Editor's Note: As you'll see, Bill is a big Sherlock Holmes fan. That doesn't surprise us at all; Bill's a keen analyst himself, and his own sleuthing has led us to some spectacular profits. Even now, he's tracked down a hidden "back door" for regular investors to hit it big on the Alibaba IPO. Today, he's "teamed up" with the legendary detective to discover a sector with triple-digit gain potential. The game's afoot! Here's Bill…
I've been a huge fan of Sherlock Holmes ever since my Dad introduced me to the fabled detective when I was 10 or 11 and living near Pittsburgh back in the early 1970s.
And two of my favorite stories are The Final Problem and The Adventure of the Empty House.
In The Final Problem, Holmes has finally beaten his nemesis, Prof. James Moriarty, setting the brilliant villain and his gang up for arrest by Scotland Yard.
With the tough work done (and the need to steer clear of the criminals being rounded up by Scotland Yard), Holmes and friend Dr. John Watson head to the Continent for a literal "getaway" vacation. But Moriarty eludes the police dragnet and follows Holmes to Switzerland, cornering him alone on a narrow shelf overlooking Reichenbach Falls…
When Watson arrives later, he finds churned-up earth and a hastily jotted note from Holmes – which Moriarty had "courteously" permitted him to write in advance of the "final discussion of those questions which lie between us."
Holmes' fans know about the premature call that happened next, but what isn't obvious is that it can help us make a killing in the markets…
To Watson, what transpired after Holmes penned his note was obvious:
"An examination by experts leaves little doubt that a personal contest between the two men ended, as it could hardly fail to end in such a situation, in their reeling over, locked in each other's arms," Watson wrote. "Any attempt at recovering the bodies was absolutely hopeless, and there, deep down in that dreadful caldron of swirling water and seething foam, will lie for all time the most dangerous criminal and the foremost champion of the law of their generation."
In a final lament, Watson said that Holmes would always be "the best and wisest man whom I have ever known."
In The Adventure of the Empty House, Holmes stunned his old friend Watson by seeming to "return from the dead." As if that weren't enough, Holmes also cracked a huge murder case and captured Col. Sebastian Moran – an exceptionally dangerous criminal and last member of the Moriarty gang to still be at large.
As Mark Twain would later say about a similar situation involving himself, the reports of Holmes' death were an exaggeration.
I'm relating this tale for a reason: Analysts have similarly "closed the book" on a particular portion of the global tech sector.
And we believe it's created a very nice profit opportunity for folks who are willing to dig for the "real story."
The focus of this "premature obituary" is the software industry.
A Prescient "Call"
Traditionalist tech investors have long assessed the sector's profit potential by looking at sales of personal computers. Historically, an uptick in PC sales was almost always ignited by the "upgrade cycle" that accompanied the introduction of a higher-speed chip or new software operating system.
But PC sales have been slowing – thanks to the zooming popularity of smartphones and tablet computers.
Like Watson, investors looked at the churned-up ground surrounding the PC sector and assumed that the drop in PC sales meant that chip and software sales must've also plunged off the cliff and into the abyss.
But, like Watson, those investors were wrong.
About the Author
Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning. With his latest project, Private Briefing, Bill takes you "behind the scenes" of his established investment news website for a closer look at the action. Members get all the expert analysis and exclusive scoops he can't publish... and some of the most valuable picks that turn up in Bill's closed-door sessions with editors and experts.