Nick’s Note: Our subscribers have made life-changing gains investing in cryptocurrencies. But that’s not the only way to profit from this emerging space.
Below, Palm Beach Confidential analyst Chris Wood explains how investors can also make money investing in publicly traded blockchain companies—straight from their brokerage accounts…
By Chris Wood, analyst, Palm Beach Confidential
On the surface, Overstock.com looks like a pretty boring company.
CEO Patrick Byrne founded the online retail business in the late 1990s to sell manufacturers’ excess inventory at a discount. Since then, it’s broadened into a more general e-commerce company.
Today, the company offers “a broad range of price-competitive brand name, non-brand name, and closeout products.”
Okay, that’s all well and good… but yawn.
So, it might surprise you to learn that Overstock.com (OSTK) is one of the hottest stocks on the planet.
On August 2, 2017, OSTK closed at $15.95. On January 8, it closed at $86.90. That’s a gain of 445% in just over five months.
Sales growth was actually down over the past year. And the firm will record its first loss since 2011 when it closes the books on 2017.
What’s the deal?
The recent interest in Overstock.com has nothing to do with its online retail business. Rather, it has everything to do with the company’s investments in the cryptocurrency/blockchain space.
In a moment, I’ll tell you how we’ll play this trend over the coming years. But first, let me show you what Overstock.com is doing…
Adopting the Blockchain
Behind the scenes, Overstock.com has been changing.
In 2014, it became the first large retailer to accept a cryptocurrency (bitcoin) as payment. And that same year, it launched a wholly owned subsidiary called Medici Ventures to develop and advance blockchain technology.
Since then, Medici has invested in a number of private blockchain companies, including PeerNova, Bitt, IdentityMind, and Factom.
One Medici initiative that has investors particularly excited is tZERO.com—the first ever blockchain-based trading platform for stocks and securities. Byrne has called tZERO.com a blockchain version of Wall Street.
In December 2016, through its tZERO.com subsidiary, Overstock.com became the first publicly traded company to issue stock on a blockchain.
And on December 18, 2017, Overstock.com launched a $300 million Initial Coin Offering (ICO) on tZERO. In the first 12 hours, the ICO reportedly raised $100 million. (An ICO is similar to an initial public offering, or IPO.)
A New Digital Market
Today, the value of all cryptocurrencies currently stands at about $542 billion, according to CoinMarketCap. That’s up nearly 3,000% from January 1, 2017.
And things are just getting started.
Blockchain-based systems could eventually surpass the impact that the internet has made on our lives over the past 20 or so years.
So, how does the average investor get in early on this trend?
You can buy the cryptos themselves of course. Subscribers to Palm Beach Confidential have already made life-changing gains following Teeka Tiwari’s crypto picks.
But many investors are confused by these new digital assets and would rather have their money in more traditional markets.
It’s understandable. Buying cryptos is certainly not as easy as buying stocks from your online broker.
The good news is that you can play this trend in the stock market… like many investors have with Overstock.com.
You see, many well-known large firms like IBM, Microsoft, Walmart, Samsung, and Google are also pouring money into blockchain technology.
Buying the stock of these companies is one way to slip some blockchain exposure into your portfolio. But these companies are so big that the trend is unlikely to move the needle very much in the next few years.
So, I’d recommend going after smaller fish…
The Blockchain Start-Up Trend
There’s a lot of opportunity in this space. And it’s growing every day. GMP Capital reports that at least 50 blockchain-related firms are going public in Canada in the coming year.
Meanwhile, we’ve seen huge jumps in the stock prices of small blockchain-related companies here in the U.S. recently.
In December 2017, for example, a tiny company called Long Island Iced Tea simply changed its name to Long Blockchain and saw its stock rise 300% in just over a week.
Now, I’m not saying you should go out and buy stocks of all companies with the word “blockchain” in their name… or buy the stocks of all the companies that claim to be leveraging blockchain technology in some way. Fundamentals have been thrown out the window for a number of these plays.
Today, you see companies with no assets or revenue achieving big valuations on nothing more than the hint of a blockchain promise.
The point is that investors are excited about blockchain technology. And they’re clamoring for ways to play it in the stock market. This bodes well for those of us who are willing and able to separate the wheat from the chaff.
Analyst, Palm Beach Confidential
P.S. In future issues of Confidential, I’ll have specific blockchain-related stock recommendations for those of you who want to diversify your blockchain holdings or who want to get in on this trend without buying cryptos directly or trading bitcoin futures. Let us know how you plan to play this trend right here…
From Troy V.: Last week, you ran an essay from guest writer Chris Mayer of Bonner & Partners (“The One Secret to Thriving in 2018”). I liked the essay, but my question to you is: Are you recommending Chris’ service or are these just advertisements? I don’t like being hustled.
Nick’s Reply: Troy, let me assure you that Chris is the real deal… I’ve known him personally as a colleague for years… And I’ve always admired his work.
Aside from knowing him personally, I can vouch for his results. Chris’ returns were so amazing that Bonner & Partners chairman Bill Bonner paid for an outside auditor to verify them. The audit showed Chris made average annual returns of 17% for his subscribers over a 10-year period.
That’s why Bill committed $6 million of his family’s trust fund to Chris’ Bonner Private Portfolio service. And the results have been stellar… The portfolio has an average return of 37% since Chris launched it in 2016. Now, Chris uses a different investing strategy than our analysts at Palm Beach Research Group. But as you can see by his returns, it’s very successful.
As a longtime reader, you know that we recommend diversification across assets. If you want to add another layer of diversity to your investing plan, Chris’ model portfolio would be a great complement to our services.
From VE Wiggins: On Monday, you had an interview with Teeka about the trends in artificial intelligence and virtual reality (“Teeka Tiwari on the Next Two Big Tech Breakthroughs”). Here’s what you guys said:
Nick: So, how can our readers profit from the trends in VR/AR and AI?
Teeka: My Palm Beach Letter subscribers have already made a lot of money investing in Nvidia. We’re up 590% since I added it to our portfolio back in December 2015. So, it’s way past our buy price.
If you’re not going to answer questions with something concrete, then you shouldn’t include them at all.
Nick’s Reply: We seldom give out recommendations from our paid services; that would be unfair to our paid subscribers. However, Nvidia is a company we’ve followed closely in the Daily. I did a write-up on the company back in November 2017 (“This Non-Automaker Will Make $12.7 Billion From Self-Driving Cars”).
Like Nvidia, other chipmakers will benefit from the trends in virtual reality and artificial intelligence. If you want broader exposure to this space, consider the ROBO Global Robotics & Automation Index ETF (ROBO). It holds a diversified basket of global companies in the robotics field.
This could be bigger than the internet. And early investors who get in before February 2018 stand to make a fortune. Learn more here…