August 27, 2019

Last week’s tumultuous market conditions put a number of investing strategies to the test – specifically, as to their viability to produce positive results against an inverted yield curve, a strong dollar, spiking gold prices, algorithmic sell programs, geopolitical tensions, the rising prospect of a hard Brexit, a Fed that is behind the curve, Presidential temper tantrums, and most of all an expanding trade war with China.

For all its current dislocation, the market has held up rather well, with the S&P 500 holding above its key 200-day moving average. Bear in mind, I’m penning this column before Monday’s opening bell, so this might well not be the case if Friday’s waterfall sell-off continues to build on itself. Mondays have been weak lately, but the strong consumer and retail earnings data of late should help attract buyers after this fresh round of selling, as we also anticipate a rate cut at the upcoming FOMC meeting on September 18.

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

I noted last week that passive investing for the past 18 months has produced zero in the way of portfolio returns (in the S&P 500), and that against the current market landscape, these sideways conditions would persist indefinitely without a breakthrough in the trade war. I also noted that savvy money managers have a fantastic opportunity to win back passive investors as specific stock selection is the key to future profits.

Here is a prime opportunity for outsized profits in leading stocks in a specific sector.

A Once-in-a-Decade Technology Explosion – Retiring on 5G Technology Profits

One sector where the promise of savvy stock picking will pay off huge is 5G technology. Janusz Bryzek, the “father of the sensors,” calls the 5G revolution taking place from 2020 to 2025 “the largest growth in the history of humans” and a once-in-a-decade opportunity. It is what I call a “stealth bull market” within a very mature and extended bull market, which makes this investment proposition so compelling.

By “stealth,” I mean resistant to slowing S&P profit growth, lagging Fed policy, the overreach of government regulation, political influence, commodity risk, inflation risk, deflation risk, environmental risk, and corporate budget and business investment risk. The current estimates are up to $300 billion being spent on the great 5G rollout over the next five years.

The 5G market is expected to deliver a compounded annual growth rate (CAGR) of 111% in the next five years! (source: www.globalnewswire.com). To put this number into context, the smartphone market will enjoy a CAGR of 7.9% for the next five years, the cancer therapy market a CAGR of 8.4%, public cloud computing a CAGR of 17.4%, Internet of Things (IoT) a CAGR 21.1%, big data analytics market 30.9%.

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

The specific sub-sectors of the 5G rollout that will flourish during this period of hyper growth include: Service providers, land-based network infrastructure, wireless network infrastructure, semiconductors, testing equipment, contract manufacturing, and smartphones.

I’ve constructed a list of 25 companies, all blue-chip, big-cap stocks with liquid option chains. Investors can consider a few strategies to play the 5G boom – buy and hold, create lucrative income streams selling covered calls, selling naked puts, or buying some Long-Term Equity Anticipation Securities (LEAPS) on a basket of leading 5G stocks to leverage the 5G revolution. This isn’t a single best idea story, or a top five picks theme. It’s a broad-based investment proposition that has to happen if the Internet of Things, autonomous driving, advanced computing, or the second Internet can be constructed and realized.

According to Accenture, 5G technology alone will add an additional $14 trillion to the global economy by the year 2030.The current estimate is that global revenues from wireless Internet of Everything (IoE) devices will grow from $7.1 trillion in 2020 to a staggering $39 trillion four years later. Compared to the PC revolution in the 1980s or the smartphone revolution of the 2000s, the growth of the 5G rollout of the early 2020s will dwarf all previous disruptive technologies in history.

If investors can grasp the essence of how phenomenal the next five years of massive spending will impact the top and bottom lines of those leading companies that will bring 5G technology to its full fruition, it’s my view that investors can boost their retirement nest eggs substantially. Such a windfall of capital spending in such a short period of time within a specific tech sub-sector has never occurred before.

The best part of the 5G investment theme is that it is early, and the volatile stock market has brought down the prices of many of the leading 5G stocks. 5G is here and right now – we’re in maybe the top of the second inning, in baseball terms. The explosion in spending and stock appreciation for the 5G pure plays is yet to come but very imminent, concentrated in 2020-2025.

For many of us who are approaching retirement (or already retired) and need a big win to secure our nest eggs, this may be the last “once in a lifetime opportunity” to accomplish that goal. Do your research, pay close attention to Navellier 5G stock recommendations and maintain a 5-year focus to capture the move.

About The Author

Bryan Perry

Bryan Perry
SENIOR DIRECTOR

Bryan Perry is a Senior Director with Navellier Private Client Group, advising and facilitating high net worth investors in the pursuit of their financial goals.

Bryan’s financial services career spanning the past three decades includes over 20 years of wealth management experience with Wall Street firms that include Bear Stearns, Lehman Brothers and Paine Webber, working with both retail and institutional clients. Bryan earned a B.A. in Political Science from Virginia Polytechnic Institute & State University and currently holds a Series 65 license. All content of “Income Mail” represents the opinion of Bryan Perry

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