Editor's Note: "Ask Bill a question… and he'll tell you a story" has been a gentle running joke at our office for quite a few years now. The story he's about to tell you has already given his paid subscribers some of the biggest stock profits around in this uncertain, fading bull market. That's why we're sharing it with you today. Here he is…
There's extreme value in being an investor who's willing to "zig" when the rest of the masses are "zagging."
No one proves that point better than the legendary investor I'm going to tell you about today.
His strategy and approach are so effective, in fact, that our Chief Investment Strategist, Keith Fitz-Gerald, is using it right now on three stocks that should prove to be among the smartest contrarian investing moves of this year – and beyond.
And you're going to be able to participate, too…
It's Always Darkest… Before It Starts Raining Cash
The legendary investor in question is the late Sir John Templeton – one of the true pioneers of the entire mutual fund industry.
His Templeton Growth Fund Inc. Class A (MUTF: TEPLX) was established in 1954, but it really made its mark (and a lot of money) during the 1960s, when it became one of the first funds to invest in Japan – enabling its shareholders to cash in on that country's economic miracle.
Templeton's work made him a multibillionaire. And his philanthropic efforts – in excess of a billion dollars – have had a lasting and meaningful impact.
But here's why I've always admired Templeton…
There's an old French proverb that tells investors to "buy on the cannons, sell on the trumpets."
And at one of the world's darkest moments, Templeton did just that.
In September 1939, with the Great Depression still hanging over the U.S. economy like the smoke from a smoldering forest fire, Germany invaded Poland, igniting World War II.
At first, U.S. stocks rallied on hopes that American companies would profit by providing war materials. But that giddiness evaporated when Adolf Hitler's panzer divisions rolled into the Low Countries of Belgium, Luxembourg, and the Netherlands in May 1940.
The Dow Jones Industrial Average plunged from its euphoric peak of 155 all the way down to 111 – a free fall of 28% – by June 1940, before it temporarily stabilized.
Rumors swirled that the stock market would be shuttered for the duration. In fact, the early-June issue of Time magazine featured an article under the headline "Stock Market to Be Closed?"
But where most investors expected the worst, Templeton saw maximum opportunity.
He scraped together $10,000, even borrowing some of it, to buy 100 shares of all 104 New York Stock Exchange companies that were trading for less than $1 a share (or about $17 in today's money) – including some that were bankrupt.
Templeton knew that some companies would implode, but figured that most would survive and many would even thrive.
He was right.
As you all know, stocks are "discounting mechanisms," meaning their valuations are based on expectations of the future. And the Dow started its rebound at roughly the same time that the Allies seemed to achieve a turning point in the war.
In April 1942, Jimmy Doolittle's Tokyo Raiders inflicted a bit of retribution for Pearl Harbor by hitting the Japanese mainland for the first time. Two months later, the U.S. Navy pulled off a decisive victory against its Japanese counterpart at the Battle of Midway – putting the Allies on the offensive for the rest of WWII.
From its bear-market bottom of 92, the Dow rebounded – slowly at first, and then more strongly. The blue-chip index reached 119 by the end of 1942 and 142 by D-Day. Over the next 24 years, the Dow rocketed sixfold – roughly 900 points – making Templeton look pretty doggone prescient.
In 1939, it was Germany's militant moves that sent investors stampeding for the exits. Today it's a worry that China's slowing economy may contain horrific financial booby traps.
Templeton's bet in the face of that great uncertainty put him on a pathway to massive wealth.
That's the end of the story, but the really good part is coming up – the part where you get to become "Templeton rich."
See, we're betting that selective investments in technology – specifically, on long-term beneficiaries of the "convergence economy" we've been telling you about – will pack a similar, long-term payoff.
And these three tech stocks have been marked down, just like those 104 companies back in 1940 – which is why Keith is saying to buy them right now.
Let's take a look…
This Is a Millionaire's Trifecta
One reason I wanted to bring this to you is that Apple and Facebook are both already longtime Private Briefing holdings. Indeed, they are big winners that were initially recommended to you by Shah Gilani, a retired hedge fund manager and a colleague who runs the Capital Wave Forecast here at Money Map Press.
With Apple, Shah essentially "called the bottom" – and the shares have rocketed as much as 125% since he told us to buy the stock at a split-adjusted price of $60.10 a share back in July 2013. Just weeks after Shah shared that recommendation, corporate raider-turned-activist investor Carl Icahn announced that he'd taken a big stake in Apple and would be leaning on management to buy back shares and craft a dividend strategy.
Shah was also the Money Map Press guru who recommended Facebook to you – this time in February 2014. When he shared that "Buy" recommendation, shares of the social networker were trading at $69, and Shah said Facebook would "never be this cheap again."
He was right.
The stock has traded as high as $110.65 – a peak gain of nearly 61%.
And now four of our experts – Shah, Keith, Radical Technology Profits Editor Michael Robinson and Money Map Press Executive Director Bret Holmes, our e-commerce guru here – are telling me that Facebook is headed for the stratosphere.
Netflix, the digital-media leader, is a new recommendation for us. That company's shares zoomed 134% in 2015, making it the No. 1 performer in the Standard & Poor's 500 Index, says S&P Capital IQ.
Each of these three stocks is down from its 52-week high, and each has stumbled in recent days on the China fears.
In making his recommendation, Keith urged his followers to look past this near-term turbulence – and to peer ahead at the hefty potential each of these companies has ahead of it.
In fact, Keith has dubbed this group as "must-have stocks."
Michael, Shah, and I continue to refer to them as part of the "convergence-economy crowd."
We're all saying the same thing.
But since Keith has the "microphone" here, let's turn to him and hear his investment case for each of these three stocks – starting with Apple.
Why You Need to Grab These Shares Now
Apple is the charter member of the "tech-ecosystem" growth society. Each of the company's products are great on their own. But it's the way they all fit together – in a true "ecosystem" – that continues to create growth for Apple. And there are products and technologies we haven't even seen yet.
There's also China.
As we told you in a report back in October, a growing number of U.S. companies are experiencing windfall growth in their China business units.
Apple is just such a company, Keith told me:
"Look at it this way, BP: Despite a 7% drop in Chinese stocks, Apple's sales in that market surged 84% in the 2015 fiscal year," he said. "That's not a company in trouble and certainly not a market in trouble."
And with a vast, $206 billion cash hoard, if CEO Tim Cook wants to supercharge his company's tech-ecosystem strategy, he'll be able to make some big-impact acquisitions.
"I see Apple making any number of strategic acquisitions in the next few years that will strengthen its consumer and business footprint – even as it drives, pedal-to-the-metal, into the exciting new world hallmarked by wearable technology, virtual reality, on-demand streaming, autonomous cars, and intelligent technology," Keith continued. "Don't forget that only 30% or so of the company's user base has upgraded to the iPhone 6, so there's still a 200-million-unit bonanza hanging out there… even before the iPhone 7 comes online."
Then there's Facebook…
"Facebook, under founder Mark Zuckerberg, knows exactly what it wants to be and has the firepower to hit any goal it targets," Keith said. "The company has completed more than 40 acquisitions, ranging from a $19 billion buyout of WhatsApp to lesser-known companies like Ascenta, which makes unmanned aerial vehicles. It has a $16 billion war chest that will finance anything else it wants to do. But what's really got me jazzed is the move it's making toward 'Deep Data.'"
The key is a program called "Atlas."
"BP, what we're ostensibly talking about here is a network-advertising program purchased from Microsoft Corp. (Nasdaq: MSFT) in 2013 for $100 million that puts it in direct competition with Google – now Alphabet Inc. (Nasdaq: GOOGL). The program may be the single deepest, best-funded artificial intelligence initiative yet. It doesn't rely on cookies to target users, it's combined with the largest and deepest digital database ever created, and it doesn't matter what device you use, be it mobile, desktop, or some other intelligent device. At the core of all this is a deep, neural network that imitates a living being's central nervous system, and that's why it's so valuable."
Facebook potentially is building an engine that can not only recognize who you are, but what you're doing, where you'll be doing it, and with whom.
"When the company puts this together with Oculus Rift, its 3D-viewing technology, I can see 3D medical applications, consultative health, and interactive politics that actually capture mood and context in the wings. All of which, mind you, can be licensed for gobs of money."
Michael has been telling me for more than a month now that he believes Facebook shares will hit $250 each by the end of this decade – a gain of 140% from where it was recently trading.
And Bret just reiterated his own "call" – one based the company's ad networks and digital know-how – by concluding that "the bottom line here, Bill, is that the only thing that can trip up Facebook is, well, Facebook."
In other words, as long as Facebook maintains its focus, continues to innovate, and keeps rivals in the rearview mirror, this is a heavyweight you want to ride along with.
The fact that Keith, too, sees big gains ahead for this stock pretty much "closes the deal" for anyone who may be on the fence.
Finally, let's look at Netflix…
"People don't just watch TV anymore," Keith said. "They binge-watch, meaning they'll have friends over, create a themed event, then watch every episode of a given series.
"Netflix has leapfrogged the 'let's watch TV' mentality and created a pop-culture experience that takes it way beyond the story itself. Whether 'House of Cards,' 'Orange Is the New Black,' or 'Arrested Development,' the point is that Netflix is increasingly in a position to author the social narrative."
The company already operates in 50 countries… and will infiltrate Russia this month.
If the numbers from Russian Search Marketing are correct, the Russian Internet universe is now 82.9 million users strong – the world's fourth-largest viewership group, Keith said.
"Russians watch something like 238 videos per viewer per month – versus about 352 here in the U.S. market," he explained. "What makes this significant is that Russian viewers spend an average of 24.8 hours per month watching those videos – much more than the 15.8 hours a month here. And the Russians are just as addicted to 'Mad Men,' 'Breaking Bad,' and Netflix original programming as we are here in America."
Like Facebook, Netflix actually pays very careful attention to what its users watch. As CEO Reed Hastings told Der Spiegel, if it sees that German viewers like motorcycle films, then the company will create more motorcycle films.
"What I'm telling my Money Map Report subscribers is this: These are three 'must-own stocks' for the New Year," Keith said. "Buy shares in all three here, look to add to your holdings on pullbacks. I'll look for new buying opportunities, too, and will circle back to let investors know when I see great entry points. Do this now and, years from now, you'll be glad you did."
And so will your heirs.
More From Bill: What happened in Baltimore recently has unleashed a new technology that will not only prevent destructive riots from happening again… but could also make a fortune for investors who seize this new opportunity. Click here for the details.
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.