How We're Going To Benefit From The End Of Cash

Jimmy Butts's picture

Thursday, July 20, 2017 - 2:30pm

by Jimmy Butts

Imagine if you could have foreseen just how successful Apple (Nasdaq: AAPL) was going to be at changing the music industry with the introduction of the iPod, iPhone and iTunes ecosystem. Or that folks would no longer run down to their local Blockbuster to rent a movie, but instead stream it over the internet -- rendering DVDs all but dead.

Of course, there are countless stories like these that illustrate how technological innovations killed off old stodgy companies and industries. 8-track and cassette tapes, VCR and DVD players, 3.5-inch floppy disks and developing film (Kodak) just to name a few. Heck, even the pound sign is being replaced with the hashtag.

In hindsight, it's easy to spot these major trend changes, but of course forecasting the next major revolution is never that simple. Just take Sirius and XM radio, for example.

These two companies aimed to change the radio industry by providing ad-free music to consumers across the nation. This novel idea seemed destined to kill off traditional radio as we knew it. After all, radio hadn't seen any major advances in decades, plus it's annoying to hear your favorite AM or FM radio station fade away as you traverse across the country. Or perhaps you were in an area where there wasn't good reception, so all you heard was static. Either case, satellite radio aimed to resolve these problems.

At the time, satellite radio was what many considered a "game-changing" trend.

But it never quite materialized as a super trend that made the average investor rich. The two companies announced on February 19, 2007, that they would merge. Shortly after joining forces, however, the company came close to filing for Chapter 11 bankruptcy (granted, their merger came as the financial crisis was beginning to unfold).

Thankfully, Liberty Media stepped in to help the struggling company with a $530 million loan, which was negotiated into a 40% equity stake in Sirius XM (Nasdaq: SIRI). Sirius XM survived and ended up turning a profit for the first time in the fourth quarter of 2009.

In short, the company is alive and well today and is nearly a staple in every new vehicle. But my point is that this development wasn't as revolutionary as many thought it might be. Sure, the company has consistently grown sales and profits, but it didn't change the radio industry the way iTunes changed the music industry or Netflix (Nasdaq: NFLX) changed how we watch TV or even how Amazon (Nasdaq: AMZN)changed the way we shop.

Apple, Netflix and Amazon have essentially altered the way we live our lives. In their infancy they were "game-changing" stocks (and still continue to mostly dominate their respective industries). And unlike Sirius XM these companies have handsomely rewarded shareholders over the last decade:

Payment stocks, Venmo stock, Cashless payment stock

Catching just one of the massive trends can be life-altering. Stocks that have the potential to revolutionize entire industries can deliver outlandish returns to investors. And I believe that's exactly the sort of potential that my most recent Top Stock Advisor pick could deliver over the next 10-years.

It's part of an unstoppable trend that I've touched on in my premium newsletter before.

In fact, we're already benefiting from this evolution with our "toll" operator holding in this space, which is already up 21% in a few short months.

But I want to gain a little more exposure to what I believe will be a massive and lucrative trend. The trend I'm talking about, of course, is the transformation of how people will pay for things...

The End of Cash
Soon paper money and coins will be displayed next to checks, cassette tapes, CDs and VCRs in the museum of history.

Even former U.S. Treasury Secretary Lawrence Summers wrote in the Washington Post a year ago that, "It's time to kill the $100 bill." Whether you believe it or not, we will soon be living in a cashless (and even cardless) society.

We're already seeing the early stages of it here in the United States. Hardly anyone (and nearly no one under 30) carries cash. Just a few days ago I purchased a new baseball cap from a buddy... except he was in a town two and a half hours away. I sent him 20 bucks using the popular money-exchanging app Venmo.

This smartphone application makes it easy to pay someone, collect money and manage a shared expense like dinner, rent or concert tickets. Plus, one of the perks of Venmo is it makes it easy to avoid those awkward conversations of asking someone for the money they owe you. With a simple tap, you can have Venmo send them a reminder to pay you.

Venmo was acquired by Braintree in 2009. Braintree provides the technology used to process credit cards for thousands of Millennial-targeted companies such as the ride-sharing company Uber, the housing rental company Airbnb and the provider of the smartphone game Angry Birds. (Remember the name Braintree, you'll see it again later on.)

More important, Venmo gives us a glimpse of how our "cashless" society will work. No more crossing town to find your bank's ATM (to avoid the $3 charge) to pull out $20 to pay your friend only for them to have to go to their bank and deposit. Everything will be done from your mobile device with applications like Venmo.

The First Cashless Society
For many, it'll be hard to imagine life without cash. But the movement of getting rid of cash is already well underway. This trend is already picking up steam and Sweden is leading the pack...

Sweden is already an almost cashless society. According to Sweden's central bank, cash made up just 2% of the value of all payments in 2015.

What's more, over half the bank branches in Sweden no longer keep cash on hand or even take cash deposits. Want to go shopping? Don't expect to pay with cash, as many don't even accept it anymore. And ATMs? A thing of the past.

This is the way forward. Cash is all but dead.

That's why, three months ago I added one of the pioneers of cashlessness to my Top Stock Advisor portfolio. Although the company was founded more than 18 years ago by the likes of Elon Musk and Peter Thiel, it went public -- for the second time -- exactly two years ago, on July 20, 2015.

The point is, the move toward a cashless society is all but assured. And my latest pick has been and continues to be the major player in this burgeoning space. In fact, I wouldn't be surprised if in 10-years it rewarded shareholders with Amazon-, Apple- and Netflix-like returns.

Since I've added this pick to my portfolio, it's already returned us over 25%. And now, a similar company from the other side of the world is poised to benefit from the exact same trend.

If you'd like to get the names of both of these companies -- along with the rest of my market-crushing portfolio -- then I invite you to follow this link.

Jimmy Butts does not personally hold positions in any securities mentioned in this article.
StreetAuthority LLC does not hold positions in any securities mentioned in this article.