Start the conversation
Comment on This Story
Or to contact Money Morning Customer Service, click here.
This time, Wall Street didn't freak out.
In fact, the S&P 500 had its best day in eight sessions last Thursday as stocks across the board entered a rally.
You can chalk that up to the fact that just the day before the Federal
Reserve struck a very dovish tone, suggesting interest rates won't rise far or fast this year.
What didn't get much notice is just how volatile the bond market had become over the past six weeks.
Here's the thing. Choppy bond trades by definition means there's quite a frenzy of both buying and selling.
And that's great news for savvy tech investors.
Let me explain. Even on a "calm day," the nation's bond market is highly active. We're talking a daily volume of $700 billion, more than three times that for stocks.
And it's our mission to look for a tech angle into this massive segment that will give us market-crushing profits.
Today, I'm going to reveal a firm that is doing just that.
And I'll show you the five reasons why this is the single best way to play this massive market...
Where the Money's At
Please don't misunderstand me. I'm in no way suggesting you bypass big tech winners and other equities in favor of bonds, even if we see higher interest rates ahead.
It's just that many investors buy bonds or bond funds for the income, and give up a lot of growth. But as I always say - avoid false dichotomies. You want at least a portion of your "fixed income" portfolio to give you so-so growth.
Otherwise, inflation can eat up a lot of your paper profits. If we could just capture a fraction of the bond market's amazing volume, we stand to make a lot of money.
Now, the U.S. stock market boasts roughly 6,500 shares traded on major exchanges. Though that's quite a lot to choose from, it's only a fraction of the more than 200,000 types of unique taxable bonds offered.
Here's the thing. Despite the rise of the Web and electronic trading, most broker dealers still buy and sell directly with each other. Analyst say that electronic bond trading only accounts for a little more than 20% of all transactions.
As you can see, that's quite a fertile field for MarketAxess Holdings Inc. (Nasdaq:MKTX). This is the premier high-tech firm serving the bond market, and it's a company with a lot of room to grow.
For instance, the tech leader in this space right now handles 95% of all electronic bond deals. But that is still less than 20% of all bond trades made today.
To show you why this exciting stock still has plenty of upside ahead, let's run it through my five filters for building wealth with market-crushing tech winners.
Tech Wealth Builder Rule No. 1: Great Companies Have Great Operations
I'm talking about well-run firms with top-notch leaders.
And MarketAxess Holdings has a CEO/founder who is second to no one in the fixed income market. Richard M. McVey began his career at storied Wall Street firm JPMorgan Chase & Co. (NYSE:JPM).
Beginning in 1992, he spent four years serving as managing director and head of JP Morgan's North American futures and options business, and then served as head of North American fixed income sales and institutional client relations.
Concannon has a Master's degree in business, as well as a law degree. He's also had stints at Nasdaq, Instinet, and Cboe Global Markets, one of the world's largest exchange holding companies.
And just a few weeks ago, at MarketAxess, McVey moved to strengthen the senior team. He named Chris Concannon as president and chief operating officer.
Tech Wealth Builder Rule No. 2: Separate the Signal from the Noise
To create real wealth, you have to ignore the hype and find companies that have rock-solid fundamentals.
The firm has that in spades. It boasts a 49% operating market, and a 27% return on equity. This is a company with nearly $267 million in cash, and stockholder's equity is seven times greater than the firm's total liabilities.
Right now, Wall Street looks at the bond and stock markets as plain binary choices. The heard doesn't seem to grasp the major fundamental here. As the world goes digital, there's plenty of upside for a firm that is leading the way.
While Wall Street busies itself handicapping the Fed's actions, our team at MarketAxcess is getting ready for more trading volume. They recently added a module that lets clients use data analytics to improve their bond trades, and now count more than 1,500 active clients.
About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech 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.
And even with decades of experience, Michael believes there has never been a moment in time quite like this.
Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.
To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.
His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.
Thank you Michael A Robinson I like your advice