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Over the last two years we've talked many times about how to make money on high-tech stocks.
Nearly all of our talks have focused on finding winners that offer a lot of upside. As I've been telling you, the road to wealth is paved by tech.
But that doesn't mean you can blindly invest in just any tech stock. To ensure that you make money in the long run, you must avoid losses in the short run.
Today, I'm going to show you how to protect your portfolio's value by dodging stocks with "Loser" written all over them.
Specifically, I want to talk with you about a mega-cap tech firm that you need to steer clear from.
In fact, this firm violates a key rule of my five-part wealth-building strategy…
Big Black and Blue
I have read numerous stories about the turnaround underway at International Business Machines Corp. (NYSE: IBM) over the last several years.
There was another spate of positive stories last week after IBM reported first-quarter results that beat Wall Street's earnings estimates.
While I'm glad to see the company making progress, I still see a lot of problems ahead. After all, the first quarter also was the 12th consecutive one in which IBM suffered an annual sales decline.
Even if IBM is able to lower overhead and boost earnings per share, that's still not a recipe for long-term success. See, there's an old saying in turnaround investing…
"You can't cut your way to growth."
I know this area well, having served as a strategic advisor to a turnaround investment banker. I've seen firsthand just how much money you can make on turnarounds – if you pick the right one.
IBM is not the right one.
Virginia Rometty has spent her entire three years as IBM's CEO trying to right a listing ship.
And she has made some good decisions, like getting IBM to focus more on Big Data. That's a new field that involves using massive computing power to comb through mountains of raw data to find key patterns, such as spotting online fraud among billions of e-commerce transactions or improving efficiencies at warehouses and factories.
Rometty also has steered IBM more toward cloud computing, a trend in which vendors host data and applications for their clients at remote server "farms" and deliver it all over the Web.
But over the past two years, these moves have not paid off for IBM's investors…
About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top technology financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
Michael is 100% independent and receives absolutely no compensation from companies he writes about. His ideas are completely his own.
So, it probably goes without saying that you won't ever be left in the dark about breaking innovations, ahead-of-their-time technologies, and breakout companies on the cusp of changing the world once you join this world.
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