August 4, 2021
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Welcome to the August goodBUYs newsletter! Read the free preview below, or listen to the free snippet by clicking the space below:
Lately, I’ve been re-reading an old Warren Buffett biography of mine.
It was written 25 years ago, titled Buffett: The Making of a Capitalist.
My version of the book, written by author and former WSJ reporter Roger Lowenstein, looks different.
It was sent to me by the publisher in 1995 for pre-publication review and comment (because I was a national business journalist at the time). The paper cover is worn, and some of the binding is starting to come apart.
But it remains a favorite investment book, which I highly recommend.
I suggest reading it not because it lionizes Buffett - but because the book often does the opposite.
Buffett, it’s clear, has made lots of mistakes - for instance buying airlines, retail department stores, and food companies that he thought would make great investments. Turns out that the companies, in many cases, were past their prime.
In other words, the risks that he took turned out to be bad risks.
Of course, when it comes to investing and speculating, making mistakes - losing money - is part of the game.
In my experience, it’s not so much the number of “wins” and “losses” that counts. It's the magnitude of the gains - making 100%, 200%, 300% and more - that really means the difference between success and failure.
More recently though, Buffett has admitted to mistakes that are really about risks not taken.
For instance in 2018, he told Berkshire-Hathaway shareholders that he was wrong not to have invested in tech companies like Google and Amazon (though he did eventually invest substantial amounts into Apple).
We can all sympathize. How many of us can tell more than a few stories about “the one that got away” because we didn’t understand the business, didn’t perceive it as cool at the time, or we just weren’t paying attention?
I try to learn from my own painful memories of ‘missed opportunities.”
In other words, I shoulda...woulda...coulda put some money into a promising stock.
But I “didna.”
So this month, I’m back with just such an idea I’m determined not to let slip away for the goodBUYs portfolio.
It's a company in an extremely fast-growing industry - drones - yet is also consistently profitable (and whose stock is off its all-time highs and undervalued right now).
In fact, I think it's set to rise 100% over the coming year.
Drone Technology: Promise, Problems...and Profitable Solutions
With every advancement in new technology, we experience lots of amazing benefits.
We’re beginning to see that with the use of drones - robotic aircraft of various types and sizes that can be flown by an operator on the ground, or increasingly - by themselves using onboard artificial intelligence.
Drone commercial deliveries are still mostly in the experimental stage - but non-profits are using these remotely-piloted planes to get medical supplies to remote villages in Africa.
Farmers use drones to precisely map their fields and identify the best growing zones for crops. Utilities use them to monitor their solar farms, pipelines, and networks of high-voltage power lines.
Unfortunately, drones are also useful to bad guys too.
Prisoners’ associates use drones to have drugs, cash and cellphones - jailhouse currency pretty much everywhere - “airdropped” into prison yards.
Think I’m kidding?
The Federal Bureau of Prisons said it recorded nearly 60 drone incursions in 2019 alone - up 50% from a year earlier. At one facility in New Jersey, wardens intercepted numerous drones attempting to drop contraband like marijuana, steroids, dozens of cell phones (as well as cell batteries and chargers), more than a hundred SIM cards, 35 drug syringes - and 2 metal saw blades.
And how can we forget drones that foul up commercial air traffic?
In the UK a few years ago, a persistent drone kept London’s Gatwick airport virtually shut down through almost the entire busy Christmas flight season.
And while we’re used to seeing news footage of US-operated drone aircraft - drones of many sizes are now a common battlefield weapon on all sides.
Most of us can barely spell Azerbaijan, much less find it on a map. But foreign observers credit the country’s prolific use of cheap drones to with turning the tide of battle in a recent border conflict with Armenia.
Likewise, in 2019 a coterie of drones successfully attacked a Saudi Arabian oil refinery, knocking it out of commission for a number of weeks.
Just a week ago, an armed drone carried out an attack on an oil tanker in the middle east - the latest of many such attacks in the Persan Gulf and Arabian Sea - killing 2 crewman in the process.
Fortunately, this month's addition to the goodBUYs portfolio provides a technology solution increasingly used by commercial companies and US-allied militaries.