Have you heard of Charles Kindleberger?
He’s the famous economist and MIT professor who literally wrote the book on stock market booms and busts.
The Economist magazine calls him, “The master of the genre.”
Sadly, Kindleberger passed away in 2003. But he’d be happy to know his groundbreaking framework for why markets boom is playing out exactly as he anticipated…
You see, over 50 years ago, Kindleberger made a truly brilliant discovery. His discovery explains what’s going on in today’s crazy stock market with such incredible accuracy, it’s almost eerie…
In his book Manias, Panics, and Crashes, Kindleberger shows how every stock market boom starts with a “displacement”—or a big shock that changes the world overnight.
In his words: “A shock that changes horizons, expectations, or anticipated profit opportunities.”
America has experienced three of these “big shocks” over the past century. Each one kicked off a historic stock market boom.
And, as I’ll show you, we’ve just experienced America’s fourth big shock.
In this essay, I’ll show you what you need to do to take advantage of it…
First, to put today’s opportunity in perspective, it’s important to see how the other three booms played out…
In the 1920s, mass car ownership changed the world…
Automobiles began sprouting up across America at the turn of the twentieth century. But by 1905, there were still less than 100,000 cars in the whole US.
The problem was these “horseless carriages” cost the equivalent of three years’ wages for the average worker. In short, this put them out of reach for most Americans.
Henry Ford knew it didn’t have to be this way.
He was impressed by how Chicago meatpacking plants used conveyor belts to take apart animal carcasses “step by step.” So Henry broke Ford’s Model T assembly into 84 steps and trained each worker to do only one job.
His assembly line changed the world overnight. It slashed the time it took to build a car from 13+ hours to just 90 minutes!
By the 1920s, a Ford was rolling off the assembly line every 10 seconds. This allowed Ford to cut the Model T’s price from $900 to just $260… which opened up car ownership to the average American.
The rise of car ownership ignited an economic revolution. It also fueled the first great stock market boom of the twentieth century. The 1920s was a wonderful decade for US stocks, with the Dow Jones surging 241%.
But folks who invested in automakers collected much bigger profits. Ford didn’t go public until the 1950s, but competitor General Motors soared 1,275%. Mack Trucks handed out 440% gains.
We didn’t see a boom like that again until the ‘40s and ‘50s, after World War II ended…
The end of World War II changed the world overnight.
All of a sudden, America wasn’t fighting for its life anymore. And in just a few short years after the war ended, America saw arguably its greatest innovation to date.
“Supermachine” UNIVAC hit the headlines when it predicted President Eisenhower’s unexpected landslide victory in the 1952 US election.
UNIVAC could complete 100 years of calculations in two hours. The US Air Force estimated it did the work of 20,000 men. Soon, America’s largest firms like DuPont, General Electric, and US Steel were using the machine to turbocharge their businesses.
This was America’s introduction to computers.
UNIVAC’s creation in 1951 ignited the computer revolution. And fueled the best decade for US stocks ever. The Dow Jones climbed an average of 19%… for 10 years straight.
As you can see below, the 1950s still holds the title as the most lucrative decade ever for US stocks. Followed closely by the 1990s, which we’ll get to in just a second…
Just like car stocks soared in the ‘20s, computer stocks soared in the ‘50s. Computer chip pioneer Texas Instruments shot up 4,600%. IBM shares handed investors 2,600% profits in the ‘50s. Burroughs Corporation, which sold storage systems to IBM, shot up over 700%.
Then in the ‘90s, the internet was born…
By 1993, less than 5% of Americans had ever surfed the web.
The internet was a barren wasteland back then. Google search didn’t exist. Text and images couldn’t load together on the same page. The internet felt like a dull, never-ending college paper.
Marc Andreessen changed that forever. While working at the National Center for Supercomputing Applications (NCSA), he developed the first easy-to-use web browser—Mosaic. Mosaic enabled pictures and text to show up together for the first time. This transformed the web from a static grey mass into a visually exciting “magazine.” Mosaic also popularized hyperlinks. This made it easy for folks to jump from one webpage to another at the click of a mouse.
Andreessen’s innovation made the World Wide Web a household term. It brought the internet into tens of millions of homes for the first time ever.
The web became a place where you could make fortunes, marking the starting line for the greatest boom in American history.
Network equipment pioneer Cisco soared 102,000%.
A $5,000 investment in PC giant Dell at the start of the ‘90s soared to more than $4.5 million by the end of 1999. Microsoft shares exploded 9,350% from 1990–1999.
And now, I believe America’s biggest boom yet is underway…
COVID is the new big shock that changed the world overnight…
As you likely know, COVID forced major changes in the way the world works that would have taken years, maybe decades, to occur.
It’s changed entire industries forever.
Take online groceries, for example. Grocery sales topped $1.8 trillion in 2019. But less than 2% happened online. Americans just never took to the idea of getting their broccoli and bananas mailed to them.
But with millions of folks stuck inside during lockdowns, that all changed: Online sales jumped 53% last year, hitting $90 billion.
Five years ago, seeing a doctor on the computer was unheard of. COVID turned virtual doctor visits into the “norm.” Now telehealth pioneer Teladoc has over 50 million paying members.
Think about the pandemic as one huge “inertia” buster. For example, millions of Americans were stuck in jobs they hated but wouldn’t leave because they were “comfortable.”
COVID hit the reset button. The decision was made for them when businesses shut their doors and layoffs started. This freed them up to go start their own business and pursue a passion.
Today, folks are starting businesses at the fastest rate since at least 2004. A record 4.4 million new business applications were processed last year.
In short, COVID is the most disruptive event in living memory. We’ve never seen anything like this. And my research shows it has set off America’s fourth great stock market boom.
During my recent Tech Panic Summit, I explained exactly how to take advantage of this rare setup…
As you’ll see, it’s NOT in the big tech players like Apple, Tesla, and Microsoft. It’s in the smaller, faster-moving names. These are the stocks that give you the best odds of doubling or tripling your money rather quickly.
During the presentation, I even revealed my #1 stock to own during this boom—name and all, no strings attached. My research shows 500%–1,000% gains are on the table if this company seizes the massive opportunity in front of it.
If you’re interested, the video is available here. But be sure to watch soon—it will no longer be available after this weekend.
Originally published by Mauldin Economics, 4/5/21
