For Investment Advice, Follow This Plumber

Searching for some sound investment advice? I happen to know a plumber. No, I'm not kidding. I know a guy who went from fixing toilets and sinks to becoming Chief Executive Officer ("CEO") of a financial technology company that's aiming to disrupt a market worth more than $125 trillion. Let me introduce you to him... […] You're receiving this email as part of your subscription to Michael Robinson’s Trend Trader Daily [Unsubscribe](. [Trend Trader Daily] For Investment Advice, Follow This Plumber April 11, 2023 Searching for some sound investment advice? I happen to know a plumber. No, I'm not kidding. I know a guy who went from fixing toilets and sinks to becoming Chief Executive Officer ("CEO") of a financial technology company that's aiming to disrupt a market worth more than $125 trillion. Let me introduce you to him... And explain how we can follow his lead to potential profits. > ADVERTISEMENT < CNN calls this battery 'the next holy grail for EVs' Tesla, Rivian, Hyundai, Volkswagen, Toyota, and GM are all scrambling to secure these "perfect batteries." But one automaker is way ahead of them... and it trades for just $12 a share. [Get the details here](. The Right Place at the Right Time The man I'm referring to is Chris Concannon. And about a week ago, he became CEO of a company that's among the leaders in electronic trading. You see, a recent Wall Street Journal piece quoted experts who said that the market for fixed-income products – investments where the borrower is obliged to make fixed payments on a fixed schedule – is under pressure... Not only due to the failures of Signature Bank and Silicon Valley Bank ("SVB"), but also because of higher interest rates, courtesy of the Fed. The thing is, I'm convinced that pressure is a great catalyst for Concannon's business. And he's in the right place at the right time to hand his investors outsized gains. Trial By Fire Admittedly, Concannon is about to face a trial by fire. That's because the global bond market has gotten very choppy. To gauge how spooked bond traders are, consider the ICE BofA MOVE Index, which measures bond market volatility. When SVB fell in mid-March, this index reached levels not seen since the 2008 financial crisis. And the Monday after the bank's collapse, the yield on the two-year Treasury note dropped by the most in a single day since 1987. Clearly, the bond markets are in turmoil. And it makes sense. After all, to the outside world, SVB was highly successful. Yet in 36 hours, it went from seemingly stable to shuttered by regulators because it had run out of money. Good Luck, Bad Decisions It turns out, a series of good luck and bad decisions led to this collapse. You see, as its name implies, Silicon Valley Bank was the favorite bank for tech startups. When interest rates were low and tech startups were hot, that meant money was pouring in. In 2021, SVB deposits grew by a whopping 86%. The bank didn't know what to do with all that extra money, so it put much of it in long-term Treasury bonds. And that was a big mistake. As inflation kept rising, the Fed started hiking interest rates. That not only meant that SVB's bond investments began dropping in value, but also that investments in tech startups started waning. As a result, companies had to start withdrawing deposits. Simply put, SVB's customers wanted their money back at the same time that the bank started losing some of that money. SVB had to start selling bonds at fire sale prices to try and meet the demands of depositors. But that wasn't enough and SVB closed its doors, sending the bond markets into shock and even exposing other weak banks in the process. Not Over Yet This story isn't over yet, though. The Fed is intent on pushing up interest rates even further. With more hikes coming, the bond market is going to see more volatility – and more trading. As a reminder, the price of fixed-income investments like bonds are negatively correlated to interest rates. As rates go up, the price and value of these investments goes down. But folks who are seeking yields typically swoop in... And it's against this backdrop that Concannon's firm has spent years working to transform the bond market. That's the forte of his company, MarketAxess Holdings (Nasdaq: MKTX). A Look at MarketAxess Concannon says his work as a plumber in his late teens gave him an appreciation for how to understand complex inner workings like those of the World Wide Web and computer trading. Founded in 2000, his company MarketAxess launched with a single goal: bring electronic trading to the old-fashioned bond-trading market. You see, stocks are traded through computers that network with each other to find the best available price. But most bond trades still happen by one broker calling up another – hardly the most efficient way to run a market that sees more than $67 billion worth of bonds traded every day. This is why MarketAxess' electronic bond trading platform has been such a success. It gives traders a live stream of prices, price history, and the available bond inventory from all participating dealers. Clients can trade instantly, without haggling or picking up the phone. Using the MarketAxess platform, clients can even set up automated bond trading strategies. Big – And Getting Bigger It's no wonder, then, that MarketAxess now has more than 2,000 active clients and a whopping total of 11,679 active traders. That makes it the largest company in the electronic bond trading space. But there's plenty of upside ahead. Only a fraction of the bond market has moved to electronic trading. There are plenty more fish to catch. In its latest earnings report, MarketAxess reported notable improvements on every metric you can think of. Revenue, for instance, was up 8%, while per-share earnings were up 15%. And keep in mind that those numbers came before the recent bond market volatility. As a trading platform, MarketAxess makes money from trade commissions, so the higher the volatility, the more money the company makes. Beating the Benchmark MarketAxess shares trade at around $385 – a bit higher than stocks I typically recommend. But it's a great case study in how to identify big winners. The stock has been a strong performer over the past five years, beating the benchmark S&P 500 by 50%. You might consider adding this stock to your portfolio. But keep in mind, MarketAxess is linked heavily to the performance of the bond market. Alternatively, you could invest in a company that is not only essential to MarketAxess' success, but is also working behind the scenes at several of the world's biggest companies, including Goldman Sachs, Mercedes-Benz, and Intel. That opportunity is only available for my "Pro" readers, however, so make sure you're one of them.   FOR TREND TRADER PRO READERS ONLY > [LEARN MORE]( < Cheers and Good Investing, [Michael Robinson] Michael Robinson Chief Investment Officer Trend Trader Daily   Copyright © Trend Trader Daily, All rights reserved. You signed up on []( Our mailing address is: Trend Trader Daily 1125 N. Charles Street Baltimore, Maryland 21201 [Update Subscription Preferences]( |Unsubscribe from this list RISK NOTICE: All investing comes with risk. That includes the investments teased in this letter. You should never invest more than you can afford to lose. Please use this research for the purpose that it's intended — as research only. 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