Welcome to your weekly mailbag edition of The Daily Cut.
Each week, we send your most pressing questions and comments to our “brain trust” of experts here at Legacy Research.
On Fridays, we share the team’s responses.
So if you have a question for Jeff Brown, Teeka Tiwari, and the rest of the team, shoot them over to feedback@legacyresearch.com.
Coming up… Jeff tackles a reader’s concerns about 5G connectivity.
And our billion-dollar trader, Jason Bodner, pulls back the curtain on the hidden buying signals moving the stock market…
First, a reader’s question about one of the newest profit opportunities on our radar – psychedelic medicine.
If you’re just joining the conversation, psychedelics are a loose class of plant-based compounds that trigger thought, visual, and auditory changes. They also trigger an altered state of consciousness.
Humans have used these compounds for thousands of years for religious ceremonies.
Archaeologists, for instance, have discovered fragments of ergot – a fungus that grows on barley and contains LSD-like psychedelic alkaloids – in an ancient Greek temple.
And evidence of the use of ayahuasca – another psychedelic – in South America dates back 1,000 years.
But in 1970, President Nixon called Timothy Leary, the Harvard psychologist and LSD advocate, the “most dangerous man in America.”
That same year, “Tricky Dick” signed into law the Controlled Substances Act. This made LSD and other psychedelic compounds “Schedule I” drugs. And it made public research into these compounds illegal.
But as I’ve been showing you, new private research suggests they will soon be game-changers in the treatment of addiction, depression, and post-traumatic stress disorder (PTSD).
One reader wants to know more. And the newest expert to join the Legacy team, Mike “Zappy” Zapolin, is standing by with an answer.
Zappy is a multimillionaire investor and former Wall Street vice president featured in Vice… Playboy… and on Fox News. And he’s one of the most connected people in the psychedelics space.
Athletes, movie stars, and world-class doctors turn to him as the most trusted source of information on this emerging trillion-dollar trend.
Now, onto that reader question…
I have been hearing quite a bit of commotion about psilocybin [the psychedelic compound in “magic mushrooms”]. Is this something on your radar, and is there a company that stands out over the others?
– Brenda H.
Zappy’s response: It’s like Teeka says. To make life-changing gains, it pays to be early and right.
We’re early on psychedelics. We know that. Now, you just want to be right.
And by right, I mean you have to find companies with a good management team and a good business opportunity.
Right now, billionaire investors such as Peter Thiel and Christian Angermayer are positioning themselves in this space in a big way.
You’ve got celebrity investors, people like Kevin O’Leary from Shark Tank and Tim Ferriss, taking stakes in psychedelic medicine companies right now.
I’ve spoken to these guys personally. They say this is going to be the next trillion-dollar industry.
You don’t have to be a genius or well-connected like these folks to profit from this industry. You really just have to be – like Teeka said – early and right.
Now, Teeka and I will be selecting the best companies in this space based on my research and sharing them with paid-up subscribers of our Palm Beach Special Opportunities advisory.
But you can get started with a psychedelics ETF. It’s called the Defiance Next Gen Altered Experience ETF (PSY).
It invests on your behalf in a basket of companies in the psychedelic space. And any one, two, or five of those companies in the basket are going to be blockbusters.
You don’t have to put everything you have into it. Just enough to get exposure to some good companies in your portfolio now, while we’re still early. Just put them in there, then forget about them.
The mainstream is still behind on this trend. When a breakthrough treatment appears – or there’s a big regulatory breakthrough – you’re going to benefit.
Switching gears, a question for Jason Bodner.
The picks he’s made in the model portfolio at our Outlier Investor advisory have handed his readers the chance to make returns of 391%… 401%… and 788%.
I (Chris Lowe) call Jason our “billion-dollar trader.” He was one of the only guys on Wall Street authorized to make billion-dollar trades.
Now, at Outlier Investor, he pinpoints outlier stocks that big-money institutional players are piling into.
When these investors take up a position in a stock, it can take days… even weeks and months… to play out.
Jason’s proprietary system spots early signs of this kind of buying. Then Jason gets his readers in so they can ride on the coattails of these massive buyers.
One of Jason’s readers wants to learn more about the timeline for this strategy…
Reader question: When Wall Street “Big Money” does the kind of position-building activity that Jason monitors, how long can the Wall Street folks keep their purchases of stock in a target company quiet or private before their activity becomes public?
One month? Two months? I assume that after these quiet purchases become public, the time until “lift-off” can vary.
– John M.
Jason’s response: Hi, John. Thanks for your great question. Big Money can and likely will keep its buying quiet for as long as humanly possible.
13F and 13D are the names of regulatory filings required by the Securities and Exchange Commission (SEC). They make public what these folks are buying.
Let’s use the 13D as an example.
If I’m a multibillion-dollar hedge fund, and I’m quietly buying up stock in particular company, I take my time. Buying too quickly lets the cat out of the bag, so others are suddenly on to it. When that happens, I end up competing with myself.
Why?
Other investors will buy shares ahead of me to sell them back to me at higher prices. To avoid that, I take my time. But I have a threshold to pay attention to.
Let’s say I’m an activist hedge fund… I want to get a board seat and control the company to try and make changes.
In that case, I have until I reach a 5% ownership stake to remain unfiled. Once I hit 5% ownership, I must file a 13D with the SEC. Within 10 days, that becomes public information.
Now here’s how to answer your question… Depending on what my strategy is for buying the stock, my activity may look like the following:
Day 1 – I buy a chunk and try not to make waves.
Day 2 – I buy some listed options (knowing I’ll likely push the stock higher soon).
Day 3 – I buy more stocks “in line” with current prices.
Day 4 – Prices start to lift. At this point, folks on Wall Street suspect there’s a big buyer out there somewhere.
Day 5 – I do more buying of stock and options, possibly “over the counter” to avoid options exchanges.
I’d keep going on like this until I hit that 5% threshold. I’d buy everything I could. I’d buy options… and buy, buy, buy until I’ve had my fill and I’m required to report it. Then the race is on.
Not all large orders work this way. But some I handled on Wall Street went exactly like this.
There isn’t a clock on the wall that says, “12 days after Big Money buys is the limit for privacy.” Different managers have different goals and strategies. Sometimes the cat’s out of the bag right away. Other times, it stays hidden for a long while.
In either case, at Outlier Investor, I focus on when big-money buyers are loading up on shares in an unusual way so that we can ride that buying to higher prices.
We wrap up today’s mailbag with a question for our tech expert, Jeff Brown.
One of the most rewarding profit themes Jeff has been tracking for his readers is the rise of 5G tech.
For instance, he’s given subscribers of his small-cap tech investing advisory, Exponential Tech Investor, the chance to make 245% on 5G semiconductor play MACOM Technology Solutions (MTSI).
And over at his large-cap tech investing advisory, The Near Future Report, subscribers have had the chance to make 146% on another 5G chipmaker, Skyworks Solutions (SWKS).
Remember, 5G isn’t another run-of-the-mill upgrade to our wireless communication. It brings download speeds 100 times faster than the current 4G networks.
One of Jeff’s readers has a question about how to upgrade her devices to take advantage of the latest 5G tech…
Reader question: Dear Jeff, I asked a computer expert about updating. I want my PC upgraded to be 5G compatible. He told me 5G has nothing to do with PCs. It only affects cell phones. I thought 5G affected the entire internet system. Could you clarify? Thank you.
– Sumiko R.
Jeff’s response: Hi, Sumiko. Thanks for your question. This is a confusing topic. There are so many different wireless technologies available. But I’ll try to make it clear…
5G brings super-fast wireless internet connections. And it’s not just for cell phones or smartphones. It’s for a bunch of different devices.
Some PCs have a 4G or 5G wireless modem built in. These are for professionals who work out in the field and don’t have access to a WiFi network.
But most of us don’t need 5G-enabled PCs, as we have access to a WiFi network in our home. This is based on cable internet, not a 5G connection.
If you use your PC or laptop and are connected to a WiFi network, then you don’t need to upgrade your PC. The speed of your internet on your PC is determined by the speed of your cable internet connection and the quality of your WiFi network.
I like to work with an iPad. And due to my frequent travel, I always buy an iPad that has 4G or 5G wireless connectivity. That way, my iPad works like a phone. It even has a phone number. It also allows me to have internet even if I am out of range of a WiFi network. For example, if I am in an Uber riding from an airport to a meeting.
The other reason I do this is security. WiFi networks in places like airports, Starbucks, restaurants, etc. are not secure. All it takes is for a bad actor to be on the same network, and they can gain access to our computers, phones, or tablets. But if I turn off my WiFi on my iPad and only connect over Verizon’s 5G wireless network, I have dramatically improved my security.
If Apple made a 5G-enabled Mac laptop that could connect with Verizon’s network, I’d buy it in a heartbeat. But there isn’t enough demand for something like that because most folks use WiFi networks to go online.
That said, I can “tether” – or connect – to my 5G-enabled iPhone or iPad. And then I can access the internet, via a wireless connection, without having to use an unsecured WiFi network. You can enable this feature by going into “Settings” on an iPhone, then going to “Personal Hotspot” and toggling that to on.
That’s all for this week’s mailbag.
Remember, if you have a question for anyone on the Legacy team, be sure to send it to feedback@legacyresearch.com.
Have a great weekend.
Regards,
Chris Lowe
September 3, 2021
Bray, Ireland