It’s Friday… which means it’s mailbag day at The Daily Cut.
This is where you send your questions to your favorite analysts… and we publish responses from them.
So if you have a burning question for Teeka Tiwari, Jeff Brown, Dave Forest, Nick Giambruno, Jason Bodner, or anyone else on the Legacy team… send it to feedback@legacyresearch.com.
I (Chris Lowe) will do my best to get you a reply.
Later on, you’ll see reader feedback on a warning I made earlier this week – how America is turning into a Chinese-style surveillance state. (One reader reported needing a stiff brandy!)
You’ll also hear from Teeka. He compares two new ways of profiting from bitcoin – without directly owning it.
First, our tech expert, Jeff Brown, weighs in on the forthcoming launch of Apple’s new iPhone 13.
One of the most explosive 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 242% 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 147% 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.
And latency – or delay – across 5G networks will drop from an average of about 0.1 to 0.001 seconds. That means communication across 5G networks will be instantaneous.
As Jeff has been spreading the word on, this will enable the rollout of new technologies that were once the stuff of sci-fi – everything from self-driving cars, to artificial intelligence, virtual assistants, remote surgery… and even holographic projection.
And with the launch of Apple (AAPL)’s new iPhone 13 sometime next month, Jeff says 5G is about to go mainstream. So one reader wants to know if there’s an investment angle…
Reader question: Does Jeff have any comments related to Apple’s announcement of the iPhone 13 release in September and opportunities with investments in Apple’s supplier companies?
– Mike H.
Jeff’s response: Hi, Mike. Thanks for sending in your question. I know it feels like the iPhone 12 just arrived and the iPhone 13 is about to fly out of the gates.
So what will be different with this new version?
Many of the changes are gradual. But one stands out for me.
Every iPhone 13 will be equipped with lidar. It uses light, in the form of pulsed lasers, to measure ranges. This gives your phone depth perception.
I’m interested in this upgrade because it’s necessary for augmented reality (AR) apps. These mix computer-generated images with reality… to give an “augmented” experience. One of the most popular kinds right now allows you to see what the rooms in your house would look like with different kinds of furniture in them.
Only the two highest-end iPhone 12 models came with lidar. That Apple is making it standard on its new phones tells me the company is laying the foundation for the widespread adoption of AR technology.
It’ll take another year or so before more than half of all iPhones have lidar. But once we cross that threshold, we’ll see a rapid rollout of AR apps for the mass market.
So although the iPhone 13 likely won’t be much better than the 12, it will help shape the future of the industry. And as my regular readers know, I’m bullish on best-in-breed AR stocks and have been for years.
Another thing to keep in mind is that the new iPhone will be 5G-enabled, like the current model. So in addition to AR apps, I expect new announcements on 5G apps. Developers are queueing up to take advantage of 5G phones and networks as they reach mass adoption.
Chipmaker Taiwan Semiconductor Manufacturing Company (TSM), which supplies the chips for the new iPhone, will benefit. There are also a handful of smaller suppliers perfectly positioned for the explosion in 5G-enabled iPhones.
I cover these companies in my small-cap tech investing advisory, Exponential Tech Investor. If you’d like to learn more about how to profit as the 5G iPhone reaches a wider audience, I’ve recorded a special presentation on some of the most exciting opportunities in this space.
Switching gears, I often hear from folks who would like to own bitcoin. But they’re not tech-savvy. And they don’t want to leave their comfort zones.
I get that. Wrapping your head around a new technology like crypto can be challenging. So next up, we’ll hear from Teeka Tiwari…
Teeka was the first person in our industry to focus a major national investment advisory, Palm Beach Confidential, solely on crypto.
And his subscribers are happy he blazed a trail.
His model portfolio has open winners up as much as 344%… 580%… and 836%… all in the last 12 months.
And he’s given his early subscribers the chance to make gains of 12,233% in bitcoin (BTC)… 35,013% in ether (ETH)… and 36,929% in a crypto called NEO (NEO).
But Teeka is upfront with his readers about the newness of crypto and the challenges that poses…
If you don’t climb the educational curve to get involved in these assets, you will be left behind forever. Forever. The stakes have never been higher. We’re in the middle of a transition unlike anything we’ve seen since we went from a farming economy to an industrial economy.
Nonetheless, that learning curve can be daunting. That’s why we’ve recently seen the arrival of less challenging alternatives.
For example, bitcoin exchange-traded funds (ETFs) listed on the Toronto Stock Exchange have been making headlines.
So has the Grayscale Bitcoin Trust (GBTC). It’s a fund that trades in the U.S. and gives you exposure to bitcoin through your regular broker.
And a Teeka reader wants to know which bitcoin fund is the best option…
Reader question: Can you help me better understand the differences between the Grayscale Bitcoin Trust and the bitcoin ETFs on the Toronto exchange? Is there more to it than the fees Grayscale charges? Thank you for your help with this.
– TC L.
Teeka’s response: Thank you for your question, TC.
There are some key differences between GBTC and the bitcoin ETFs that have recently launched on Canadian exchanges.
GBTC is what’s known as a closed-end fund. These are actively managed and have a fixed number of shares at any given time.
Since there’s a fixed supply of shares, investor demand can cause GBTC’s price to move away from its net asset value (NAV). That’s the value of the bitcoin that backs the fund.
If demand for GBTC shares is high, they may trade at a premium to NAV. This has historically been the case. Since it launched in 2013, GBTC has traded at an average premium of 34% to NAV.
But if demand falls, GBTC shares could trade at a discount to NAV. GBTC is currently trading at about a 12% discount to its NAV.
The bitcoin funds that launched in Canada are exchange-traded funds. These are passive investments that can issue unlimited shares continuously. And their prices will always trade close to their NAVs.
This means ETFs tend to be more “liquid” than your typical closed-end fund. That means with ETFs it’s easier to buy and sell shares at a value that reflects the underlying asset.
Closed-end funds also tend to cost investors more in the form of higher fees. This is often because these funds have greater expenses than a passively managed ETF. GBTC, for instance, has an annual fee of 2%, which is higher than the typical ETF fee. But it will go down over time as new competitors enter the market.
Having said all that, both GBTC and the Canadian bitcoin ETFs offer an easy way to gain exposure to the price movement of bitcoin without going through the process of buying it on an online crypto exchange and storing it in a digital wallet.
Also, with these funds, there’s no need to file separate taxes on your bitcoin. The IRS treats them as it would other investment funds you buy through your brokerage account.
But for U.S. investors, holding a foreign ETF carries tax implications. So if you plan on holding any of them in your brokerage account, talk with a tax professional about it.
Depending on your broker, you may also be able to invest in GBTC or the bitcoin ETFs in your IRA. But again, if you’re a U.S. investor, please talk to a tax professional if you plan on holding a foreign ETF.
If you’re interested in buying one of the bitcoin ETFs to expand your bitcoin exposure, our preferred option is the Purpose Bitcoin ETF (BTCC-U.TO).
Paid-up Palm Beach Letter subscribers can read Teeka’s full write-up here and view buying instructions here.
To wrap up today, we return to the controversial topic of vaccine passports. It’s an issue I explored in last Wednesday’s dispatch.
Judging by the feedback you sent in, you’re in two minds…
On the one hand, vaccine passports could be useful in helping us move beyond the pandemic and get back to normal life.
On the other hand, they set a dangerous precedent.
As I showed you here, China uses a similar system to track a lot more than just your vaccine status.
Its Social Credit System monitors how well you’ve behaved in the eyes of the government. Get a low enough score, and you’ll face discrimination in airports, hotels, and jobs.
One reader wrote us to say how much this system reminded him of George Orwell’s novel Nineteen Eighty-Four.
It’s a theme that struck a chord with your fellow readers…
Reader comment: I read Nineteen Eighty-Four about 20 years ago. It was and still is the most terrifying novel I have ever read. Cormac McCarthy’s The Road is a close second, but at least it had a glimmer of hope at the end.
Mandatory mask mandates… travel bans… vaccine passports… indoctrination camps at our most prized universities… Big Tech censorship… gun control… thought control… Twitter trolls… What a mess!
I’ve seen the phrase “Orwellian” mocked on Twitter for being overused and banal. But I can’t imagine reading that novel and not seeing the parallels with today’s world.
How about a punitive arrangement for noncompliance in the future? Not vaccinated? Tax penalty. Still driving a gasoline-powered truck 10 years from now? Major tax penalty. Still use crypto? Hah! In your Orwellian dreams…
– Karlton L.
Reader comment: The people of mainland China are not the same as Americans. They are sheep for the most part. This can be an advantage in a pandemic but is obviously not a preferred way of life.
However, we came very close to becoming like China. Not from vaccines or mask mandates, but from a corrupt, deranged demagogue trying to orchestrate a coup, using his minions to overthrow our legitimate government.
The thought that Donald Trump could ever even run for president (or anything else) again is what makes me conceive of America as a possible totalitarian state. Only the independent judiciary prevented us from turning into Orwell’s nightmare.
Privacy and security will always be a delicate balance. Do I want to be recorded every time I walk down the street? No. Am I glad when surveillance cameras help catch dangerous criminals? Yes!
– Michael S.
Reader comment: Wowsers, that was depressing! I think I need a brandy now.
This appalling takeover of our freedoms has turned my free spirit into a conspiracy mindset, to the point that I consistently feel greater evils this way come.
Something is definitely wrong in our earthly paradise. Yet I arise each morning and look out my windows, sometimes at a glorious sunrise, and give thanks to God for granting me the privilege of being here on our beautiful planet. Then for a while the goblins stay quiet.
– Jean M.
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
August 13, 2021
Dublin, Ireland