Note From Jeff Brown: 2021 is shaping up to be another great year for tech and biotech companies. We have a lot to look forward to at Brownstone Research.
And today, we’re bringing Bleeding Edge readers some technology insights from a new voice. Below, Jason Bodner, an expert financial analyst, shares his sharp perspective on the tech markets in 2021.
Jason honed his skills on Wall Street, where he routinely traded more than $1 billion worth of stock for his clients… often in one day. But more importantly, his time there gave him a keen eye for how to spot what he calls outlier investment opportunities. He even crafted his own proprietary stock-picking system, which he uses to help investors outperform the markets.
I’ve followed Jason’s work for the last three years, and I’ve peeked under the hood. I have to say that I’ve been very impressed. He shares my mission to “level the playing field” for regular investors. He also knows how retail investors are often kept from the best opportunities to profit… and he’s determined to balance the scales.
So I hope you’ll enjoy hearing from Jason and learning what he sees as the biggest opportunities in technology right now…
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By Jason Bodner
To most investors, it must be difficult to pin down which stocks will be the biggest winners in 2021.
There’s no denying that the U.S. is in one of its most volatile periods since the early 2000s. While a pandemic rages across the country and political tensions reach new heights… investors watch the stock market trade at record highs.
These truths seem totally at odds with each other. And it makes sound investment decisions difficult to reach.
But in my research, I don’t rely on world events to guide my investments. Instead, I rely on the turning gears of the great financial machine… big money.
These heavyweight institutions and hedge funds have a firm grip on the market’s direction. And following them proves more profitable than any other strategy I’ve seen.
So today, I’ll show you where the big money has its sights set for the coming year and the best way to position yourself to profit…
First, let’s break down my big-money system…
After personally handling trades worth millions of dollars every day for my Wall Street clients, I learned how to spot the patterns that suggest a big player is pouring money into a specific stock. Their behavior is consistent – buying into a position slowly and consistently over a period of time.
After I left Wall Street, I found a way to develop software to identify these patterns. And everyday, this software shows me the top stocks that big money is likely buying at that moment.
First, the system scans over 5,500 stocks every day. It analyzes each one for fundamentals like great sales, earnings, and profits. It also looks at technical factors – how each stock is trading.
The software ranks each one… and then overlays a special algorithm – looking for when big money is moving in or out of the stock in an unusual way. It assigns a buy or sell signal to the few stocks that trigger that algorithm. They’re what I call “big money buy and sell signals.”
All of these signals combine to form the Big Money Index (BMI) – a 25-day moving average of big-money buy and sell signals that shows us where things are likely headed in the broad market.
When that index is over 80%, it means buying is unsustainable, and I would expect a market pullback soon.
(It’s been over 80% for nearly seven weeks. Based on this, I expect stocks to pull back moderately over the next few days and weeks before resuming their march upward.)
This data-driven approach eliminates emotions from the process, which can often cloud the picture of investing. I’ve accumulated over 30 years of data on thousands of stocks. And history has shown me that this data gives strong insight on what to expect for both the market and individual stocks.
Throughout much of last year, my data told me the big money was far more interested in buying stocks than selling them.
But where was that buying focused? When we break it down, we can clearly see where big money was focused: technology stocks.
I believe 2021 will be another banner year for technology. But the trick is, of course, to know which tech stocks to lean into… and which to avoid.
And right now, the old standbys of the tech world are facing major headwinds…
Big tech is in a shaky spot right now. Following the siege on Capitol Hill, the former president fell into the crosshairs of big tech. Facebook, Twitter, and Amazon all effectively gagged then-President Trump – in their words, as an attempt to prevent any further unrest.
Whether or not you support these platforms banning the former president, these bans are troubling. Yes, private companies can do whatever they want. There is no technical violation of the First Amendment here.
Still, it’s clear to see that plenty of people feel strongly enough about this to stop using these big tech services and search for alternatives. This is just one reason why I see near-term headwinds for big tech.
There’s also the problem of what I call the “ceiling effect.”
Think about this… We just saw the first company hit a $1 trillion market cap only a couple years ago. But there won’t be many more companies to grow to that level anytime soon.
Compare this to the abundance of companies worth less than $10 billion that could easily grow to $100 billion or more…
So big tech may face near-term headwinds due to the political climate and longer-term ceiling restrictions. But there are pockets of tech where I see great opportunity…
In my research, I uncovered something startling about the tech sector…
50% of all tech buy signals last year – and 10% of all stock buy signals – were in software stocks. This trend should continue as software increasingly powers the world. We all rely on software to help us do our jobs and go about our lives.
Investors seeking broad exposure to the software sector might consider an exchange-traded fund (ETF) like the iShares Expanded Tech-Software Sector ETF (IGV).
I’m also seeing huge big-money moves coming into the digital payments space. With industry stalwarts embracing cryptocurrency and pioneering secure digital payments for our online world, cash is increasingly becoming a thing of the past…
And right now, there’s just no reason to believe cash suddenly surges in popularity again. Investors seeking broad exposure to digital payments might consider an ETF like the ETFMG Prime Mobile Payments ETF (IPAY).
And finally, consider semiconductors. Semiconductors are the hardware that powers all of the above innovations.
The chipmakers and component manufacturers are continually striving to keep up with demand. With ever more mobile devices proliferating on the market, demand continues to soar for faster and better chips.
Investors seeking broad exposure to semiconductors might consider an ETF like the iShares PHLX Semiconductor ETF (SOXX).
Tech attracted much of the big money last year and is poised to do so again in 2021. But be careful where you place your bets…
As always, I’ll let big money be my guide. It’ll be interesting to see how 2021 unfolds. But looking through the big money lens, I have my eye on software, semis, and payments above all.
Patience and process!
Jason Bodner
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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.
