Facebook Massive Earnings Beat

      Could Facebook's earning beat finally be the boost that tech stocks need? They are up 6% today after crushing earnings... Other companies have beaten earnings and fell flat on their faces the next day... But could Facebook be different? Microsoft beat earnings and fell 9%, Amazon fell short and has dropped 13% in a week, Netflix knocked earnings out of the park and fell 23% in the last month and 13% in the last week.


      So will Facebook be more of the same or the anomaly? Let's look at their earnings.

      Their financials are highlighted by a 33% growth in advertisement revenue- compared to quarter three of 2017. That's on top of the 1% growth in revenue in other payments and fees. The growth in revenue has increased earnings per share by 11%, to $1.76. It also helped their assets, cash, cash equivalents, and marketable securities increased to over 41 billion... But revenue has never really been Facebooks issue, going back to quarter two the sharp decline in stock price was due to their users.


      They crushed user totals on almost every measurable scale. Daily active users (DAUs) increased to 1.49 billion, an increase of 9% year over year. Monthly active users (MAUs) increased to 2.27 billion, an increase of 10% year over year. The increase in the users has resulted in the increase in ARPU, or average revenue per user. Every region except " Other " have expanded their ARPU. Worldwide their average revenue per user increased from $5.97 to $6.09.

      Overall, I was very impressed with Mark Zuckerberg's honesty and ability to easily explain who, what, where, when and why... He had an answer for all questions and was easily able to elaborate on what the company is planning on doing in the future... Including better monetization of Instagram stories, Instagram shopping, upgraded Facebook stories, and even more expansions into Facebook TV, Facebook marketplace, Jobs (which has already helped connect 1million people with new careers) and even in dating (Maybe a new Facebook acquisition is on the horizon?)

       Overall, Facebook is a buy for me. In my few years of investing, I have never felt this good about a company, I love Mark Zuckerberg and his vision, they have the goodwill and reputation to be the most recognizable and profitable brands in the world.

     


IBM Closes Deal to Purchase Red Hat For $34 Billion

       First off, a massive congratulations are in order for all owners of Red Hat(RHT) shares- Your shares are going to be purchased at a 63% premium, thanks to International Business Machine Corporation, better known as IBM.



       IBM announced on Sunday that they came to an agreement to buy Red Hat, the multinational software company that provides open-source software products to the enterprise community. IBM, one of the largest and most reputable technology services company will purchase all outstanding shares of Red Hat for a premium of $190. That number represents a $73 upgrade on the Friday closing price for a total of $34 billion.


        The acquisition, which is IBM's biggest acquisition ever and the third largest tech acquisition ever is much needed for the company, as they have lost about 17% of their share value in the last year. But could this really be the boost the company needs? IBM chairman seems to think so, stating " The acquisition of Red Hat is a game-changer. It changes everything about the cloud market. Most companies today are only 20% along their cloud journey, renting compute power to cut cost, the next 80% is about unlocking real business value and driving growth. This is the next chapter of cloud."

       IBM has been trying to get into cloud service but have been bumped by Amazon web services, Google cloud, and Microsoft Azure. Who Red Hat already has a partnership with, one that will be continued even after this move.  

       IBS said that it will halt its share buyback program, but the dividend will remain untouched. 







Stock Vs. Real Estate Investing and How You Can Do Both

       One of the most popular questions in the world of investing is " Should I invest in real estate or the stock market?" my answer is always the same- why not both? Both investments have pros and cons and both can make a poor person wealthy if done right. They both take lots of due diligence and patients but are well worth the wait. So what are the pros and cons of each?

        Stock Investing

When you invest in the stock market you have the advantage of a low upfront cost. You can literally open a brokerage account for a few dollars. On average, the market gains about 8% in value a year. You can easily diversify your stock portfolio with an exchange-traded fund or just a large slew of different stocks.

You can form streams of passive income in the form of dividends.

But the largest benefit the stock market has is liquidity- even in the worse bear market you almost always find a buyer for your shares. You can turn your portfolio into liquid cash in just a few days.

Stock investing has been the single best wealth creator ever, in a recent study done by Fortune magazine, if you bought a single share of Johnson And Johnson during it's IPO in 1944 at the price of $37.50 and had reinvested the dividends, the share would now be worth $900,000.

        Real Estate Investing

There is no better feeling than buying your first house. Or maybe there is... How about your first investment property? There are a few different ways to invest in real estate... you can buy, restore and sell a property for a higher amount than you bought ... or you can buy a house, multifamily or apartment complex and rent it to tenants.

The real estate market has boomed since 1962. The average cost of a house has risen 1,760%. Yes, one thousand seven and sixty percent.

So yes, real estate has appreciated in value at a massive rate, but there is a risk that is involved that is not involved in the stock market. The liquidity issue- if the market is down, no one is buying houses. Your assets are sinking in value and there's nothing you can do except wait it out.

On top of that, the upfront cost could be massive, Generally, mortgages require a 10-20 percent down payment. A three-family house in Boston averages about $600,000- that, at a minimum, would require 30-60 thousand down.

However, a Boston apartment can run about $3,000 a month.

Multiply that by three apartments, then by 12 times a year, you could be making $108,000 a year before any deductions.

Multiple that by three or four investments, you could be making a pretty penny for not lifting a finger.

       Invest in them both?
There is a way you can invest in both at the same time, you can get the liquidity of the stock market, the passive income of the real estate and the growth of both. It's called a REIT, also known as a real estate investment trust.

It trades on the stock market like a regular stock, there is no huge upfront cost and is a great form of passive income.

REITs are required to pay out 90% of their net income in the form of dividends.

If you took the same $60,000 you used for a down payment on the three families and used it to buy some REITs, let's say EPR properties.. you would have yielded nearly 8% in dividends alone.

You would have made $9,000 in dividends and capital gains.


Time to Load Up on Tesla Shares

      I want to first congratulate everyone that has been holding onto Tesla (TSLA)for the long haul. The chance investors have taken on the stock has had a massive pay off... the companies shares are up 670% in the last five years and I would even send my congrats. to people that are new investors in the company. It seems like for the first time ever, Tesla can turn a profit and actually show some stability moving forward.

       With that being said, Tesla blew wall streets expectations out of the water during their last quarterly earnings. The Tesla 3 was the highest grossing revenue vehicle in quarter three, easily beating the next two largest revenues from The Honda Accord and Toyota Camry. They were able to push up volume sales as well- they had the fifth largest sale volume falling behind the Civic, Accord, Camry and Corolla. But what's even more intriguing about the Model 3, is that from all the customers that had trade-ins- half traded in a vehicle that had an MSRP under $35,000. That means that customers are trading up in value and that the Model 3 has larger market potential than just the luxury sedan market.


       The long-standing issue Tesla was the inability to grow their revenue(And make a profit)- but it did not disappoint this time around. Due to the growth in Model 3 deliveries, they were able to achieve 82% QoQ revenue and 158% YoY.

EPS was $2.90.. compared to the ($0.19) expected.


       You can compare almost any financial metric from this 10q and compare it to last years and see a massive change in the company.

Automotive sales are up nearly 3x
Net income went from ($671,163,000) to $254,673,000

      Overall, the company seems to be turning things around, even though they fell short of production of 5,000 per week for the quarter.. they came close- due to their large push of 5,300 cars per week for the last few weeks of the quarter. They are receiving more and more orders and are delivering more cars in a timely manner.



     

FAANG EARNINGS RECAP

Facebook (FB), upcoming earnings on October 30th

Apple (AAPL), upcoming earnings on November 1st.

Amazon (AMZN), upcoming earnings on October 25th

Netflix (NFLX) 
       Netflix delivered strong earnings for quarter three, revenue grew by a billion dollars from quarter three of last year. Cost of revenue rose but revenue growth outpaced it. They are invested heavily in their intangible assets... Which has increased nearly 5x since quarter three of 2017.

       They crushed EPS, reporting $0.89. Easily beating the expectation of $0.68

       Total net income is up 250 million since last year, that goes up alongside the 3 billion in licensed content.

       But what was most impressive was the fact that they added 7 million new domestic memberships and over 19 million new international members.

       The one concerning piece of information they released is the forever growing debt... Which is growing at a massive rate.

Alphabet INC. (GOOG)

Googles parent company, Alphabet INC. announced earnings after the bell on October 25th. Shares dropped as much as 7.6% during after hours in large part due to their miss on revenue which came in at 33.7 billion- that is compared to the 34.04 billion consensus estimate. They are still up 24% in revenue for the year.

but despite falling short on revenue- they still crushed EPS. They reported an earning per share of $13.06, beating the estimated $10.44. 

As always- Googles ads accounted for 86% of revenue, the 86% accounts for nearly 29 billion in revenue.

The "other" 14% of revenue came from its cloud business and hardware sales. The "other" revenue hit 4.64 billion, which is up 30% this year.

Their spending continued to increase, mostly for research and development- as you would expect from a company like Google. 






We are already in a bear market..

       Technically speaking- No we are not in a bear market. There may be a few companies in bear territory, but according to the standard and poor five hundred... The market is only down slightly in the year. But I think the S&P 500 is skewed. The S&P 500 represents the 500 largest market cap stocks that are traded in the American market. But it represents some more than others.
 
       For example, Apple- which has the largest market cap in the world has an S&P weight of 4.41. That 4.41 is larger than the bottom 100 stocks on the S&P 500 combine. So Apple, which is up 40% in the last year alone, is weighed more than 100 other companies... Of those 100 companies, 64 of them are down for the year. 

        Out of those 64 companies, 49 of them are down at least 10%.

        Of those 49 companies, 30 of them are down over 20%. 

        Some are even down 40%. 

        But despite the 64% of the bottom of the S&P 500 being negative for the year, it is outweighed by Apples Good performance. 

         But Apple isn't just the only heavy weighted stock- the Top 50 heaviest weighted stocks AAPL, MSFT, GOOG, AMZN, BRK.B, FB to name a few, outweigh the other 450 stocks. 

         When those Mega-cap stocks perform well, it gives the impression that the entire market is doing that good. Which could not be further from the truth, over 260 companies in the S&P 500 are down for the year. Nearly 20% of the components are down 20% plus. 

         This correction is nothing but a good time to buy in on some mega stocks at a discount. 


Warren Buffet's Top 5 Stock Positions

       Warren Buffet is considered the Michael Jordan of investing- He started investing when he was just 11 years old and has successfully amassed a 60 billion dollar net. During his seven decades of investing he has earned the title of being the most successful investors ever. People are always curious about what he's investing in. Him speaking positively about a company is enough to send the stock soaring. But what is he currently holding onto?

       1. Apple (AAPL)

Apple is Buffet's largest position by far- It's almost two times as large as any other investment he has. It comprises 24% of his portfolio and this investment makes perfect sense, the biggest market cap in the world and the first company to hit a trillion dollar mark. Apple has been innovative, profitable and the best company in the world at marketing. They have a massive cash reserve, pay a good dividend and still have great growth potential- up 44% in the last year and 236% in the last five.

       2. Wells Fargo (WFC) 

Wells Fargo is one of the largest and most recognizable banks in the world. But their reputation did not protect them from committing what Buffet called a "cardinal sin". If you don't recall, Wells Fargo was opening fake consumer accounts, charging people fees and overcharging for insurance to meet their crazy incentive-based goals. Buffet compared this situation to what happened to American Express in the 1960's. Essentially, Buffet realizes the mistake that Wells Fargo made, but see's no reason why the bank is inferior to other large banks. He likes the CEO and is confident that it will turn around.

         3. Kraft Foods (KHC)
Kraft Heinz has been able to grow revenue, net income, assets and cash equivalents over the last five years. The thing i'm concerned about with this investment is the massive debt they have. The debt which has outpaced revenue in the last five years has had a massive weigh down on the stock.. which is down 25% in the last year and 10% since it's IPO.

I'm not to sure about this company. Sure it has a reputable name, but so did General Electric at one point.

         4. Bank Of America (BAC)
I don't understand why Bank Of America has been stagnant for the last year, it's down 2% for the year, but i'm not sure why. It's the second largest bank in the world in terms of market cap. They handle over 2.2 trillion in assets and have a retail presence in over 40 countries.

They are expected a 13% growth in revenue in 2019 and are extremely under valued.

They pay a dividend that yields 2.4% and that could easily be raised- as they have a payout ratio under 30%.

          5. Coca-Cola (KO)

They say you should only invest in companies that you believe in their product, and Warren Buffet drinks 5 Coca Colas a day.. No joke. He drinks 60 ounces of Coca Cola a day. This position is one that he started back in the early 80s. Even if I don't see the growth value in this stock, I understand why he's holding it. It still pays a healthy- juicy 3.4% dividend that has been increased every year for nearly 6 decades.

Even being out paced by the market growth, KO represents a safe gamble with a nice form of passive income.

They have a wide range of products and are looking to expand. 

Most Common Money Mistake Millennial Make

       In a recent study done by Bank Of America, it was found that an estimated 1 out of 6 millennials have over $100,000 saved up. I'm not sure about how active that study is, but as a millennial, I do see some of my friends make critical money mistakes.

       1. Negative Equity 

Having negative equity is one of the most common money mistakes young people make. Negative equity is when you owe more on an asset than an asset is worth. This is most common with vehicles.

They will buy a new or new(ish) car and the car will depreciate faster than they are making principal payments. When I worked in the car industry and was dealing with a customer that had a monthly car payment- more often than not they had negative equity.

One time I had a customer owe nearly $30,000 on a car that was worth about $15,000. Realistically they had no options but to roll the negative equity into a new loan, refinance and pay it off faster or suck it up and tough it out.

Leasing a car will eliminate any chance of negative equity.

       2. High credit card debt
As Americans, we live in a country that buys, buys and buys. We buy stuff we don't need to impress people we don't like. They impulse buy for no apparent reasons and put it on credit cards. The issue with credit cards? They charge huge interest rates. The average American has over $6,000 in credit card balances. A number that has been steadily increasing.

Credit card companies offer something like 1% cash back in hopes that you use a large amount of credit and don't pay it back before the interest hits your account.

       3. Wrong bank account

I didn't think this was an issue until I got into the banking industry. I see people all the time with a savings balance of $50,000+ in a checking account...? WHY?

In an account that yields no interest. Even basic savings account in today's day has virtually zero value in interest. But the money market account is yielding around 2% ... Sure it's not stock market returns but it's liquid cash that is easily accessible and has no risk factor.

       4. Negative changes in life events
Okay, it's not that I'm against marriage but marrying the wrong person could put a massive financial burden on a person. Aside from assets being divided, the legal fees can bury someone. A child is similar, it's all timing. If you have to take out loans, credit cards etc. to stay above water- It's not good timing.

       5. Bad Purchases
The average smoker smokes 6 packs of cigarettes a week...  a pack cost about $10 that's $60 a week. That would be over $31K over a 10-year span with a 1.79% interest rate on a money market account.

Alcohol, clubbing, even going out to eat one or twice a week are massive financial burdens.

What about those monthly subscriptions that you hardly use? Netflix, Gym, Spotify, Pandora etc?

       6. Not having an emergency fund

An emergency fund and savings account should be completely separate. An emergency fund is if you get a sudden one-time payment that you can't cover with your regular checking account. I recommend keeping somewhere between $500-$1000 in a separate account.

        7. Only having one stream of income
Just like the stock market, you should diversify your income portfolio. Your job will be the biggest income source, but if you could diversify and have multiple people sending you checks for multiple things... Do it.

Passive income is money you can make in your sleep. If you're looking for passive income ideas, check out this article.

http://www.modernizedinvesting.com/2018/10/my-favorite-7-passive-income-ideas.html

       8. Student loans

I'm all for investing in yourself- but you have to choose your battles. Spending $30,000 more for school for the same quality classes does not really make sense, does it? Unless you actually gain some type of experience that you wouldn't get at a more affordable school... why spend the extra money?

       9. Not understanding the importance of your credit score (or how to make it better)
This one is simple. Unless you are insanely rich- it's impossible to avoid taking out lines of credit completely. But what you can control is your interest rates. If you make on-time payments, keep balances, inquiries and negative marks low.. You will have a high score and will qualify for lower interest rates... Resulting in lower payments.

If you are interested in raising your credit score- here is how you can do that.

http://www.modernizedinvesting.com/2018/10/step-by-step-way-to-increase-your.html

        10. Knowing your wants and needs
Something as simple as knowing the difference between your wants and needs is huge- sure those new shoes may be nice... But is the extra 100 bucks maybe even nicer!












Three Stocks To Buy In November

       October was an interesting month, with just six trading days left we saw the S&P 500 drop about 6%, we saw Proctor and Gamble and Netflix slam earnings... We saw pot stocks blow up, then fall back on their faces...Facebook shares continued their fall and Snapchat is nearing a penny stock status.

       With that being said, it was a lackluster month for me- despite beating the market, my October stock picks are in the red. I have a return of -3.05%. But I have confidence that my month can be salvaged by Facebook earnings, which are being announced on the 30th. Etsy, on the other hand, has bounced back with an increase of 10% since hitting its rock bottom on October 11th. I was able to reiterate my position with both of these companies and average down. I was pretty happy with the small correction.

         Aside from buying more shares of these companies while prices are still low- I am also looking into some new companies as well.

1. Visa (V) 

No need to over think this one. Visa is up 31% in a year span and it sitting at a $140 price mark. Visa, is a financial service corporation that facilitates electronic funds transfers. Contrarian to common belief- Visa does not actually issue cards, set rates, or extend credit to users. Instead- they provide financial institutions with Visa-branded payment products. In 2014 they processed over 100 billion transactions for a total volume of 6.8 trillion.

Being the leader in this space is no surprise when you look at this companies financials.

Since 2014 we have seen a 214% increase in assets, 23% increase in net income, 44% increase in revenue and a 50% increase in gross profits.

2. GoDaddy (GDDY) 

This is going to be my spec stock going forward. I dedicate a small section of my portfolio to unproven companies that don't have a long track record. They generally make up less than 5% of my portfolio. This is that stock, GoDaddy is a domain registrar and web hosting company that helps people and companies get a connected to the web.

But the reason I call this stock speculative is because it's up 70% in the last year despite being profitable for the first time ever. But being profitable does not seem like it was just a fluke. They have been trending in the right direction for years.. for four years in a row they have become more profitable than the last, raising revenue and racking up cash and assets.

On top of their own revenue growing- they have more than quadrupled their short term investments. I really like the direction this company is headed. I will be purchasing shares on every dip.

3. Alibaba (BABA) 

I rode Alibaba few a short swing earlier this year and made a pretty penny on it. Thankfully I got out before it sank like a rock in water. For those that don't know- Alibaba is kind of like the Amazon of China. They have their hand in a ton of different business'.

They are involved in music streaming, video streaming, video games, online payments, cloud services, mobile messaging, ride share, retail outlets.. the list goes on an on.

I'm buying this stock because it is severely undervalued in my opinion. I don't want to get into this stock with a time frame.. but rather a price target. I would like to buy some shares around the $148-155 range and get out around $200-210.

This stock- like Amazon will have a massive boost from their cloud services.


My Three Favorite Stocks With 3% Dividend Yields

       A dividend is a small portion of money that a company pays out on a monthly, quarterly or annual basis- out of their profits or cash reserves. Companies that pay dividends are typically "blue chip" stocks that are beyond their growth stage and reward investors in other ways. But a dividend stock is only considered a "good" dividend stock if they can continuously raise their dividend while maintaining a good payout ratio. Some companies pay out an unreasonably large dividend that restricts them from other business ventures ( See L Brands ).
     
1. Realty Income Corporation (O)

       Realty Income is a real estate investment trust that invests in free-standing, single-tenant commercial properties. Their companies slogan is "The monthly dividend company" .. and that's a name they live up too. They pay out a monthly dividend of $0.22 per share. They have increased their net income, assets, and revenue for the last three years. This is due to their large amount of different organizations that they have lease agreements with. Such as Walgreens, FedEx, Dollar General, and WalMart.

       The dividend which currently yields over 4.5% which has increased every year for the last 22 years. They have a payout ratio under 85%.

        Share value has also increased by 8.64% in the last year as well.
If you invested $10,000 in this stock a year ago you would have collected $506.88 in dividends. Which does not include the 8% growth this stock has seen over the last year.

2. Proctor And Gamble (PG)

        If your looking for a company that has growth potential, safety, and a juicy dividend- look no further. Proctor And Gamble is a staple of dividend investors portfolios. They have a market cap of over 200 billion and have successfully raised dividend for over 60 years. With a payout ratio under 70%, they are certainly able to continue raising the dividend.

        The company itself is one of the most recognizable brands in the world, even if you don't realize it. Chances of you have one of their products in your house is more likely than not... They own multiple brands including Olay, Pampers, Tide, Dawn, Downy, Crest, Vicks, and the list goes on and on.

       They are well diversified and have enough continuous revenue to increase on the 3% they are already yielding. Which they already announced they are doing- on Friday, during the conference call they announced they are raising the dividend by 4%.

3. Paychex (PAYX)

       Paychex is a provider of payroll, human resources and benefits outsourcing for small and medium-sized companies. They have yielded a nice 3.32% which has been increased every year since 2011. But this company is not just focused on their dividend. In the last three months, their stock has increased by 8%. They also some very nice financial statements. Their net income and revenue have increased over the last four years with a very low growth in debt.







Aurora Cannabis Will be Traded on the NYSE This Thursday

       Cannabis stocks have caused a lot of hoopla in 2018, they have been one of the most volatile industries on the market. One of the most popular pot stocks- Aurora Cannabis will finally be traded on the New York Stock Exchange. But who are they? Can they finally emerge as the clear-cut leader in the weed industry?




        Aurora Cannabis (ACB) is a Canadian based company that is led by CEO Terry Booth. They are often referred to as the Berkshire Hathaway of pot stocks, due to their history of investments. But besides selling pot and making good investments.. what do they do? 

        Well, in 2017 they acquired BCNL and UCI- two companies that develop and sell systems to help people make their own cannabis. With recreational usage becoming legal in Canada- and it becoming legal in more and more places, they have a massive untapped potential to not only sell pot. But to help people make it.




        They aren't just stuck in Canda either, they already have an agreement with Germany, Italy, and Australia to supply medical marijuana.

          They are one of the only profitable pot stocks on the NYSE. They have grown their net income from hundreds of millions in negative income- to 70M+ in profits, they have expanded their investments, they have lower cash and cash equivalents than a few years ago. But that's because they have been paying down debt on a massive level.

           I usually invest in companies long term- I like to invest in companies that have a long history of being profitable, innovative and have the safety. Even if this company does not have that yet. I do believe in this company long term to emerge as the pot favorite.



     

My Thoughts on Square, Roku, Etsy, GoDaddy and Planet Fitness

       Saying these stocks have had a great year would be an understatement ... Square is up 124%, Roku is up 150%, Etsy is up 165%, GoDaddy is up 65% and Planet Fitness is up 80%... Obviously, this growth is not sustainable. But can they continue to grow?


 1. ETSY

My only regret with Etsy is that I didn't invest in it quick enough. Since their chief executive officer took over the stock has been a juggernaut. They have been able to grow revenue in a massive way while reducing their total debt. They have competed very well against other E-commerce platforms. In their last conference call, they announced they will be increasing their selling fee by 40%.  A 40% increase in their largest revenue stream is massive and I am completely sold on this company long term.

I won't go on forever about why I like Etsy since I already wrote an entire article on why it's my biggest investment. You can read it here:

 http://www.modernizedinvesting.com/2018/09/why-etsy-has-become-my-biggest.html

2. Square 

Square has had a ton of hoopla surrounding them this year, they busted onto the scene of payment processing and have not looked back. Making it easier for small business' to accept credit card payments, helping with payroll and employee resources there's no wonder why people love this stock. It's a stock that could be around for a long long time. They have not yet been able to turn profits on a consistent basis- but they are well on their way.

3. Roku 

Roku says they are the pioneer in streaming for TV. Essentially they sell devices that allow your TV to connect to your TV so you can watch your streaming services.. Such as Netflix, Sling TV, PBS ETC.

I simply don't see the vision for this company. I don't see how they are going to be profitable. The only way I can see this company being profitable in the long-term is if they have a partnership with one of the massive companies that are coming out with a streaming service.. Such as Wal-Mart, Facebook, Apple and Disney.


4. GoDaddy


GoDaddy helps people have an internet presence. They help people register domains, create and host their websites. They have turned a profit for the first time ever in 2017 and have been trending in the right direction every year for the last four years. Aside from just the net income- they also have more money spent on research and development, assets have grown, they are investing more in the long and short term.

I like the direction of GoDaddy

5. Planet Fitness

This one may be big due to the massive growth in subscription base stocks... But I do believe they are the premier gym. They have more locations than any other publicly traded gym. Of this list, they have the best balance sheet. They have seen large increases in revenue and assets over the last three years and debt is manageable.

Upcoming Must Watch Earnings

       We have already seen Netflix and Proctor and Gamble crush earnings in the last week. PG rose as much as 8% and Netflix rose 11%, but these next two weeks will be even bigger.. Some of the biggest companies in the world are expected to release earnings.. Including Microsoft, Amazon, Google, Facebook, Snapchat, Twitter, Visa, 3M company, Kimberly-Clark, Nasdaq INC, AT&T, Verizon and the list goes on and on.. But what companies earnings should you be watching besides the companies you are invested in?


1. Facebook (FB)

Everyone should be interested in Facebook's earnings. Last earnings call sunk the stock 23% in a couple of hours. Since then it has all been down hill for Facebook stock.. But I believe it is nothing but an over reaction.  Revenue is up 300 million per quarter since the end of 2017, they are spending 600 million more per quarter on R&D, assets are up 6 billion since 12/31/17 while debt is up just 600 Million.

They received more revenue per user than expected, and beat EPS estimated.. So why did it drop? Because they didn't hit the estimates for total new users in Europe. . #overreaction

2. Amazon, Google and Microsoft 

Everyone should be watching these three stocks because they have a combined market cap. of over 2.4 trillion dollars. Cut and dry these three stocks could send the market soaring.. or a massive decline. They represent 3 of the 4 biggest companies in the world and weigh so heavily on the S&P that every person invested should be listening to the conference call and reading the 10Q.

3. Snapchat and Twitter 
I'm not invested in either of these companies- But they are are in the same space of social media along with Facebook.

This may be the last straw for Snapchat investors. The stock is down 55% YTD, They have -3B in net income. Cost of revenue is outpacing revenue and their debt has doubled in 3 years.

Twitter on the other hands is starting to look like a young Facebook. They have all the financials heading in the right direction and the user total are increasing. I don't think it will ever get to the point that it will be as big as Facebook, but it will be nice to compare the three biggest social media platforms in the world.

4. Kimberly-Clark Corp.

I'm interested in this specific companies earnings because they are a direct competitor to one of my biggest investments- Proctor and Gamble. As a whole, the personal products industry has struggled, with the 5 largest personal products companies averaging just 1.77% increase in stock value in the last year.. And that includes the Proctor and Gamble 8% increase the other day. If Kimberly-Clark can rally and get a nice quarterly report it could put this industry back in the right direction.

5. AT&T and Verizon

After years and years of hype, 5G is finally becoming a reality. 5G is not just about faster smart phones, but also help with virtual reality, connected smart homes and smart cars. I am interested to see what the two biggest telecommunication companies say about it and each other.

Cleveland-Cliffs CEO Tells Analyst to Commit Suicide

       Cleveland-Cliffs operated as a mining and natural resource company. Led by CEO Lourenco Goncalves- they had a very .. umm... interesting interaction with Goldman Sach's analyst Mathew Korn on Friday after releasing earnings. 



During the conference call, he went off on a tangent after he said that Korn gave his company faulty profit estimates. Goncalves said " It's not like you don't understand our business... You don't understand your business. " 

I understand that an analyst can sometimes be annoying .. especially when they say something negative about a company that you're invested in.. But the CEO of the largest iron producer in North America probably just went too far. 

He went on to say that Korn is a disaster and that his parents should be ashamed of him. However- he did add his next three things he wants to accomplish as the chief executive officer.

1. He wants to reward long-term stockholders, which he has.. the stock is up nearly 50% in 52 weeks. 

2. He wants to initiate a stock buyback program.

3. He wants to " Screw analyst so badly that they can't just resign but they have to commit suicide " 

I myself have been on the back side of a stock dropping because of an analyst giving it a negative rate. But I've also been on the flip side of that and saw a stock go up 5% because of an analyst. 

Either way, I don't think I would have gone this far- specifically on a conference call that anyone in the world could hear.  








What Are Stock and Reverse Stock Splits?

     



       Stock splits are a lot less complicated than people think. A stock split is when a companies board of directors decides to increase the number of outstanding shares. The board of directors will decide what kind of split there is. The most common split is a 2 for 1 split. This means for every one share you own- you will now own two.

       For example, let's say you own 10 shares of ABC financial for $100 each- Then ABC financial decided to split the stock 2:1. So now instead of owning 10 shares, you own 20. But the shares are no longer worth $100. Instead, they are worth $50. So your equity of $1000 did not change, just the amount of shares you owned did.


       Although the 2 for 1 split is the most common, there have been bigger splits. For example, Berkshire Hathaway (BRK.B) had a 50:1 split in 2010. Meaning a single share was worth 1/50 of what it was before. But you owned 50 instead of 1.

But why would A company want to do this?

       Liquidity is one reason, the lower price makes and more attractive for smaller investors to buy and sell shares.

Stock splits on reputable companies generally result in a short-term boost for companies- the lower price is more attractive to smaller investors causing the supply and demand to fluctuate.  Another reason the stock may increase is because a split is an indication to the market that the stock is doing well. 

       On the flip side, companies sometimes go through a reverse stock split. A reverse stock split is not a good sign for your company. It's the exact opposite of the regular stock split.



       Let's say you have 100 shares at $1.00 each. The board of directors then decides to have a 1:2 split. The 1:2 split indicates that for every two shares you owned, you now own 1, but worth twice the value. The company doing these generally do it to avoid being delisted on the NYSE or Nasdaq.

       The higher price is also for the companies image, no company wants to be a penny stock.

Why I Don't Care About Netflix Beating Earnings

     Netflix (NFLX) crushed earning after falling flat on their face in their quarter two earnings call. But I'm not buying in on Netflix being a solid long-term investment just yet. They have a lot of fundamental issues that makes me want to avoid them at all cost.



     For one, do they have no concept of income to debt ratio? They have a massive amount of debt that does not coincide with their income. They have about 500 million in net income with about 15 billion dollars in debt. The debt has outpaced almost every measurable category on the income and balance sheet.

Look at the changes in these major categories over the last three years.
Debt- 197%
Net income- 109%
Cash and Equivalents- 153%

     

They have no short-term investments... Compared to the 500 million they had invested three years ago. Even with their 160% growth in assets, over 50% of their assets are intangible. Which brings me to my second point. What happens when real competition comes into their space? For 11 years they have owned 75%+ of all video streaming market share and they have rightfully dominated that space. Sure there have been a few small players such as Hulu, Amazon Prime etc. but what happens when other massive tech companies want to get in on the movie streaming service?

Disney(DIS) already announced they are pulling all of their content from third-party streamers and starting their own streaming service, and who owns more original content than Disney?

Apple(AAPL) is launching their own FREE streaming service and will be creating original content as well.

Facebook (FB) already launched the Facebook watch, where you can watch top videos from your favorite pages. They already started streaming live events such as sporting events.

Google obviously already has Youtube, who is able to offer free movies and generate revenue from advertisements

Netflix will not be able to hold 75% market share forever, it's simply not possible. Apple, the largest company in the world by market cap has less than 19% of the worlds smartphone sales. So what happens to Netflix' biggest asset when they have to share it? Licensing, trademarks, copywriters etc. will all have to share with the biggest companies in the world- quite frankly, Apple, FaceBook, Amazon, Google, and Amazon are the last companies I would ever want to compete with. 




Netflix Earnings Recap

       The streaming mammoth Netflix(NFLX) share price rose 11% in after hour trading after crushing their quarter three earnings. They reported an earning per share of $0.89, a strong beat on the expected $0.68. But that's not the reason why the stock shot up- really the big surprise was the addition of new subscribers. They crushed the 5.1 million expected new subscriptions, adding nearly 7 million users globally. This comes after the quarter two disappointment of just 4.47 million new subscribers. The stock took a 24% hit in result to the quarter two disappointment.
                             



Total revenue was up 2.35% from quarter two. 
United States revenue was up 2.32% from quarter two. 
Streaming revenue 36% year over year. 
net income was up over 300% from Q3 of last year. 

They are carrying more cash on the balance sheet, 200 million more to be exact. They now have over 3 billion in cash and cash equivalents. 
Total assets have risen 4 billion since December 31st, 2017. 

Their debt has grown with the assets- up three billion in total since December 31st, 2017. 






The One Brick and Mortar Industry Amazon Can't Touch

       As another once-prominent S&P 500 stock files for bankruptcy due to the ever-growing e-commerce competition, I decided to research what went wrong for Sears... But I was actually more shocked to find a specific brick and mortar industry that has not been affected by the wave of cheap online products. But I shouldn't have been as surprised as I was. I mean, who could offer cheaper products then dollar and wholesale stores?



        At their core- Amazon is known for having an everlasting reservoir of inventory for low, affordable prices. But so are dollar stores. You can look at almost any major dollar store in the United States and see their net income rising over the last few years, Dollar General (DG) is up 50% in three years, Dollar Tree is up nearly 150% in the same time frame, Even Costco(COST) has a positive net income of over 600 million dollars since 2014.

         One of the biggest arguments people make when talking about investing in brick and mortar retailers is that the prices are a lot better on Amazon. So I decided to do some self-research and see if this was true. I picked a few random items from Dolar General and Dollar Tree and compared them to the Amazon price. I found little to no discrepancy at all. If anything the few cent difference leans in favor of the dollar stores more.



         The next biggest argument is Amazon's "convenience", yes their shipping is a lot faster than other e-commerce platforms and a lot cheaper... But it's only cheaper to those that order a lot online. Otherwise, it does not make any sense to have Amazon Prime. But you know what's even faster and more convenient than ordering something online? Buying it in store. You will get the item instantly, there is absolutely no shipping or handling cost ( Yes, you still pay for shipping with Amazon even if you have prime, you're just paying for it on a monthly or annual basis.) and you can physically hold multiple products in your hand and compare them.


        Even if the rumor of Amazon opening up physical store locations is true, can they compete? the rumor was that Amazon is planning on opening 3,000 cashier-less stores by 2021, the cashier-less part is impressive and all.. but what if you have a simple question and need to ask an employee? Can the 3,000 Amazon stores compete with over 30,000 Dollar Tree and Dollar General Stores? There are a ton of logistics that Amazon will have to figure out to be successful in the brick and mortar space. This expansion (which has not even been confirmed yet) could easily be a flop for Amazon.


       I do not own any of these companies but plan on buying shares of Amazon (Not for the retail reason) and will continue to monitor dollar stores. I will want to wait and see if Amazon can legitimately figure out the logistics of the stores.





10 Tips to new Stock Investors

Investing in the stock market is always exciting, whether you are investing for income, preserving your wealth or to build wealth. It has consistently been one of the best ways to make your money grow. On average, the S&P 500 grows about 8% a year- While that may not seem like much, the average savings account in the United States pays just 0.06%. But with the potential for growth comes the risk- The stock market could crash at any time and you could lose more than you make.
That's why it's important for all investors to consider the risk before investing.

1. Invest in yourself

When I first got into investing in the stock market I thought I was going to be able to just buy low and sell high with ease. Try to ride trends and read charts- that was not the case. After a few hundred dollars lost I decided this strategy was not working. So I invested in myself, I read book after book, watched Youtube videos, listened to famous investors such as Warren Buffet and tried to soak in as much information as I could. Once I started doing this, I could see my investment strategy changing and along with that so did the results. But I never stopped. I continue to try to learn something new every day.

2. Only invest what you can lose
It's important to know that the market goes up and down, sometimes it enters what is called a bear market. A bear market is when the market is down 20%. This does not happen often- but definitely happens from time to time. The likelihood of you losing your entire portfolio value is slim to none, but for it to lose value on your investment is likely if you don't do your due diligence.

3. Trust in yourself

When I first started investing I was just buying everything "successful" stock traders told me too. This could be anyone from Jim Cramer to a popular Youtube personality. Most of the time the trade lost me money. When you do your due diligence and stick to your strategy, you will prosper. It might take a lot of trial and error but you WILL find a strategy that works for you.

4. Only invest in companies you understand
It's easy to say " I like iPhone, I'm going to buy shares of Apple " But do you understand the overhead cost to manufacture an iPhone? Do you know what the company is invested in? Do they rely on imported goods? are they subject to tariff changes? Do they have other sources of incomes? How do they compete in the market against their competitors?

5. Find what broker is best for you
There are tons of brokers that want to earn your business. The broker acts as a middleman when your buying or selling shares of a company. Most charge a fee to execute the trade.

So it's important to see who fits your needs better. If you plan on making a ton of trades, a lower trade fee would make sense. If you only make a few trades a year and would value better research tools, a broker that offers that would make sense.

Some of the most popular brokers are Robinhood, Fidelity Investments, TD Ameritrade and Merrill Lynch.

6. Don't panic sell 
My biggest problem to this day is panic selling. Anytime there is a significant drop in the market people (Including myself) like to sell because a specific investment does not look as good now that it's in the red. But if you believed in a company one day when it was up 4%, you should believe in it when it's down 2% a week later. If the company fundamentals did not change, neither should your investment.

7. Don't overlook ETF'S

Exchange traded funds are a great easy way to diversify your investments. You invest in multiple companies in one trade and are stretched across multiple industries. They usually have a good return rate and take away the risk factor of one company crashing.

8. Hold some cash
It's important to have some cash on hand and ready to invest. You always want to buy when a company stock is low.. and nothing sucks more than not having buying power to buy into a really nice position.

9. Avoid day trading, swing trading, and margin trading
Day trading is speculation, you invest in a company in hopes that the stock goes up in a one day spam. You can certainly make money in the short term- but this is an unproven method of gaining long-term gains.

Swing trading is similar, instead of investing in companies in a day that plan to be in and out within a week or so. Again, it's possible but there has been no evidence of this being a legit way to make large returns.

To quote the great Warren Buffet, "it's stupid to borrow money to invest".

10. Don't be lazy
If you are going to invest thousands, if not tens or hundreds of thousands in a company- you better know every nook and cranny of the company. Email the company, ask questions about operations. Look at all financial statements- listen to earnings calls. Ask for second opinions (take it with a grain of salt).



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