By John Pangere, CFA, Strategic Investor
Nobody seems to notice the funny-looking green pole on the corner of 17th Street and Glenarm Place in downtown Denver. It’s one of dozens dotting the city.
The green pole is a 5G cellular antenna. If you don’t already know, 5G (or fifth-generation) cellular technology is about to transform the way we communicate. It will replace our current wireless network infrastructure and open the doors to new capabilities… along with immense profits for those who know how to get exposure.
That’s why I traveled to downtown Denver to investigate this trend. Here’s a photo of one of the poles that we’re talking about.
A 5G antenna in downtown Denver
Now, if you have a 4G smartphone, the signal is useless to you. But if you have a 5G-enabled smartphone, being near this pole gives you download speeds up to 100 times faster than what’s available using your current phone.
Sounds awesome, right? Not so fast. There’s one big problem with this pole that no one is telling you about… and 5G won’t take off until this problem is solved.
Today, I’ll tell you all about this fatal flaw in 5G… and why it represents a huge opportunity for savvy investors.
But first, let me show you why you need to be paying attention to 5G…
4G Can’t Keep Up With Our Smartphone Addiction
According to Statista, about 2.71 billion people around the world use smartphones. The GSM Association, a trade organization representing mobile network operators, estimates 5.13 billion people have some sort of mobile device using one of the nearly 9 billion mobile connections worldwide.
In the coming years, those numbers are set to explode higher. Swedish telecom company Ericsson estimates that we’ll have around 29 billion connected devices by 2022.
We’re addicted to our devices, and as users demand more and more functions that require more and more data to be processed, our devices have to keep up with that demand.
For instance, the new generation of smartphones are coming loaded with ultra-high-definition capability. It’s what we call 4K resolution. Streaming a movie in 4K requires four times the amount of data that current phones can handle. And our current 4G network can’t handle that much data.
But the 5G network can. That’s why we’re seeing towers, like the one we showed you in Denver, pop up in cities across the country.
2G worked well for calls and text messages. 3G allowed you to send a photo to a friend… slowly. With 4G, you could view your Facebook newsfeed or browse Amazon.
And with 5G, you can download an entire HD movie in seconds.
If you’re skeptical, so was I. That’s why I decided to test out 5G myself…
Our 5G Field Test
First, I got a brand-new Samsung Galaxy S10 5G smartphone. We compared this to a 4G iPhone that our team also had on hand. The difference is, the new phone connects to the signal coming from the green poles in downtown Denver.
I decided to download the movie Gone with the Wind onto my new 5G phone, and the 4G phone. This movie is nearly four hours long. That means the file size is so large, the only practical way to download it is by using a Wi-Fi connection.
You can watch a video of part of the experiment below, featuring my colleague, Strategic Investor editor David Forest.
Connected to 5G, the new smartphone downloaded the full-length version of Gone with the Wind much faster than the 4G phone. In fact, it finished downloading the entire movie in less than two minutes.
Meanwhile, the 4G phone downloaded less than 1% of the movie in the same time. At that pace, I would be halfway through the movie before the 4G phone completed the download.
(If you want to watch the full video of the experiment, and find out one of the top picks to profit from the 5G revolution, click here.)
There’s a key difference between 4G and 5G signals that can explain this.
Radio waves vary from long arcing signals (think CB radios) to very short signals with little space between arcs. 5G signals are some of the shortest.
This short space between arcs means the signal is more powerful. That means a 5G signal packs more data into a signal than any cellular service. And it reduces latency, or the gaps between signals.
Latency is the time it takes for a signal to travel from sender to receiver. The lower the latency, the faster the network.
This is the power of 5G. But even with this capability, there’s one obstacle holding it back…
The Fatal Flaw
This is the fatal flaw of 5G that few know about.
Once you walk just 50 or 100 feet away from any of the green poles dotting downtown Denver, the 5G signal disappears. And you’re back on regular 4G.
That’s because the powerful 5G signal can’t cover a wide area like 4G can.
Because of this, 5G phones only work when you’re in sight of one of the funny green poles. In Denver, that means standing outside on the sidewalk to access the powerful signal.
Practically speaking, it means cellular service providers need to install thousands of 5G antennas before the technology can take off.
Like I said before, there are dozens of these poles in downtown Denver right now. Soon, there will be hundreds, and eventually, thousands. But it’ll take years and billions of dollars to build out the full 5G network nationwide.
Companies like Verizon and AT&T are committing vast amounts of money to do this. But while these big telecommunication companies may get all the headlines in the press, it’s the device makers, which will allow 5G to reach its full potential, that stand to benefit.
Instead of focusing on telecommunication giants, investors should look into the picks-and-shovels of the 5G revolution. That means companies that build the parts that make the 5G network functional.
If you’re looking for a place to start, check out the VanEck Vectors Semiconductor ETF (SMH).
Semiconductors are tiny computer chips that can be found in numerous devices today, including your smartphone, and as 5G spreads, manufacturers will have to pump out more of them to keep up with demand. This ETF holds a basket of companies that will give you indirect exposure to 5G as this trend takes off.
That being said, don’t risk more than you can afford to lose. And be careful not to bet the farm on a single trade.
CFA, Strategic Investor
P.S. There’s one company that’s come up with a brilliant solution to the 5G problem.
It’s called the “5G Master Key.” It fixes 5G’s biggest flaw. And I’m convinced it’s going to make this company a fortune.
It’s happened before… Every wireless rollout has seen winners that soared thousands of percent…
And 5G is no different. In fact, shares of this company could skyrocket as its “Master Key” helps 5G become a reality.
But time is running out. This tiny stock won’t stay cheap for long. Go right here to learn all the details.