When to sell profitable stocks
5 Rules for When to Sell Stocks
atlanta
florida product hey bow tie nation
thank you for being here for another
beer money sunday i love getting
together with you at
you know 2 p.m eastern 11 11 a.m pacific
time and wherever you're at in the world
uh just talking to some of the some of
the good people in the chat here
where are you from uh you know where
you're tuning in from uh
again thank you for being here love
having these little you know
face-to-face
live conversations with everybody gets
me you know gets me charged and
energized for this next week
great video for you today one that i get
asked about a lot so i wanted to make
that the theme of
today's video really when should you
sell a stock it's one of one of the most
common questions i get
not just for stock traders either but
really a critical question
even for you longer term investors you
know you must have whenever you buy a
stock or an investment
you need to have a sell price in mind
and a reason to sell before you buy
and really what that's going to do is
it's going to take the stress out of
that investment right
it's going to take uh you know no matter
what you see in the news about the stock
or
or where the price goes you're going to
have a plan for it and you're not going
to have to be watching it every day
and you're going to be able to get out
you know frankly in front of
some of the some of the hard stuff that
that might happen to that sock
so really excited to uh to talk to you
about
that about that today and then of course
you know after we covered
cover those five reasons to sell a stock
then we'll have some
question and answer and really get the
conversation going um
so i see a lot of people here in the uh
in the in the chat there thank you for
being here again see a question already
about zynx
in the news a couple of the a couple of
the stocks that i've been following and
and a couple of the the big names of
have taken a hit
just this last week i know xynx did
there was a couple other fastly
has also taken a pretty big hit and
you know we could talk more about this
in the in the question and answer part
but uh you know just a big part of this
penny stock and these growth stock names
is understand that you know not all of
these are going to be
huge winners uh fastly even after the 25
26 percent drop that it took uh i think
friday
you know it's still up something
something like 500 percent
uh since last since recommending it last
november uh so still doing really well
but with a lot of these penny stock
names that we talk about on the channel
and a lot of the other growth stocks
your your intent here isn't to make
every single pick a winner it's just not
going to happen okay you know in my days
as a venture capital analyst
um you know we used to have upwards of
40 to 50 percent
of the picks you know so even four out
of 10 of the companies that we invested
in
go completely broke you know maybe some
of those would uh
would return some of the money after a
liquidation or after a sell
but you know four or five out of ten
aren't going to aren't just aren't going
to do anything for you
what you want though in looking for
these high growth names these penny
stock and high risk
names is you get those three to five
that are then going to go on to be you
know 5 and 10 and even 20 times your
your your investment so what that does
is in a portfolio
it averages you out to 27 30 uh
returns on the portfolio annualized
which is an amazing return
and really you know the how how those uh
you know the venture capital investors
uh really how they make their money is
on that portfolio return
so i'm going to uh going to talk about
that in the q a if there's any other
questions on those
but i want to get started here i see a
lot of a lot of great
people from the bow tie nation here in
the uh
you know in the chat so thank you for
being here again uh real quick
last couple of videos last week i wanted
to point out uh
getting into earnings earnings surprises
or earnings for
the third quarter last week and this
week
last week was a lot of the bank names
this week it'll be a lot of the uh the
tech names and a lot of the bigger
big box retailers things like that so be
watching for that uh earnings third
quarter earnings could be
you know the big turning point of the
year whether higher or lower
because you know beyond the news beyond
the stimulus beyond the vaccines beyond
all the other
all the other things that are affecting
the market it really has to come down to
fundamentals and it has to come down to
those earnings
so uh really what we hear uh from the
you know from the from the companies
about third quarter and looking forward
to fourth quarter and next year it's
really going to be important
so wednesday we did a video on possible
earning surprises five stocks where i
think
could surprise on the upside so uh you
know if you didn't catch that one make
sure you
you check that out next week actually we
are actually starting
our 2021 portfolio tomorrow and got a
couple other really cool videos coming
at you tomorrow
a little early to start thinking about
2021 no because
right now i think there are so many
catalysts in the market that you want to
be
positioned ahead of your 2021 stock
picks of what you think is going to do
well
next year so we're going to start
talking about that going to put together
a portfolio tomorrow
and really cool really excited about
this one because i i've got a way to uh
for you to track the portfolio and
follow it and
and get those updates before i even do a
video so anytime i
i buy or sell a stock in the portfolio
you're going to be able to see
uh what when that happens without you
know before i add it to uh to a video
so i want to get started now again we'll
have a question and answer
after after we do the topic here of when
to sell
so if you've got a question ask it in
the comments there
make sure you add a question mark there
so i know it's a question
but getting to this topic about you know
when to sell a stock you know and it's a
question i get all the time
uh and it is so important and not just
for traders again
you know short term day traders or even
uh shorter term traders
you're going to have your buy points and
your sell points and you know your
charting and
and know pretty much when you want to
get out of a stock how when you want to
take that profit
but it's also important for you longer
term investors okay because
all you have to do is look for some
great companies like
general electric research and motion
companies that really dominated their
field at one point
and sky-high uh stocks that
pretty much fell from uh fell from above
right uh you know i i've actually i'm a
i hold ge shares i have for a couple of
years now
right around a i think right around a
750
maybe a little bit lower uh price per
share i think it'd go much higher and
and i'm bullish on the
stock but anybody that's been in in the
long term uh for the long term over the
five
ten years you know how important it is
to know when to sell a stock okay
because that
those shares of ge have come down you
know out of the stratosphere and uh
you're likely never to get some of that
money back same thing with research in
motion used to dominate
the smartphone uh smartphone space and
you know fell so hard so quickly that
you just can't plan on holding a stock
forever you need to have
have a plan for when to sell if you're
gonna sell
a stock so i want to cover five
reasons that you can look for to when to
sell a stock five reasons
that will clue you into maybe something
worse worse at the company something
in the the company's future that you
might want to sell and i'm only going to
cover really kind of the highlights here
of these five reasons i've actually
pinned a comment the first comment uh
below it's going to be to a longer 11
minute video that i did on the subject
gives you uh you know stepping stepping
points um
and really the detail in what to look
for in these five reasons
so i just want to cover the basics here
uh of these five reasons
uh you know link to that to that video
if you want to check that out check that
out and then i want to get to the q
a uh because i i really you know love
talking to
talking to everybody here in the chat uh
it's really why i do these
why i do these beer money sundays and
actually i
started early so you know
grab your favorite beverage of choice
and let's get started here
so one thing you'll notice here in these
five reasons is
they're not necessarily tied to price
okay a lot of people
ask me okay a stock has fallen a certain
percentage from the
from the peak should i sell now well
it's really not the the fact that it's
fallen it's
you know what's behind that fact why has
it fallen uh what is the company doing
to address that
and a lot of times when a stock falls
especially one that falls so quickly 20
30 percent
in a day over bad news or or something
then
people get that knee-jerk reaction and
they rush in to sell well the problem is
okay you know what that information's
already based built into the stock price
okay
you know unless you are a hyper-fast
algorithmic trader
a high frequency trader that's got some
of that ai and some of those other
you know the the quick data you know at
your fingertips and you're
at your computer you know all day during
market hours
you're not going to be get be able to
get out before that information
is in that stock so don't think that
okay some news came out
and you know i'm gonna i'm gonna sell it
before all that news gets baked in
because it's almost instantaneously
what you need to do is analyze how that
news affects the long-term
view of the company and what it does to
your investment thesis
and uh and some of these these other
five reasons so we'll start off with uh
you know if there's
a scandal or a major lawsuit uh in a
company you know obviously this
is something like the wells fargo thing
that happened a few years ago now
with uh kind of you know having having
their
their people their their customer
service people put push people into
loans and filling out
fake loan applications stuff like that
uh and it's not necessarily
the scandal itself but the
accountability afterwards what the
company does with that
afterwards okay if there's no
accountability at the top
so you know they none of the management
gets uh gets fired or none of the
directors
uh get get fired or anything like that
you know if there's no accountability
and the company really doesn't address
the problem of why this happened you
know the compensation and the
the rewards packages of that pushed this
scandal pushed the actions behind the
scandal
scandal then they really didn't fix
anything right and it's just gonna
happen again and uh you know eventually
they're gonna get hit with another
scandal and you're gonna get hit again
um what you'll what you'll see a lot of
times is you know after these these
major news events hits
these scandals and other things that
that'll hit a stock then yeah you get
that huge rush to sell
it'll push the shares down but then you
know i mean the shares
bounce back a little bit whether you
know it's the next day the next week
or just gradually over over a period so
the thing is though you know if there's
no accountability at the top after these
scandals
or after these major lawsuits or
something then it's just something
that's going to reoccur and reoccur
and eventually you know the the the
company's going to be bankrupt right
so while you might bounce back on your
shares a little bit
after the news of that scandal if
nothing happens uh to to fix that
culture within the company
then you'll ultimately never be able to
get back to where you were
and i want to point out this isn't
talking about a lot of the spammy
lawsuits that you see
so anybody that uh especially on yahoo
finance right
if you look at the scroll through the
news feed on the company for
yahoo finance um then it is just rife
almost every company is rife with you
know impending class action lawsuit
and uh you know deadline deadline to
file for this class action law
suit right a lot of these they're just
spammy lawsuits okay there are
there are actual law firms out there
that make their living
on these class action lawsuits right and
if you follow these
you know the stock the news for long
enough you'll see the same law firm
uh come up over and over again in
different lawsuits on different
companies
and uh you know it's not saying that the
company hasn't done anything wrong
but a lot of times you know when a stock
comes down when a share prices come down
and
and of course investors want to blame
somebody so these these
just just piece of [ __ ] law firms okay
excuse me but but that's a lot of what
they are
they they come out of the woodwork
preying on investors
right they try to get enough of
investors to sign these uh this this
class action lawsuit against the company
there's really nothing wrong with the
company did a lot of times you know
maybe it's just a loss of a business
partnership or you know whatever caused
the stock price to go down it wasn't
management negligence
but that law firm knows that it can prey
on those investors
you know their their need to blame
somebody
sign them up you know approach the
company with this lawsuit this class
action lawsuit
and get a settlement basically that's
all this is is a lot of those is just
trying to get a settlement
uh to line the lawyers pockets uh the
investors
actually very usually you know
broadly get nothing almost so we're not
talking about those kinds of spammy
lawsuits
because frankly most of them are never
even settled
okay they never even go to court never
settled because that's the way the game
is you know these law firms they're just
uh they're just spam
you know uh chop shops that that want to
try to sue
everybody and get a settlement and and
the companies are wise to it so
they know that they'll drop the lawsuit
when the company doesn't settle
um so anyway scandal or major lawsuit no
accountability afterwards that's your
first reason there
next is going to be something like a
debt fueled buying
binge right you know over the past 10
years it's been really common because
we've seen this
low growth low revenue growth
environment right with a you know the
economy only growing maybe
two percent a year it's very hard for
companies to grow that top line revenue
that chop line sales
right so what's happened is they've had
gotten they've built into this
acquisition strategy right and they're
trying to acquire growth
and then what they do is is also with
interest rates so low interest rates
next to zero then
it's cheap just load up on a ton of debt
to buy these other companies
and basically they're just buying sales
growth okay
and one it's just an excuse for poor
management okay you know so this is why
i always say
when you're looking at different stocks
you always need to compare
those stocks against the same companies
or against other companies in that same
industry right
and compare that sales growth you know
why is one company able to grow its
sales
without acquisitions why is it able to
grow it sells at one
one percentage at a certain percent and
another company
can't seem to make any sales growth
right so what a lot of times will happen
is is this company that's got maybe the
weaker management
can't grow that that sales growth uh in
that lower growth environment
uses acquisition strategies as as an
excuse
so again you know one it covers up for
poor management but two they're taking
on
so much debt that eventually that debt
is going to come and
come up to bite them in the ass right
you know they they buy they make an
acquisition that is just too large
or the sum total of all those
acquisitions just kind of builds up
on the on the books they never get the
kind of profits or the kind of
earnings out of it they thought they
would and and the interest expense
builds up until basically they're
they have to file bankruptcy so another
one something to look for
in your companies if they start going on
a debt-fueled buying binge
it might be a time to reassess your
investment in them that doesn't mean
that
that acquisition strategy isn't
something that can grow a company but
you have to make sure that it's not an
excuse for poor management
and that that debt isn't getting out of
hand okay they're actually they're
they're making these acquisitions and
they're actually able to turn that
into uh you know into better
fundamentals uh over the long run as
well
number three here when investors really
lose faith in the management okay and so
this
is kind of tied to that first one with
the uh the the major lawsuit or a
scandal
and you'll see this is kind of a
recurrent theme here a lot of this is
going to be about management right
and how management is uh running that
company you know it's not necessarily
how the stock does from quarter to
quarter it's uh that longer term trend
of how management is helping to grow the
uh grow the business
you know and one of some of the things
you can look for in this part
in this one uh as far as you know
investors losing faith in management
is are they regularly missing
expectations okay
a big job of management and it kind of
sucks it's kind of the argument for
you know doing uh by biannual earnings
releases
like they do in a lot of other countries
or even uh you know even going private a
lot of companies uh
you know will go private because of this
because man is a big part of
management's
a job and a lot of stress on management
is those expectations those quarterly
expectations
they have to manage what the street what
investors think
they're going to earn every quarter and
then they've got to beat it right
because
the vast majority i think it's something
like 73 percent of companies
actually beat earnings expectations uh
each quarter
right and of course if you don't beat
expectations if you don't beat
what the wall street is expecting your
earnings to be then then your stock is
punished
because for summer supposedly you didn't
do anything anything right
and you didn't grow beyond what was
expected of the company
um and it's all kind of a farce right
you know i mean management
massages those expectations ahead of
earnings so they can then beat it later
you know a lot of companies are
very adept at doing this apple is one of
the best uh the apple's management is
one of the best at doing this it just
historically i mean an amazing track
record for beating expectations
and it's because yeah you watch some of
the news flow out of management ahead of
time
you know and as well as the outlook they
provide during their earnings uh
releases and they're they're managing
those expectations you know
and uh so it's kind of a game but uh if
management can't play that game if
they're not able to play that game
then investors are going to lose faith
you know they're going to lose faith
that the management
isn't able to manage those expectations
also you know constantly underperforming
on the operating margin or other ratios
and again you can just compare that
company with other companies in that
same industry
and say okay why is company a the
operating margin
they're able to get you know 30 percent
uh to convert 30 percent of their sales
into operating profits
whereas at this company you know
perennially
they're only able to convert maybe 10 or
15 percent of sales
uh into into operating profits you know
and again
uh quartered quarter isn't that big of a
deal maybe maybe a company specific
stuff
but ongoing you know long term
if a company isn't able to raise raise
its
uh operating margin some of these other
ratios to the uh to the average
in the industry then then it's a problem
you know it's a problem with management
right because they're
they're uh they're both selling
relatively same products you know in
that industry they're
still selling uh uh cloth similar
products
and it's management's job to be able to
take that product and
and really get more out of it out of it
in terms of sales and earnings
so again when investors lose faith in
management that they're able to manage
these earnings expectations beat those
earnings expectations
constantly underperforming on some of
these ratios that we talk about here on
the channel like the operating margin
like gross margin you know things like
that
the fourth reason you might consider
just shares at a fair value
you know whenever you make an investment
you need to uh
you need to kind of put put a fair value
on the shares right
you need and that's that means a short
term and a long-term fair value estimate
okay you can be a long-term investor
and and still have a fair value idea of
the stock
okay and then you know maybe once a year
you update that fair value so it's not
like
you know you're you're trading out of
your stocks anytime they they get any
kind of a big boat
a big bump you're still you're still
doing that analysis on the stock to see
okay maybe
is the fair value maybe a little bit
higher now because they did sign on this
partner that
that led to a big bump in the shares so
you constantly need to be
uh you know reevaluating where you want
to be
on these stocks and what's a good what's
a good value because
you know if you're in if you buy a stock
primarily because it's a value stock
then even if you're a long-term investor
shouldn't it stand to reason that
you know if those shares come back come
up and it's not of not doesn't meet
those criteria for a value stock anymore
then you should sell it right i mean
that just stands to reason
you know but i see a lot of long-term
investors they get into something
primarily because it's a value stock you
know maybe they like the company they
like the brand
marginally but mostly it's because of
that value estimate
the shares come up they don't sell and
you know i mean the show it's just kind
of dead money after that
uh so you definitely need some kind of
an idea of fair value that doesn't mean
you can't
raise your fair value opinion uh
regularly maybe every three months you
look at your stocks
and reassess that fair value or maybe
every year
and and you think about that last here
is just a fundamental change in the
outlook right
you know one of the biggest reasons you
should be investing in a stock
is because the company has a competitive
advantage
or some kind of a best-of-breed status
over its peers
okay and and you know competitive
advantage can come from
just its brand right so i mean coca-cola
has spent
billions hundreds of billions i i
probably uh over over the decades
to create this brand and uh you know and
that means something that
that uh that carries a lot of weight you
know people pick uh
uh pick up a coca-cola just because of
that brand and what it makes them what
it makes them feel
so it can come from a brand it can come
from
uh you know other advantages uh you know
like leading edge technology
in a company it can come from first
movers advantage you know if a company
is the first out with
a way to do something you know like a
lot of the
a lot of the stocks we've been looking
at this year uh some of those first
mover tech companies like fastly
that's moving uh you know using a lot of
their tech advantage
in that in that streaming service that
they have uh the z scaler is a big one
where it's
providing that uh cloud security uh
platform that is taking a lot of the
comp the business away from
some of the legacy providers that are
still dependent on you know hardware
security
um so you know when companies have that
first movers advantage that's a
competitive advantage because
they can bring customers in on that
first movers advantage
and then you know keep them there uh and
uh and really turn that into a long-term
you know business uh business
profitability uh so you've got those
competitive advantages
uh best of breed strat status in a
company whether it's from just economies
of scale or
you know a company's dominance in the
market but if something changes
then then you really need to reassess
why you're
investing in that stock right so if z
scaler you know with their first movers
advantage
if uh if another company comes out with
uh
you know a bigger and better way to
provide uh
corporate security i you know digital
security
comes out with the next tech and then
z-scaler doesn't have anything to
uh you know to answer to that right uh
it's gonna lose that competitive
advantage and you
really have to reassess uh is is that is
the scalar still a good
good long-term company right so those
are really the five reasons that i look
for
when i'm when i'm thinking about whether
i'm holding my stocks for the longer
term
or whether i need to reassess why i'm
investing in that company
and again notice that falling stock
price was not it was
not in that list you know um if nothing
else so we were thinking about selling
out of company with the
when they reached that fair value when
the stock price goes up you know that's
when that's when i
start thinking about whether i should uh
whether i should
uh still invest in a company you know so
so falling stock price a lot of times
the news that whatever news caused that
stock price to come down
it's already priced it you know and it's
not to say that you should just ignore
these
falling stock prices in a stock but your
job now is to take
all of that in decide if that stock is
still worth investing in
right now with this new information how
does that change
your fundamental outlook in the company
you know it's competitive advantage
how management is is able is running the
company
whether there's going to be any
accountability uh for whatever this news
was
whether it's a scandal a lawsuit or or
just some kind of a
general business uh business problem
okay so again you know five real quick
reasons right there uh just kind of the
the overview on each
if you want the detail in each of those
look for uh in the comments section
below
i i linked the uh the video with the
detail a little bit longer video
the detail on each of those five reasons
um when exactly when to when to sell out
of the stock
now i want to um to uh to get to the
question and answer here
again i'm going to try picking out some
of the questions that were already asked
if you
if you got a question just go ahead and
ask it again in the comments below
as we get closer to the election i see
more and more
political commentary in the uh
you know in the chat and that's one not
what we're here for okay so let's
let's keep it let's keep it uh
you know let's keep it investing uh what
else
att should i buy the dip you know i i
mean
i've been i i've been bearish on att for
a while like for a little bit there
you know it was it was a nice stock
trade and i was i got in it
uh and i still think i mean it can be a
an okay company but they're just they
they just don't strike me as
a leader in anything they do right uh
you know i mean if you're looking for a
pure play telecom company
and i like telecom right now because of
5g and a lot of that other stuff
i i mean i think you can go with some of
the other ones maybe verizon
or or uh some of the other pure play
companies there
at t it's just in so many so many
business lines
i think streaming it's really not doing
as well streaming versus competitors
like like disney
and netflix so it's kind of falling
behind there it's it's
spending a lot of money on content with
dish i think they actually taught were
talking about
spinning off or selling their dish uh
their dish
business finally because it just hasn't
worked over the years since they've
acquired it
and i think with at t you run into a lot
of that that acquisition strategy you
know they just
they just started acquiring as much as
they could and put on so much debt
that it's really started now to become a
problem so uh
i think there's better stocks out there
better companies out there than you can
buy
versus at d it's got a nice yield and
they're they've been good about
growing the uh you know growing the
dividend payment to keep that yield
higher
uh so it's not you know it's not a a
quick sell
it's not something you have to rush out
and sell and you know if you see
something in the
in the management and in the company
then uh you know hold on to it for
by all means but uh but i'm i'm probably
not uh not investing more in
in att right now uh
what else
trying to find what is the best
commodities etf out there
uh august portfolio what is the best
commodities etf out there you know
i mean i i really couldn't tell you
right off the top of my head um
i mean i don't know if i would invest in
a
whole commodities uh in a whole
commodities
etf i would rather do the individual
metals
in ets so so you've got like the the the
i share a silver
uh which is slv you've got the spyder
gold
etf which is uh gld which are just going
to give you direct
access into or direct exposure to those
prices you might also try the
the copper etf and um
that one uh the name the the name
escapes me for the the copper etf let me
see if i can find it here real quick
oops
um okay uh so yeah i mean i i would go
with
uh with the the pure play ones instead
of
a a instead of an all-around
commodities etf you know uh i know uh
the
the u.s copper index fund is is popular
uh and that ticker
is the the
uh cper uh it's a little bit more
expensive than some of the other
pure play commodities etfs so uh
so so look for that if you're you know
trying to position
in copper for growth now copper is
obviously much more of an industrial
metal
versus gold or silver so you would have
to have a
big uh a good
outlook for industrial growth world
global
global economic growth uh you might try
also some of the the
etfs for commodities you know farm
commodities uh some of those i know
moo ticker m-o-o is a good agricultural
commodity etf and that's one that i
actually do like
i know there's corn which is corn it's
another
agricultural etf i would go with those
if you're looking at agriculture
or the pure play metals ones if you're
looking at metal so the gld the slv
or you know one of the the pure play
copper etfs
rather than you know just just general
copper or general commodities experience
or exposure now i do like commodities
uh over the next few years uh just on
that
on that idea of maybe higher inflation
and higher government spending that kind
of thing
so and what else we have uh you know all
investors not terrorists would use
tech analysis to determine uh so uh
kat l wants to know about tech technical
analysis
uh so you know there there's are some
traders here but mostly yeah
mostly that longer term uh longer term
investors buy and hold investors
that kind of thing uh and so you know
technical analysis
is is mostly chart watching right you're
you're following the charts the price
patterns
and and things like that and i'll do
this occasionally it's mostly
on the on the idea of valuation right
and so
you get that relative strength uh
indicator where i'm trying to find
stocks that have come down
and maybe are short-term cheap you've
got
other ones with the the on-balance
volume the obv
is another really good technical
indicator to follow and basically this
just takes
volume into account as well as those
stock price moves
right so a lot of times when you see a
stock move whether it's higher or lower
if it's on very low volume so not very
many many investors
in that then then it's really not much
of a conviction but what this on balance
volume does it takes that volume
into account and so you're looking for
stocks that
whether uh high bigger moves on the
upside or on the low side
and the commensurate volume spike as
well so a lot of conviction
in that move uh so i'll use that
occasionally as well
but uh you know if you're gonna be a
long-term investor then it's okay
you know i generally i'll look for these
short-term
uh tar uh you know short-term uh
indicators uh
as to whether i should you know get into
this stock now or maybe wait and watch
the fundamentals a little bit longer
but generally you're looking at those
longer term uh ratios and fundamental
factors
so you know you can you can spend a lot
of time doing this
uh if i if i were to drop one thing from
my process
uh you know to to free up a little bit
more time it would be that techn
technical analysis right because you're
really analyzing a stock for the long
term for that long-term investment
and what it's doing you know from
quarter to quarter probably
isn't uh isn't quite as as important if
you're talking about uh
you know long-term investing uh
what else
what are some of the best long-term hold
stocks to look out for
um you know a lot of that's going to
going to depend on
you know what you already have in your
portfolio a lot of times
you know the best investments are just
what fill out the fill out the gaps in
your portfolio
okay now i can preview real quick
what uh you know what some of the some
of the things we're adding to the
adding to the portfolio tomorrow for our
2021 portfolio so kind of a preview here
uh i know we are doing we're we're
putting uh
i'm putting citigroup in there which uh
might kind of surprise a lot of you as
far as
you know kind of long-term uh but buy
and hold uh investments because
you know it's not necessarily a growth
stock right it's a
very extremely old company in a in a
very mature industry mature uh
sector but um you know and what i what i
explained tomorrow
in that video is really the two sectors
that i'm looking at for
amazing excellent entry points into a
long term
a long-term portfolio so uh citigroup
you know i think the financials have
really been hit hard especially over the
last week as those bank earnings came
out
and and i think it's overdone you know i
think uh if you're looking for
one industry that really isn't doing
that badly
uh and and will rebound eventually and
will make for
great long-term returns i think it's the
financial side i think it's a lot of
those bank stocks
and uh so i'm getting in citigroup uh
for that
you know look uh the banks just aren't
making any money right now
and uh you know with those with those
rates where they are
right uh but they're not in fundamental
uh
fundamentally bad shape you know okay
we're not looking at 2008 where
the banks have a lot of distressed loans
a lot of bad loans on their portfolios
yeah the the more commercial commercial
bank uh
banks out there that that are more you
know have more of their business
in commercial loans they're going to
have some loan defaults but they're
putting
tens of billions of dollars into that
you know just the top four banks
has have like 40 billion dollars in loan
loss reserves
waiting for those loan defaults to uh to
come up
so one they've already prepared for it
two
you know if the economy keeps on growing
and we get more stimulus and more
handouts from the government frankly is
what it
what it is then those loan defaults may
never happen and they can move that
money back onto their
income statements and uh and it's going
to be you know a very good year i think
even if even if they don't rebound
immediately in 2021
the financials i think is definitely one
you can start putting your
your money in right now into some of
these best banks these biggest
biggest largest banks and you're going
to be doing
very well over the long term
another one that were that we're
investing in
here fang f-a-n-g
it's uh you know diamondback energy and
this is one we kind of highlighted last
week but um
strong energy company and another sector
where i think you know you can get in
now
it's a great value play and and it will
it will rebound okay
you know you look for you look for these
energy companies these explorers
that uh can survive you know at this
forty dollar
a barrel oil right because oil will come
back up
uh you know it's going to be at least
five to ten years before we really get
that electric vehicle
uh revolution that pushes out the demand
for oil
so i think a lot of these uh these
explorers that
uh you know are down fifty percent plus
uh
from their from their peaks you know
they can be very good
long-term three to five year uh
investments at least
uh what else do we have
somebody asked i know somebody asked if
okay so eric asks if who else is worried
about a stock market crash
now i mean you know i've i've been first
to uh to sound the warning bell you know
sound the alarm on
on the market it is so expensive right
now with the exception of a few of those
sectors like the uh
you know like the the the financials
like energy like
uh healthcare is actually pretty cheap
right now as well but beyond that
the the the market is extremely
expensive i'm not
chasing stocks uh in into in a lot of
those sectors tech stocks
and that because you know i don't need
to i don't need to
try to get that extra three percent to
return uh
if i have to invest in a stock that's
trading at like 40 or 50 times it's it's
uh p e p e ratio um
and you know the economy is not nearly
as great as the
the market makes it out to be i think um
you know you we've still got
900 000 people filing new unemployment
claims every week now that's not
that's not people that were laid off you
know in march or april when uh when we
had that complete lockdown these are new
unemployment claims
companies that are you know laying off
people right now because of the economy
um we've still got you know what is like
8.4 percent a 7.9
unemployment rate the real unemployment
rate when you uh include this
discouraged workers and a lot of this
other workforce
is much higher so yeah i don't think the
economy is doing uh well at all
right now and does not justify these
prices now why i am a long net long
investor
though why i'm more bullish on the the
stock market over the short term though
is because you know right now it's
really not about the economy
uh the market is singularly focused on a
vaccine
right a vaccine approval uh stimulus
and you know in some part to the
election
you know and and the market's only
looking at the only looking at the
election
in terms of stimulus right the market
right now is
is pricing in you know whether you like
it or not whether you believe the polls
or not
the market is pricing in a democratic
sweep
in november right that would be
presidency senate
and they already control the house right
and like it or not you know
republican or not whatever the the
democrats typically spend more money
there for more government spending
they've been pushing for higher
higher stimulus you know the democrats
rolled out in
may their 3. 3.4 trillion dollar plan
they brought it down just last month
into like a 2.2 trillion
dollar plan to be closer to the
republican plan for that for that
negotiation
uh but if we get a a clean sweep in
november then
you know we might get another two
trillion uh in stimulus
and you know whether it's actually going
to help people or
you revive the economy you can argue all
you want about that
but it undeniably pushes asset prices up
right
so the the market is looking for that uh
you know looking
looking for that extra stimulus pricing
that into stocks right now
and that's holding it up uh i know
pfizer
pfizer said last week that it was going
to be seeking emergency authorization
for its coronavirus vaccine around late
november
right and you know there are so many
companies in this vaccine race
that we will get a vaccine approved uh
probably on emergency authorization in
november you know late aft it'll be
after the election
but it'll be either november december
and that'll be a big boost to sentiment
okay so the market is looking at those
two and it's saying okay you know what
yeah the economy sucks right now yes
stocks are extremely expensive right now
but we've got these two huge sentiment
boosts we've got this this money
flowing into the economy the fed is
keeping rates
extremely low never going to never going
to raise rates basically is what the
fed's saying
and that's going to you know that's
going to keep a floor under stocks right
so i do believe you know through um
through november december uh maybe even
into january or so then you're going to
have that floor of support
under stocks that is going to keep
stocks from coming down too much you
know
could we get a five or a ten percent
correction yeah of course of course we
could because stocks are so expensive
right now
but uh but there's going to be that
floor of support
so i would be a net long at least over
the next uh you know
three months three to four months uh
longer out
from that though i am looking at
probably february you know
i mean and obviously it's hard to say
you know month to month
any specific month when it could happen
but there will be a point
where the market's going to look and say
okay we've got our stimulus
we've got a vaccine but the economy
still sucks right
you know we're still fairly high
unemployment
unemployment hasn't yet
you know trickle down into retail sales
and consumer spending
and that's really the big shoe to drop
right you know and but you can't have
you know uh retail sales for for last
month came out this week and they were
way above expectations uh you know it
was a big market mover
and uh big surprise but you're not going
to have that going forward
you know okay if we get more stimulus
then yeah it prolongs it a little bit
but you cannot have seven eight percent
unemployment uh you three unemployment
or or even you know 10
plus unemployment on some of those other
measures the u6 and such
uh you can't have that and still have
high consumer spending it's just not
going to happen
right so there's going to come a point
where we've got all these big
uh you know these are these big uh
catalysts these
the vaccine the stimulus you've already
got those in the market they're already
done
uh and the market's looking for
something else and all they're seeing is
the economy that
isn't in the best of shape and doesn't
justify these record high prices
uh and that's when you know before that
so you know i'm thinking i'm i'm
thinking february
you know late january february march is
when this market actually starts pricing
some of that
pessimism uh into into prices
so again you know i would probably
probably be net long bullish uh through
the next few months
i think the stock market can do well
with that floor of support
uh but then you know i definitely want
to reassess
where i think the market is uh you know
in january of next year
and be positioned for that be ready for
that
what else do we have bosom gold and
silver
uh yeah you know i i mean like i said i
think i do like the
uh the the commodities here just if
nothing else for that
for that real assets and that inflation
trade over the next few years
like i said that the fed has committed
to
not raising rates for several years uh
the economy
is is uh you know it's basically
i think last income report uh they said
something like a third
of household incomes was being supported
by that stimulus
uh so yeah you know i i mean the
the the stimulus is is holding it up and
pushing
pushing prices out there um
jean fritz john st paul wants to know
about cvs low operating margin but
other points are solid in in his
position wants to know what i what i
think of
cbs i love cbs you know i mean those of
you in the nation probably get
get tired of hearing me talk about cvs
and some of the videos
and in fact tomorrow's video on our 2021
portfolio is going to include cvs
so a little bit of a spoiler alert there
but yeah you know cvs
they they haven't done well over the
last couple of years
so it's it's been it's been a tough call
i just started i just started my
position probably about
four or five months ago that i started
going long into the stock so
you know hoping uh hoping it gets gets
into a turnaround story and i think
there's a lot of reasons to be in it
for the short term but but especially
for the long term okay you know health
care
is uh is a major factor of all of our
lives
and only getting more important as more
people age into that
demographically important part of
healthcare spending
but more so cbs i mean they've been
building this this
just giant healthcare distribution
network for about 10 years you know
they've got
aetna for the insurance they've got uh
scripps i think it is right uh or or uh
caremark i think is is the other is the
the uh the pharmacy benefits uh company
that they acquired a few years ago
they've obviously got
you know more than 10 000 stores so a
huge retail network
uh for pharmacy and and all that um
so you know just a an all-encompassing
controlling
uh uh you know healthcare distribution
network that they're going to be able to
use
you know to uh to to really grow profits
uh what i've really been looking for and
what i'm frankly kind of surprised they
didn't get a bigger bump
was i think it was either thursday or
friday the news came out that no vaccine
distribution partnerships
that we've heard about uh went to cvs
and walgreens and actually you know if
you look at some of the
some of the videos i've done about cvs
uh over the last
uh over the last couple of months that's
really been a big part of my of my
thesis is
you know they've got this huge
distribution network they can reach
anyone and everyone uh they are primed
to be able to distribute that vaccine
like like no other company
and and i think it's going to be a major
upside a surprise upside evidently from
the
uh you know from the share price
perspective because you know we got the
news come out and i think it was up two
three percent maybe uh which which
wasn't a big isn't it really a big move
for for cvs but i think
i think it should be in high much higher
and i will i do think it's going to be
much higher over the longer term
uh what else
okay uh
one wants to look at doc rf i really
haven't looked at it from the from the
looks of it it's probably maybe a penny
stock
i would say so so very very small cap
stock haven't looked at it i'll have to
look at that
maybe a little bit later uh
so what else uh walgreens boots alliance
so so yeah that's another one
and i think somebody you know said yeah
one way
uh said feeling like they're setting up
to be bought out that would be that
would be tough
uh but i could see it happening you know
amazon is is obviously
trying to corner the market on health
care uh so i i wouldn't be surprised
maybe if amazon does go after a
distribution network
uh like something like that i haven't
looked at walgreens as far as the
the debt load and some of that other
stuff so you know it would have to make
sense as far
as uh you know how much debt they have
on the books how much
how much how much how many much of that
problem that uh that another company
would have to uh would have to pay to
acquire it or the valuation i haven't
looked at that
as well obviously but uh but yeah you
know i mean
with the thing is with with interest
rates as low as they are right now
then uh you know it just makes sense for
uh for companies to to load up on the
debt and not make that acquisition
uh if it think if they think they can
acquire some growth uh
into a sector or the market that they
want to be in so and that's why you're
seeing a lot of acquisitions now
um you know in the in the space
capital gain tax okay uh so mark mark
has a great question here could be a
sizable pull out of the market by the
end of the year
millions million dollar investors if the
democrats win
and looking at that capital gains tax
increase
uh now okay so so uh biden has come out
with
uh his his tax proposals right and it
does include
raising the corporate income tax from 21
to 28 now
understand remember it came down from
like 35 percent so
it's really not a huge uh tax increase
on corporations he has talked about the
capital gains increase
uh but again it's it's probably going to
be at the very high
segment so you know 400 000 uh a year
people
millionaires like like you talk about
now the thing is
uh one is i don't think it's though and
the reason why i don't think it's going
to happen
by year end if he wins uh because
you know nobody's going to be increasing
increasing taxes next year okay just
ain't going to happen i mean
you don't you don't increase you you
don't raise taxes
in uh when when uh unemployment is at
seven or eight percent right
you don't raise taxes at the same time
you're you're pushing stimulus out there
for you know ppp loans and
and other stimulus to try to bolster the
economy uh because they just cancel each
other out
right and plus it would be political
suicide okay um
you know even even the the democrats in
congress would would just
mass exodus out of the camp there uh if
if there was a
a serious push to raise taxes even next
year you know i could see
maybe maybe towards the fourth quarter
of next year starting to talk about it
but but certainly not even in the first
half of the year not even talking about
raising taxes
so i don't think the market's going to
be really worried about that and and i'm
not i'm not worried about
any of those tax increases either even
though i am in that
you know would be probably paying higher
capital gains taxes uh if they do go
through with that
i think it's like a 400 000 and above uh
income range
um but it's just not going to happen you
know not when not when unemployment's
where it's at not when the economy is
where it's at
somebody zuli wants to know about square
for the longer term i do like square
i've highlighted it before
i haven't looked at it in probably a
couple of months though
so you know i i mean it's a payment pro
system and payment systems are big
obviously especially over the last few
months i don't know where the valuation
is right now so i would
hesitate because you know most of these
tech stocks are just extremely expensive
on a valuation
basis i think you can wait uh for maybe
that sell-off
into you know february march april
somewhere around there
and probably get it at a better price
and honestly if we do get
you know more stimulus we get a vaccine
and as i think as we move on to some
some normality next year then you're
going to see that rotation
okay you're going to see the rotation
from growth where it's been where the
market's been this year those growth
stocks tech stocks
a lot of the best performers this year
in the value which you know
or again is why i'm looking at energies
and why i'm looking at healthcare and uh
and financials a lot for next year
because uh
you know you get that you get that
rotation every once in a while in the
market
where uh investors just kind of
naturally shift uh to
one segment of the market right and
growth has been doing very well
but it is so expensive right now and i
think a lot of your value names is where
the money's going to be going to
mostly just for con from consumer
spending standpoint okay you know
people aren't going to need the maybe
some of the some of the work from home
technologies quite as much next year
so a lot of those revenues are going to
come down uh and disappoint the market i
think
so p investors going to be looking for
where else to put their money in they're
going to find it in in growth
so so i would be you know i mean someone
else a
pregler asked about dropbox slack
technology
uh you know i mean i like these
companies for long term plays square
slack and dropbox uh they're great
long-term
ideas as the you know as our world
shifts to more up being more online
but right now a lot of them are
extremely
uh you know extremely expensive and
there you you will get that rotation out
of
out of those names i think next year so
i say put them on your watch list you
know if you really really love them and
if you think
the the valuation is perfect right now
maybe pick up uh
some shares uh may pick up a small
amount just to
make sure that it's there in your
portfolio and you're watching it
but i would say hold off on any big
purchases for
for a while what else we have reits
highly undervalued reits are tough you
know
reits are
[Music]
reits you know i love real estate it's
where i got my professional start at as
a commercial property analyst
and i've worked as a read analyst for a
while
but again with reits you got to talk
about it in set in sectors uh you know
in property types you can't talk about
the entire reit market
because uh you know within that i mean
you've got the digital reits the the
data centers and that
the tel the the wireless towers right
that are doing very well obviously uh
but then on the other side of the
spectrum you've got
uh other other property types like
uh office like retail uh
those you know uh shopping malls things
like that that are obviously doing very
poorly
and and there's a reason for that you
know so uh
if you're looking now now i assume uh
when you talk about value
in reits you're talking about those that
have that have underperformed the
the shopping malls the retail and the uh
the office
and i i think it's dangerous you know uh
i would say over the next couple of
months especially as that vaccine comes
out
is approved and as we get more stimulus
and you could you could get a bounce
in these especially the retail and the
shopping mall ones you know spg
uh you know some of those i actually
like mesa rich a little bit better than
uh spg just because it's a little bit
better quality malls
that maestrich owns uh so you could get
a big bump
over the next couple of months but
longer term these malls
and the retailers are in trouble okay on
one part
you know you've got that long cyclical
structural change from
traditional traditional shopping to
online okay and it's just an undeniable
unstoppable force
that is driving that up this year
accelerated it because of the virus
but um but it's it's just gonna keep on
going so you know retailers are gonna be
struggling for decades uh with that that
shift to online right
and but but more so also you know
especially with the malls
then uh they're converting a lot of this
space you know as these
big box uh retailers like jcpenney like
sears drop out
they're converting a lot of that space
to uh to warehouse you know i
i think uh spg was talking to amazon
about
leasing a lot of the space for
distribution centers well
you know the the problem is people don't
go to the mall to look at the amazon
distribution center okay
and that's what these big box retailers
i used to be they used to be
magnets traffic magnets for these malls
uh so
you know if you convert too much of your
mall to a warehouse to a distribution
center
then uh then it just becomes an
industrial property right actually i
think it was the journal the wall street
journal last week
uh put out a piece maybe it was
bloomberg about you know the effect
of of changing the the property type in
your malls in these malls
uh to these other you know warehouse and
storage and uh
and and whatnot uh and they said you
know you dropped the value down by
you know minimum like 60 of these just
because you know retail lease rents are
so much higher than
than warehouse uh distribution that kind
of thing
uh so you know what you're going to get
is is a lot of these i think you're
going to get
spg even macerich you know which owns
better quality uh
you know better quality malls but even
macerich they're going to have to write
down a lot of value over the next couple
of years
okay and i think that's really going to
be the next shoe to drop for for the
malls for the mall rates is going to be
you know writing down the value of those
malls when they figure okay
well you know what instead of jc
penney's now we got an amazon
distribution center
in that mall uh so we're not getting the
rents we we used to be getting from a
lot of these other
these other uh retailers we're not
getting certainly not getting it from
amazon
so that mall just isn't as attractive or
as
valuable right now so you know i would
be very wary
of uh of some of these these malls the
retailers
as well as some of the other those those
reits that have been they've been doing
poorly
uh what else what else we have
let's think of buying a little bitcoin
to assimilate for the future
uh another question by mark great great
questions love it um
you know what about buying a little bit
of bitcoin for for the future
and you know i mean i i don't like
bitcoin at this price and i'm not a
bitcoin expert
but i have been in in and out of bitcoin
in the past
uh i like bitcoin more and i think i
talked about this last week uh with uh
with the
um you know with the the way to value
uh bitcoin and i want to look that up
because i couldn't remember what it was
called
uh social social theory
social valuation theory
bitcoin users see if we can find what
that
theory is for
uh metcalf
metcast law okay if you wanna if you're
investing in bitcoin
look at metcast law okay and it's a
little
it's a it's a little heady uh
mathematically but
it's not too difficult but what
metcalf's law is says is
the value of any social network okay and
that applies to facebook twitter a lot
of these social media stocks
but it also applies to bitcoin because
its business
is uh you know this business depends on
that
that um basically that network of users
okay and metcalfe's law says that any
network of users
any company that is based on a network
of users can be
valued off of that okay and and it's
going to give you kind of a
a floor price a support price of fair
value
for bitcoin and what it says right now
it's actually only right around
maybe four thousand four to five
thousand dollars
for a fair value now of course that
doesn't mean that bitcoin can't go
higher up in price on
you know maybe a little bit of a hype or
investor value investor sentiment
but really that's where i like bitcoin
at it's down there
i know it hasn't been there in a while
and that's why i haven't invested in
bitcoin for a while
but generally when it does fall down
between four or five
even you know into the mid five five
thousand dollars per bitcoin
i'll pick up some bitcoin and and then
sell it out when it's you know
nine eight nine ten thousand uh per per
bitcoin
can it go higher in the future sure it
can you know i mean it's
uh the the uh you know the whole idea
behind it uh the distributive network
and everything it's it's a great idea
and i think it is the future of a lot of
different sectors and industries
but um you know but but i i don't know
that uh
it's it's a great it's a great trading
strategy
uh or a great long-term thing if you're
you know if you're in it at 10 or 15 000
it might be a very long time to to uh to
wait for it to have any kind of a return
or a gain
with a lot of these you know with a lot
of these these high risk high return
these long shot moonshot investments
what i say is you know and the penny
stocks that we talk about on channel
what i say
is that you know put maybe okay total
10 percent of all your wealth in these
so maybe maybe
two or three percent uh in any single
single one so you know you've got maybe
two or three percent of your money in
bitcoin
maybe you've got two or three percent of
your money in uh
in a certain penny stock or in a group
of of five penny stocks maybe you have
five percent total
right and the idea here isn't that uh
you know isn't that that you're going to
get rich off of them but you know you're
you're going to get
enough of that that moonshot return on
just a couple of these
that it's going to juice your portfolio
for you know maybe another another five
ten percent uh portfolio return on top
of of your other your other stock picks
so uh you know i wouldn't be obviously
wouldn't be going into it with 20 or 30
percent of my money
but i think it can it can be a small
part of your alternative investment uh
part of your portfolio uh it's been
about an hour i'm going to
close it off from there i got to go i
got to go lyft actually
started just uh just getting to the back
to the gym it's opened up down here
so loving that loving being able to do
that uh thank you again for everybody
that's been here uh today i love having
these conversations with you
again next week sunday at 2 p.m
uh eastern time 11 a.m pacific i'll be
right back here uh
talking about something else so if i
didn't get to your question ask it in
the comments below
the video usually takes about 30 minutes
to process gets up on youtube
and you can ask your questions there in
the comments so thank you again i will
see you
tomorrow for tomorrow's video
![The BEST Investment Strategy [Stock Market]](https://img.youtube.com/vi/HlVR2k_LNrw/mqdefault.jpg)
