dr Alex Cowie

After the Correction: Gold Stocks Set for the Biggest Gains
4-06-2013 – Dr Alex Cowie

The Single Best Way to Build Wealth: Invest in Business…
3-06-2013 – Kris Sayce