By MoneyMorning.com.au
He returns.
Royalists might look forward to the Queen coming to Australia.
Catholics would look forward to the Pope coming to these shores.
And spiritualists would feel satisfied with a visit from the Dalai Lama.
Your editor doesn’t fit into any of those groups, so we would treat their arrival with indifference.
But there is one person whose arrival in our Albert Park office today we are looking forward to. You may know him as technology analyst Sam Volkering.
But we call him the ‘Moon-Shot’ hunter. His arrival back in Melbourne for two weeks from his base in London gives us a chance to grill him on what could be an exciting year for tech investors as the NASDAQ index nears an all-time high.
Is now the time to be aiming for ‘moon-shot’ investments? Sam says yes…
Of course, that’s easy for Sam to say. He devotes his entire day to searching for the best tech investing opportunities on the market.
If you don’t or can’t spend your day doing the same it’s easy for other events to distract you. For instance missing aeroplanes or fretting about Crimea.
Or how about the latest disagreement among US Federal Reserve board members? As the Financial Times reports:
‘The US Federal Reserve damaged its credibility and created uncertainty that will weaken the US economic recovery, said a senior official as he explained his dissent from this week’s monetary policy decision.
‘Narayana Kocherlakota, president of the Minneapolis Fed, said he voted against new forward guidance on monetary policy because it implies the central bank will tolerate inflation below 2 per cent and creates unwillingness to stimulate the economy.‘
Mr Kocherlakota needn’t worry. He knows as well as we do that inflation is the number one game for central banks. It’s what they do. They’ve done it for hundreds of years. Why on earth would anyone expect them to stop now?
It’s Obvious Inflation is bad
Anyone who believes that inflation is good for an economy, businesses or individuals really does have an idiotic view of economics and how inflation impacts people and prices.
It should be obvious that price inflation is bad for almost everyone in the economy because it results in higher prices.
That makes it difficult for businesses to plan for the future. And it also means that households need rising income otherwise their standard of living drops.
You only have to look at the US as an example. The big reason why millions of Americans are on food stamps today is that during a period when prices should have fallen as the economy slowed, the Fed printed trillions of dollars of new money to prevent prices from falling.
With so many people losing their jobs or not getting a pay rise it meant a lower standard of living and a reliance on government handouts.
In fact there are only two groups who benefit from inflation – governments and banks. Rising prices and rising wages makes it easier for people to repay debt. And governments benefit because they typically get the new money first, allowing them to spend it before the prices rises take effect.
That’s why the biggest cheerleaders for money printing over the past six years have been governments and banks. But money printing has another impact. It causes asset prices, including share prices, to go up.
This is the precise reason we’ve encouraged investors to invest in shares.
The ‘Positive’ Impact of Money Printing
And it’s a good thing we did.
Stock markets had a great year in 2013, especially tech and biotech stocks.
That’s the sector ‘moon-shot’ hunter Sam Volkering focuses on. His best performing stock pick is up 422% in just eight months.
Remember, that’s during a time when most in the mainstream worried that stocks would fall as the US Fed cut back on money printing. We knew that was junk. Why? Because we knew the Fed wouldn’t really cut back.
All that changed was the pace of money printing. It has slowed rather than stopped.
And just as money printing pushes up prices, it pushes up stock prices too – hence Sam’s great track record since launching Revolutionary Tech Investor last year.
Now the challenge is on to see if he can repeat those gains this year. Arguably it will be harder. You’ll hear a lot of the mainstream say that stocks aren’t cheap anymore.
You can take that with a large pinch of salt. Mainstream commentators always say that after a stock rally. That’s because they’re incapable of seeing into the future. They also fall into the trap of not understanding that all stock prices can look expensive after a rally.
The important aspect is whether a company can grow profits in order to justify the higher price. That’s exactly what many companies have done over the past year.
‘Moon-shot’ Stocks Continue to Innovate
But that’s not all. The mainstream also forgets that companies (especially tech and biotech companies) are always innovating. That means at any point in time they can develop new revenue streams or find a way to grow an existing revenue stream.
Tech giant Apple [NASDAQ:AAPL] is a great example of that. But so are the smaller tech companies that Sam looks at.
So even though the NASDAQ index is nearing the record high it last achieved in 2001, we don’t see that as a concern. We certainly don’t see it as a reason to label the rally a stock market bubble.
In fact, we see this tech rally as a positive. Sure, a big reason for rising stock prices has been money printing. It would be idiotic for us to claim otherwise.
But it would be wrong to say it’s the only reason for rising stock prices. Stocks have also gone up because innovators, entrepreneurs and capitalists have developed ideas and taken risks.
Sam is uncovering these opportunities all the time.
Don’t be fooled. Despite the noises from the Fed, money printing isn’t about to stop anytime soon. If you don’t want the central banks eroding your wealth, your best chance to combat their actions is to buy assets that will benefit from further money printing. In other words, stocks.
We’re pretty sure Sam has the same view on this too. We’ll find out more in tomorrow’s special live tech event. Details on what this is all about directly below…
Cheers,
Kris+
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