10 Mega Trends- TMF's Brian Feroldi and Brian Stofel

Investment Analysis Clubs Macro Economic Trends and Risks
1

I’ve been pondering how to deploy my cash cache as the current Bear downtrend develops, matures, and transitions to the next Bull.
In the past, I had a job, steady income, and monthly additions to my cash hoard for new investments.
Now, I’m at a different investing place. I’m looking to move some but not all my investments from higher risk, to lower risk.

From the youtube, below, I’m seeing AMZN, MSFT and GOOG as strong candidates for my “lower risk” investments.
You must know YOUR risk tolerance. These may not fit your definition of ‘low risk’, or ‘Value investing’. Ie YMMV. LOLOLOLOL
I offer this as a starting point for discussion.

Here is a youtube from a year ago, in which Brian Feroldi and Brian Stofel list some megatrends (that broadly affect and result in significant changes in society).
These trends have potential to offer good investments.
Some of these may be ‘VALUE/lower risk’ (ex Large Caps: AMZN, GOOG, NVDA, MSFT), while others may be more ‘GROWTH/higher risk’ (ex Medium, Small, Micro Caps: MELI, SE, U, PL).

A year ago, Nov2021, was the ‘top’ of the market over the recent decline.
LOTS of people are ‘price anchoring*’ on the November2021 to January2022 ‘top’.
And, then ‘price anchoring’ on the ‘bottom’ in March or May or June 2022.

10 Investing Trends With HUGE Return Potential

Here is their List, and some potential companies in which to invest. Some of the companies are their suggestions, and some are my suggestions (some of which are more a ‘picks and shovels’ investment in the space/megatrend rather than a direct investment).

  1. Gaming. U. RBLX. SE. Metaverse. FB. MSFT.

  2. Fake meat. I put this into ‘ralph’s can’t own em all’ category, primarily cause I’m not really interested in Fake Meat.

  3. Autonomous Vehicles. TSLA. AMD. GOOG. AAPL. NVDA.
    Chinese: NIO, LI, BYD, XPEV.

  4. Digital payments. SE. BABA. MELI.
    GLBE. NU.
    (AMZN as a beneficiary/user of digital payments? )

  5. Streaming. AMZN. SPOT.
    U. RBLX. MSFT. Gaming companies are switching to SaaS type.
    TSLA via Starlink, and high speed internet ‘anywhere’.
    TSLA has also recently added ‘streaming’ capabilities to it’s cars.

  6. Augmented reality (metaverse). FB/META. U. RBLX.
    GOOG. NVDA AMD via Chips.
    MSFT via gaming.
    AMZN as people start “shopping with AR tech”?

  7. Digital advertising. GOOG. FB. AMZN?

  8. Cloud computing. AMZN. MSFT. DDOG. SNOW. PLTR.

  9. Healthcare 2.0. ISRG. TDOC. more.
    AMZN drugs, etc.

  10. Ecommerce. AMZN. MELI. SE. BABA. JD. GLBE

You will NOTE that some of my ‘additions’ are not necessarily a company that does ‘that’ megatrend, but is a ‘picks and shovels’ or a ‘beneficiary’ of that megatrend technology.

I see AMZN all over these 10 (11). Even the fake meat, cause you can buy fake stuff online.

GOOG. MSFT. DDOG.

I’m gonna add:
11. Space. TSLA. AMZN via Rockets, and supporting space industries.
PLTR analyses of satellite info.
PL (Planet Labs) offers ‘affordable’ satellites.

  1. Robots. TSLA. SFTBY (SoftBank). All of the companies offering AVs.

  2. Cryptocurrencies and Digital Currencies. IMO, this is a developing megatrend, but there are no clearly acceptable investments - YET.

  3. Cybersecurity. CRWD. ZS. S.
    (PLTR - not a cybersecurity TECH, but a tech that uses cyber-data to identify threats, and potential responses. ie a ‘picks and shovels’ investment?)

Happy investing.
ralph

  • Price Anchoring is a type of logical error.
5 Likes
2

I’m missing the ‘preview’ capability.
yeah. the ‘edit’ is ‘similar’. But not the same.

How did I get the ‘indents’ for #s 12 to 14?

ralph

3

Are you on desktop or Mobile?

If desktop, the preview should be to the right of the compose box - if it’s covered up, just x-out of the info covering it.

If Mobile, there should be an icon that looks like a TV or monitor in the lower right of the Compose box - clicking that will open the preview window (and clicking the pencil icon that shows up in that window, will switch you back to the compose box.

1 Like
4

Thanks @CMFMints !
I SWEAR that was NOT there earlier.
LOLOL.

Anyway, After reading the Topic on E-bikes, I would add a megatrend in:
15. E-sports and E-transport (such as E-bikes, E-scooters, the One Wheel, and electric sit down scooters, 4-wheelers, etc.
FWIW, TSLA has teased tesla-bike and tesla 4-wheeler.
An investment in TSLA covers this ‘megatrend’, as well.

:sunny:
:bike:
E-ralph

2 Likes
5

Thank you for starting a thread on actual, specific investments!

If I had to buy one name on that list, it would be MSFT.

Two names to add:
Digital Advertising: TTD (risky stock)
Cloud/Cybersecurity: NET (risky stock)

On risk, to me, FB is risky for the impacts we recently saw on their business model and also growing awareness of privacy concerns (similar for GOOG, but Alphabet has search and cloud which I view as more durable). Maybe Meta can pivot to the metaverse, maybe not.

2 Likes
6

Just to be clear, Starlink is a subsidiary of Space X, a non- public Elon Musk-led company. Nothing to do with Tesla other than they occasionally share engineering resources.

7

Is Starlink working over Iran currently?

1 Like
8

Apparently the satellites are activated and approved by the US Govt for sanctions-free use, but they require on-the-ground Starlink terminals to be of any help. The Iranian government doesn’t appear eager to make that possible.

2 Likes
9

No surprises. Nothing the Iranian government will be able to do about it. Maybe find one or two routers but not much.

1 Like
10

Can’t argue with those though it wouldn’t be because of mega trends. The thing about such “trends” is that they are driven by cutting edge technology or innovative business models that disrupt the status quo. AMZN, MSFT and GOOG are the status quo, they are the Sears, RCA, and GE of today. They are the targets for disruption, they are the rules that upstarts need to break (to use TMF terminology). Therefore, the winners of the mega trends are likely to be companies you haven’t heard of yet. Picking between current Fortune 500 companies based on disruptive mega trends seems contradictory.

But if I had to choose a several hundred billion dollar company most likely to dominate a mega trend, I think it would be Tesla. They have the best tech and highest margins in a sector that still has 95% of the market to fill. They sell as many cars as they can make without advertising while entering an era when nations will be passing laws favoring their product. If any company can go from $1T to $10T in the next 10 years, it is probably Tesla.

That said, I wouldn’t consider Tesla low risk.

5 Likes
11

@mostlylong yep. There are more companies that offer exposure to one or more of the megatrends mentioned.

@SpeyCaster. True, Starlink is not public.
However, it is disrupting legacy satellite internet, and, IMO, even the legacy fiber internet providers such as Verizon, AT&T, Comcast, etc.
Starlink may eventually be the only global satellite ISP.

@Leap1 Iran authorities do not want the protestors to easily communicate. As you say, Iran may not be able to stop it.
This inability of governments using force, to shut down communication, is very disruptive.

@btresist . I agree. Disruption happens at the edge. But, that disruption often takes years. And, the larger companies often buy the smaller companies that innovate the trend.

I like (and own) TSLA. I agree that Tesla has immense potential, which, as you note, comes with more risk.
TSLA, AMZN, GOOG and GOOGL, MSFT are definitely on my watch list.

:alien:
ralph

12

so is killing innocent people got some hahas!

13

Transitioning from an attitude that one has to always be swinging at hitting home runs to being satisfied with a long string of steady base hits requires removing the constant steam of “temptation” offered by the financial media and the industry it supports. No trading means no commission or bonus.

Especially if you are retired, think back to those dark day of the second half first decade of this century and imagine if you simply picked up a load of “blue chip” issues paying 10% dividends and reinvested them, how much stress you would have missed riding Saul’s stocks to the moon and back.

Hindsight is 20/20, but it also rhymes with the future. We are not at the end of a bear market, but at its beginning. Make sure whatever you pick up today at “bargain” prices is robust enough (and your pain threshold high enough) to ride through the storm to the other side. And, if I’m wrong, and the world has become perfect again, so you will just have to live off of companies that only beat inflation and provide a reasonable living rather than trying to catch the next great thing.

I don’t see Desert Dave around any more (maybe a casualty of the Great Change), but I’m guessing life is so much calmer for him than for most.

Jeff

5 Likes
14

Yep. Especially the “robust enough” - thats why AMZN, GOOG, MSFT are on the list. And NVDA and BRK.

And especially the “high pain threshold”. I do have a high risk tolerance.
I have a pension, which is my “bond / low risk alternative”.
SS will add to that.
Therefore, I don’t have real concerns for my future living expenses.

And, therefore, I have higher risk tolerance for stock choices.

Tesla has very low Debt and a lot of cash.
Palantir, PLTR, too.
At least the Zombie company “risk” doesn’t seem to be there?

I really like the “story” for TSLA and PLTR. But I am well aware that it’s a story.
:alien:
ralph

I’ve missed DD, too.
And Denny - capitainccs.
And a couple others.
I didn’t form “off board” relationships with them, or really anyone else.
I RESENT that TMF removed that option.

1 Like
15

Ralph and Jeff,

This rally has legs. For how long who knows? People want this rally. People want to believe the bottom is in. It is like if they have to look at their portfolio they see pain and they want the pain to stop. The pain to stop rally. It wont stop come next year.

Mea culpa, I called it a micro rally. It is more than a micro rally.

How long will it last? How low will she go?

I am not betting on it.

Except if the timing is good with Opensea and things I hope Ethereum rallies a great deal from here. I want to sell in to it.

16

Might be informative to look at the top 10 companies in the Fortune 500 from 1990 to 2020

1990 2000 2010 2020
GM GM WalMart WalMart
Ford WalMart ExxonMobil Amazon
Exxon Exxon Chevron Apple
IBM Ford GE CVS Health
GE GE Bank of Amer United Health
Mobil IBM ConocoPhillips ExxonMobil
Altria Group Citigroup ATT Berkshire
Chrysler ATT Ford Alphabet
DuPont Altria Group JP Morgan McKesson
Texaco Boeing HP AmerisourceBergen

WalMart might be the safest bet and there seems to be a sudden rise in health care revenues over the past decade (more signs of an aging America). If one fears a recession the best place to hide one’s money might be WalMart and Amazon. If retail turns bloody in a downturn, these two sharks will probably just increase their marketshare.

5 Likes
17

My recurring thought, we are going to get back to being the leading manufacturing economy. A rise in stock price over a decade or more is the “safe” position.

JMO

1 Like
18

Remember that Fortune 500 is based on revenue, not market cap. So lower margin retail companies tend to rank higher than other lists

Mike

7 Likes
19

Great point! Perhaps it would be more informative to take the most valued companies prior to the 2008 recession and see how long it took them to recover from the recession. Here is a list of the 10 highest cap companies in 2005 and their market cap before, during, and 10 years after the Great Recession (in billions of dollars):

2005 2008 2018
GE 365 161 66
Exxon 344 406 288
Microsoft 271 173 780
Citigroup 250 38 123
BofA 214 71 238
WalMart 194 219 270
JnJ 179 166 343
AIG 177 4 34
Pfizer 172 119 249
Intel 147 81 211

So 40% of the largest companies in 2005 had not recovered their pre-recession values a decade after. Not sure what to make of this other than if one expects a big recession is coming and one has a 10 year investment window, then going with the biggest company in a trending sector may be the way to go as suggested by the OP. In 2005 that would be computer tech (Microsoft, Intel) and health care (JnJ, Pfizer). That elephant in the retail room (Walmart) also seems a safe bet.

7 Likes
20

I came across this NY Times article from 2000 where big time investors were asked to name one stock to buy and hold until 2010. Here is the list with split-adjusted stock prices for 2000, 2010, 2020. JDS Uniphase was spun off into two companies in 2015. JDSU and CSCO were the two trendiest companies as both went up several thousands of percent from their IPO in the 1990s.

2000 2010 2020
JDS Uniphase 100 3
Cisco 60 20 45
Oracle 39 25 55
Nokia 48 13 4
Medtronic 51 38 100
Flextronics International 35 7 14
Henry Schein Inc. 5 22 67
Waste Management 25 35 116
Zee Telefilms 500 137 284
Jones Apparel Group 10 11 28

Yikes. 2000 was the peak of the dot-com bubble so the trendy stocks were the wrong choices. The winners were in the untrendy sectors of medical supplies, retail clothing, and garbage.

2 Likes