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...
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Go to the firm's website, write down all the names on the exec team and board of directors. Then go and find out what you can about them.
Is that info not readily available? Do those leaders have thin résumés?
If so, move on...
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.
This rule exists specifically to avoid the hype machine that dogs the investment world. That's hard to do with ICOs these days because so many celebrities - from Paris Hilton to boxing great Floyd Mayweather - are touting them.
Rather than placing your faith in celebrities, look for investment advisors who have consistently shown excellent results. For instance, on Sept. 5, paid-up members of my Radical Technology Profits trading service sold half their holdings in two stocks for 100% gains.
At that time, we had a 96% win rate on all open positions, and fully 32% of our stocks were triple-digit winners. We did that by ignoring all the noise out there and focusing on firms with breakout technology and huge earnings upside.
Rule No. 3: Ride the Unstoppable Trends
Look for investments in red-hot sectors because they offer the best chance for life-changing gains.
There's no question that ICOs are part of a massive trend. I believe that digital currencies are the wave of the future and offer unlimited upside. And as I noted earlier, I've been involved with Bitcoin from the very early days.
What you want to find out is if the companies or funds issuing ICOs are themselves part of major growth sectors like Big Data, artificial intelligence, cloud computing, the connected car, or chips and sensors.
That's important to know because these digital coins are pretty illiquid. You need to have a compelling reason to hold them, and that means they should be in target markets with huge growth potential.
Rule No. 4: Focus on Growth
Companies that have the strongest growth rates almost always offer the highest returns.
It's rare for me to recommend a company that isn't growing by at least 7% a year. However, I have the ability to check out these facts simply by looking at their earnings statements, which they also have to file with the SEC.
With that in mind, unless you have some type of audited financial statement, you're going to have a tough time knowing if the growth rates being touted are actually true.
Rule No. 5: Target Investments That Can Double Your Money
This is where we look at the firm's earnings growth and see how long it will take the firm to double profits. By doing that, we can determine how long on average it should take for your investment to roughly double.
To be candid, I doubt there will be many companies issuing ICOs that meet this mandate. Remember, you are buying a virtual currency issued by the company itself, with the idea that in most cases you will later trade that in for a product to be sold by the issuer.
Now then, I'm not saying that some ICOs won't at least double in value. If I find any, I'll let you know.
Finally, I want to emphasize once again that I'm a big believer in the value of digital currencies like Bitcoin and Ethereum.
Both are highly liquid. You can basically trade them 24/7 via a secure website like Coinbase, whose CEO I have met with in the past. Also, you can buy either of these in dollar amounts that fit your specific needs and budget, devoting as little as $100.
There's also the ARK Web x.0 ETF (NYSE Arca: ARKW). This is an actively managed fund that invests in web-centric firms like Amazon.com Inc. (Nasdaq: AMZN) and Netflix Inc. (Nasdaq: NFLX).
But it's also a play on Bitcoin. ARKW's largest holding is the Bitcoin Investment Trust (which is only open to high-value investors and funds like this), which accounts for 7.5% of the fund.
So ARKW is a rare hybrid play - it gives you access to a leading frontier investment (digital currency) along with a safety net (proven tech leaders).
Plus, it's up 133% since I first shared it with you - just 19 months ago - beating the market by more than fourfold.
Those are the kind of gains with which you could pick up an 18-karat gold necklace - or that Omega Speedmaster you've had your eye on.
And there's a lot more to come.
As you consider that, I'll be keeping an eye on ICOs. And the minute I find one that meets our standards, I'll be sure to let you know.
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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.