In today’s Exponential Investor

  • Can anyone be a good investor?
  • Proof there are winners in the market
  • Cannibalisation?

How good at investing are you?

Be honest with yourself about it. In fact, it’s essential that you’re honest about it.

For example, I’m shocking at trading. My timing generally in short-term trading stinks. But as an investor, I’m pretty good. I’m pretty good because I’m pretty skilled at spotting long-term trends, themes, ideas and finding a way to invest in them early to ride out.

That doesn’t mean I’m perfect. Far from it. But on the balance of things, identifying something with long-term potential, investing and realising gains over time… that’s my bread and butter.

It’s why I do what I do. And hopefully pass on that information and access to opportunities to people like you. That is after all why we are here and you’re reading this essay.

With that said, it doesn’t matter if you’re a good investor, great investor, or you stink at investing like I do at trading.

You see, I believe that anyone can make great long-term money in the market as an investor. And I’m going to explain right now why that is…

Not what you’d expect

People in today’s world want big gains, fast. They want “tenexxer” stocks yesterday. They seek stocks that will shoot up 1,000% and then some in their portfolio.

That’s fine, you should want a few of those big winners in your mix. And the good news is that they’re out there.

Recently I cashed out a second position in a small, unknown Australian quantum computing stock for my subscribers at Revolutionary Trend Investor.

The stock is called Archer Materials (ASX:AXE). We got on to it on 16 December 2019. We sold the first half of the position on 13 August 2021. The second half we sold just a couple weeks ago, 1 December 2021.

The average gain from those two positions… was 1,437.5%.

I say this because the markets all over the world are filled with big winners. And it’s not the first 1,000% winner I’ve found for subscribers. If things go my way, won’t be the last either.

However, I think anyone can find 1,000% winners. You don’t even need to have a great deal of experience. In my view, you just need two things, a good idea and time.

And you shouldn’t just set your sights on 1,000%. Why not aim for 100-times your money and more? For 10,000% returns and above?

For example, what if I told you that over 35 years you could have made 160-times your money in just one stock?

Yes, it’s a long time… but it’s also 160-times return. It involves turning £2,000 into £320,000 or £5,000 into £800,000… in just one stock.

Also, it’s not a tech stock that we’re talking about here. It’s not a stock where you’d expect to see those kinds of mega gains. It’s just an everyday run of the mill consumer goods stock. It’s a stock that you’ll know the name of and know exactly what they do as soon as you hear it.

The kind of stock which you absolutely wouldn’t expect 160-times return over 35 years.

So what is it?

Harley-Davidson (NYSE:HOG).

You know the name. You know what it does. If you don’t, the company makes and sells motorbikes. The brand name is one of the strongest you’ll find in its industry.

And in late 1987 (adjusted for stock splits) you could have picked up stocks in “Harley” for 25 cents.

Today, Harley stock is over $40. That’s a 15,900% return over 35 years. From a stock that sells motorbikes.

That’s the truth…

So today, fast forward another 35 years. Is Harley the kind of stock that goes from $6.46 billion to over a trillion in market cap (assuming no further dilution in stock, etc.)?

Maybe. 35 years is a long time. Or in 35 years will Harley as we know it even cease to exist? Perhaps it’s not Harley you should be looking at at all. Maybe you need what I said before… a good idea and time.

Eating your parent to survive

Harley is a unique stock. It’s a unique company with a unique brand. And things are changing. Harley as you know it, is a company from a bygone era. From an era of big noise, big oil, big everything.

Tomorrow’s motorbike industry isn’t like that. What was before shall not be in the future.

You see the bikes of the future are heading the same direction as the automobile industry. They will become electric vehicles (EVs).

Electric Harleys might be sacrilege to the die-hard Harley fans. But you can’t get in the way of progress.

LiveWire is the electric bike company that has been spun out of Harley. It is Harley Bikes… but electrified.

You can even buy a LiveWire now, for about $22,000. That’s not cheap, but that’s a Harley for you.

Well LiveWire is looking to hit the public boards soon on its own. LiveWire is looking to list on the New York Stock Exchange under the ticker LVW. It’s doing this through a reverse-merger with AEA-Bridges Impact Corp (ABIC).

ABIC is a special purpose acquisition company, a SPAC. Now, SPACs have been white hot in early 2021 and then absolutely crushed by the market. They’ve been in favour, out of favour and everything in-between.

But the fact of the matter is that SPACs are a legitimate investment vehicle. They’re nothing to get in or out of favour with. They’re a way for innovation and exciting companies to get to market fast and easier than through long-winded (and usually pretty costly) traditional initial public offerings (IPOs).

LiveWire hitting the market through a SPAC is a sign the SPAC isn’t dead; it’s just that the market grossly misunderstands the SPAC market.

I say this because two of my other recommendations in Revolutionary Trend Investor hit the market through SPACs and in September, we clipped off a 217% gain from half the position in one of them. Its remaining half is still on a 108% gain.

SPAC investing is still a great area of the market to research and find hidden gems. It’s a part of the market that I think everyone should be looking in.

Companies like LiveWire pop up and force you to think about the future, force you to consider what may be, what our world might look like in 35 years and force you to ask yourself, is this something I want to look at long term?

Maybe LiveWire is it. Maybe it’s not. I don’t know. I’ve not done a deep dive on it.

It is hitting the market with a $1.7 billion enterprise value and considering Harley itself is at $6.2 billion … it does feel like LiveWire is pricey.

You also have to wonder for LiveWire to be a success, wouldn’t it have to cannibalise Harley?

Nonetheless, these are the kinds of stories and sections of the market you should be thinking about. SPACs, future technologies, future brands, future companies that might have 35 years of longevity, tomorrow’s “Harley-Davidson” which you can invest in today.

As I say, if it’s a good investment idea and you’ve got time then in my view, anyone can find winners in these markets.

Regards,

Sam Volkering
Editor, Exponential Investor