Dear Reader,
Welcome to our weekly mailbag edition of The Bleeding Edge. All week, you submitted your questions about the biggest trends in technology.
Today, I’ll do my best to answer them.
And first, I have an important announcement…
As longtime readers know, I’ve focused my career in the world of high technology and investing. In Brownstone Research, I’ve brought my subscribers the best technology and biotechnology investments out there. And we’ve seen incredible gains as a result.
This is why what I say next may be surprising…
For the first time, I’m going to be focusing outside the world of technology… and looking at the broader stock market instead. And that’s because I’ve spotted an anomaly…a “glitch” in the markets.
You may have seen it too… a stock that rockets up for no apparent reason. Sometimes it might appear random.
But it’s NOT.
I’ve found a way to predict when this “glitch” is going to happen… even weeks before it hits… so that regular investors can profit. We can get in on these stocks early… before they show up on CNN and CNBC.
That’s why I’m holding an event to break this story wide open. Wall Street doesn’t want you to know about this “glitch.” Yet it’s the first step on your way to an entire nest egg.
On July 28th, at 8 p.m. ET, I’ll explain what this glitch is – and how you can profit from it – at my Outlier Investments Summit. There’ll be a Q&A session that evening to answer questions… including whether any stocks on attendees’ lists have experienced a “glitch” recently.
I’ll even give away the name of a “glitch” stock you can invest in right away, for free…
This will be an exciting night. So please, just go right here to put your name down to attend.
And now let’s return to our mailbag. If you have a question you’d like answered next week, be sure you submit it right here.
Let’s begin with a question on alternatives to the near-ubiquitous Gmail:
Dear Jeff,
I was one of the early adopters of Gmail, acquiring my account during the second wave, back when you needed an invitation from one of the initial users to obtain an email address.
Gmail has been convenient and has many features that work fine for me, but I have long been desiring a product that I don’t feel is spying on me and selling my data. Until now I’ve been lazy, as it is not convenient to switch email after 20 years of entrenchment, and I haven’t been willing to change the price tag from “free” (data surveillance) to a tangible monetary cost.
For a number of reasons, I’m ready to make a change now, though. I seem to recall that you mentioned something in one of your publications about a secure email provider that you either use or recommend looking into, but I haven’t been able to locate that particular missive. I value your expertise and knowledge highly. What are your recommendations, sir?
Thank you,
– Christen P.
Hi, Christen, and thanks for writing in. I know you’re not alone in looking for an alternative to Google’s series of products. “Free” and functional is such a compelling value proposition that it’s easy to get sucked in.
I commend you for trying to cut the cord, so to speak. Google has burrowed deep into consumers’ lives, offering convenience… in exchange for as much data as the company can extract from us.
That’s because Google relies on this data for growing its advertising revenue. And the better it can target ads toward us, the more money it can make from advertisers. And more than 80% of the giant’s revenues come from advertising.
Most users have no idea that Google is reading and parsing every single one of our emails to collect valuable data about us and our networks. This information is, of course, immensely valuable to advertisers, which is how Google makes almost $200 billion a year in revenues at 67% gross margins.
The good news is, there are a few reasonable alternatives that offer greater privacy and data protection standards.
For consumers who want the ease of use, it is hard to beat using Apple. Apple has proven to be a far better steward of our data than Google.
And its iCloud email makes a great option for any readers who are familiar with Apple’s line of products. An “iCloud for Windows” app is also available for PC users.
This service encrypts our data traffic, and most critically, Apple doesn’t sell our data for advertising revenue.
Also, at this year’s Worldwide Developer Conference (WWDC), Apple announced iCloud Plus, a new subscription plan that offers additional features to avoid spam and hide your identity from your internet service provider (ISP) and the websites you visit.
These may be valuable features for some readers. Apple has been consistently making improvements to protect and preserve our privacy.
On the other hand, if any readers want a non-Apple alternative to Gmail, there are more good choices.
The top contender is ProtonMail, which is an open-source email software company. It focuses heavily on maintaining its users’ privacy, using end-to-end encryption to make sure that only you can read your emails. And its servers are hosted in Switzerland, which has strict data privacy laws.
The free version offers 500 MB of storage, and Premium plans enable users to expand their storage capacity. These paid plans are how ProtonMail makes money to further develop its services.
Another up-and-coming email service is Tutanota. Like ProtonMail, Tutanota relies on user donations and premium subscriptions. It also encrypts your emails with its proprietary system. Plus, it doesn’t even use cookies on its website.
The free plan offers 1 GB of storage, with the option to pay for up to 10 GB.
Remember, though, that Gmail is just one of Google’s avenues for harvesting our data. If we want to limit its access to our data, we should plan to adjust many of our defaults…
I recommend choosing the iPhone over Android devices… using the Brave browser rather than Google Chrome… searching online with DuckDuckGo or Brave instead of Google’s search engine… opting for Square’s Cash App or Venmo over Google Pay… using alternatives like Apple Maps or OpenStreetMap instead of Waze or Google Maps… and watching videos through Vimeo rather than YouTube (which is owned by Google).
These alternatives offer equal or better quality than Google’s products, with the added benefit of remarkably better privacy.
Next, a reader wants to know more about natural gas cars:
Hi, Jeff, and thank you for taking my question! So what are your thoughts when it comes to clean natural gas energy? I’ve read that you can run an engine on natural gas and not need to change the oil for 100,000 miles. So why aren’t we driving more natural gas vehicles?
Also, what are your thoughts on shipping natural gas via liquefied natural gas (LNG) to foreign countries like India? Tellurian (TELL) seems to be a leader in this space with over $24 billion already in signed contracts.
– Steve R.
Hi, Steve – thanks for writing in. This is an interesting question…
I’ve discussed alternative fuels like hydrogen in the past, but I haven’t spilled much ink on natural gas.
And there are several reasons why natural gas could be an attractive option.
For one, it’s readily available in the U.S. In 2019, the U.S. became the top natural gas-producing country in the world, responsible for a whopping 23% of production. This was enabled by technological advancements in extracting gas from complex geological formations in the ground.
These advancements have affected the price of natural gas as well. Estimates say that fuel savings could run as high as 30–40% compared to regular gasoline. Switching to natural gas would also lower our dependency on foreign oil.
It’s also better for the environment than gas- and diesel-powered cars. Compressed natural gas (CNG) runs cleaner than traditional gasoline, especially if it’s mixed with biomethane. It can cut carbon-monoxide emissions by as much as 97% and nitrogen-oxide emissions by as much as 60%. Non-methane hydrocarbon numbers can drop by as much as 75%.
CNG is also safe. In the event of an accident, it dissipates into the atmosphere, unlike traditional gasoline, which can pool on the ground and create a fire hazard.
So why aren’t natural gas vehicles (NGVs) a competitive option these days? There are a few reasons…
At present, there are about 23 million NGVs worldwide, with only 175,000 of them driven in the U.S.
Right now, there’s isn’t much demand for natural gas passenger vehicles. That’s partly due to limited availability – few models are available aside from commercial fleet vehicles.
And the ones that are for sale generally have higher up-front costs than comparable gas cars, especially if the buyer opts for a home refueling system. All in all, it can cost as much as $10,000 more to opt for an NGV compared to a similar gas car.
It’s also possible to convert existing vehicles to use natural gas, but that too can be expensive.
Additionally, the infrastructure of fueling and maintenance stations is very limited at present. There are only about 1,000 CNG stations in the country and only about 70 liquefied natural gas (LNG) stations. And many of the stations that do exist are operated by fleets – not just anyone can use them.
That can pose problems for longer trips. The Honda Civic Natural Gas model, for example, has an estimated usable range of 160–180 miles. While that may not cause an issue for local usage, the lack of refueling options can make longer travel difficult.
With few car options, higher up-front costs, and limited infrastructure, there are some significant barriers to entry. And the lower demand also makes it difficult to justify improving the range of models available or expanding infrastructure. So it’s a bit of a “chicken and egg” situation.
Or to use a different metaphor, older readers might remember the VCR vs. Betamax conundrum. The market didn’t exist for both options to succeed, so one rose to prominence while the other faded into obscurity.
We’re seeing a similar situation right now. Electric vehicles (EVs) have faced some of the same challenges as NGVs – such as higher up-front costs and limited infrastructure.
Yet EVs have momentum on their side. There are already more than 41,000 EV charging stations around the U.S., and the current administration is aiming to increase that number to 500,000 by 2030.
And consumers have a range of options for buying an EV. Models range from luxury to economy from carmakers like Tesla, Jaguar, Audi, Porsche, Volvo, Volkswagen, Ford, Chevrolet, Nissan, Kia, and more. Many of these EVs are already becoming comparable to the prices of similar gas cars.
And while current EVs are only as clean as the power used to generate their electricity… once we can create truly clean energy through technology like nuclear fusion, we’ll see next-to-no emissions. We won’t need to upgrade our vehicles again to experience the environmental benefits.
Somewhat ironically, depending on where you live, a lot of the electricity that is produced and used to fuel EVs comes from natural gas. For anyone curious, you can visit the U.S. Energy Information Administration website and find the sources of electricity production state by state. Most countries have similar resources to understand this as well.
I happen to live in a state where about half the electricity comes from nuclear fission plants and the other half comes from natural gas. That means that the EVs in my state are powered 100% by carbon-based fuels and energy that produces radioactive material. That always makes me chuckle, and it is also something I want to change.
I’m very familiar with LNG because of my time living in Japan. It became our lifeline. After the massive earthquake and tsunami that devastated the country, all of the nuclear fission reactors went offline. There were massive energy shortages across the country and we had to engage in extreme measures to preserve energy consumption.
The fastest way to produce energy without nuclear fission was to build natural gas plants. And that resulted in massive imports of LNG to Japan, which continue today.
Japan has further supplemented natural gas with the construction of many coal plants around the country. It’s heartbreaking to see such an advanced country taking steps backward to coal-powered plants, but the cost of important LNG was too high to sustain for the entire country. And there is too much political resistance to turn back on all of the nuclear fission plants.
Natural gas simply won’t catch on for passenger vehicles. The decision has already been made to focus on EVs. And it has sadly become highly politicized.
And I see the use of LNG as a strong resource until such a time that nuclear fusion is widely available, supported by other renewable sources like wind, solar, and hydro.
I haven’t researched Tellurian enough to have an opinion about the company, but from a glance, it looks like a forecast for about $60 million in revenue this year and a negative $44 million in free cash flow.
Considering that it only has about $58 million in cash on the books, it is going to have to go out and raise capital in the near future. And I’m just speculating here, but to deliver on $24 billion in contracts, I’m pretty sure it will have to invest heavily in its infrastructure.
If I were analyzing the company, I’d be digging in to understand how much capital would be required to grow that business to scale and how long it would take. Equally important would be to understand the impact on free cash flows.
Let’s conclude with a question about preparing for inflation:
Dear Jeff,
As a Brownstone Unlimited member, I’m consistently awed by the depth of both the technical and intrinsic value analysis contained in the recommendations of your various services.
As others have written, I’m concerned with the macro environment. I know you and your staff are watching it closely. I agree that near-term interest rate increases don’t appear likely, but if inflation continues at higher levels for the next few months, the calculus may change.
If you deem that a stronger possibility, will you advocate for a “lightening” of some positions (and possibly closure of others) depending upon the merits of each company?
I know you can’t give individual guidance, but I and possibly others would like to make some general contingency plans, as there may be more than a few trades to be made in short order if things worsen. Thanks again for the best service focused on the technology space.
– David T.
Hi, David, and thank you for the kind words. I’m glad to have you along as an Unlimited member. I hope you are enjoying being an Unlimited member and the benefits that come with it.
I’m not sure if you were able to check out the latest investment recommendation that I just published only for my Unlimited members. If you haven’t done so, I recommend you do so [paid-up subscribers can catch up here].
As I wrote just this week, inflation concerns remain at the forefront of my mind.
While Modern Monetary Theory (MMT) says that debts don’t matter… that we don’t need balanced budgets… that we can print as much fiat currency as we want and things will be fine… history feels differently.
And since the government is on track to print more than $10 trillion in less than three years, I expect we will see serious inflation. In fact, due to the current fiscal policy, we’re already seeing inflation for consumers in food, gas, real estate, and commodities prices.
We are feeling the effects on our daily spending as a result. Yet I’m predicting that we’ll see continued government stimulus and artificially low interest rates, which will keep us afloat for a period of time.
As I wrote earlier in July, if the current economic house of cards does start to collapse, it most likely won’t be until after the next elections.
But to answer your question more specifically, yes, if I become convinced that we are on the cusp of a rapid increase in inflation – especially if it gets so bad that the Federal Reserve needs to start raising the interest rate – then I will start to recommend that we close many positions across our portfolios.
I don’t expect any panic or sudden moves, but there will likely be a moment in time when we’ll be taking a bunch of profits off the table, rebalancing our portfolios, and even potentially buying some hedges to protect and potentially profit from any market downside.
If or when I feel this way, my subscribers will be the first to know. I have no problem at all sitting on the sidelines for a while until the storm passes, but we are not there yet. And the reality is that it could be years before we see that happen.
And ironically, the incredible advancements in technology and the efficiencies they bring are acting as an offset to terrible monetary policy. Many services and goods continue to improve, get cheaper, and become more convenient than ever before. And the pandemic has driven more people than ever before to a more digital lifestyle, which is driving even more scale than before.
In the meantime, each investor will have to decide what their comfort level for risk is. And as long as we maintain rational position sizing and continue to maintain exposure to companies that are best in class and operating in high-growth markets, we are going to manage any volatility just fine.
So in short, I see no reason for us to panic. Markets are trading near all-time highs, still have positive momentum, and I am still finding fantastic companies for us to invest in.
My team and I will always keep our subscribers in the loop any time we need to take action or if we see the market situation change significantly.
That’s all we have time for this week. If you have a question for a future mailbag, you can send it to me right here.
Have a good weekend.
Regards,
Jeff Brown
Editor, The Bleeding Edge
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The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
