Where Tomorrow’s Technologies Begin
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President Trump’s attack on Syria the other day demonstrates that military force remains a powerful instrument of U.S. foreign policy.
And tomorrow’s military technologies are being created today, sometimes in places you don’t suspect.
If you get in a car in Alexandria, Virginia and drive through Crystal City, through Pentagon City, through McLean, out to Herndon, Virginia, you’ll see is endless strings of shiny office buildings.
You won’t find hedge funds or investment banks here.
They all house defense contractors. You’ve never heard of 90% of them. But many are public, and can be traded on the market.
At Rickards & Massengill’s Defense Technology Alert, my partner Kevin Massengill and I don’t follow the Big Boys.
It’s not about the Raytheons or Boeings of the world. They’re excellent companies, but they’re too big to deliver investors the outsized gains we’re looking for.
We identify the small, nimble, forward-leaning firms developing the cutting-edge technologies that will produce big changes in the coming years.
These small firms will either expand because they’ll be successful, or — just as likely — they’ll be bought out by the big guys.
For example, Northrop is a large company with great scientists developing many new technologies. But a company like Northrop often looks to acquire many of the smaller firms we follow.
That’s because these firms are developing the niche technologies that a Northrop isn’t. Some of these firms are pioneers in this space, so Northrop will acquire them. And that’s how they try to keep ahead of Boeing when it comes to new defense sales.
=So we’re looking to invest in small public companies with great growth prospects, or ones with an excellent possibility of being bought out by the big boys.
Our job is to weed out those companies with truly great prospects from those that are simply hyped or badly managed.
Others have little real promise but survive because they have political influence in Washington.
These are the companies we screen out. We seek out only the firms that are actually producing valuable technology and are well managed.
And the beauty here is that many of today’s new defense technologies will become tomorrow’s civilian technologies.
Just think of the internet or GPS, for example. Both started as defense programs and they’ve transformed the civilian world.
The bottom line is there are huge opportunities in this space. And early investors can see truly exceptional gains for years ahead as President Trump’s new defense spending kicks in.
Regards,
Jim Rickards
for The Daily Reckoning
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