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Our very own Shama Patwardhan, Head of LiveOps, has published a new portfolio to the Portfolio Store. This portfolio is particularly interesting because of its focus on companies that are shaping the future by making the world smarter. Investing in future-defining companies is always a good strategy. However, it is even more important to go the extra mile and bring our attention to the companies that are shaping the world's future. During the COVID-19 market crash, most investors get bogged down by the day-to-day market fluctuations. However, savvy investors don't take their eyes off of the prize, and that's precisely what this new portfolio is set out to achieve. Scroll down to read about the Smart World portfolio.
Invest your money now, to secure your future!
Make your money work for you!
Every now and then, we come across such advice through articles, books, and news. So why not secure our future, by investing in it? Our future will be highly impacted by advancements in research and technology. Rapidly growing fields such as artificial intelligence, machine learning, big data analytics, and Internet-of-Things would be the backbone of our future. Overwhelmed by the big complex words?! Don't be! It simply means that our future will be dependent on technology that develops fast, high-quality products, makes our devices understand us, and helps us connect with the outside world using the internet. These products have been and will shape our future, giving birth to a Smart World. You have already heard of smart homes, smart cars, and smart cities! So how can we participate in this exciting future? We find strong growing companies that are working towards making the world smarter and invest in them over the long term! As the company succeeds, our portfolio succeeds and rewards us with a strong positive return.
Every investor looks for a chance to buy shares when the stock price is undervalued. And that's what's happening now. With the Coronavirus outbreak, the stock market has been consistently falling. Instead of panicking, we look at it as an opportunity to buy great companies at a discounted price!
Read that with a sound of evil genius laugh echoing the room ... Past few weeks were all about Mexico - U.S. trade war. As an economist, I may argue against tariffs. But, as an investor, I embrace them.
These days the market is very volatile. It can be scary. But, there is a better way to deal with the market frenzy. Wait patiently and fill up your time by learning about the trends that are shaping the future. Maybe watch Eric Cuka (publisher of Get F.I.R.E.D. Up! portfolio) and stay away from the day-to-day craziness of the stock market. And, when the news of trade wars pops up, you'll know that it can only mean one thing; opportunity!
Here is a typical cycle:
- Stocks hit all-time highs
- Politicians get into trade war discussions
- Media and social media go frenzy
- Investors panic
- Stock prices drop to undervalued ranges
- You pick up a few stocks of well-managed companies that are caught in the news
- Stocks go back up
- You hold on to your shares (cause they are well-operated companies), or even sell a bit of it to have cash on the side for another inevitable cycle
It's simple, but not easy! Today's Stock Card V.I.P. pick is a new addition to the Get F.I.R.E.D. Up! portfolio brought to you courtesy of the stock market's fear cycle!
Retiring early is an elusive goal! Everyone wants it, but a limited number of people are willing to do the work required to get there. But, not Eric Cuka!
Eric, as you might have heard in one of latest episodes of Renegade Investors podcast, is on the mission to retire in his mid-40s, gain the freedom to do what he likes to do and maybe do a little bit of globetrotting with his wife. He plans to do all that using his Get F.I.R.E.D. Up investment approach. And, that's the portfolio we are launching today for Stock Card VIP members.
There is no magic formula behind gaining your financial freedom and not having to work for money. There are three steps:
It's a mix of aggressive growth investing to start with and a gradual transition to dividend growth investing. How does it work exactly? Scroll down to learn more ...
You'd need to invest in stocks with aggressive growing power to increase your net worth as fast as possible. Whatever you can save every month, can be boosted significantly by careful but aggressive growth investments. Eric will include some of such companies in his Get F.I.R.E.D. Up portfolio. In the Portfolio Planning sheet that all Stock Card's portfolio publishers fill out, Eric wrote: "Generally, I follow long term cycles for growth, such as cloud technology, autonomous driving, etc.". And, from my conversions with him in the past few days, he has picked up quite a few aggressive growth stocks in his Get F.I.R.E.D. Up portfolio to take the most advantage from the recent stock market downward trend. When everyone panic that the share prices are falling, savvy investors like Eric who have a plan, invest more aggressively.
Gradually, as you grow your money using such aggressive investments, you have to transition them to the safety of dividend-paying stocks. Eric also included some of such dividend-paying stocks in his Get F.I.R.E.D. Up portfolio. Those dividend-paying stocks are not just any random dividend-paying companies. As Eric puts it in his Portfolio Publisher planning sheet: "Generally, I prefer a dividend payout ratio of less than 50%, constant dividend growth of 5 or more years, dividend yield of 3% or less, and, of course, a quality company with a high probability of future success."
Make sure you have clicked on the bell icon on the top-right corner of the portfolio to get notified when Eric adds a new stock. You can always sort the stocks included in each portfolio by the Decision Date column and discover the latest additions.
Without further ado, today's Stock Card VIP picks are 11 companies that mark the launch of Get F.I.R.E.D. Up portfolio! Get "fired up" now!
We have arrived on the last day of the cannabis month. And what a month it was! This is an industry with tremendous potential mixed in with extreme emotions and volatility. I know the portfolio hasn't been moving upward yet, but looking at the stocks that Mark - The Green Fund's portfolio publisher - has picked up, I'm very confident we have got a basket of stocks that are worth paying attention to.
Today, to celebrate the end of our month-long deep-dive into the cannabis stocks, I'd like to share a long-form blog post to explain how we evaluated and picked the stocks that are included in The Green Fund portfolio. If you have a few moments to think through some fascinating ways of evaluating pot stocks, keep on reading.
Later today, May 29th @ 3:00 PM Pacific, Mark and I will host a virtual get-together to discuss this approach among other cannabis-related topics. Join us for that live event by reserving your seat.
How to deal with the overvaluation?
The cannabis stocks are some of the most overvalued companies you might have ever invested in. That's why you can see periods of extreme price fluctuations. For a few months, the stocks are running up. Doubling and tripling of the prices are not unheard of. Such glorious run-ups are most certainly followed by a period of a downward trend. Losing 10%, 20%, or even higher percentage of stock valuations is very likely in such times.
Therefore, the number one thing you need to be comfortable with is that you are investing in mathematically overvalued companies. You'd need to be emotionally ready to tolerate the ups and downs.
You'd also need to be logically comfortable with investing in overvalued stocks. How?
Think about it this way: Investing in overvalued companies is what most private market investors do, day in, day out. Large, institutional investors such as Fidelity or Softbank pour in money into overvalued startups every day (e.g., any recent tech IPOs that comes to your mind) When it comes to cannabis stocks, we are not talking about private market investing, but the nature of cannabis stocks is not too far from the private market and startup investing. Both are similarly overvalued! Period!
The advantage the private market investors have over us, the cannabis investors, is that they don't have the stock market reminding them of the value of the startups they are investing in. We, unfortunately, have to deal with the daily fluctuations of the stock market. The best of us understand that and move away from paying attention to the day-to-day volatility. Mark and I spoke about this in part 1 of our 2-part podcast episode.
Okay, I got that! But, how do I know which pot stocks to invest in?
Once we put the valuations aside, what's left is the operational strength of the companies we are evaluating. You certainly would want to avoid investing in operationally shaky companies that are also overvalued.
And, can you explain what do you mean by operational strength?
Companies with a high amount of debt, unproven management, lack of competitive advantage to protect their turf, or those who do not have cash readily available to fund their operations are the no-no choices in a basket of cannabis stocks. That's why, in the past five weeks, every time we spoke about a new investment pick for The Green Fund, we myopically focused on the operational strength of the companies.
That's why neither Mark nor I am worried about The Green Fund's under-performance so far. We are talking about startup-like investing here, and that comes with the territory. I have to say, I hate to see that the portfolio is not up, but I'm not worried, as explained above!
Knowing all that, where are the investment opportunities in the pot industry?
The next step is to see where in the see of cannabis-related stocks, we would need to focus on. Mark and I talked about it in part 2 of our podcast conversion.
Broadly speaking, there are two types of market opportunities in the cannabis industry: Pure-play cannabis and Adjacent markets.
Pure-play cannabis opportunity refers to the part of the cannabis industry that is purely focused on the cultivation, extraction, and retail and distribution of cannabis products for medicinal and recreational purposes. Some of the big names are Tilray or MedMen. While good investors try to focus on pure-play companies with strong operations, better investors also pay attention to the opportunities in the adjacent market. That's where the long-term gems reside. Companies that are working on developing pharmaceutical intellectual property or companies that are using cannabis as a new ingredient to bring a new category of products into the market are the most exciting investment opportunities in the cannabis sector.
Can you give me some examples?
Let's review and map two stocks that I personally have on my radar:
I hope this visualization and explanation help you create a reliable approach to evaluating cannabis stocks or other stocks that are in the mathematical overvalued price range.
As mentioned earlier, later today, May 29th @ 3:00 PM Pacific, Mark and I will host a virtual get-together to discuss this approach among other cannabis-related topics. Join us for that live event by reserving your seat.
To see the above framework in action, consider subscribing to Stock Card VIP, and access The Green Fund.
My new favorite investing approach is beaten-down investing! You might have noticed that if you are following our Beaten Down portfolio. Every day, I look at the stock market universe and rank the companies based on how much they've lost. If it is double-digit price-fall, the day gets exciting...
Is the stock price down double-digit in the past month?
Is the company well-managed?
Why the price fell so much?
Can I see a reasonable path for the company to recover?
If the answer is yes, I'm very likely to jump in.
Lately, the pot stocks are showing up a lot in my daily beaten-down screening. Mark - The Green Fund's portfolio publisher - is in complete agreement with me. Beaten down investing is one of the best ways to pick up the stocks you have been watching for a while. He also wrote about why it's the best time to invest in pot stocks, despite the recent price falls. You can read Mark's post in this fascinating and informative blog post: "Duck Donald and Buy The Dip". We are also planning another live webinar to answer your pot stock investing questions on the last day of The Green Fund month. Reserve your seat and submit your questions for this free live webinar.
Without further ado, let's get to the main business. Today's Stock Card VIP pick is yet again a new addition to The Green Fund portfolio to tap your feet into the federally legalized side of the cannabis industry in the U.S.