Curzio’s “Silicon Valley Solves Social Security Problem” Teaser

What's the inaugural teaser pitch from Curzio Research Advisory all about?

By Travis Johnson, Stock Gumshoe, April 9, 2017

Frank Curzio has graced the pages of Gumshoe quite a few times over the years, under the aegis of several different publishers, but this is the first time he has actively promoted his new self-published “front end” newsletter, Curzio Research Advisory (he launched his “back end” newsletter, Curzio Venture Opportunities, late last year).

I don’t know whether Frank keeps track of his personal returns over time at all those letters or treats his picks as a portfolio, or whether his picks, on average, beat the market, but he’s certainly had both good and bad ones in the years I’ve covered his teaser ads. I don’t think I ever covered his small cap stocks newsletter over at when he was working under Jim Cramer a decade or so ago, and his stint at his dad’s FXC newsletter before that was before our time here, but the big marketing machine at Stansberry certainly threw his notions at the Thinkolator many times in the years he was there, and then after his letters failed at Stansberry his brief stay with Weiss generated a few hype-y ads… and his name sometimes pops up when looking into Marin Katusa, since the two are often enthused about the same natural resources stocks and private placements (and Katusa is often a guest on Curzio’s excellent free podcast).

So I imagine I’ve written 50 or so articles about his teaser picks over the past decade, with a few that have generated phenomenal returns in either the short or long term… and a few that have since gone bankrupt or disappeared. Many of the most heavily hyped ones were for Stansberry’s priciest Phase 1 newsletter, and those often pop up as the worst performers on our tracking spreadsheets (lots of junior miners picked during the last bull run for gold, for example, or more speculative little uranium miners or tech stocks), though it’s unlikely that he still holds or recommends many of those now… so although I do like and recommend his Wall Street Unplugged podcast, and I appreciate his fairly no-nonsense style and enthusiasm, I don’t know whether his favorite picks are going to make you rich.

How’s that for a disclaimer to get us started? Curzio’s attention-getting headline in this latest wave of ads certainly works to grab our eyeballs:

“Silicon Valley Solves Social Security Problem… Forever?

“Revolutionary Device Promises to do What Both Political Parties Have Failed to do for Decades….

“And Could Make You a Fortune in the Process.”

You can see the whole ad here if you want to, but that basically boils down to “the Internet of Things is going to save the government so much money that we won’t have to worry about Social Security anymore” … which is, obviously, a little silly.

But that’s not the point — not really. The point of that Social Security reference was just to get your attention, and, in case that reference wasn’t attention-getting enough, some versions of his ad also note that Trump will be the most popular president of all time as a result of this same “miracle”:

“… far from the inner circle of the D.C. establishment, teams of high-tech engineers were creating what some might call a ‘miracle device.’

“A breakthrough technology that, if implemented by the federal government, could ultimately save Social Security.

“And not only save it…

“But add billions, perhaps trillions of dollars to the government coffers.

“In fact, what I’m about to show you could be the one thing that turns Trump’s historically unpopular presidency into one of the most celebrated of all time.”

But yes, it’s all about the Internet of Things — which is certainly a booming trend that is gradually having an impact on just about every big business (and government) in the world.

It’s a very diffuse trend, though, with thousands of different companies coming at it from every angle, and no one clear product or technology that’s obviously leading in a significant way… which makes it easy to guess at the big picture impact as the world gets more efficient and smarter, but more difficult to assess which specific companies will do better than others as the trend makes headway.

Certainly it seems unlikely to be a “winner take all” or oligopolistic business like social networking or internet bookstores or even PC chips or smart phones, at least right now, which probably means that no company or standard has taken a big enough share of the market that everyone else is willing to either line up behind them or shift to other strategies. We’ve been talking about the Internet of Things for at least five years already and it is gradually maturing… It’s a real industry now, with real revenue, and there are probably ways to improve your investing odds by playing along with the broad trends, but at this point, I think, if you choose a 1,000% winner here you’ve probably either got a fair amount of luck on your side or a powerful and predictive imagination.

Does Curzio have either of those things? Well, let’s see what stocks he’s hinting at, and we can decide for ourselves. Or, perhaps, come back in a few years and check to see if the ideas played out as he promoted.

The Social Security notion, by the way, is built on Curzio’s reference to the big leaps that some cities and governments have made in using various “IoT” sensors and networks to improve efficiency, usually with pretty early-stage stuff like smart streetlights, internet-connected parking or traffic/toll systems, and utilities and energy efficiency. There’s an interesting paper up as part of a Harvard project. here describing Barcelona’s experience with some of this work, that seems to be where Curzio got a bunch of his city data, and the possibilities are, of course, real — though all those things also take fairly substantial capital investments that aren’t often referred to in the efficiency numbers, and come with ongoing maintenance and obsolescence risks that we probably don’t understand all that well in these early stages.

And much of the urgency for his picks comes from this notion that the Feds are going “all in” on IoT investments — here’s a little snippet of that from the ad:

“Now consider that the U.S. government is the single largest enterprise in America, according to the Govtech Fund, a venture fund focused exclusively on government technology startups.

“And that governments around the world spend more than $400 billion every year on technology.

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“To put that into perspective, Walmart, the world’s largest company, spent $10.5 billion on IT in 2015.

“It’s not hard to extrapolate the numbers…

“Over the next several decades – as the Social Security funds would otherwise become depleted – the government could be making trillions of dollars.

“In fact, this chip could not only save Social Security… it could literally make good on Trump’s promise to ‘Make America Great Again.'”

He also references a presentation that McKinsey made last year, which is interesting in that it both lays out the potential of the IoT market as a huge “value pool” (they throw out the notion of $100 billion in platform revenues as the potential, estimating $10 per connected device and 10 billion devices) and reinforces the immense competition and the rapid rate of change as new platforms are being built, without any place where there’s a clear winner outside of some very small niche areas. You can browse that presentation here if you’re curious, it’s a year or so out of date now, and I have no idea whether or not it’s really accurate in all respects, but it provides some good perspective.

And then, as promised, we finally get to the actual “secret” investments Frank is going to be recommending…

“For you, as an investor, the fact this chip could save – even improve – Social Security doesn’t really matter.

“Because the amount of money you could make by investing in this technology today could easily fund a comfortable retirement.

“This is a megatrend unlike anything we’ve seen.”

And then the first stock he hints at:

“Why the Richest Bankers on Wall Street are Throwing Money at This IoT Chip Maker

“I’ve had my eye on one powerhouse chip maker for quite a while…

“I bet not one in a thousand investors has ever heard their name but, for years, they’ve dominated the market in one very specialized and high-growth area – making chips for use in the mobile internet market.

“I’m talking about things like iPhones and iPads… and more recently virtual reality devices.