Here's the deal: NFC technology will explode, but it will take longer than you and the media think.
When companies like Mastercard, Visa, Apple, Samsung, Blackberry, Nokia, and First Data start start talking about NFC technology, start including NFC in their products and are actively investing in the adoption of the technology, it is without doubt that NFC adoption will expand widely.
My impression is that most NFXI supporters on this board think it will be some time in the next 3 quarters due to positive/aggressive media coverage and articles. A conservative and more realistic view would be that NFC will gain major traction in 2014. By "major traction", I mean widely distributed in smart phones AND merchants widely install the equipment to handle NFC payments.
Use the "McDonald's Rule" to estimate when you think you're going to be rich from NFC-related companies. The McDonald's Rule is when you think you can walk into a random McDonald's and see most people paying with their smart phones. Let's face it... that won't happen in the next 2 years maybe 3 years. After 3 years, all bets are off. NFC could and probably will be everywhere.
How to play NFC market?
The NFC market is a lot like the cellphone manufacturer market was in 1995. In 1995 I was in college and just starting to invest. It was obvious to me (and everyone else) that EVERYONE was going to have a cell phone in the near future because every year I could see exponentially more students carrying cellphones around campus.
Back then, I simply put money in Nokia, Motorola, and Qualcomm. I wasn't smart or confident enough to pick an individual winner so I put in roughly equal amounts into each. Needless to say, it worked out very well.
So what am I doing now? I have my entire portfolio invested in NFC related companies. I think that NXPI will ultimately win, but like before I know I am not smart/confident enough to accurately predict a winner. So I have healthy amounts of money invested in NFC/chip companies like STM, BRCM, and INTC.
A lot of people want to feel "smart" and pick the winner. If you are sure you can, than do it. You will make a TON of money. But be realistic, if you don't have an edge (and being an avid reader of Motley Fool does NOT constitute an edge) than make sure you profit handsomely from NFC no matter what happens.
P.S. I am a currently long NXP and plan to be so for years.
P.P.s. NXP is so very undervalued when you consider buying a company at a 10x multiple in a market that will explode in a few years. One of the best bargains in the market now, but traditional value investors just won't see it that way.
What do you think about AUTH as opposed to the other tickers you mentioned? I am thinking about buying either NXPI or AUTH and would like some input as to their relative merits. Why do so many articles on NFC not mention AUTH at all? Thx in advance.
My understanding is that chips for phones are already being made for facial recognition so they can be locked and only unlocked by the owner.
The reason nxpi is the standout is because they have 50% of the worlds NFC patents which makes them a Gorilla in the making.Because they are a barrier to entry against anyone else.
This is similar to PANL another company I have a large position in and they have 1200 patents for OLED screens and by next year they will be the hottest think in TV's and screens and lighting for years to come.
"Why do so many articles on NFC not mention AUTH at all?"
auth is a secondary play on NFC not a primary one like the chip makers. NFC and digital wallet makes a good case for strong security on phone with an unbreakable lock like biometrics but does not require it. all digital wallets may have NFC but not all NFC will have biometrics. auth is also a play on embedded security through their VPN and DRM clients. auth is good play in overall security market. be aware that auth has a large insider (vc) selling at this time which appears to have capped the price for the time being.
also see INVE as potential investment in NFC, and related identity market.
Your investing strategy is almost like the one outlined in the "Gorrilla Game" . Only when the horse race is a year in,rank your choices by performance and dump the straggler and reinvest in the others until you whittle it down to one.
Thank you, your analysis is far sight and very good. You described the investment philosophy is for people who are not pro. Just want to add one point, NFC may not be adapted in US but in Asia, it is popular for paying subway fair, at 7-11 store and bus etc. They used cards not phone,but same principle.