Before Investing in Any ICO, Do This One Thing

Michael A. Robinson

I'm sick of them already.

Since about midyear, every morning I open my email box after eating breakfast and settling down at my desk.

And each and every morning that inbox is filled with "big opportunities."

No, I'm not talking about notes from Nigerian princes or offers to refinance my home. My spam filter catches just about all of those.

These notes come in from washed-up boxers, former beauty queens, aging reality TV stars, and other bottom-rung celebrities – and they're all pitching chances to "invest" in the latest initial coin offering (ICO). (Yes, I purposefully used "scare quotes" there.)

I'm sure your inboxes are filled with similar garbage – or maybe it comes through your kids' social media accounts.

Either way, I can't wait till this fad dies down some.

Now, don't get me wrong. I'm not saying you can't make money on ICOs. After all, they are based on digital currencies like Bitcoin – our "gold of tech" portfolio insurance. I've been immersed in Bitcoin virtually since it launched, and I remain a big backer of it, no matter what Jamie Dimon says.

The reason I want to talk to you about ICOs today is to make sure you understand what they are – and to make sure you don't get taken for a ride.

With that in mind, I'm going to show you the one thing you should do before investing in any ICO.

With it, you'll protect your hard-earned money and bolster your net worth…

Wilder Than the Wild West

Now then, I'm a big believer in frontier investing. After all, we've spent the past year getting into legal cannabis, and I was one of the first analysts to get investors into rare earths several years back.

And I recommended Bitcoin to subscribers of my premium service Nova-X Report long before that cryptocurrency began its massive quadruple-digit run.

So, I hope you don't think I'm dismissing ICOs out of hand.

For example, Paragon sounds like a brilliant mashup – a company using blockchain technology that undergirds Bitcoin to facilitate cannabis transactions.

Joining forces with a rapper known as The Game, Miss Iowa 2014 Jessica VerSteeg is offering an ICO in Paragon.

The issue I have here is that most ICOs are more like crowdfunding, in which you put up money and then can trade the digital currency for products down the line. Let me explain…

In an ICO, you give the ICO some of your already existing cryptocoins (such as Bitcoin) – and then you get the ICO's newly issued cryptocoins in return. These are essentially "tokens" issued on the blockchain. You can easily trade them – if you can find willing traders – but they do not confer ownership rights. All that you can hope for is that the ICO company is successful and your tokens' value rises.

ICOs are thinly traded and totally unregulated. On the other hand, initial public offerings (IPOs) offer investors actual shares and are carefully regulated by the U.S. Securities and Exchange Commission.

In other words, ICOs are even wilder than the frontier investment plays we often go after here.

But that's okay.

As your tech investing guide, it's my job to tip you off to the big winners, to warn you away from the losers, and to help you hang on to your hard-earned money.

The road to wealth is paved by tech.

And we're willing to go after any investment – as long as it passes one big test.

So, to help you judge if an ICO is really right for you, be sure to run each one through Your Tech Wealth Blueprint – our five filters for finding tech winners that can put you on that road to wealth.

Rule No. 1: Great Companies Have Great Operations

Each and every one of our investments must be well-run by top-notch leaders.

Having spent more than 30 years knocking around Silicon Valley, I can't emphasize enough how important senior leadership is to any tech investment you are considering.

I never recommend a stock without drilling down to find the track record for the CEO and executive team. I'm looking for leaders with years of proven success in managing tech firms – and making money for their investors.

Then again, I have personally spoken with some of the nation's top CEOs, including those for Bank of America Corp. (NYSE: BAC), Boeing Co. (NYSE: BA), FedEx Corp. (NYSE: FDX), General Motors Co. (NYSE: GM), and Symantec Corp. (Nasdaq: SYMC).

Here's how you can do it yourself…

Michael A. Robinson

About the Author

Browse Michael's articles | View Michael's research services

Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.

… Read full bio