Nothing, Nothing Boom.
After a New York conference many years ago a friend of mine once said, “the market is a psychotic beast that wants to take your money.”
I remember sitting in that dank tourist trap off Time Square, with the fine oaky waft of $20 Macallan barely outpacing the stank of Pine-Sol, spilled beer, and puke from the night before. It was 1999 and we had just gotten back from some dog and pony show about how the Internet boom was different — the information superhighway was going to last forever and change everything.
The Gartman Group had numbers stating that over a billion people would be online before the end of the decade. Those companies that got there first like AOL or Yahoo! would make billions.
Well, they weren’t wrong. Facebook has a billion people alone. And while the AOL leadership was smart enough to cash out at the top, it still goes on.
The funny thing is what also got jacked up during the Internet boom.
One Company Was Corning Glass (NYSE: GLW).
You, or your mother, may know the company as the makers of Pyrex, Corelle, and CorningWare. Over its 147-year history it has blessed mankind with a great number of inventions, including that hardened safety glass that makes up your windshield.
You may not know that back in the boom, boom years of the Internet craze Corning was making fiber optic lines. The fabled T1s that would solve the last-mile broadband problem.
As you can see, the stock went up more than 1000% in about a year. It didn’t matter that GLW had been making fiber optic lines for years. It just mattered that the market cared.
Keep CALM
Or how about Cal-Maine?
Cal-Maine (NASDAQ: CALM) produces and sells eggs. That’s right, the lowly chicken egg. I can’t think of a more boring industry than freaking eggs.
One of my first jobs was as a chicken killer. I would walk down lines, find diseased chickens, put their heads between my fingers, snap their necks with a sharp flick of the wrist, and toss them in a shopping cart stolen from the Piggly Wiggly. It was dirty work and I didn’t last long.
My point is what is the damn margin on eggs? What would possess you to own an egg company? Well, it turns out the margins are 17.49%. And if you were smart you’d be damn glad to own CALM.
You see, about 15 years ago baby boomers were hitting late middle age and were getting fat. All of a sudden this guy by the name of Dr. Atkins said that the way to get slim is to eat less bread and more protein. In fact, despite what the government says, eggs are the best thing for you.
And boom, CALM went from $1.50 to $12 almost over night. Then it kept going…
It will probably keep going. CALM has a p/e of 10 and a forward dividend yield of 5.96%. It’s a forever stock. People will always eat eggs.
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The Point
The point I’m trying to get across is that the market is a fickle beast. Positive trends can be forecast for years before the market gloms onto them. But when it does — Boom. Katie, bar the door…
One such trend is autonomous cars. Yes you hear something about driverless or robot cars and you think ‘that is something that might happen down the line.’
But you’d be wrong. It is happening now. Check out these headlines:
Driverless Trucks to Test on UK Roads By End of Year.
Londoners to be Able to Hail Free Laser-Guided Driverless Cars for Rides.
BMW to Build Most Intelligent Car Ever.
Google Patent Application for Deciding When to Run a Yellow Light.
Uber Shows 10% Drop in DUIs.
China’s Baidu Hits the Gas in Race to Develop Driverless Car.
Self Driving Cars Could Be on Phoenix Streets By Summer.
Business Insider predicts that there will be 10 million driverless cars on the road by 2020.
The autonomous car will change the world. It will change where you live, where you work, and what you do in your free time. It will make the switch to buying eggs look like an ice-cream social.
The companies that win this market will see their share prices take off. Companies like those that make the radars, software, and cameras that allow cars to interact with each other and the world around them.
All the best,
Christian DeHaemer
Check us out on YouTube!Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor’s page.
