If there was a simple answer to how one could earn returns that are higher than the inflation rate, everyone would have flocked to it.
FDs, when done in the safest banks, give interest rates that are almost the same as inflation rates. The reason one earns higher-than-FD returns is that there is a higher risk.
Therefore, in investing, risk cannot be avoided but has to be managed. From amongst the choices available to retail investors, equity is the preferred asset class.
While success is not guaranteed, it can be achieved by following a good process with discipline. This is what we mean by ‘The Sahi Way of Investing in Equity’.
What is the Sahi Way that a retail investor should follow?
However, any good process for investing in equities must ensure that they stay invested and let compounding do its magic.
This requires investors to understand and have confidence in the investment recommendations and decisions.
So a good process must have a sound rationale that is easy to understand.
Are there any rules every investor must follow?
Yes; stay invested for long and let compounding grow your money.
So the do’s and don’ts can be stated simply as:
do everything to stay invested and don’t do anything that will make you stop investing in equities.
Can one get rich following this advice?
Yes, absolutely! Savings grow into wealth when you put your surplus money to earn returns higher than inflation and let it compound for a number of years.
As you can see there are 3 variables:
- Surplus (the saving you put to work)
- Returns (CAGR) that you earn
- No of years you stay invested and earn these returns
But, higher returns can create wealth faster!
Retail investors can neither afford this kind of drop in their savings nor do they have the temperament to handle this kind of risk.
So they will not be able to stay invested in a high risk-high return portfolio. Those who claim they can are probably investing a very small fraction of their surplus – the ‘can-lose’ money.
Hence, chasing higher returns comes with a risk of not meeting your wealth creation goal.
How to ensure you stay invested and earn inflation-beating returns?
Why think Portfolio and not individual stock or MF?
Say you have a stock that falls 20%. You are likely to be upset, very upset if you have put a lot of your savings into it.
However, when you have a 20-stock portfolio, you may see that this stock is only 5% of your portfolio and hence the impact is only 1% on the entire portfolio (or even lesser as some other stock could have gone up). This helps us make level-headed decisions.
Another advantage of thinking portfolio and not individual stock or MF is that you are preventing yourself from getting attached to a stock. This makes it easier to sell when required.
What is a well-constructed portfolio?
A well-constructed portfolio helps manage both risk and returns. It is instrumental in achieving reasonable returns while managing the risk at a level that ensures that you stay invested and reach your financial goals.
Risk is prevalent and exists, but does not always materialize. For example, you use a motorcycle regularly; sometimes you wear a helmet and sometimes you don’t.
Till now you have not had an accident. Does that mean you were over-cautious on the days you wore the helmet and smart when you didn’t?
An accident is unpredictable but taking precautions and wearing a helmet every time you ride a motorcycle prevents serious damage and saves lives.
But can’t one invest in an MF and be done with it like an FD?
Beyond the choice of the bank, there is no decision you are required to take.
However, MFs are not the same – there is no guaranteed return.
That’s why there is the all-famous warning: they are subjected to market risks.
There are 350+ equity mutual funds that follow different processes/strategies. Selection requires some knowledge and expertise.
A Mutual fund is a portfolio managed by an expert. Then why does an investor need to manage his portfolio?
However, it is not their responsibility to ascertain whether the product is suitable for you and remain suitable even when market conditions have changed. That’s the job of your Investment Adviser.
An investor needs to know and do what is right for his portfolio. That is where the Investment Adviser comes in.
Investment Adviser is responsible for assessing your return requirement based on your risk appetite. Based on this assessment, a suitable investment solution can be chosen.
Why do the returns of MF vary over time?
Every fund fits in a category. For eg: Large cap fund managers build and manage the portfolio within the rules specified for the large cap category.
Within these rules, every Fund Manager uses a process or a strategy to select stocks that can deliver great returns and the risks which are acceptable to him.
However, no process works in every market conditions and hence, there are periods of good and underperformance.
For eg: small cap funds outperformed the markets in a bull market of 2017 but underperformed in 2018 and 2019.
And how does one manage this uncertainty?
Investing in a fund enables you to invest in multiple stocks – this is one level of diversification. However, this is not adequate.
There is one more dimension of diversification that you need – diversification across investment style/processes/strategies.
The most common ones and the times they work best are:
- Momentum – has worked best in rising markets
- Value/Dividend – in flat or falling markets
- Quality – in tough/bad economic conditions
- Size – in good times.
For a more detailed understanding read How to achieve the right diversification in Mutual Funds?
A lot of people say ‘MF Sahi hai’, but are there any disadvantages of investing in MFs?
MF Sahi hai, but that does not mean every MF is Sahi for you. The way in which MF is sold to you may not be right. MF is mostly sold based on past performance.
This is similar to driving by looking into the rearview mirror; it does not work. A fund is a top performer today because the prices of the stocks in its portfolio have already gone up.
This makes it difficult for the fund to deliver returns again in the coming years since the new money is invested at increased prices.
For example: check any small cap fund and you will see great returns in 2017, but the returns in 2018 are negative and many are still negative in 2019.
So, the right advice should have been to sell small cap funds in 2017 when it was still rising.
However, most retail investors were buying small cap funds in early to mid-2017 and they would not have recovered yet and probably it will be a few years more before they do.
The second disadvantage of MF is that you incur a 1 – 1.5% Fund management cost. If you buy a Regular Plan, an additional 0.75% distribution cost will be added.
Thus, MFs come at a cost. This cost hurts when the returns are not well above the FD interest rates.
If not based on past performance, how do you select the right equity MF?
There are three important things when short-listing an MF:
1. Quality of the Portfolio:
However, it can backfire in terms of higher drawdowns – bigger losses when the market corrects. This may not be acceptable and hence you need to assess the quality of the fund’s portfolio.
Alternatively, a fund manager may ‘mimic’ the benchmark index, i.e., the portfolio will be very similar to the Index and hence you cannot expect higher than index returns.
2. Consistency of Returns:
As an investor, we are more interested in a fund earning consistent returns that compounds, rather than swings from very high to low/very low.
We also need a way of looking at returns that do not have the limitations of using past returns, which depends a lot on the start and end dates; especially because we could enter and exit at any time.
3. Upside Potential:
Once you have shortlisted a fund, you need to know if it is the right time to buy it – especially if you are investing a lumpsum amount.
For this, you need to know the upside potential of the fund; what is the likely return one can realistically expect.
MoneyWorks4me fund selection methodology is based on this:
Should one invest in Index Funds?
An Index Fund is a mutual fund where the portfolio of stocks is not actively selected by a fund manager but is a replica of the Index. Eg: the ‘Nifty 50 Index Funds’ portfolio matches that of Nifty 50.
Mutual funds are called actively managed funds while investing in index funds is called Passive Investing.
The advantage of an Index fund is that its portfolio is predictable and comes at a lower cost. So you get the benefit of diversification at a lower cost.
However, the decision to invest in Index funds is similar to any mutual fund.
What are the advantages of investing directly in stocks?
The benefits of directly investing in stocks, over a 100% MF portfolio are:
- Higher control of your investment: You can decide what to buy when to buy/sell and how much.
MFs are not the best positioned to take advantages of some opportunities, such as investing at attractive prices in a bear market (usually they face redemption pressures and require to sell rather than buy) or from a short term performance problem in an otherwise good company (because they need to be the best performing fund or close to the top to attract more funds).
A retail investor can do all this. This can add significantly to better returns while risk can be low.
- Lower cost: Investing in direct stocks incurs brokerage cost which is significantly lower than the expense ratio of Mutual Fund.
But isn’t investing in stocks directly risky?
Remember: MFs also invest in stocks.
The biggest risk is ignorance.
So does it make sense to have a portfolio of Direct Stocks and MFs?
Yes! You can think of your direct stocks portfolio as one fund which you can build and manage directly under guidance from your investment advisor.
This enables you to get the best of both:
- Invest in strong investment-worthy companies through a direct stock portfolio on which you have higher control and lower cost.
This is also likely to enhance your returns as you can pick and choose stocks with high upside potential.
- Diversify across processes by investing in a set of MFs. SIP for your monthly savings in a set of MFs. Invest lumpsum in those funds with higher upside potential.
However, not all advisors are equipped to guide you on investing in stocks.
How to ensure you have selected a strong investment-worthy company stock?
The wider the moat, the more difficult it was for enemies to enter and capture the castle. For you, the castle is a company in which you want to invest.
The moat is A sustainable competitive edge, which protects the company from the competition and tough economic conditions!
During tough times, companies fight harder to win customers, thereby leading to a fall in prices and thus, margins.
Only a company with a wide, unbreachable moat – a competitive edge – can maintain and grow its profits even during tough economic conditions.
Is there a way to confirm if a company has a sustainable moat?
Why 10 years? This is because, over a 10-year period, the company is likely to have experienced one full economic cycle – good & bad times; growth and recession.
A business does not do well over a 10–year period just by accident! A company which has performed well over a 10–year period is most likely to have a moat.
But does it mean that the past performance is a guarantee of future performance?
However, an excellent past performance over a long period is an indication of a competent Management that can handle the ups and downs it is likely to face in the future.
For that, you need to have an assessment of what is the future upside potential from the current price to decide whether you should invest in it at that price.
What else is essential to qualify as a great business worth investing in?
In addition to a sustainable moat and its excellent track record, one more thing is essential: A Respectable Management.
What is Upside Potential in Stocks?
There are different ways of making this estimate. MoneyWorks4me makes an assessment of what returns one can expect from the current price should the stock trade at its fair price 3 years later.
It is mentioned as CAGR. This is not to say that 3 years from now, the stock will trade at this fair price.
However, it gives us a good way to decide whether we should invest in it as the current price is attractive or fair or avoid it because it is expensive.
Is there a good thumb rule for making decisions based on Upside Potential?
A few very good stocks could even be in the 6 – 10% range. Stocks with less than 6% upside potential are expensive and should not be bought.
In fact, one should consider selling such stock partly or fully.
How do you arrive at the fair price of a stock?
However, fair value is an estimate based on certain assumptions that every analyst makes.
They then track actual company performance versus their estimates and, over a period of time, come to a judgment of its fair value.
The usefulness of fair value is that it provides a better anchor for taking buying and selling decisions.
This is achieved by extending the idea of fair value to the stock’s Upside Potential. For more details read ‘What is the right price to buy a stock?‘
What is the best way to invest your monthly savings?
This is tougher than one imagines. Committing to a plan that gets automatically executed without your intervention every month is seen to be most effective.
This is what a SIP (Systematic Investment Plan) does. Right now, you can set this up for mutual and index funds.
Looking at the success of SIP in mutual funds, solutions to invest your monthly savings in a portfolio of stocks are also now available.
They may not be as regimented as mutual funds, but those convinced about direct stocks will find it acceptably simple.
Learn more about investing in equities-stocks, mutual and index funds, so that your knowledge keeps pace with your growing portfolio.
You can get everything you need to do all that is part of the Sahi Way of Investing in Equities in one place – MoneyWorks4me PRO.
If you liked what you read and would like to put it in to practice Register at MoneyWorks4me.com. You will get amazing FREE features that will enable you to invest in Stocks and Mutual Funds the right way.
Need help on Investing? And more….Puchho Befikar
The post The Sahi Way of Investing in Equity – A Guide for Beginners appeared first on Investment Shastra.
10 of the Best Value Stocks to Invest in Now
Value stocks can seem like a bargain to investors, but can become a valuable part of an investor’s portfolio. This article will explain what value stocks are, how they differ from growth stocks, and how TradingSim can help investors find the 10 best value stocks.
What is a value stock?
A value stock is a bit like a stock on sale. Value stocks tend to trade at lower prices than other stocks. In addition to being cheap, value stocks tend to have less-than-average growth than other stocks. They also tend to have low valuations in relation to earnings and cash flow.
Value investing can be a great choice for risk-averse investors who want to slowly wade into the investing waters. Value stocks also tend to have dividend payments to investors every quarter. Also, with the Dow Jones in such volatility, these value stocks could be a safer alternative to faster-paced growth stocks.
How is a value stock different from a growth stock?
Here are some differences between growth stocks and value stocks. The comparison of value stocks versus growth stocks shows vast differences.
Growth stocks usually
- have high valuations. Tech stocks, like Amazon (NASDAQ:AMZN), often have a sky-high valuation in the billions. Amazon has a record-shattering $1 trillion valuation.
- have high P/E ratios. Growth stocks usually have a P/E ratio of 16 and higher. Netflix’s ( NASDAQ:NFLX) P/E ratio has skyrocketed to trading for 86 times its earnings.
- steadily rising stock prices. Growth stocks like Zoom ( NASDAQ:ZM) have stock prices that surged 200% above its listed IPO price of $ 36 per share.
- strong growth rate. Many growth stocks have better-than-average projected future earnings. Growth stocks also tend to outperform the overall S&P 500.
- more available cash flow. Easily available cash flow is usually a sign that a company has a growth stock.
- don’t pay dividends to investors. Growth stocks from corporations tend to reinvest money back into corporations. They don’t usually offere quarterly dividends to investors.
- many growth stocks are in tech or other growing industries. Teledoc (NYSE: TDOC) is a growth stock that rose 18% just over the past month. The telehealth company is successful because of its innovation in medicine. Teledoc’s stock is also performing well because of its timely use by patients during the coronavirus crisis.
- riskier for investors. Growth stocks can rise higher than the overall market, but can fall faster into a bull trap when the market declines into a bull market as well.
Value stocks are less volatile than growth stocks
In contrast to growth stocks, value stocks usually
- have low price-to-earnings ratios (P/E). Value stocks, like MetLife(NYSE:MET) have a rock-bottom P/E ratio of 5.10. Life insurance stocks often have a low P/E ratio below 16.
- have a slower growth rate in more established industries. Growth stocks tend to increase quickly in innovative new fields. Tech stocks, like Tesla (NYSE: TSLA) especially, may have wild swings on the stock market because of production issues ( or Elon Musk’s comments). However, value stocks usually grow at a slower pace and are in industries that have been around for decades. BP(NYSE:BP) is a giant in the oil industry and is a value stock with less drastic change in its stock price.
- pays dividends to investors. In addition to BP, another oil stock, Chevron (NYSE: CVX) is a high-paying dividend stock. Chevron pays investors a 7.5% dividend to investors.
- are undervalued. Semiconductor maker Qualcomm(NYSE: QCOM) has undervalued stock because it’s overlooked, but will be vital to the future. Even though Qualcomm stock is in the $66 range, the stock should rise soon. Since Qualcomm is making chips that will be used in 5G technology, the corporation’s stock will likely benefit from this in the future.
- are less risky than growth stocks. Value stocks are usually less volatile and have steady returns for investors. Even though IBM (NYSE:IBM) stock has dropped, the stock is still a solid value stock. IBM is moving into cloud computing with its acquisition of software company Red Hat. The stock will likely remain a safe bet for investors who are looking for value stocks.
Top 10 Value Stocks for Investors
For investors that want low-risk investing , this value stock list has venerable stocks that have high-yield dividends. Here are 10 stocks that are some of the top value stocks to add to a portfolio.
1. Berkshire Hathaway
Warren Buffett is the OG investor and his Berkshire Hathaway (NYSE:BRK-A) and (NYSE:BRK-B) is the top value stock on Wall Street. The Oracle of Omaha has been choosing stocks since the Beatles were a new group. His conglomerate has chosen some of the best stocks to invest in, and Buffett’s corporation itself is a must-pick stock.
Berkshire Hathaway started in 1929, but didn’t become a viable company until Buffett took over the corporation in 1965. His investment strategy was to buy undervalued companies, then let them grow. As a result of value investing, Buffett’s fortune has grown to almost $70 billion.
Former hedge fund manager Whitney Tilson says Berkshire Hathaway is a top value stock because of Buffett’s wise choices.
“I’m being even more conservative because I’m not factoring in the value Warren Buffett will likely create as he puts his $128 billion cash hoard to work amidst this chaos: buying back his own stock in size, buying other stocks, and negotiating deals with desperate companies,” said Tilson.
“It’s an incredible collection of high-quality businesses… it’s run by the greatest investor of all time… and it has the ultimate, Fort Knox-like balance sheet: $128 billion in cash and short-term investments, $19 billion in bonds, and roughly $200 billion in liquid, blue-chip stocks,” added Tilson.
This TradingSim chart shows Berkshire Hathaway’s trajectory the week of March 19, 2020.
Berkshire Hathaway has a low P/E ratio of 5.46, which makes the company’s undervalued shares a value stock for investors. While most value stocks offer dividends, Berkshire doesn’t. Buffett noted that he’d rather reinvest in his companies to improve the efficiency of his investments. For investors interested in value investing, Berkshire Hathaway is a must.
Buffett only buys stocks he likes for the long haul
Berkshire Hathaway is a value stock because of its investment in other blue-chip stocks. Buffett is known for his quotes about cautious, long-term investing. One quote about long-term investing is especially timely with the stock market slowing down now:“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
Buffett also loves to quote Benjamin Graham, the father of value investing. “Long ago, Ben Graham taught me that price is what you pay; value is what you get. Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down,” said Buffett.
Buffett doesn’t just chase trading trends. He only invests in companies he believes in for a long time. Even though his stock picks may seem too safe, they pay off in the long run. His recent $549 million investment in Kroger grocery stores in February has been very savvy. The recent run on grocery stores like Kroger during the COVID-19 pandemic has made Berkshire Hathaway’s investment a good buy. Buffett has the Midas touch when it comes to picking stocks. His time-tested value investing in top corporations make Buffett’s Berkshire Hathaway a top value stock.
One of the value stocks that Berkshire Hathaway invests in is Apple (NASDAQ:AAPL). The tech giant is a value stock because of its lower-than average P/E of 20. For the largest tech company in the world, Apple is ironically undervalued compared to other tech stocks like (NASDAQ:FB). Even though Apple is a tech company, it’s also seen as a hardware company since it produces iPhones and Apple Watches.
The company has a hallmark of a value stock, strong earnings reports. Apple’s last earnings report saw the company earn a record- shattering $91.8 billion. Apple’s ample cash glow gives the stock a characteristic of a growth stock. However, the company’s $58.9 billion in cash flow in fiscal year 2019 helped pay its $14.1 billion dividend payout to investors. That’s an impressive 6.5% yield. Apple is a reliable value stock that investors should add to their portfolio.
Coronavirus will impact Apple, but stock will bounce back
The COVID-19 crisis has hit every corporation, especially Apple. Many Chinese factories that make Apple devices have been shut down in February. However, the pandemic is slowing in China and factories are starting to reopen. Apple is also set to launch its 5G iPhone in the fall, which should help Apple stock recover from its current losses. Apple recently noted that even though iPhone sales are down in China, there is still growth in sales in other countries. This TradingSim chart shows the volatility in Apple’s stock.
“Outside of China, customer demand across our product and service categories has been strong to date and in line with our expectations, ” said Apple.
Wearables make Apple a value stock
Even though Apple stock is currently down, Apple devices are still going strong. Many homebound people are Facetime on their iPhones and iPads to stay connected to each other (and to the games they’re addicted to playing). Apple Watches and other wearable device sales rose 17% in 2019. The ability of Apple to innovate in technology gives value investing in Apple a benefit to investors.
Craig Johnson, chief marketing technician at Piper Sandler, said Apple is still a value stock because of customer loyalty. He noted that even through the last economic downturn 10 years ago, customers still bought iPhones.
“People are still going to step up and they’re going to buy the iPhone. You know, when this gets relaunched and gets released for the 5G iPhone, they’re going step up and buy it. We saw the iPhone get released in 2007 and 2008 in the middle of the crisis there. Consumers still were able to open their wallet and buy these things,” said Johnson.
Apple can withstand the current market volatility and COVID-19 crisis because of its ample cash flow, innovative new products, and a devoted customer base.
Another value stock Buffett believes in is Coca-Cola( NYSE:KO). Buffett owned the stock since hip-hop was a new category of music. The soft drink company is a value stock because of its high dividend and its steady cash flow. Coca-Cola made billions by selling its soda. Then the corporation pivoted to sales from water and low-calorie drinks and increased sales. The beverage company’s earnings for Q4 2019 were $9.07 billion and the stock rose 22% over the past year. However, CEO James Quincey noted that Coca-Cola has been negatively impacted by the coronavirus pandemic.
“The supply chain is creaking around the world. There are flash points when it’s getting a little harder to get ingredients through, whether it’s delays at the borders, the big changes in channel mix,” said Quincey.
The corporation also noted that the 2020 guidance would be impacted by restaurant closures and sport events cancellations. Coca-Cola sells many of its beverages in dining establishments and during games.
“[S]ince our last guidance update, local market policies and initiatives to reduce the transmission of COVID-19 have significantly increased. These initiatives include the direction to refrain from dining at restaurants,” said Coca-Cola.
However, Quincey noted that Coke’s workers are “doing a great job at adapting” to the changes brought on by COVID-19.
Coca-Cola dividend consistent for investors
The company’s dividend may be small at 3.5%, but it’s very consistent. The dividend has risen for an astonishing 57 straight years. For a value stock that proves that slow and steady investment pays off, investors should choose Coca-Cola.
In addition to Coca-Cola and Apple, ExxonMobil ( NYSE:XOM) is an established value stock for investors for many reasons. One reason investors can pick ExxonMobil to implement their value investing is its well-paying dividend. ExxonMobil had $6.6 billion in free cash flow last year. The oil corporation paid $14.6 billion in dividends to investors in 2019. Like many value stocks, ExxonMobil is an undervalued stock that has a high-yield dividend of $3.48 per share. That’s an impressive 9% dividend for investors.
ExxonMobil will survive oil crisis
ExxonMobil has been hit by two crises. The ups and downs of the stock market has affected the Dow Jones overall. However, oil companies have been rocked by the decline in oil prices. Saudi Arabia is overproducing oil to drive down prices and spite rival producer Russia.
As a result, the volatility of the stock market and oil prices have dropped to about $30 a barrel. ExxonMobil CEO Darren Woods announced that ExxonMobil will reduce capital expenditures to reserve its cash flow.
“Based on this unprecedented environment, we are evaluating all appropriate steps to significantly reduce capital and operating expenses in the near term. We will outline plans when they are finalized,” said Woods. This TradingSim chart shows ExxonMobil’s stock trajectory over the past few weeks.
Despite the reduction in spending, Woods said ExxonMobil will survive the current uncertainty in the oil industry. With refinery expansion around the world, ExxonMobil is poised to recover from this current setback.
“We are confident that we will manage through these challenging times by taking deliberate action to keep our people safe, our environment protected and our company strong,” said Woods.
ExxonMobil is a value stock before oil companies recover
ExxonMobil is a bargain value stock for investment. Investors could buy the stock while the oil industry is in turmoil. Then they could reap the benefits when the economy and oil industry recovers. Oil will likely bounce back above $30 a barrel if Saudi Arabia compromises with Russia and other oil-producing countries in OPEC ( Organization for Petroleum Exporting Countries) to reduce its oil output. If the economy recovers, the oil company will rebound and ExxonMobil will remain a value stock.
5. Johnson & Johnson
Just as ExxonMobil has been an established stock for almost a century, Johnson & Johnson (NYSE:JNJ) is another value stock with longevity. The multinational corporation has been around for a century and has been a reliable stock for value investors. The company’s stock pays a healthy 2.6% dividend and increases every year. The corporation has survived a scandal about asbestos in their talcum powder to remain a value stock. For investors that want a safe value stock, Johnson & Johnson is a safe pick-especially in the wake of the coronavirus outbreak.
Johnson & Johnson stock rises on coronavirus vaccine hopes
The world’s biggest healthcare product producer is racing to create a vaccine for COVID-19. The company has signed a $1 billion deal with the U.S. government to create 1 billion doses of a possible vaccine for the respiratory disease. Johnson & Johnson CEO Alex Gorsky expressed optimism that the company can create an effective vaccine to slow the disease.
“We have very good early indicators that not only can we depend on this to be a safe vaccine base but also one that will ultimately be effective based on all the early testing and modeling we’ve been doing. This is a bit of a moonshot for J&J going forward, but it’s one we feel is very, very important for use to be doing at this period in time,” said Gorsky.
Johnson & Johnson said in a statement that it “is committed to bringing an affordable vaccine to the public on a not-for-profit basis for emergency pandemic use.”
The hope of a vaccine has raised investors’ confidence in the stock. Johnson & Johnson stock has jumped 8% as a result of the news. Johnson & Johnson’s stock shows that an established company can weather any storm and persevere. By providing medical devices and other badly needed products during this health crisis, Johnson & Johnson has proven to be a value stock that will withstand Wall Street volatility.
6. JP Morgan Chase
Just as Johnson & Johnson is a health product institution, JP Morgan Chase (NYSE:JPM) is a banking institution that has a value stock. Chase’s P/E ratio is 8.68, making it an undervalued stock that’s perfect for value investing. Chase had a positive earnings report in Q4 2019 with profits of $8.52 billion. CEO Jamie Dimon said in a statement that the company can withstand Wall Street’s ups and downs.
“While we face a continued high level of complex geopolitical issues, global growth stabilized, albeit at a lower level, and resolution of some trade issues helped support client and market activity towards the end of the year,” said Dimon. This TradingSim chart shows the volatility of Chase stock during the week of March 19.
Chase stock has also been helped by the Federal Reserve injecting $1 billion into banks as part of the Fed trying to revive the economy. With that security, Chase can loan more to customers. Customers themselves will need to take out loans more than ever with the struggling economy. Before the coronavirus crisis, Chase was opening more branches and investing more in banking apps. Now the bank can be an option for consumers during this time of economic uncertainty. Chase is a top value stock for investors looking for a solid bank stock to add to their portfolios.
While many banks have value stocks, the nation’s biggest retailer also has a reliable value stock. Walmart(NYSE:WMT) has succeeded by selling many essential products and become a value stock because of its strength during the COVID-19 crisis. The nation’s largest big-box store was a top stock to financial experts like Jefferies analyst Christopher Mandeville. Even before the coronavirus pandemic, Mandeville praised Walmart for its financial strength.
“WMT[Walmart] exhibited just how well the company is leveraging its physical scale/digital presence and financial stamina to push the boundaries of retail, using innovative tech and learnings from abroad. With clear momentum in grocery and a sustainable productivity loop in place, WMT[Walmart] now pivots to better general merchandise, one item alongside enhanced fulfillment practices that is critical to long-term e-com success,” said Mandeville.
Walmart thrives during COVID-19 outbreak
After the COVID-19 outbreak,Walmart has become an essential resource by staying open during the pandemic.
Walmart CEO Doug McMillon noted that the corporation has seen e-commerce sales grow by 35% over the last few months.
“We continue to see good traffic in our stores. We’re growing market share in key food and consumables categories, especially with its online grocery delivery service. including fresh,” said McMillon.
Goldman Sachs analyst Kate McShane noted that Walmart will help customers by keeping stores open and by delivering groceries as well.
“In the short term, we expect demand to remain robust, even if panicked buying subsides, given the companies’ mix of essential/grocery. Further, these stores will likely remain open (versus over half of retail in the U.S. that is currently closed), even in states that have “shelter in place” rules,” said McShane.
Walmart dividend makes stock attractive to investors
Like many value stocks, Walmart has a well-paying dividend for investors. Walmart’s payout to investors tops 2% and has steadily increased for an impressive 47 years. Walmart’s consistent dividend payouts make the retailer’s stock a stable value stock for investors.
AT&T(NYSE:T) is another top pick for value investors. The telecommunications company has been a great value stock. The corporation is a “dividend aristocrat” that consistently raises dividend for investors every year. The current yearly payout to investors is a hefty 6.5%.
AT&T also will keep many of its stores open during the coronavirus pandemic. The corporation said that it’s critical for customers to stay connected during the quarantine orders nationwide.
“Connectivity is always essential to our customers — doctors and nurses, first responders, governments, banks, grocery stores, pharmacies, and others delivering vital services.”It’s even more critical during a public health crisis that’s challenging everyone. In fact, as a critical infrastructure provider, AT&T views it as our civic duty to step up and keep our customers and communities connected,” said AT&T.
5G technology and streaming could help AT&T stock
The lastest Wi-fi technology could also help boost AT&T stock. 5G technology will soon come to many phone customers that subscribe to T-Mobile ( which is owned by AT&T) could benefit from having 5G devices. With faster streaming on devices, AT&T could have a lock on the 5G market once the technology takes off.
In addition to 5G technology, AT&T stock could rise once it enters the streaming wars. The corporation plans to launch HBO Max, which will fan favorites like Friends and The Boondocks. When the service debuts in May, HBO Max could help AT&T stock grow if gains a lot of viewers. AT&T stock could rise after launching the streaming service. AT&T stock could be ideal for value investors looking for a long-established stock pick.
Just at AT&T is evolving to meet new communications needs, Disney is adapting to new forms of entertainment. The entertainment conglomerate has been struggling during the COVID-19 crisis because of the closure of its theme parks. However, Disney+has been a bright spot for the corporation. The streaming service has attracted 28.6 million subscribers since its launch in November. The international expansion of Disney+ in Europe should help the corporation’s earnings in the long run. Minal Modha, consumer research lead at Ampere Analysis, noted that Disney has to appeal to kids that love Frozen 2 and adults who want to binge watch Star Wars: The Mandalorian.
“It will now be key for Disney to ensure it retains these customers with a mix of new Disney Plus originals and new release movie titles,” Modha said in a statement. “Furthermore, while there is still room for growth among both the two core demographic groups, it will be imperative for Disney Plus in the longer term to broaden out its content offering to appeal to a wider audience.”
Hulu, another Disney-owned streaming service, is also an area of growth for the company with 30 million subscribers. Even though many sports events are canceled, ESPN+ still has 6 million subscribers. With many people being quarantined, Disney’s popular movies can enjoy a greater audience and possibly increase its stock price.
Disney dividend is no Mickey Mouse amount
Disney can be a daily stock pick for investors because of its ability to withstand the current Wall Street volatility. The corporation’s dividend payout is consistent for investors. Because Disney’s net income grew to $10 billion in 2019, its dividend payout to investors is 1.8%. While that figure is smaller than other companies’ yields, it’s still a steady increase year after year. Disney stock is a top stock pick for value investing.
10. Weight Watchers
Another value stock may be the least likely. Weight Watchers(NYSE:WW) isn’t just for your fluffy Aunt Margaret anymore. The company has grown from a weight-loss company predominately for women to a wellness company for all genders. Since Oprah purchased 5 million shares of Weight Watchers, the company has added 6 million more subscribers. “The Oprah effect” of her magic touch helping businesses has helped Weight Watchers.
Weight Watchers has also evolved because of its new marketing campaigns to reach more male customers. DJ Khaled has become a spokesperson and another one- big male superstar, that is- is aligning with the brand. The Rock joined Oprah on her Weight Watchers tour to promote the rebranding of the corporation. The revamp to focus more on holistic health instead of weight loss appears to have worked. Chief Financial Officer Nick Hotchkin, said that tour helped drive Weight Watchers awareness up with potential customers. The success also drove the corporation’s earnings up to $29 million in its last earnings report.
“We believe this high visibility has had a halo effect well beyond those who are in the audience.In addition, the tour helped reinforce our brand transformation, showing how WW is your partner in both weight loss and wellness. Member recruitment so far in 2020 has been well above the prior year, as expected, and is reflected in revenue and earnings growth guidance for full year 2020,” said Hotchkin.
Weight Watchers may benefit after quarantine
With many people cooped up inside and stress eating during the quarantine, Weight Watchers could benefit after the nationwide quarantine ends. When the COVID-19 crisis passes, people will be eager to be more active and become healthier. Morgan Stanley analyst Lauren Cassel says that Weight Watchers could add more subscribers after the end of the nationwide quarantine.
“Once the ‘cocoon’ phase ends and shelter in place measures are raised, we[Morgan Stanley] see WW as a potential beneficiary of changes in consumer behavior. We anticipate a heightened focus on health, wellness, and weight loss after weeks of gym closures, stress eating, and limited physical activity.”
In addition, Cassel said that “the extent to which existing subscribers are currently showing greater interest and spending more time engaging with the app during the cocoon phase could lead to better retention curves for these subscribers over the medium term, which we incorporate into our $47 Bull case valuation. Bottom line, we think WW’s value proposition is actually stronger post-COVID-19 than it was before,” Cassel said.
“WW’s value proposition is actually stronger post virus than it was before”, said Cassel.
The wellness company has had its stock rise 17% last week while the S&P only gained 11%. Weight Watchers can be an affordable option for investors who want to cash in on wellness.
Weight Watchers stock is a bargain for investors
The wellness company is undervalued and is selling for only 8 times its earnings. The stock will likely continue to rebound and be a great pick for value investing. Unlike other value stocks, Weight Watchers stock doesn’t pay a dividend. However, Weight Watchers stock is a value stock that investors can choose if they want a stock that is capitalizing on the wellness trend.
Value stocks are safe stocks in volatile stock market
Value investing may seem boring, but can pay off in the long run. In this time of economic instability, value investing can be a great way for investors to build a slow and steady growth in their portfolios. Growth stocks may get more attention, but value stocks can stand the test of time. For investors taking a long-term view and that can exercise patience, value stocks are a safer option.
Diversification is key in value investing
Even though many value stocks are in similar established fields, there is still room for diversification. Value investing can consist of investing in life insurance stocks, bank stocks, and even tobacco stocks. Altria (NYSE:MO) is a long-established stock that offers a strong dividend. By diversifying a value stock portfolio, investors can get bigger returns in their investments. If the bank industry is struggling, diversification in another field can help create a healthier portfolio.
Conduct research before investing in value stocks
Research is important to find the best stock for investors. By using TradingSim’s analysis and trading simulations, investors can find the best value stocks for them. Investors can take advice from Warren Buffett, but ultimately have to decide for themselves what value stocks are best for them. With TradingSim’s charts and guidance, value investing can be rewarding- and maybe even profitable.
I Put Together A New Swing Set
After peak news flow over the weekend, along with the state of Louisiana shutting down, I decided to take the day off and build a swing set for my two little girls. This was my first build of any sort of playground set and I was a little terrified going into the project. I heard horror stories of grown men putting together these contraptions, and promised myself I would always pay labor for that task.
Being that we are in unprecedented times, with the state shutting down and the government mandate to shut down my small businesses, I said, “What the hell, I’m going to build a swing set as if was a giant outdoor puzzle and take my precious time with it.”
And, that’s exactly what I did. I took my 4×4 Ford to Academy, put the swing-set box in my truck like superman, and drove back to my residence before the whole state shut down.
Upon arriving, my girls were excited. I one-armed the swing set box (I’m 6’4 225lbs) out of my truck and threw it in the garage. Then, I opened the box and realized what a grave mistake I just made. This was worse than a 10,000 piece puzzle. I remained calm.
This was the box the swingset came in. Imagine opening a box to find this shit. pic.twitter.com/YQM5ruXlk3
— Cajun ✪ (@RaginCajun) March 24, 2020
Long story short, this was just the therapy I needed to get away from the news flow. I sashayed in and out my backyard to office, taking my time with each wood board while buying every dip in $AAPL.
The news flow was too negative. I was damn near attacked on Twitter for even the thought of buying shares in $AAPL. This gave me big confidence in the trade, so much confidence that I went back outside and built my girl’s playground like I was Bob fucking Vila.
Here are some pictures from the project. Don’t believe the hype, with time and a clear head, these things can be a lot of fun to put together with your family. Just as investing can be.
— Cajun ✪ (@RaginCajun) March 23, 2020
— Cajun ✪ (@RaginCajun) March 23, 2020
The swingset is complete and so is my new swing long in $AAPL.
$AAPL long with a 212 stop looks good.
— Cajun ✪ (@RaginCajun) March 23, 2020
No lie, I was attacked several times today for noting my buy in $AAPL
— Cajun ✪ (@RaginCajun) March 24, 2020
The end result to my day: PRICELESS. Go build something.
WARNING: Fake Sykes Scammers Want Your Money
I got so mad I wanted to SCREAM.
Recently, someone contacted my team asking for their money back. But here’s the thing…
They hadn’t purchased any of my DVDs. They weren’t part of the Trading Challenge. As a matter of fact, they hadn’t spent a single penny with me.
It gets worse. You might be thinking I was upset at this person and their claims. Nope. I felt sorry for them.
Because before the person in question got in touch with my team, they’d been conned out of several thousand dollars.
It all started when they were contacted on social media by someone claiming to be me. After the poser scammed the unwary victim, he disappeared. Never to be seen again…
Finagling Fraudsters Pose as Teachers
They come at you with a fake account in my name, say they’re me, and then do everything they can to take your hard-earned cash.
These immoral scam artists deserve nothing less than the full brunt of the law to come crashing down on them.
In the meantime, beware. If something sounds too good to be true, it probably is…
SO many scammers these days, 1.) don’t pay anyone via Western Union 2.) don’t use Walmart Moneycenter and 3.) I don’t refer ANYONE to ANYONE else other than my own teachings are there’s so much BS these days it’s disgusting
— Timothy Sykes (@timothysykes) January 15, 2018
Needless to say, the scam victim was distraught. One of my team members was nearly in tears because the victim was in tears. It was awful. For privacy reasons I won’t name the victim, but I want you to understand how serious this is.
It’s not the first time something like this has happened. But it seems to be happening more often. My team is already working hard to stop the scammers.
Click on the link below to watch a very important 7 minute video. (Video opens in a new tab.) Then continue reading this post so you know what a scam attempt looks like.
Bottom line: I’ve had enough. Scammers, pay close attention to these words … I’m on a mission to out you crooks once and for all. I’m gonna expose you and your methods so you can’t prey on innocent people anymore.
Now I want to give you some ideas … some red flags to tip you off to potential scams.
Scam Alert Red Flags: Conversation With a Con Artist
Below is an excerpt of a direct message (DM) exchange on Instagram. The victim was targeted because he follows me on social media. Luckily, this follower knew what to look for. Be aware of what cybersecurity specialists call spear-phishing and social engineering.
The conversation was taken from actual screenshots, some of which I’ve included. I’ll point out the red flags along the way so you know what to look for, as well.
If you ever get a private DM from someone saying they’re me it should instantly raise…
Scam Alert Red Flag #1: Private Chat Invitations
To be clear: I don’t have a private chat page. As a matter of fact, I will never DM you. I hardly have time to DM my family, friends, and members of my team … let alone students. Students get my attention on webinars and in my chat rooms. That’s about it.
Here’s how the conversation played out…
[scammer] Hello. Welcome to my private chat page. How are you doing today?
[victim] Cool. How are you?
[scammer] Am great. Where are you from?
[victim] From US. Live in UK.
[scammer] Okay. Have you ever traded and earn some profit before?
[victim] Only paper traded so far.
The victim, at this point, thought I’d contacted him. He thought it was pretty cool he’d been invited to my ‘private chat page.’
Scam Alert Red Flag #2: Forex, Bitcoin, Options, and Money Management
I don’t trade forex. Nor do I mine bitcoin for people. I’m neither an options trader or options trading teacher. If someone tries to tell you I do anything other than penny stock trading education, alarm bells should ring in your head. Don’t give them a penny.
In the next part of the exchange, the victim knew enough to question the forex trading claim.
[scammer] Oh. I see. Would you want to trade in forex and earn huge profit daily?
[victim] You trade forex? I thought you were penny stock trader.
[scammer] I trade forex and also I mine Bitcoin for people. I can help you earn real big in forex and crypto trade.
[victim] Oh. Your blog says you trade penny stocks. How can you help?
As the conversation continues, notice how the scammer works to keep the things moving along and overcome objections.
[scammer] Penny stocks and forex trade. I can help you if you are ready.
[victim] I see. Well, I’ve been saving to fund a trading account.
[scammer] Very well then I can help you kick off. How much have you saved so far?
[victim] A few thousand.
[scammer] How much exactly?
[victim] £2800 roughly. Been paper trading while I save.
Scam Alert Red Flag #3: The Platform Change or … “Hey, Step Into My Office”
Watch how the scammer tries to get the victim to move to a different platform to continue the conversation. In this case, it was WhatsApp. But it could be any platform where they can avoid getting caught.
The target in this chat knew by now he was dealing with a scammer. He went along with things for a while, just for fun. As soon as this exchange ended, he contacted my team…
[scammer] Okay […] that’s still okay…you can start up with something even lower than that.
[victim] Yeah, but I’m practicing the patterns you teach on your blog.
[scammer] Send me your WhatsApp number now so I can add you up and we chat better over there. So I can teach you all you need to know.
Scam Alert Red Flag #4: The Scarcity Principle
Look, scarcity is used in legitimate marketing. Heck, I use it. For example, I don’t let just anyone join the Trading Challenge. You have to go through an interview process. Not everyone makes the cut.
Here’s another example: we have a limited number of seats for my Trader & Investor Summit every year. Once the tickets are sold out … that’s it.
So you see, scarcity is nothing new. But scammers hit you with “be fast because I have so many people I chat with.” Sorry, that’s just BS.
[victim] I almost joined your trading challenge. Thinking of pennystocking silver subscription first. Is this for trading challenge?
[scammer] This is for a full package of all I do…. Send me your whatsapp number now so I can add you up now. You need to be fast because I have so many people I chat with.
[victim] I see. Which is forex/crypto/penny stocks?
Like I said, I don’t have time to chat with potential students. I wish I did. If you want to chat … join the Trading Challenge and hit me up in the chat room. Better yet, become one of my top students.
Only after you apply for the Trading Challenge will one of my team contact you. The conversation continued and raised…
Scam Alert Red Flag #5: You Should Be So Lucky
Notice how the scammer tries to make the victim feel both lucky to be in direct contact and … beneath him.
I don’t talk to my students like this. Yes, I’ve been known to be harsh on a webinar. It’s called a pattern interrupt and it helps students break dangerous thought patterns. Thought patterns that keep them in the wrong mindset to be a self-sufficient trader.
But this is different. This is an air of arrogance meant to lull the mark into feeling like he’d better act fast.
[scammer] Yes. All of it.
[victim] I was under the impression I had to apply to the challenge and someone from your team would call. Where are you now?
[scammer] You should be very happy that you are communicating privately with me now so you are lucky.
[victim] Most definitely. Exciting.
[scammer] You still haven’t sent me your WhatsApp number…I will go off soon now.
The exchange continues…
[victim] Don’t really use WhatsApp. What can we do?
[scammer] Quickly download WhatsApp on your phone now, register it and send me the number you used in registering it so I can add you up right now. Do that fast now.
[victim] Why WhatsApp? What do I need to do to study with you? Is this how all your top students started?
[scammer] Listen, you need to understand that I am a very busy business man and I am not always here…that’s why I’m asking you for your whatsapp number…so if you are not serious or ready it’s up to you.
[victim] What’s your best forex setup? Did you trade today? How many stock trades did you take today?
[scammer] I trade everyday and am too busy to be chatting with just only you…
[scammer] I have so many people I chat and trade with…and they are all waiting for me.
[victim] But I’m going to be your next millionaire student. Did you see Bohen today?
[scammer] You can only be my next millionaire student when you are serious. I don’t work with people who are really not serious.
[victim] Did you trade $TTCM today? I’m totally serious. 100% dedicated.
Ultimately this led to…
Scam Alert Red Flag #6: Gaslighting
Gaslighting is a form of psychological manipulation where the victimizer sows seeds of doubt in the victim. Check it out…
[scammer] You are asking me lots of private questions and I don’t take that from anyone.
[victim] But you are asking me to give you my number. Where are you?
[scammer] You have a nice privilege of chatting with me and you are blowing it up, if I leave here … I won’t be able to chat with you here again. I am asking you to send me your WhatsApp number because I chat all my clients on whatsapp … so it’s for your own good.
The exchange continued, but you get the idea.
How To Protect Yourself From False Stock Gurus and Con Artists
The above conversation is real. It went along for a while longer, and the ‘victim’ had a little fun with the scammer. Unfortunately, the scammers get away with this all too often. They ask for money and some unsuspecting person gives it to them thinking I’ll make them a millionaire.
- I will never ask you for money.
- I will never ask you for investment.
- And I won’t offer to manage your money.
I am an educator. That’s it. No forex, no options, and no crypto.
They Who Laugh Last Have the Last Laugh
Unfortunately, this is no laughing matter. I want you to be successful. My mission is to help people. These criminals are using my name to scam unsuspecting people out of their hard-earned money.
All you Internet scammers and impersonators out there should be ashamed of yourselves and know it’s not your fault for your unethical behavior, it’s your parents and teachers who failed you…but if you keep scamming you’re going straight to hell so don’t say I didn’t warn you
— Timothy Sykes (@timothysykes) January 15, 2018
Contact My Team
Please be safe. Please, please don’t fall prey to these crooks. If you’re ever contacted by someone claiming to be me, contact email@example.com. Together we can let these jerks know we won’t stand for any more of their BS.
Verify Social Media Accounts
I use verified accounts on social media. If you EVER receive something from an account that looks like it’s from me but isn’t verified … it’s NOT from me.
Here’s Twitter’s official Verified Accounts FAQ page. There you’ll find all sorts of information about verified accounts, what they look like, and how to report a fake.
And here’s Facebook’s Verified Profile information page.
Remember, I won’t contact you via direct messaging. Should anyone contact you claiming to be me, get in touch via the contact page and we’ll get the fake page or account taken down.
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