On the 13th November, 1789, Benjamin Franklin wrote a letter to Jean-Baptise Leroy. He wrote it in fluent French. The letter contained one of the most recognised quotes in history.
In the letter Franklin wrote:
‘Notre constitution nouvelle est actuellement établie, tout paraît nous promettre qu’elle sera durable; mais, dans ce monde, il n’y a rien d’assure que la mort et les impôts.‘
The last part of that paragraph translates as, ‘nothing is certain except death and taxes.’
This is a renowned quote, but I believe had Franklin lived 200 years later, he might have added a third certainty.
Because in a world of revolutionary technology nothing is certain except death, taxes and technological advancement. Technological advancement is the Third Certainty. And it’s the key to everything.
I call this the ‘Vision of The third Certainty’. It’s a blueprint of the future. It’s a detailed outline of the technologies and trends that will drive the world forward. It explains how society works, lives, engages and moves. It’s a tightly held construct of the next five, 10, 20 and even the next 100 years.
You see, this blueprint, the Vision of the Third Certainty, is something I work on and think about all the time.
That’s because as a technology analyst it’s not just my full time job to research, investigate and find revolutionary technology. But it’s more than a full-time job. It’s a way of life, it’s a complete lifestyle.
It’s a 12, 13, 14-hour day (and longer) looking for the next trend and technological advance, and then finding a way to invest in it.
You may have read some examples of the Third Certainty in past articles I’ve written for Money Morning. These trends include Immersive Tech, the Molecular Revolution, 3D Printing and the new Industrial Revolution, and the War to Protect the Internet.
These trends illustrate that a vision of the future isn’t some bizarre sci-fi movie with aliens and flying cars. It’s a logical theory of where the world is heading based on my insight into the applications of new technology.
Look, I don’t claim to have a crystal ball. But the ‘Vision of the Third Certainty’ is how I see the big trends evolving and playing out in the future.
And importantly, it’s how I identify the innovative companies that are best placed to capitalise on these trends.
Armed with this vision of the future I hone in on the next trend that’s set to hit the mainstream and then find the best companies with the biggest opportunities.
Once I’ve got a shortlist of stocks I then subject them to a five-step screening process. These are what I call the five keys of revolutionary technology…
This is the most important of the five keys.
This criteria involves the most amount of analysis because it’s the most subjective, and I’ll explain how we do it in a moment. But first, why the name?
The Apple Newton was a PDA released by Apple in 1993. At the time it seemed like pioneering technology. But within five short years the Newton platform and hardware was discontinued. It was blink-and-you’ll-miss-it technology. It was tech that appeared too soon and in the wrong design.
Technology that really made an impact in terms of bringing together all your ‘personal assistant needs’ was the laptop, tablet and smartphone.
Although the Newton itself was outstanding, it lacked longevity. And that’s one of the biggest risks of technology. Much of it is fly by night; it rarely lasts more than a few years. That’s not the kind of technology we’re looking for.
For something to be revolutionary technology it should have a long lifespan ahead of it.
Another example of the anti-newton principle is the LaserDisc. The technology itself was revolutionary and pioneering. It was the step forward from VHS and Betamax, but was ultimately doomed by technology that dragged the world into the Digital age: CD’s and DVD’s.
LaserDisc was effectively the technology that sparked the era of CD and DVD. But at its heart LaserDisc was merely new technology that promised a lot, delivered little and never lasted.
We look for the opposite, the anti-Newton. The key for a company to be a real revolutionary stock tip is to have the technology that’s pioneering, timed perfectly, and has the potential to go above and beyond even its own capabilities.
It needs to be the kind of technology that inspires others. That creates new, unique markets. And then spawns new markets off that. It’s the kind of technology that we identify with 3D printing, composite materials, immersive tech and molecular biotech.
This leads us to the second most important criteria.
The Big Picture principle is all about whether the company and the technology has scope beyond what it currently does.
A company with big picture potential knows the way technology advances means they need to innovate and expand their technology for a bigger purpose. And that means the future potential of the company is unlimited. More on that in a moment.
In every case the stock must fit within the specific trends I’ve identified.
Not only must it be relevant to the trend, but also we must be able to pinpoint what role the company will play in the trend. It may be that they create the ecosystem or infrastructure needed for the future of immersive tech. They might be the benchmark standard for new forms of medical treatment like ddRNAi or 3D bioprinting. Regardless of what the trend is, the company must play an active and vital role in the longer-term macro vision.
By this stage, after having assessed the first three criteria we’ll know if the company genuinely has revolutionary technology.
The last two criteria are the more ‘traditional’ concepts. They’re also the two that not every one of our tips will meet.
Ideally we want these last two criteria to be satisfied as well. But it’s not a requirement.
It’s all well and good to have a company that is successful, makes good products and is well established. But that doesn’t make for a revolutionary technology company. You need leadership with a greater vision. They need to carry a bigger picture view of what the company is capable of. Without that visionary mentality, even the biggest of big companies can fail.
Kodak, Blackberry and Netscape are all examples where leadership was incapable of seeing past the end of their noses.
If I can find a revolutionary company without a visionary leader, great. But if I can find one with a visionary leader that’s even better.
There’s no point in a company that’s only going to return 5% or 10% in a year. Of course that’s a possibility because of other external factors. But in essence I look for a company with untapped financial opportunity. A company that the market has underpriced. Or the best of all, a company that’s priced on their current market value and not the full potential of their revolutionary technology.
So there it is. Hopefully that should give you some insight into what I look for in a revolutionary stock. One final point I’ll make is that not every stock will meet every criteria.
For example, we may recommend a company even if it doesn’t have a visionary leader. Sometimes a technology is so good and the trend so strong that anyone could run the company.
Now, I can’t take you through everything I do to find these stocks. For a start it wouldn’t be very interesting, and I could probably go on about it for hours on end. But these five keys are an important part of how I hunt for technology companies with the potential to revolutionise the world.
Sam Volkering,
Contributing Editor, Money Morning
Ed note: Next week Money Morning technology analyst Sam Volkering will launch his brand new free email Tech Insider. Six days a week he’ll bring you the latest tech breakthroughs around the globe, the innovative companies behind them, and reveal how to potentially profit from these changes. To make sure you’re among the very first to receive Sam Volkering’s Tech Insider, click here to automatically sign up now