This Chart Shows How Triple-Digit Gains Are Made
When I was a kid, I had a friend named Corey. His folks were loaded: His dad was a successful gynecologist, and his mom “came from money,” as polite people used to say.
The family cars were all Mercedes-Benzes. I was fortunate to have a relatively affluent upbringing, so luxury cars were not unknown to me. But one thing set Corey’s family’s cars apart: They had cell phones installed in them.
#-ad_banner-#During the 1980s in Wichita, Kansas, cellular telephones were an exorbitantly expensive device limited mainly to very serious oilmen and very important physicians. But when I could finally afford it a decade later during my sophomore year of college, I became an early adopter of the technology and bought a Nokia handheld model. It was expensive-ish, I suppose, but the convenience made sense to me, and it wasn’t like I had a mortgage to worry about at the time.
Well, you know what happened. It wasn’t much longer before the cell phone trend caught on and then took off. The technology grew better and better, and so did the service, which simultaneously became cheaper and cheaper.
Now, of course, no self-respecting college student — or street-corner bum — lacks a cell phone.
Think about how fast that happened… Because what I’m about to share with you today could mean the difference between finding the occasional big winner in your portfolio and locking in triple-digit gains on a regular basis.
In my memory, cell phones became ubiquitous in only a fraction of the time it took the nation to switch from rotary to digital phones. (Government data show that the TV was adopted even faster.)
After the cell phone emerged, smartphones appeared and replaced cell phones even faster. Then we blinked — and everyone bought a Kindle and a tablet computer. This continual process of technological adoption is called the diffusion of innovation.
You see, in 1962, Everett Rogers, a professor of rural sociology, published what pretty much is the standard theory of product adoption today. He said diffusion is the process by which an innovation is communicated through certain channels over time among the members of a social system.
This idea can be summed up in the chart below, which has become a mainstay among academics and technological “big thinkers” today.
Now, here’s where all this becomes important for investors… The speed at which this happens varies, Roger says, but the outcomes are scattered in a normal bell curve-shaped distribution of innovators, early adopters, late adopters and laggards. This has been exhaustively measured in everything from the flush toilet to the Internet and per-capita airline miles.
This pattern of adoption is crucial for investors to understand. It’s led me to uncover dozens of innovative companies that have returned triple digits for readers of my premium newsletter, Game-Changing Stocks.
Take for example when I recommended Gogo (Nasdaq: GOGO), a company that provides in-flight Internet connectivity, in mid-July of 2014.
On June 21, the Wall Street Journal had published a dispatch claiming that the Federal Aviation Administration was expected to relax rules on in-flight use of personal electronics. And knowing that Gogo had long-term contracts with Delta Air Lines, American Airlines, US Airways and Alaska Airlines, I realized that this technology was in the early stages of rapid adoption, and Gogo was the main provider of these in-flight wifi services.
I recommended Gogo on July 15 at $14 per share. By Dec. 4 the stock had reached a price of $34.34 — a 145% gain in less than 5 months. Meanwhile, the S&P 500 gained just 6.5%.
Now, let me be clear… Any investor looking to make money from tomorrow’s game-changers needs to understand the concept of diffusion of innovation.
In Game-Changing Stocks, I recommend companies that I think are going to revolutionize their industry before their stocks have taken off. And just about every successful pick my readers and I have enjoyed over the years has benefitted from some sort of innovation that has followed this pattern — including Gogo.
The ordinary media doesn’t cover this beat. They’ll tell you all about a discovery once it comes out — but they don’t look ahead to see where the next one is coming from.
But the next game-changer is always just around the corner, and someone is going to profit from it. If you understand this concept, you’ll be one step ahead of the crowd — and greatly increase your chances of finding more triple-digit winners.
P.S. There’s another global trend that’s attracting early adopters right now led by none other than tech giant Apple. Other investors who have recognized this coming revolution have already collected gains of 76%, 78%… even 104%. I’ve put everything you need to know in a free report. To learn more, simply follow this link.