Here’s the headline of the latest ad from the Casey Research folks…
“The One Step the President Must Take to Push the Dow Jones to 50,000 – and GUARANTEE He Wins the Next Election.
“This is the Start of the Last Bull Market of Your Life and a Massive Opportunity to Get Rich Before it’s Too Late.”
See what they did there? In two sentences you have a “red meat” political statement to get attention (whether Trump reelection horrifies or delights you doesn’t matter, what matters is that you pay attention), a “greed” tantalizer that promises massive returns (DOW 50,000… which would be roughly 100% returns from here), and, in what really gets peoples’ attention, a “fear of missing out” pitch that those of you who missed out on the recent bull market or the bitcoin craze or the hot biotech or whatever else have just one more chance in “the last bull market of your life.” And, of course, you get the implied “before it’s too late” deadline that makes you pay attention now.
That’s pretty good copywriting… if you throw in “you’re one of the only ones who will know this secret” you’ve pretty much covered the gamut, and you’re ready to pass your ad copywriting class after two sentences!
But we’re not here to praise the copywriter, of course, we’re looking to answer questions about this teased investment idea… and to defuse the marketing hype a bit so you can think clearly for yourself… so let’s dig in.
“About 20 miles southwest of Houston lies a ‘top-secret’ operation…
“For the Oval Office, it is simply “too vital to fail”…
“Its sheer scale is breathtaking.
“Right now, some 3,000 specially trained scientists and technicians are toiling away, day and night…
“Inside a cavernous facility, I’ve dubbed ‘The Texas Silo’…
“The only thing that I can compare it to is the Manhattan Project during World War II…”
And we get “top secret” in the first sentence of the ad… and a made-up name for a top-secret location! This one might end up in the copywriting textbooks.
I know, I know, I’m supposed to be focusing on the reality behind the ad… don’t worry, I’ll move along.
The pitch, by the way, is for The Casey Report, the “generalist” newsletter from the Casey folks (now controlled by Stansberry Research), which will run you $149/year.
And apparently E.B. Tucker, the Casey analyst who signs this ad, thinks that “if the White House wants to win in 2020, they need this ONE company to succeed and help push the Dow Jones over 50,000.”
So what’s the company? It’s got something to do with technology… here are a few clues:
“… one sector, in particular is driving the market’s double-digit percentage rise. Technology….
“Facebook, Amazon, Apple, Netflix and Google – account for 10.6 percent of the index.
Together, these five powerhouse stocks make up more than one-tenth of the entire stock market.
“This should make the White House nervous.
“Because the market can’t go up unless they go up.”
But apparently there’s some small company that’s critical to the tech sector. Tucker says that “the company I’m recommending today is central to all this” and goes on to share some specifics…
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“… without this firm’s technology…
“Amazon would be hard-pressed to guarantee its famous “next day delivery…”
“Facebook wouldn’t be the king of social media…
“… and Netflix couldn’t stream hit shows like Ozark without freezing Jason Bateman mid-frame.”
And, in my favorite part of the tease, we get that most delectable of words to tempt all the investors into our lair… monopoly.
“This no-name company has a ‘quasi-monopoly’ on virtually every tweet (all 200 billion per year)… every photo shared online …
“And practically every penny earned by the biggest companies in the digital world.”
So this “Texas Silo,” the ad says, is “The ONE Company Amazon, Facebook, and Netflix Can’t Function Without.” Makes you wanna know the answer, right? Me, too.
What do they do? According to the ad, they manufacture an “optical transponder” — so this is some sort of fiber-optic equipment company. Any more specifics for us?
“You’ll find at least one of these devices inside every data center in the world.
“All 8.6 million of them!”
“This secretive company happens to be the premier manufacturer of these optical transponders for data centers….
“The “Texas Silo” makes a whopping 71% of its revenues from three major data center customers: Facebook, Microsoft and Amazon.”
OK, so that doesn’t necessarily sound like a monopoly… if you’ve got a market where there are only a few buyers (as opposed to only a few sellers), economists will probably get all fancy on you and call it an oligopsony, with a fair amount of power in the hands of the customers. Just ask mobile chipmakers whether they can set their own prices and keep nice, high margins if Samsung and Apple together make up 75% of their sales.
Though of course, if this secret “Texas Silo” company does happen to sell something unique…or at least uniquely much better than its competitors, perhaps it could still be a monopoly when it comes to pricing power. Let’s see what other clues drop into our lap…
Apparently they’re at least an indirect beneficiary of the government spending on digital infrastructure and the “intelligence clo