Surfing the Market's "Ultimate Wave" in 2024
By Adam O'Dell
Chief Investment Strategist, Money & Markets
Banyan Nation,
Nazaré is a small seaside town in Central Portugal … and it's also home to one of Earth's most powerful natural spectacles...
Walk Nazaré's streets, and you'll be able to take in stunning architecture, bask in the subtropical heat, and maybe even catch a bullfight if you're in town during the summer festivals.
But step out on the battlements of the Fort of São Miguel Arcanjo, and you'll bear witness to Mother Nature's awesome power:
Because this sleepy seaside town is home to some of the biggest waves anywhere on the planet.
Big wave surfers travel from all over the world for a shot at riding these 80-foot mountains of water. World records are repeatedly set — and broken — on these monster swells.
Nazaré's waves are consistently massive thanks to a huge underwater canyon that's just offshore from the town.
The canyon funnels and redirects millions of gallons of rushing water, leading to a phenomenon called "convergence," where two gigantic waves are driven together and combine their energy.
The result is like nothing you'll ever see anywhere else.
Today, I'd like to tell you how I'm harnessing the same kind of powerful convergence in my portfolio…
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Riding the Mega Trend Wave
After growing up in landlocked West Virginia, I fell in love with surfing once I came to Florida.
I was never quite enough of a daredevil to ride the waves at Nazaré. And now that I'm a father of three, that's not likely to happen anytime soon.
But the similarities between surfing and investing are still ever-present.
When I was surfing, success was all about finding the best spots with the biggest waves. And when I'm investing, I'm constantly scouring the market to find the most powerful mega trends.
After all, finding great value and quality isn't all that hard. With today's technology and a little bit of skill, you can research everything you need to know about a company's fundamentals in a few hours.
But a great value investment is like a surfer without a wave … or an expensive yacht without any wind in its sails. You're just not going to go anywhere.
To account for this, I also factor in momentum and a number of key technical indicators.
And nothing in the investing world creates momentum quite like a mega trend.
Just like the 80-foot wall of water at Nazaré, mega trends are massive, dominant forces that impact virtually everything on the horizon.
Take artificial intelligence (AI) for instance…
The launch of ChatGPT in November 2022 was like a starting gun going off. Finally, consumers around the world could see the benefit of having AI-powered tools in their lives. And we all wanted more.
As the wave picked up and gained momentum, early leaders emerged. The mega-cap "Magnificent Seven" seemed like a shoo-in to lead the first wave of AI development.
Now, the wave is spreading, reaching industries and businesses across the world. Recent estimates indicate that AI will add $15.7 trillion to the global economy by 2030, greater than the economic output of China and India combined.
AI is far and away the biggest mega trend in the history of tech investing. Bigger than the internet. And now, it's converging with another massive mega trend…
Pinpointing Convergence for Massive Profits
As I've reported extensively in recent issues, inflation is cooling off far faster than expected.
After an abrupt rate-hiking cycle that crushed both stocks and bonds in 2022, the Federal Reserve may have actually succeeded in engineering a "soft landing" for the economy.
With Fed Chair Powell's first interest rate cut planned for next week, borrowing costs should start following soon after. That will stoke performance for small-cap stocks — currently in their second-worst period of underperformance since the 1930s.
With easier access to loans and capital, small businesses will finally be free to do what they do best: innovate.
Apple was started in a garage. Microsoft was started in a dorm room. And Nvidia was started over a breakfast at Denny's.
With each new major tech trend, we see a whole new generation of small-cap stocks "ride the wave" into multibillion-dollar valuations. And the AI mega trend won't be any different. In fact, I've already pinpointed four small-cap stocks that are poised to soar as these two mega trends converge in 2024.
Earlier this afternoon, I hosted a LIVE video broadcast to brief my readers on each of these four stocks and show you exactly how I expect them to reach 10X gains over the next one to five years.
You can watch the replay below:
Regards,
Adam O'Dell
Chief Investment Strategist, Money & Markets
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