Category Archives: Investment Strategy

Best Stock Picks For 2018

Many sub-sectors in the technology industry have exciting developments. But some companies are constantly struggling. Other companies have many promises, but they cannot. Only a few companies will be prepared for more growth.

When I read these tech companies, the two stocks I listed repeatedly on the list of companies I have never bought were Snap (NYSE: SNAP) and Fitbit (NYSE: FIT). I think one company is Skyworks Solutions (Nasdaq:SWKS). Why is that.

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Image source: GETTY IMAGES.

A social media stock has a very low volatility and feasibility

I used to think that Snap’s Snapchat app is a novel and unique way to communicate via social media. But with the sudden intrusion of Facebook (Nasdaq:FB) and the start of replicating some of Snapchat’s core functions, this view has changed dramatically.

Facebook not only has Snapchat’s serial story feature, but also has a similar version on its own platform, but its Instagram app does the same thing – and it works amazingly. Facebook’s Instagram launched its own story feature in August 2016, and in eight months, the number of people using it exceeded all of Snapchat’s daily active users.

Snap’s quarterly revenue increased 72% from the same period last year to US$285.7 million. Non-GAAP (generally accepted accounting principles) net loss per share was US$0.13. These results exceeded Wall Street’s expectations and drove the company’s share price up. However, a good quarter did not make up for the basic problem of Snap: it can be easily copied. Facebook’s determination to adopt Snap – and its applications can be easily cloned – makes this company very fragile.

Since Kylie Jenner sent a tweet to push the Snapchat app, Snap’s share price may lose 7% of the value, which clearly shows why I want to stay away from this social media stock.

Wearable technology games are all worn out

For a while, not too long ago, Fitch Bitter looked like an effortless purchase. The company is a leader in wearable technology devices; it is snatching small companies like Pebble to increase its wearable advantage; even before major technology companies take action, it is also in front of the wearable market. My business changed.

Just this month, Apple (Nasdaq: AAPL) formally replaced Fitbit as the world’s number one operator of wearable devices. The decline in sales of Fitbit equipment has been a sign of future changes, but it is still a major blow to Fitbit.

James Parker, the company’s chief executive, recently accepted an interview with TechCrunch and said the company is moving more toward the medical industry, although it will still produce consumer equipment. He calls health care “an untapped source of income,” but it feels more like Fitbit is scrambling to find a viable market to sell its equipment.

Maybe it can work, but when Jawbone said last year that it was turning to medical equipment and away from the consumer market, new concerns about health care reminded me of too much… and it went bankrupt. Simple and simple, Fitbit is becoming a slow-wounded Apple Watch. Apple doesn’t need people to like its watches or be excited about wearable devices. It only needs to slowly and continuously over-sell Fitbit to place the nails in the coffin – I think this has started to happen.

Internet of Things Play Connection

It is time to look at a technology company that is developing its core business and expanding into new markets. Skyworks Solutions manufactures semiconductors for mobile and Internet of Things (IoT) devices – amplifiers, filters and connectivity chips. Although the company accounts for 40% of Apple’s total chip sales revenue, Skyworks is rapidly expanding its technical coverage.

I admit that being so dependent on Apple is not the best case, but Skyworks seems to be diversifying its sources of income. In the first quarter of fiscal year 2018, the company increased sales in its “broad market” area, including smart speakers, hardware for connecting vehicles and smart watches, and the business now accounts for about 25% of the company’s total revenue.

As the market expands from 11 billion devices this year to 20 billion by 2020, Skyworks should be able to benefit from the growth of IoT devices in the coming years. The company has already announced that Nest’s Nest and Amazon are customers who connect home devices and that they are connected to the car. As it adds to the Internet of Things customers, Skyworks will position itself in the next three years as the Internet of Things develops into the $1.4 trillion market.

Skyworks’ stock’s expected return is only 13 times, and the company has no debt. Its small size and early adoption of the Internet of Things means that there may be more fluctuations in the future, but if it can continue to develop the Internet of Things business and balance its dependence on Apple, then Skyworks may eventually become a stable long-term IoT game. .

Warren Buffett’s Advice About Stock Investing

“Diversity is the protection of ignorance. For those who know what they are doing, this is meaningless.”

This sentence comes from Warren Buffett. Warren Buffett is famous for investing in a small number of stocks and is always held. As a strong advocate of highly concentrated investment portfolios, Buffett believes that holding too many shares may reduce your returns. How much is too much? Well, he thinks that you need six good careers and added, “Few people are getting rich on their seventh-best idea.”

He practiced what he said. Although Berkshire Hathaway owns approximately 45 companies, most of the portfolio (nearly two-thirds) invests only in six companies. The largest of these is Apple (NASDAQ: AAPL), followed by Wells Fargo (NYSE: WFC), Kauff Heinz (NASDAQ: KHC), Bank of America (NYSE: BAC), Coca-Cola Company (NYSE: KO) and American Express( NYSE: AXP). Buffett is not afraid to make huge investments in a few positions. With few exceptions, these big bets usually perform well. Of course, we are also talking about the most agile stock pickers in history. For those without his legendary skills, this strategy may be far less efficient – and it may even be dangerous.

Even Buffett made a mistake

Until recently, Buffett’s largest position at Wells Fargo (4.88 billion shares worth nearly $30 billion). Recently you may have seen this bank in the news – for all the wrong reasons. Wells Fargo was caught in an embarrassing scandal involving the creation of millions of fake, unauthorized customer accounts.

The impact of these deceptive sales practices and poor corporate governance is very serious. More than 5,000 employees were ruled and the company has allocated more than $3 billion to pay for the expected fines and legal fees. Several board members were almost thrown off their teeth and kept their jobs.

In the ongoing investigations and sanctions, innocent shareholders have also been stimulated. On February 5th, the outgoing Fed Chairperson Janet Yellen implemented some harsh penalties, condemning the bank’s “universal and continuing misconduct”. The stock price of WFC plunged more than 7% on that day, resulting in Berkshire Hathaway spending about 2.4 billion U.S. dollars.

If even Warren Buffett (who is the CEO’s name) does not see the wreckage coming, how can Joe average expectation? The fact is that we usually cannot. Unless you want to keep all your money on a secure bank CD, investing in stocks sometimes encounter unexpected setbacks.

Fighting in the gut may wait at the corner

This is not about Wells Fargo. The fact is that, for a variety of reasons, stocks that punished 20%, 30% or more fell. Some can be seen a mile away, but others are sudden and unavoidable.

This is why I advocate a more careful allocation of assets among a larger number of assets, so one or two torpedoes will not flood your entire portfolio. With very few exceptions, I seldom recommend using more than 5% of your funds for any position.

Of course, I will invest more confidence than others but not excessively. This may limit the impact of the three-digit winner of my high-yield portfolio (such as CME Group (Nasdaq: CME)). We showed a 156% return in the last count, but this also Will ease the backwardness.

Buffett has the ability to bear the $2.4 billion risk, but you and I must be more cautious.

Ironically, this more secure approach can also bring better returns. Morningstar has just conducted an interesting study to analyze the correlation between portfolio size and return. It analyzes tens of thousands of mutual funds that are grouped by the number of portfolios, have no other variables, and then compare their performance.

Warren Buffett

Morningstar found that the most concentrated portfolio (1 to 29 stocks) generated the lowest five-year return, while the most diversified (250 or more stocks) generated the highest return. Ranked by the average percentage, they differ by 17 percentage points.

Now, I don’t mean that you need to call your broker and order and buy 200 stocks. Even fifty may be cumbersome and difficult to pay close attention to. The key is this: Be careful to bet more than one chip in a hand or two.