Every so often, I get a specific kind of feedback after I publish my essays. Usually from my close friends…
They say, “Well Jason, you sure talk a lot about what the big money is doing. But I’m curious… what would YOU do if you were in their shoes right now?”
It’s a great question. Often, I mention what sectors the big money is piling in to – tech and discretionary right now, for instance.
But of course, not every stock in those sectors is created equal. There are a ton of different stories playing out in the technology world alone that all merit a closer look.
So today, I’ll show you the specific plays I’d make today if I were the head of a billion-dollar institution…
Your Kids Probably Know Tech Better Than You
For all the havoc the COVID-19 pandemic has wreaked on businesses across the world, there’s one that seems to have endured – or better, even thrived – amid all the chaos.
And I’d bet your kids know more about it than you do.
I’m talking about video games. And before you roll your eyes, you need to know that gaming is big business, and your kids are center stage.
Just take a look at these facts:
The global video game industry is worth $159.3 billion. That’s roughly three times bigger than the global film and music industries combined.
Despite that, it’s still a fast-growing business. It’s expected to grow at a compounded annual growth rate of nearly 13% through 2027. (That would put it at around a $375 billion valuation in seven years, more than twice its current size.)
More than 214 million people in the United States alone play video games for at least an hour per week – nearly two-thirds of the U.S. population.
It’s hard to believe, but video games are quickly becoming the go-to entertainment for a majority of Americans – and not just kids. A recent study even found that 64% of U.S. adults and 70% of those under 18 regularly play video games. I admit – I like playing NHL myself.
While television remains the stalwart champion of global entertainment media, it’s not in growth-mode anymore. Compared to the games industry, television is mature. So, the opportunities aren’t nearly as plentiful.
Speaking on those opportunities, let’s take a look at where I’d start buying today with a big-money war chest…
What My Sons Taught Me About the Next Big Winners
If you’re a parent, what follows will likely seem familiar…
My sons have spent a lot of time at home lately. But between all the remote learning they’re doing… They need to relax at the end of the day. But then night time creeps up and I realize I haven’t seen them. All three of my sons log in to their games as soon as the school day is done. Between Roblox, Minecraft, Fortnite, and the newest craze Among Us… I can barely get a word in with them.
And when they’re not playing these games, they’re watching others play them on platforms like Amazon-owned Twitch. (In fact, one of the most-attended Twitch streams ever was last night, at 435,000 concurrent viewers.)
What does this tell me? Two things:
Companies that make video game and livestreaming peripherals (like webcams, headset microphones, and controllers) will be successful businesses – especially in this prolonged “stay at home” environment.
Companies that manufacture servers to host online communications, improve cybersecurity, and provide cloud architecture will continue to dominate the tech landscape.
With the strength of this trend, and the future of communication and entertainment, these two things are near-inevitable truths.
So, if I were a big money manager, how would I play it?
Right now, video game peripheral manufacturers like Logitech (LOGI), or bigger hardware makers like Microsoft (MSFT) would be at the top of my list.
For a broader exposure, I would recommend the VanEck Vectors Video Gaming and eSports ETF (ESPO). Or the Roundhill BITKRAFT Esports & Digital Entertainment ETF (NERD). Both have been huge winners this year, and both are trading near all-time highs.
And, as there are a ton of cloud services competing to take market share, I would probably buy the Global X Cloud Computing ETF (CLOU) to spread my risk on this trend. That, too, has performed well throughout this year.
Because this industry’s grown as fast as it is, I have little doubt this will pay off in the coming years – regardless of what the broad market does.
Patience and process!
Editor, Palm Beach Insider
P.S. This is just one of many trends I’ll be writing about in Palm Beach Insider… while sharing some of my top ways to play them.
But to get my best ideas, you need to check out Palm Beach Trader. There I give specific recommendations on the next big winners of tomorrow – often multiplying my readers money several times over.
My next pick releases tomorrow afternoon. And it has to do with another high-growth story you’ve likely heard about recently…