How to Profit From Bezos’ Rocket Ride
Amanda Heckman|June 12, 2021
It’s a race for the ages… or, rather, for the billionaires.
Jeff Bezos announced this week that he’s headed to space. He’s hitching a ride next month on Blue Origin for its first human spaceflight.
The suborbital rocket will take the world’s richest man 62 miles above the Earth. He’ll float on the edge of outer space for about 10 minutes… and then return to the West Texas desert.
It didn’t take long for news of Bezos’ joyride to reach fellow plutocrat Richard Branson.
Not to be outdone, Branson is now rumored to be pushing up his own trip to space. He wants to get there ahead of Bezos… and score the interstellar bragging rights.
Of course, it doesn’t matter to us who gets there first.
What matters is what this battle of egos means for investors… and how to unearth the sizable opportunity buried beneath the headlines.
Tech’s Golden Age
We’re in a technology golden age. In recent years, investors have profited handsomely from advances in crypto, digital banking, communications and medicine, to name just a few.
Researchers say the pandemic has accelerated technology trends by more than a decade. And with more and more everyday objects becoming “smart” (even some refrigerators now require Wi-Fi), it’s clear this trend will pay off for years to come.
In fact… the government is doing all it can to ensure Big Tech’s success. Here are three ways it’s pushing tech forward:
- Negative interest rates are accelerating innovation and growth. When it costs nothing to borrow, why worry about debt? Tech companies in particular benefit from having access to cheap capital. The money helps businesses invest in themselves and fund rapid growth. Even a behemoth like Bezos’ Amazon has taken advantage. Despite having a strong balance sheet, it borrowed $10 billion last year and has borrowed another $18.5 billion this year to build new warehouses and cloud-computing data centers.
- Uncle Sam is doling out money left and right. We’ve seen that money funnel directly into the stock market and company coffers. And tech companies have benefited the most from the influx of investor cash. For example, the Morningstar U.S. Technology Index was up almost 50% in 2020, while the Morningstar U.S. Market Index was up less than half that amount.
- A mad rush to beat the competition. The U.S. is about to spend a quarter of a trillion dollars on technology in order to gain an edge over China. A bipartisan bill is making its way through Congress, called the Innovation and Competition Act. It aims to bolster America’s competitive edge by investing billions of dollars in scientific and technological innovations – including artificial intelligence, computer chips and robotics. It also earmarks $10 billion for private-crewed moon landers… a boon for the space aspirations of Bezos and his fellow billionaires.
In sum: The government is throwing a free-money party for tech companies… and it’s showing no signs of calling it a night.
Profit From the Space Race
Andy has written plenty about the tech sectors he’s most excited about – fintech, medtech… and especially space tech.
As he told us earlier this year…
When it comes to high-tech wizardry, the space industry is leading the charge. It’s a libertarian investor’s dream. The private sector – including companies like one of last year’s hottest special purpose acquisition company (SPAC) trades, Virgin Galactic (SPCE) – has pushed the government aside and made vast leaps in a short time.
One security that takes advantage of the best of the space sector is the Procure Space ETF (UFO). While its ticker is clearly having fun, this ETF means business. It’s a basket of some 30 companies involved in the space sector.
Unlike other space funds – many of which have a broader focus or contain eyebrow-raising inclusions like Netflix – this fund invests only in space pure plays. That means 80% of the stocks in the fund must have at least 50% of their revenue come from the space business.
The space race is heating up. And while some of the biggest companies in the sector aren’t yet available to investors – such as Bezos’ Blue Origins – this ETF gets you access to a broad range of space stocks involved in aerospace, defense, communications, materials and manufacturing.
If you’re interested in gaining some exposure to this new frontier of investing, the Procure Space ETF is worth a look.
Note: We mentioned SPACs above… They’ve quickly become the hottest way for everyday investors to get into some of the most innovative tech companies before they go public… for just $10! And you can get all the details on Andy’s favorite SPAC play right here.
