Innovation is the most powerful force an investor can
It supercharges companies and helps them deliver outsized
By using a relatively small allocation of yourequity
portfolio's assets, you can effectively capture these returns and
have the potential to build greaterwealth at what I believe to be
the least amount of risk and the least amount of effort.
Lots of companies can execute. Solid execution achieves
predictablecash flows and solid dividends. That's admirable. But
itwill not move the needle on your portfolio -- it will merely
add anincome stream.
My mission as editor of
is to deliver these game-changers to my subscribers. I
spend all my time getting to know companies like Google and
considering which companies might be on to The Next Big
For instance, in 2009 I told subscribers of my premium
newsletter that there would be a big move in nanotechnology. In
the months that followed, our nanotech pick shot up 293%.
Today, I'd like to share with you the story of one of the very
first game-changers. And while it might not be as exciting as
some of the innovative companies I regularly cover -- believe me,
it's still a pioneer in its field.
One Of The First American Game-Changers
The fact is, he didn't really need themoney .
Though he was young, he had a good trade and made a good
living. His rural Vermont customers respected him, and he had
more orders than he could fill.
In New England in the early 19th century, this was what
affluence looked like. But for a twist of fate, that might have
been the end of the story...
When, unexpectedly, theeconomy took a turn, and the
32-year-old blacksmith found himself headed west to seek a new
opportunity. He landed in Grand Detour, Ill., and set up
Right away, the farmers he'd traveled with from back east
found trouble. Their plows simply didn't work. Dull iron blades
did fine in New England dirt, which was sandy, but the richblack
dirt in the Midwest stuck to the heavy-bottom plows like cake
So the blacksmith threw out the old "eastern plow" and
designed a new model, curved on the bottom and built not from
iron but from highly polished steel sawmill blade. The locals
hooted. Then they saw it in action. The new plow -- lighter and
more agile -- not only did a better job but did it much
John Deere had a hit.
He didn't stop. He made plows as fast as he could (they sold
like hotcakes), and he refined the design constantly, once
changing specifications for a plow 10 times in oneyear . His son
came aboard, and the company expanded into other types of plows
and other implements, always delivering a faster, more efficient
way of planting andharvesting crops.
Deere & Co. (
equipment, painted in its familiar green, is still thegold
standard on the farm. To this day, the company still can't turn
out equipment fast enough. Even if you have $400,000 -- the base
price of Deere's latest combine -- the waiting list could be a
year or more, according to the Deere representative I checked
What is the value of such innovation? During just the past 10
years, this innovator has
outperformed the S&P 500 by afactor of six
Even though Deere & Co. was founded in 1837, you can
easily see that the innovations it continues to make have paid
off to this day.
But this example of one of history's most influential
innovators isn't just an interesting story. It's a playbook for
literally millions of dollars in alpha for YOUR
portfolio. You see, I believe that by knowing history, we're
better prepared tocapitalize when it repeats itself.