What does it mean to be a Revolution Investor?

Also, I gave Bryce carte blanche to write an article for us about three hours ago. And this is a brilliant piece of analysis about Revolution Investing that he wrote for us.

For those that might not know me, I have been reading and investing alongside Cody for about twelve years now. I started investing my own money when I was 16 years old, then started managing a small family fund thereafter.

Now that I am doing this full-time, I wanted to put into words how/why the Revolution Investing playbook works, so that hopefully we can re-focus our efforts and ensure that we manage our money in the best possible ways.

So let’s start by asking a very basic question: How do we invest our hard-earned capital in the best possible ways? Seeking the answer to this question is, at least in part, why we all subscribe to TradingWithCody.com. And it is why we (Cody and I) spend so much time researching stocks, reading articles, analyzing 10-Qs, and watching YouTube to learn about products/services offered by various companies. It is why we spend hours on conference calls listening to executives talk about their companies. But as you might have guessed, there is no single answer to the question posed above. How each of us, individually, best invests our money depends on numerous factors such as our age, goals, career, and investment outlook, just to name a few. Thus, we at TradingWithCody.com cannot answer that question for each of you. Ultimately, how you should invest your capital comes down to your own circumstances and an evaluation of your personal financial situation. Investing, and business in general, are both hard, and at the end of the day there is no substitute for hard work, honesty, integrity, intuition, wisdom, discipline, and a little luck. Integrating these principles into your investing life is the best way to lead to long-term success as an investor.

So what can we at TradingWithCody.com do to help you as you seek to determine how best to invest your capital? We often say that we are Revolution investors. But what exactly is a Revolution? While the word has several definitions, for our purposes the proper definition from Merriam-Webster is: “a fundamental change in the way of thinking about or visualizing something: a change of paradigm” or “a changeover in use or preference especially in technology.”

Why are we Revolution investors? As stated above, Revolutions are paradigm shifts. When they take place, they often affect how massive groups of people live their ordinary lives. Revolutions are not subtle, nor are they submissive to the way things are. Rather, Revolutions, by their very nature, seek to upset the status quo and replace it with something often perceived as better, more efficient, more fair, etc.

History teaches that the result of political Revolutions, for example, are not always “better,” but they are always transformative. In the investing world, the reason we try to find the next great technological Revolutions is that those Revolutions always bring about multi-billion and trillion-dollar creation/shifts of wealth in the economy. With the creation/shifting of wealth/value/revenue/profits comes great new companies that we can invest in, and poorly-positioned companies that we can bet against that will be disrupted by the new technology. This happens repeatedly throughout history. From the Industrial Revolution to the Internet Revolution, what can be known for sure is that existing companies/industries will be disrupted (at least in part), and new companies/industries will disrupt existing players and benefit accordingly.

In this way, Revolutions (ironically enough) are somewhat predictable. When the internet came along and started reaching critical mass in the late ’90s and early ’00s, it was clear that it was a Revolutionary technology that would change the way the world worked. What was not clear, and never is with Revolutions, is who the winners and losers would be. There were literally hundreds of internet startups that promised to change the world, but only a handful would even survive the crash to follow, and fewer still (like AMZN and GOOG, each of which we have owned for years) would turn out to be the ultimate winners of the internet economy.

What we are interested in then, is (1) identifying technological/societal Revolutions at play in the economy; (2) finding the best industries/companies that are leading and/or benefiting from those Revolutions; (3) finding the worst industries/companies that will lose to those Revolutions; and (4) putting our capital to work before the Revolutions go mainstream in order to maximize our returns. In our view, this playbook is one of the most repeatable and successful investing strategies out there. That said, it is not easy. Revolutions in general, are not easy. They take an incredible amount of force, time, and effort to materialize. The groundwork for Revolutions takes decades to lay before individual business models become viable. Technological Revolutions are also somewhat subject to cyclical changes in the broader economy, political upheaval, credit crises, and so on. Thus, we must remain incredibly disciplined so that we may properly position our capital to benefit from these Revolutions while being mindful of the incredible risks that are always present when investing.

We are and have been, in the midst of several great technological Revolutions affecting our society and economy concurrently. Moreover, the rate of technological change is exponential. For literally thousands of years, the primary form of transportation was by foot, horse, or by boat. Rail transportation took hold in the 19th century and then in 1908, Henry Ford introduced the world to mass-produced automobiles. The Wright Brothers flew in 1903. Only 11 years after the Wright Brothers flew, and within six years of the Model T’s introduction, the first commercial flight took place in 1914. Then the first jet airplanes were made in the late 1930s and early ’40s. And then, in 1969, we landed the first humans on the moon. It is simply amazing that for thousands of years, human flight was not possible, and then within 66 years, we went from the first flight ever, to leaving the atmosphere and landing men on the moon. Paradigm shifts, for sure. It’s obvious that the massive improvements in transportation over the course of the 20th century alone had massive impacts on our society and economy, and fortunes were won and lost accordingly.

The reason for the quick history lesson on the change in transportation is that it is easy to forget how rapidly technology has changed in an extremely short period of time. Oftentimes, we get too close to the issues of the day and lose perspective of the much more important Revolutions happening all around us. We do not want to get locked into our current thinking and must always do our best to stay flexible and be willing to learn.

So what are the great Revolutions taking place today? It would be hard to create an exhaustive list, but as you know, we are highly focused on the following: the Space Revolution (SpaceX, RKLB, BKSY, PL, & RDW), the Electric Vehicle Revolution (TSLA & RIVN), the Driverless Revolution (TSLA, NVDA, and UBER), the AI Revolution (TSLA, NVDA, SNOW, UBER, and UPWK), the Semiconductor Revolution (INTC, WOLF, NVDA, and TSM), the Cryptocurrency Revolution (Bitcoin), the Reshoring Revolution (ROK, INTC, and MP) and the Energy Revolution (SMR and SEDG). Additionally, we still have legacy holdings in “forever positions” from the Smartphone Revolution (AAPL), the App Revolution (META), and the Internet Revolution (AMZN and GOOG) plus holdings in NVDA and SEDG which are still in the ongoing Revolutions mentioned above. As many long-time readers know, we have had several 5, 10, and 100 to 800-baggers over the years from investing in these Revolutions.

But we cannot be content to rest on our success. For as easy as it might seem to have bought AAPL when it was trading at less than cash in 2003, decisions like that are not easy. The Wall Street people on TV and in the papers were not recommending AAPL in 2003. The brokers and bankers were not recommending FB (now META) when it crashed below $20 after its IPO. In fact, most people were betting that those companies were finished.

We must continue to work hard and follow the playbook if we are to benefit from the next great Revolutions. Remember, look for paradigm shifts. Even if you are not a professional investor who has hours to spend researching stocks and reading articles, just ask yourself these questions as you walk through your daily lives: Are there any products/services I am using now that I didn’t use last year? Is my company purchasing or producing some new product/service that is incredibly efficient and saves money? What are the biggest problems facing our society and what do the potential solutions look like? What am I excited about? What am I worried about? How has technology changed since I was a kid? How are my friends/family living, and how does that compare to how they were living 5, 10, or 20 years ago? What do they spend their time and money on?

Obviously, the answers to those questions are just the starting place to finding the next great Revolution and the associated companies to boot. But if we can keep a clear perspective, and be conscious of potential paradigm shifts, then our chances of finding and capitalizing on future Revolutions are much higher!

We would encourage everyone (ourselves included) to think about potential paradigm shifts that are happening right now. In addition to hearing from us, TradingWithCody.com is a community of Revolution investors. Each of you has the potential to identify and find great companies. As you ask yourself these questions, please post your ideas/thoughts in the Chat Room. The more open and fluid our communications are, the better. We must all be willing to learn from and empathize with others. As Toni Nadel (coach and uncle to all-time great tennis player, Rafael Nadel) says, “A person’s main talent in life is the capacity to learn.”

Stay focused, disciplined, and encouraged. We are super excited about the Revolutionary names in the portfolio and the many more that we will find and invest in over the next 10,000 Days!