Why Was The Market Down Today?

Unless you’re a professional money manager, you don’t watch every minute of the stock market.  Most of us have full time careers, lives, etc. that keep us busy.

However, if you happened to check your brokerage account today, you might be wondering: “What the hell happened today?!?!?!”

What seems to have happened, for one, is the market is not so confident in this so-called trade truce between the US and China.  It breeds uncertainty.  The markets hate uncertainty.

There is also talk of the Federal Reserve raising interest rates.  I am going to discuss this in greater detail tomorrow.

What is important to remember is this: when you’re a buy and hold investor, headline items like this don’t mean that much to you.  Just keep holding on to what you have, and take advantage of times like these to add to your positions in good companies at a discounted rate!

 

This Tech Boom Will Make You Millions!

In the late 1800’s, we saw the emergence of three huge technology platforms simultaneously.  They were the the telephone, electricity, and the combustible engine.

These three, together, were the catalyst that ignited economic growth unprecedented at the time – thus creating billions, upon billions, of dollars in wealth.

Today, we are embarking on a technology boom that may dwarf the previous booms.  For the first time in history, we have at least seven technology platforms evolving at the same time.

They are:

1. Artificial intelligence (AI)

2. Blockchain technology

3. 3-D printing

4. DNA sequencing

5. Mobility as a service

6. Financial technology (fintech)

7. Cryptocurrencies

I didn’t even mention the cloud, ecommerce, streaming video, and gaming (which is in its infancy, but will become ginormous!)

Oh, and I almost forgot to mention China…and, down the road, India.

We are going to see a tech boom unlike anything we’ve ever seen!

If you haven’t already done so, I suggest you start researching great companies to invest in.  Check the previous posts I linked to above for some ideas!

The Chinese Bear!

The threat of a trade war with China is continuing to wreak havoc on the shares of some of China’s largest technology companies.

This means that the share prices are becoming very attractive!

Chinese stocks are in a bear market.   The 50 million dollar question is how much longer it will last.

It’s impossible to know.  However, I saw a similar scenario in 2015, in which Chinese stocks were down seemingly every day.

At that time, I bought shares of Alibaba (NYSE: BABA) at a price of $80, and it went down to $55.  Over the next three years, it would go from $55 to $211.

I understand the fear investors have regarding a trade war.  But I don’t think either Trump or Xi Jinping wants an all out trade war.

Regardless, the prices of Chinese stocks are continuing to fall.   Here are some companies to put on your radar if you want some exposure to China.  The percentages represent how much they are down from their 52-week high.

Alibaba (NYSE: BABA): down 27%

Tencent (TCEHY):  down 35%

Baidu (NASDAQ: BIDU): down 26%

NetEase (NASDAQ: NTES): down 49%

Baozun (NASDAQ: BZUN): down 33%

There is a secular trend in China regarding the emergence of the largest middle class in history.  That trend isn’t going away.

When you think about the economic impact this can have on companies, think Walmart (NYSE: WMT) and Home Depot (NYSE: HD).  These are two of the best performing stocks in history, and they were both disrupters that benefited from the emergence of the American middle class.

This story will play out over the next 25 years…not 25 days.

Until next time!

China Is Starting To Look Attractive!

If you don’t pay attention to foreign markets, you might not know that emerging markets are not doing as well as the United States.

For starters, there is a growing concern that the economic crisis in Turkey could be the beginning of a contagion.  The price of oil is also down, and that has people scared that the world economy might be slowing down.

Lastly, there is this looming trade war with China that has caused the Hang Sang Index to fall over 20% this year.  As a result. Chinese tech stocks have been getting crushed…

Alibaba (BABA): The largest e-commerce company in China is down 24% from its 52-week high.

JD.com (JD): The second largest e-commerce company in China is down 33% from its 52-week high.

Tencent (TCEHY): The largest gaming company in the world reported earnings that disappointed due to a lower revenue number.  One of the reasons the revenue number is lower is that the Chinese government made Tencent pull one of its popular games due to its graphic violence.  Tencent is down 48% from its all-time high.

NetEase (NTES): NetEase is a huge gaming company in China, and one of the best-performing stocks over the last five years.  It’s down 34% from its all-time high.

Baozun (BZUN): The “Shopify of China” is down 37%.

iQiyi (IQ): The “Netflix of China”, and newly traded company, is down 74% from its high.

China comes with its own set of challenges.  It’s still a communist country; the government can dictate what a company can and cannot do.  So if you decide to invest in China, know that there is considerable political risk.

However, the tailwinds are enormous.

China is the most populous country in the world, with the largest emerging middle class in history.  I expect each of the businesses I listed to flourish!

I feel having at least one of these companies in your portfolio is a good idea, if you don’t already.

Disclaimer/Disclosure Statement: Information in this article is not intended to be a recommendation to invest in any stock.  Rather, it is presented for readers’ education and consideration when making their own investment decisions.  The author is long iQiyi.

The $500 Fortune, Part 2

Yesterday, I listed some stocks that, had you invested $500 in them years back and held, would have increased your wealth exponentially.  Of course, I was then asked, “What stocks can I do that with today?”  Here is a list of five that I like:

  1. Tencent: In case you didn’t know this, China is the most populous country in the world.  They will soon have a middle class that consists of 500 million people.  It makes a great deal of sense to have some exposure to China in your investment portfolio, and one of the best ways – if not THE best way – is thru owning shares of the largest video gaming company in the world!  Tencent is already a big company, worth half a trillion dollars.  I think that it has the possibility to one day be worth multiple trillions of dollars.  I firmly believe that this company can make you rich!
  2. The Trade Desk is a small digital advertising company with a market value of $1.4 billion.  Trade Desk uses artificial intelligence (AI) to aggregate and analyze data from different websites in order to help companies improve their marketing.
  3. Match: My selection of Match.com may surprise some people…however, did you know that Match owns Tinder, OKCupid, and Plentyoffish?  Tinder is the third highest grossing app in Apple’s App Store, behind Pandora and Netflix.  The truth of the matter is online dating has been a huge trend and will continue in the future.
  4. Activision Blizzard: It may be hard for non-gamers to believe this, but the gaming industry is HUMONGOUS.  One of the major players is Activision Blizzard.  Although the company has been one of the best investments over the last 20 years, the next 20 years look absolutely just as bright!  Esports, which are organized video game tournaments, are on track to be an absolutely colossal moneymaker for Activision Blizzard.
  5. Roku is a small company with a market value of under a billion dollars.  Roku is the fastest growing streaming platform in the United States.  Streaming video on demand is obviously the direction the world is moving toward, as evidenced by the phenomenal success of Netflix.  Roku has the platform that could eventually make it the dominant streaming video company.

If you’re just getting started or you’re looking to add to your portfolio, these five companies are ones you may want to watch!

If you haven’t checked out my ebook yet, head over to Amazon.  And please, please, share your thoughts and questions in the comments!