Millions of investors are focused, very myopically, on short-term trading at the moment. That's perfectly understandable, but it's a huge mistake in a midterm election year.
Why?
Because the single biggest risk facing investors today is not that the numbers driving our economy - earnings, jobs, interest rates - collapse, but rather that they're better than "everyone" expects.
Too much "short-termism" results in too many losses, especially at this time of year, when traders are looking to do two things: a) clean house on their portfolios, and b) get in line for big year-end bonuses.
To be sure, the business cycle is long in the tooth; so is the bull market rally. But nowhere is it written in stone that either of those things must come to an end.
What is written, however, are the things that tend to produce huge profits time and again for savvy investors...
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Most Important: Revenue Drives Profits, and Profits Drive Stock Prices
Never forget that.
Write it down if you have to... tape it to your mirror... install it as a screensaver. It doesn't matter how you do it, just make sure that thought is front and center in your mind.
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Corporate profits are still strong, and the next earnings cycle is only a few weeks away, which means the risks now, again, aren't what most investors think. They're not the headlines themselves, not a trade war, not South America, or even politics.
The big drivers - the stuff that creates truly legendary, life-changing wealth - are and will always be the trillions of dollars driving the "Unstoppable Trends" we follow:
Demographics... Scarcity & Allocation... Medicine... Energy... Technology... and War, Terrorism & Ugliness.
And when it comes to investing, the companies working on the forefront of these trends, the companies making "must have" products and services (as opposed to the "nice to have" junk most people think constitutes something worth their investment dollars) are the right place to put your money to work.
Let me prove it to you.
Two Stocks: One Is Undervalued, the Other Is Cheap
Take Amazon.com Inc. (Nasdaq: AMZN). Unless you were on the dark side of the Moon last week, you've heard its market cap just hit $1 trillion.
Here's the thing: I think it's going to hit $2 trillion before long. As a matter of fact, I think Amazon could beat Team Cook and Apple Inc. (Nasdaq: AAPL) to that milestone!
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And I think it's still inexpensive - even north of $1950 a share, as I record it this morning.
Let me briefly explain why...
Amazon Web Services - its "cloud" services subsidiary - is just one of four key company drivers. AWS accounts for 65% of Amazon's total operating income. Revenue jumped 49% in the last quarter alone; it's on track to hit $25 billion this year.
Amazon just oozes growth right now.
It's making similar, just as potentially lucrative pivots into pharmacy and health right now. Team Bezos is working on streaming and artificial intelligence; machine learning is at the core of everything it does.
And Amazon wants to put that in every customer's home, in the form of its smart, voice-activated Echo units, featuring "virtual assistant" Alexa.
The voice technology market - Alexa's stomping grounds - is on pace to triple to $18 billion by 2023, according to Markets and Markets, but I think the figure is probably going to be closer to $25 to $30 billion.
By the way, none of this even factors in the push to consumer grocery shopping, driven by Amazon's acquisition of Whole Foods.
That store is no longer "Whole Paychecks," and in fact, you can now pick up Amazon goods there while you enjoy huge savings - which in some cases are cheaper even than Costco Wholesale Corp. (Nasdaq: COST) - and take advantage of your Prime membership.
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Even if you can only buy one share of Amazon, I'd urge you to get aboard with the one stock that can get you exposure to countless billions in actual and potential growth.
Or... you can buy a company like Snap Inc. (Nasdaq: SNAP).
Yawn...
The company is a joke, and the notion that it's a serious social media player is a nightmare. The stock has dropped more than 65% from its all-time high and is a staggering 42% below its IPO price of $17 a share.
It's trading for just over $9 a share right now, but I wouldn't touch it with the proverbial ten-foot pole. Oftentimes, stocks are cheap for a good reason.
Snapchat users are fleeing in droves, there's no redeeming value to its technology, and the company has never been able to successfully monetize its "limited-time camera" app.
In other words, Snap was built on sexting and salacious language; you simply cannot translate that into widespread consumer acceptance... unless you're into sexting.
The company dreams of changing the future, but it's so far off the mark that even the Kardashians don't keep up with it!
My point is, everything is a trade off in today's financial markets.
You can go with a proven winner using tips, tactics, and the specific techniques we talk about here and even more in-depth in my free Total Wealth research service.
... Or, you can go it alone like most investors who will never reap the huge profits they crave.
Profits, I might add, that you are already reaping if you're following along as directed with choices like Amazon... instead of SNAP; Raytheon Co. (NYSE: RTN)... instead of some two-bit defense play nobody's heard of; ABB Ltd. (NYSE ADR: ABB)... instead of General Electric Co. (NYSE: GE).
I think the difference is pretty clear.
I'd love for you to join me and the other like-minded individuals in my Total Wealth research service. At least three times a week, I'm in touch with a new investing idea, specific stock recommendation, or strategy briefing. You can click right here to start getting this absolutely free service yourself.
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About the Author
Keith is a seasoned market analyst and professional trader with more than 37 years of global experience. He is one of very few experts to correctly see both the dot.bomb crisis and the ongoing financial crisis coming ahead of time - and one of even fewer to help millions of investors around the world successfully navigate them both. Forbes hailed him as a "Market Visionary." He is a regular on FOX Business News and Yahoo! Finance, and his observations have been featured in Bloomberg, The Wall Street Journal, WIRED, and MarketWatch. Keith previously led The Money Map Report, Money Map's flagship newsletter, as Chief Investment Strategist, from 20007 to 2020. Keith holds a BS in management and finance from Skidmore College and an MS in international finance (with a focus on Japanese business science) from Chaminade University. He regularly travels the world in search of investment opportunities others don't yet see or understand.