How to Find the Next Apple... Ahead of Time
Ten years ago, people would have laughed at you for saying we would soon be walking around with mini-computers tethered to us.
Now millions of people won't step out the door without their beloved BlackBerry or iPhone.
If you had put $10,000 into Research in Motion (Nasdaq: RIMM) (Blackberry's maker) at its , you would have been sitting on close to $800,000 in less than eight years. Apple (Nasdaq: AAPL) stock was $7.77 (split-adjusted) the day the iPod was launched. Today, thanks also to the iPhone, Apple is above $340. That's almost a 50-fold gain. $10,000 turned into more than $440,000.
Think of what Netflix (Nasdaq: NLFX) did to Blockbuster. Just a few months ago Blockbuster declared bankruptcy; Netflix simply revolutionized the video-rental business. Blockbuster will be wallowing in bankruptcy court while Netflix investors are deciding where to moor their yachts. At press time, Netflix was trading at $189 per share. It traded at $21 less than two years ago. That's an 800% gain.
I have a pet name for companies like Apple ,Research in Motion , and Netflix. I call them "game-changers."
Game-changers are those companies sitting on a truly revolutionary product, concept, or. They can (and do) come from any industry, or any sector. They can be enormous companies, but I've found they're usually smaller businesses that few have heard about... and in which even fewer invest.
But there's one thing they all share in common -- enormous potential that can translate to profits worth thousands, hundreds of thousands, even millions of dollars.
There is a problem, though. The ordinary media doesn't cover this beat. They'll tell you all about a discovery once it comes to light -- but they don't look ahead to see where the next one is coming from.
That's why I wanted to provide you with some of the strategies I use to invest in game-changers. As the Chief Strategist for StreetAuthority's Game-Changing Stocks newsletter, it's my job to find those revolutionary ideas that could be the next big thing... and bring my results to readers.
Game-changing tip #1 - Be a research fanatic
Whether you have 60 minutes or 60 hours to devote a week, research is the only way you'll successfully find game-changers. Remember: Most game-changers are ignored by media outlets until they're bigger trends. By then the opportunity for the biggest profits has passed.
I do have a confession to make. I have an advantage over most when it comes to research -- it's my full-time job. If you could see into my office, you'd see clippings, newspapers, SEC reports, and magazines just about everywhere. (I read just about anything I can get my hands on.) Those piles don't include the amount of research I do on the computer -- online medical journals, dozens of blogs, and updates on legislation. It actually comes as second nature; in a previous life, I was a business editor for some of the nation's biggest papers.
For those with more limited time, I recommend focusing on a market you're already familiar with and researching as much as you can in that area. For example, if you were a former sales rep for a pharmaceutical company, focusing on new game-changing medical breakthroughs is a natural fit.
Game-changing tip #2 - Consider the potential market
I have a quick reality check I give to any game-changing idea. I call it my "Segway" test. You might remember the buzz that accompanied the Segway, the two-wheeled "human transporter" first launched in 2001. The company boasted that it would revolutionize how we get around. Dean Kamen, Segway's inventor, even bragged the Segway "will be to the car what the car was to horse and buggy."
But with a price tag in the thousands and few advantages over walking or riding a bike, the potential market has been limited to only specialty uses. The broad appeal the company expected never materialized.
It's an important lesson. A product can be revolutionary. It can present a bold new way of fixing a problem. But when you get to brass tacks, if there isn't a potential market, then it's worthless.
Game-changing tip #3 - Make bold predictions and invest accordingly
I mentioned the quote above by the Segway's inventor, but it's hard to fault him for being bold. To identify a groundbreaking idea, you have to be forward thinking... and you have to go out on a limb.
If you want to get in on the ground floor of an opportunity -- where the most money is made -- you've got to be willing to take a bold stand that makes other investors look at you funny.
That's why I like to come up with a list of predictions regularly, and use those to help guide my portfolio. Will all of them come true? I doubt it, but I do know that the profits from the predictions that do come to fruition should amply cover the rest.
[If you're interested in reading about my current crop of predictions, you can visit this link. I've put together an entire videocast -- 6 Financial Surprises That Will Create Huge Opportunities in 2011 -- based on my latest and boldest predictions.]
Game-changing tip #4 - Profits can come overnight, but hold for the long term
Companies behind game-changing ideas can see their "pop" seemingly overnight. Whether it's regulatory approval, a major contract with a new customer, or simply the launch of a new product, I've seen some stocks rise 50% or more in just a day or two on good news.
But that's not the sort of gain I'm looking for (although I wouldn't turn it down!). Real game-changers see strong returns for months and years -- look at Apple. It's tempting to take a solid gain and book profits, but the most successful investors will continue to shares of formerly unknown game-changers.as more people discover and buy the
P.S. -- I mentioned above about my brand-new videocast. From tiny nuclear power plants that can be buried in your lawn, to revolutionary pain killers made from cobra venom, I'm convinced these game-changing ideas could take off in the coming year. To get briefed on these opportunities, and several others that I think could return many times your money, please watch this video.
StreetAuthority LLC does not hold positions in any securities mentioned in this article.