We write a lot at Crowdability about investing in early-stage, private companies.
And rightfully so –
Historically, private start-ups have delivered the highest returns of any asset class.
But you can use Crowdability for public stock market investing, too.
To show you what I mean, today we’ll show you three big themes we follow in the private market – and a simple way you can play them in the public market.
The Best Way to Play Big Themes
If you’re a longtime Crowdability reader, you’ll know that we often write about big themes and trends...
Trends like Cyber Security, Drones, or “The End of the Stock Market.”
For private market investments, we identify start-ups that fit those themes, then we invest in them at their earliest stages.
But for public market investments, the most efficient way to profit from a big theme is by finding an appropriate ETF.
So without further ado, here are three themes we’re bullish on for the long-term...
And three ETFs that give you a simple way to play them.
Theme #1 – Software is Eating the World
We have an expression around our offices: “Software is eating the world!”
We can’t take credit for that phrase, by the way: it was coined by Marc Andreessen.
Marc’s the guy who invented the web browser, and now he’s one of the world’s most successful technology investors.
He was an early investor in many of the most successful software companies of the past twenty years – from Netscape and LinkedIn to Facebook.
His belief – and one that we share – is that over time, all industries will come to rely on software.
Why?
Because software can help make all industries more efficient, and it can improve product quality for customers.
We’ve already seen this shift in the retail sector with the advent of e-commerce.
And now, with services like Airbnb and Uber, we’re starting to see it in traditional “offline” industries like hotels and taxis.
But for fields like Healthcare and Biotechnology, software has only scratched the surface – so we believe this trend will be in tact for another 10 to 20 years.
One of our favorite ETFs that correlates to the “Software is eating the world!” trend is the iShares North American Tech-Software ETF (NYSE: IGV).
It holds 60 different stocks – from big boys like Microsoft, to smaller software companies like Splunk, Inc.
Theme #2 – Keep Your Head in the Cloud
You may have heard the term “Cloud Computing,” but weren’t sure what it meant.
Well, simply put, cloud computing means taking all the software that used to run on your computer, and moving it onto the Internet.
For example, maybe you use accounting and tax software like QuickBooks or Quicken. Traditionally, you’d need to install the software onto your computer – and then you’d need to be sitting at your computer to use it.
But today, you can use the “cloud” versions of these programs:
That means you can access all your software and data from any computer in the world that has an Internet connection. And you can access all of your data there, too – it’s all there “in the cloud.”
Cloud computing has already experienced enormous growth:
According to a recent study conducted by IBM, the market has grown by 50% in the last three years alone, and will grow another 50% in the next three years.
To get in on this trend, take a look at the First Trust ISE Cloud Computing Index Fund (NYSE: SKYY). This ETF holds 40 different cloud computing stocks, so you’ll get broad representation to the entire sector.
Theme #3 – Get HACK’d
Cyber attacks were up almost 50% last year...
And the financial destruction they inflicted nearly doubled...
Experts estimate that cyber crime now costs global corporations $1 trillion annually.
These are frightening statistics –
And they’re leading the world’s largest corporations and governments to increase their spending on Cyber Security.
To capture the financial upside of this trend, a new ETF was recently launched: PureFunds ISE Cyber Security ETF (NYSE: HACK).
HACK raised $100 million to invest in a broad range of cyber security companies.
Private Alpha
As you’ve seen today, it’s possible to take the themes and trends we write about for private market investing, and apply them to public stocks.
If you’re interested in learning other advanced strategies – strategies that offer even higher profit potential – check out the essay I wrote last year:
Read How to Trade on “Private Information” »
Happy investing.
Best Regards,
Founder
Crowdability.com
