The PlanStrong Financial Forum 05-27-17

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Sunday, May 28th
00:53:43

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From the plan stroll in the broadcast studios he would still play and strong environmental forum where you're hosed. Jim farmer and president Roh plans strong investment. Hold portions of stars Bruce Morton investing. Symbian phone. And I'm Ken carver had introduced along with Paul Parsons and a follow in the start up I wish you happy Memorial Day weekend. Water also especially all the members of the armed services that have done such incredible jobs that allow us to have a radio show like this to be able to speak freely and move freely and you know express our opinions whether you like them or dislike demonstrates just incredible that we owe these people so much you know and feels great and great certainly gonna try to do my best to honor those veterans this weekend. Now I know one thing you like to do a long weekend legacy will be put a little golf that's true that's another way to honor their utterances like play golf hopefully with a veteran but yes I do. So you you we've mentioned last week about an article in the Wall Street Journal talking anyway it started about golf and and and you targeted very nicely golf and finance and this is pretty interesting stuff it is fascinating isn't it that that type. The article is called the golfers delusion and you'd say what is odd article about golf doing in the Wall Street Journal but it was all about how the mentality that human behavior. Really transcends a number of things that we do in the you know one example was golf Powell as a human being. On that they actually statistic we took a look at when people play golf to date overestimate or underestimate your abilities and not surprisingly many of us myself included I tend to overestimate our abilities in other words we remember the good shots we hit it much more. Then we remember the bad shots we hit. I and as a result we tend to. Not picked the right club to shoot into a green we tend to think we're gonna hit the ball further because what we remember is the good shot and how far that one went as opposed to kind of the average shot which. You know isn't exactly perfect and so what once studied that the golfers delusion article in the Wall Street Journal came out with was sent the following that only 5% of the shots into a green. Typically go over the green in other words the person actually underestimated. How much how far they hit the ball. But 40%. Of them are shorter degree in other words people who thought they could get to the green with the right shot they still under shoots 40% of the time in other words date date overestimate. Their ability eight times as many as underestimating. Your breath and it's just a fascinating look at human nature and the reason that's so important is because. Are at the exact same time. Within a weaker Euro. A big research company here in Boston called to alvare released I think it was their 21 consecutive survey on investor behavior. And the type you know a lot of it had to do with a couple things first of all how does that powers the typical retail investor perform. Compared to the markets overall. And I guess not surprisingly. They really underperform. Or sell out another way they under shoot. OK here are the greens they don't hit the green eggs come up short in fact they come up short. On and they only get about 60%. Of what they should have earned in the market and that's what this last year's we're results war and if you look at first there you'd find out that the reason that they under shot the underperformed so much was because they got fearful right when that it was the opportune time to not be -- flew from a return perspective and hopefully a professional investment manager isn't gonna fall prey to the same kind of of a motions that are retail investor is much more likely to fall prey to it and so that was one part of one of the service that was released recently was this Dowell bar serving that said hey at the typical investor. Typically under performs literally. 40% they get 40% less than they should've gotten out of the market and another study done exactly the same time ties into the golf study and now was that. Three quarters a individual investors rank themselves as having high financial knowledge so three quarters. But literally when they took an incredibly simple test offered by Sandra. A six question test. Only 15 of them could actually be answered the six basic questions accurately enters OK so one it think of it this way five times as many people thought they knew a lot about investing and it or some level about investing and literally only 15. Of that amount actually answered the questions correctly and so kind of the moral of the story is this. Whether it's golf earned fasting you need to have a rational assessment mine of whatever your deal and in the case of golf in my case. That's why I go to golf tack that's why I go have a golf coach because. You know in the end I realized yup. A lot of the time I I think I'm gonna hit the ball further than I actually do a working on that consistency and and I'm taking lessons to improve that consistency striking the ball. But until and unless I get that expertise. I'm gonna be under shooting a green okay and the same is true with a investors. Take a look at sure investment performance. Most on average. Hi investors underperformed the market this last year by 40% retail investors who did it themselves OK they underperform by 40% of the time now maybe you're one of those people. But. Odds are there a lot of listeners out there who probably thought they did okay. But if they measure their performance against the right benchmark they'd find that in fact. They didn't get as much as they should have or set another way they didn't advance the ball all the way to the green didn't get all of that that they should've got rice and perhaps it's time for you to get a coach until if you wanna do yourself a great. But until you can actually perform in line with how the markets the professionals still. It's time to get somebody to coach shoe or better yet somebody to culture portfolio. And that's why I I brought this analogy up this it just rang so true enemy. Sure Brewster a lot of listeners to Paulson let me just. Remind your pulse toll free number 8889727526. EDD 8972. Plan or in Guam on to plans strong dot com. And when you think about it you know one thing I like to sail on him on the golf course is. You know if it's if I played golf I remember playing with my kids when they were young and actually like their father actually even looked up to me a little different now there were one Veres who receive exactly another 2629. So that those days are long gone but I remember I hit good golf shot and my son or my daughter would say in our daddy you should be a professional golfer and I I heard of them and I'd laugh I say if daddy was a professional golfer we'd all be very thin and our family because there'd be new food on the table. Right and and debt but I always laughed about it is I always say hey we're not curing cancer here all we're doing is trying to have fun play a little golf right but when you're dealing with your retirement saved thanks him it's that's that's not a laughing matter you're not curing cancer but your Surrey certainly trying to do something relatively serious which is the implications are if you or somebody else does it well for you. Then you're gonna be able to retire comfortably and in its timeframe that you had in mind and if you don't. The implications the opposite of that I gotta tell you that's a big difference between that and joking and saying. I guess I'm just not that good a golfer I can live with that but boy somebody said to me do you have to play golf and and how well you play golf will determine. Whether or not you can retire in a timely fashion I'm telling had to get the golf pro even more right. Once again call Paul's office till three can ask for a copy of the of his latest market outlook which have been talking about as well eighty Dade 97 Tucson five to six. 88972. Planned or wanted to plans shark dot com. And that market outlook by the way that's another good acid test. On it really gives you an idea of the underlying fundamentals well we're looking for as as we develop. And design. On investment portfolios for our clients and if you read through that and you say you know what some of the stuff I knew but some of the stuff I didn't know. That's another reason feeder. Frankly to a candid assessment of your own. Knowledge base. And if it if you don't understand literally every word that it's probably a good indicator that you should call us and at least have us take a look at. At your portfolio. And see if what you're doing is consistent with a at least our perspective on the market. Once again to get a copy of Paul's paper ADV 9727526. Or just 100 Armstrong dot com. Our public silly quickly take a review what we've seen over the last week a stock market over. Are all really good week in the US stock markets they were up one and a half to 2% this week we have clips a couple of very very high numbers and some of the markets are so while the US stocks short one and half the 2%. International stocks were much less not more muted basis about half a percent. Each year to date the S&P 500 which is an index 500 largest publicly traded stocks is up about almost 8% excluding dividend isn't enemies and who is five months isn't that just amazing. While international stocks are up fourteen and a half percent so what an incredible beginning of 2017. This is spin. But on the US stock side many of the end axis are act or very close to all time highs reached recently let me just give you a couple of examples. Yes and 500. Over 2400 this week say about that it's just stunning okay. And did NASDAQ. Over 6200. And don't forget the NASDAQ just cleared 6000 for the first time in the last month it's already at 6200. For those of you who aren't familiar with what the NASDAQ is it's considered the tech heavy you're. Index of US stocks it's actually an index of stocks of approximately 3000. Publicly traded companies listed on the NASDAQ stock exchange so. Whether it's yes and he whether it's the NASDAQ. You know we are at or near all time highs this is very exciting stuff and frankly very good for for US investors. And as the stocks went up whatever it wants its interest in Boston it relatively flat this week yup. The price of high quality bonds was pretty consistent the tenure US treasuries yielding around 2.2 6%. Are the ten years now trading about two tenths of a percent below the beginning of 2017. And the ten year German bond the Japanese all stayed about the same the ten year German bunds around point 4%. Japanese ten years essentially just north than zero. And I'm in debt interesting thing is the probability. Of another interest rate increase. In June increased from 65%. To 83%. On the Fed meeting minutes that I'm gonna actually talk about just a couple minutes on the show when we come back I want to talk a little bit about what the implications are to investors associate. So stay tuned for that that's when we return its plans strong financial form this is Paul Parsons president of planned strong investment management. And you're listening to them plans strong financial forum on WRKO. Boston's talk stations. If you like what you hear on our show and what you need to take a look at your investments and retirement plan called my office. EDD 897275260. That's 888972. Plan. Securities and investment advisory services opportunity financial group member to go SIPC cluster investment management is an affiliate of mismanagement grouping concluded that any Russian diplomats who threw six. Hi this is loving Nelson. People use different strategies to acquire enough money for retirement. Some try to do it themselves. Others buy insurance for investment products though sometimes those benefit the seller more than the buyer what makes sense is to hire an advisor with first rate credentials and why do investment management experience. Should have a fiduciary obligation to acting your best interest. And be paid the same amount no matter watcher invested in if these things matter to you. Call Paul Parsons at plan strong investment management to learn more. Call 8889727526. Hiring the right advisor could be your best investment. That's 888972. Plan or vision plan strong dot com. Securities and investment advisory services offered through next financial group and member tumor SIPC plans to investment management is not an affiliate of next financial grouping and is located at 980 Washington street them. Okay. It's. OK okay. It's. It's. It. Crumbled plans strong broadcast studios of the epicenter of journalism. This is no plans strong financial forum where all portions president of planned stronger investment management and I'm Jim Courier the anchor desk and we are decorated in full capitalistic veterans today we've got. Water bottles of microphones and this is the epicenter of capitalism. The channel later radio studio insurer yes and here we are here are beautiful Memorial Day weekend and again thanks to all of our vets for their service we really appreciate it that's what this holiday is all about and thanks for all of our freedoms as a result. Ball before we take a break we're talking about the bond markets and a damn what happened there was essentially flat this week but we also are what I mentioned was that the probability that fan I didn't actually raising interest rates ash in the next FOMC meeting in June. The probability went up from 65%. To 83% that's that's a pretty high probability and those who betting where their money here yet that's not out in ala a popularity contest that's literally bets being met with Fed Funds futures so it's it's dollars. And you know what it really means is that it's likely that short term interest rates are gonna rise and if you're bond investor. That's really important because if you get short term interest rates rise and then when I talk about what the Fed said very shortly it looks like longer term interest rates may also rise. This is really important stuff because you for the first time in thirty years will see are rising interest rates and rising interest rates can really adversely impact the price of existing bonds and something people haven't experienced for many many years. And it's no different Kenny then there's a thing called recent C by us. In what we do there's an awful lot of study of of investor behavior out there are one of the things I mentioned was that you know people remember the good golf shot they had heard or if they have a good stock investment they remember the one stock that they that hit the home run cure tend to forget about the other six or Tara. Right let's do a lot of things for those reserves and there's find ourselves in the casino we remember the good date was never remember when we lost it's that's a market perception right in fact the recent C bias is that I'm referring to a we've talked about the last few weeks also. Has to do with the fact that. Fewer and fewer people now remember the financial crash of 2008 when they actually are investing rash and say they feel incredibly confident about the market in the marketplaces at this point consumer confidence is an all time highs and you sit at back and you think yourself. Wait a minute people you're the exact same people. Who 2008. Bit I'll never forget itself over and over again when they came to hire us I'm never gonna do that again I'm never gonna make that mistake again of putting almighty eggs in one basket of of really believing that the census gonna go up up up and and so what do they do they were overly conservative. In 200920102011. Because they remember what happened in 20080. Here we are now 2017. Very few people are acting without bias anymore very few people are saying you know I need to remember. Things could go south and I should be conservative so the reason I brought that up Kenny is set here we are again. It's not eight years ago it's thirty years ago. Is the last time that we had a bond market where you saw the those interest rates going up now interest rates Arafat enough for thirty years they've been coming down over thirty years they've been coming down from. Long term rates went from fourteen or 15% all the way down to three or 4% right. And and now they may finally turn the other way but people don't Burma are many of the people or even investing thirty or thirty chargers of course they don't remember anything about some so that's why again I think it's incredibly important to listen to switches. It's really likely that interest rates are gonna go up over the next few years assuming. Battery our economy continues to expand. And and and the worldwide economy continues to expect if that happens it's likely interest rates are gonna go up and for the first time in thirty years people are gonna say whoa wait a minute what happened my bond portfolio hi this is never half an Emmy for her but that it did it just happened a long time ago and you just don't remember. It's another reason perhaps why you should call someone who does remember and this is your business and you keep an eye out for this stuff. When GM also free number 8889727526. A pol let's get some horror of the news of the week the dollar. Dollar was pretty flat Afghan it's still around a dollar twelve per Euro would still about a 112 yen per US dollar was interest thing is it dropped to the dollar dropped compared to the Mexican peso now within 1%. Of the pre election. Com results is not a musings yeah so was all the way up at at one point it at the dollar appreciated twelve or 15%. Against the pace sell its all the way back now to within 1%. And the reason for that because it looks like any changes made to NAFTA are knocking impact. Meg the Mexican economy nearly as much as what the campaign rhetoric within camera. Now oil prices dropped it and they did actually dropped you don't want to two dollars a barrel and it was funny you know this is a file this under no good deed goes unpunished or better yet what have you done for me lately it okay because here's the deal first of all crude inventories fell for the seventh week general OK so that if inventories fall that means there's more demand or there's less supply such a drive up the pressure or observe that should go on the right direction. Unknown and by the way it dropped a lot four million barrels. OK another thing. Is debt Saudi Arabia and the rest of OPEC and even some of the non OPEC members all agreed to extend. Their output cuts. Their supply cuts. Four not six months not to the end of the year for nine months until the end of Q1 of 2018. Seats say. While that should have a huge impact on the price well. Yeah that shot. But here's what happened the price of oil dropped during the same per attempt you know why because the market already baked in all that and the market was actually looking for even more than a nine month extension extension even though the original expectation was a six month extension to the supply cuts. And so there are some other technical things or going on. Can I continue to believe that that the equilibrium price of oil over the U. You know by the end of this year I'd like to see around sixty dollars a barrel that's certainly the target for Saudi Arabia and others the reason it's their target is because they depend so much on revenues derived from oil and are unlike us where we get our tax dollars from income taxes there is no income tax and Saudi Arabia and a bunch of these other places instead they slap taxes on top of their oil prices. And so that's where they get a lot of their government revenues. If it if day of the price of oil is an opera that leveled their government revenues suffer they have a really vested interest to see this thing rise to at least sixty bucks barrel by the end of the year and I'm thinking somewhere around eighty bucks a barrel over the next two or three years that's down from where it then and the reason for Alaska as we're seeing efficiencies. That are really being cultivated by more efficient trackers out there in the United States that are frankly driving some other marginal producers. Daddy because it's making it zero oil. It inferior. From an expense perspective dare you oils too expensive now where the US can actually produced track the oil anywhere from say 35 to 55 dollars a barrel that is really upending the market right now that number used to be a lot closer to 75. Apparel. Okay so we'll keep an eye on that I'm anti government data that we should go about bluster of the week well certainly the biggest story of the week Annie was that meeting minutes from them that made second set and said open market committee meeting on and what the minutes show was that the Fed is really gearing up to raise interest rates and they do this so that they don't shock the markets when they ultimately took us what's gonna happen we expect interest rates to rise in the June timeframe OK so. What they reported in their may meeting minutes was that they're gearing up to raise interest rates quote unquote so un quote okay if the economy stays on track most would say it's thanks pretty much on track. While also discussing plans to shrink their balance sheet in a measured fashion what does that mean what they're gonna deal. Is there are gonna finally. Include gradually scaling Barack re investments of maturing securities and that's actually begin this year that's gonna impact bonds in the intermediate and longer term ended occur. So short term rates are gonna go up. And if they scaled back there re investments in these intermediate long term bonds that's also gonna drive those rates up a bit as well. If you were a bond investor you need to pay attention this because for the first time in thirty or 35 years we actually may be beginning to see. On interest rates going up not the worse your existing bond prices going down that's not good for your total return and there are certain actions you should take as an investor if that's the environment you foresee. And things drew look like this is happening at the next meeting in the June timeframe for sure you know. I think very likely certainly 83% of the Fed Funds futures indicate that and they're also saying that they intermediate and long term into the curb is likely to begin. Between now and the end of 2017. We did get a report from a the main manufacturing and services of boo yeah we get a flash report in the middle of may and that's kind. They call a flash report 'cause it's kind of a first look at how do you think may is gonna turn out and overall it was pretty good services were better than Dan traditional night not in non services are manufacturing type jobs. But overall relatively good report. New home sales were not good not in in not April but the prior two months were revised upwards. So the three month average is still okay. On and by the way around 570000. Now down from about 650000. In March that's pretty good sized drop but this this report is known to be quite volatile. Now that's new home sales but existing home sales are the big ones are a lot more existing homes and newly built church rage and existing home sales were also down they were down. Up from five point seven million annualized down to about five point 57. Million annualized. Between march and April you might say geez that doesn't sound very good it sounds like he came down to is that a problem don't forget we're very close. To the post recession high and whether it's at five point seven or five point 57 it's still pretty strong number it's just that the growth has slowed. In existing home sales so that the housing market a little bit softer than we would have liked to seen in growth. Then the manufacturing number not terrific but not terrible the service's number pretty good. And overall on the employment side initial unemployment claims came in again very very low number and as a result on the employment side. Pretty strong results. Well we come back we'll look at. The earnings reports so we have pretty much all the Q1 earnings in and what that means for investors and more it split a strong financial form. This is tall Parsons president of planned strong investment management. And you're listening to them plans strong financial forum on WRKO. Boston's talk station. If you like what you hear on our show and what they need to take a look at your investments and retirement plan called my office of EDD 89727526. That's 888972. Plants and. Hi this is on he Nelson if you're fifty or older here's a suggestion. Commit to getting your financial house in order over the years you worked hard took chances made sacrifices. And built up as much wealth as possible so you'd never run out of money in retirement. Well. Now it's time to get organized and to make sure you have a financial plan. Who protect your retirement. If your financial life together. Call Paul Parsons a plan strong investment management. Just schedule financial checkup call 8889727526. That's 888972. Plan commit to getting your financial house in order call 888972. Plan or vision plan strong dot com. Securities and investment advisory services offered through next financial group linked member tumor SIPC plans to investment management is not an affiliate next financial group think and is located tiny Washington street the map. This says financial talk guaranteed signing and be informative. At least it's informative it's black and strong financial forum where bold portions president's bold plans stronger investment management. America incorporated the anchor desk along with the whole Parsons will be just remind you calls toll free number. 8889727526. That's eighty 8972 plan. Or ignore along the planned strong dot com to ask for the Tony seventeen outlook which is still very useful to you and also to set up an appointment with Paul once again plaster on dot com. Or 8889727526. Are also Erie armed Q1 is clearly over here in the end so we've gotten all the earnings reports and what do we learn about Q what. As a very good earnings series in Paris overall the S&P 500 which are mentioned as an index of 500 largest poppy trade stocks the United States. Aggregate earnings up thirteen point 9% arm they were expected to be 10% came in 4% higher than thirteen point 9%. This is the best corporate earnings growth since Q3 of 2011. Gains across ten of eleven sectors the only sector that didn't she gains which Telecom. And by the way as I said you before if earnings were up about 14%. The index itself. Year to date up almost 8% excluding dividends including dividends overeat percent right now. Again it it stands it it definitely there's some correlation there between age if I have increasing profits I'd expect to see prices of those underlying securities go up as well we are seeing that another great spot. Sales are picking up after many companies had turned to reducing costs and delaying investments to boost their profits and now they're actually getting organic growth that's really good news and by the way. Revenues are expected to grow seven point 7%. In Q1 that's what the overall final expectation was. And much of the earnings growth came from energy firms thanks to rebound in oil prices but also banks saw strong earnings growth thanks to higher interest rates and are targeted technology companies just continued to hit the ball out of the park we think about companies or cloud computing at some of the other areas. There earnings growth was just fabulous as well FactSet is still reporting facts it assists and indeed it does all of this reporting is is it thinking that earnings growth for all of 2017 is gonna come in under 10% just around 10%. I actually believe that think that numbers can be a little bit higher. But that is just a very very strong growth for 2017. And when you look at that you think wow that's terrific got should really fuel underlying. Stock market improvement in the United States as well but don't forget. Some. Some would say even quite a bit. Of this is already baked in to the prices that are were already seeing in the stock market and that future earnings gains. Are probably also built in to a degree you would expect. The only way for the stock market to do even more would be for those expectations to be further updated and further improve from where the expectations. Are today Brett okay now with the expectations of the S&P 500 growing at about 10% what are we seeing. The possibilities for Europe or rubles projection. While this is frankly you know the last couple weeks you know I've talked about how Europe's gotten a lot of locks from investors and we're even seeing fund flows you know increasing to Europe and decreasing United States equities. And part of that's because while you're just hasn't recovered as well as the United States has we talked about. What kind of growth had the our European stocks seen since the bottom of bear market vs say what did you US stocks gotten during the same period of time. US stocks had radically outperformed Europe during the same per return so in other words there's more improvement left to be had in Europe and their company's earnings are expected to grow by 16%. In 2017. So US tan. Europe sixteen. And don't forget Europe's had a couple pretty good quarters now of broad economic growth which your GDP growth. Has been as good or better than the United States GDP growth so. If it if that continues act could be very very important but don't forget there are risks with your justice there are risks with the united state but. You know certainly the reality of the UK exiting eurozone. Is something that's much more dominant and impressing of to eat our European stocks and it would be to US stocks for example. And don't forget also that the Italians. Are gonna have a presidential vote sometime either in 2017. Or early in 2018. And when that happens there's a possibility. That Italy. Could vote to also leave the Euro zone and the European in the Euro currency that would have pretty significant impact. And an adverse impact. Two European stocks. You were you like to quote. Bob doll quite a bit and Bob Boozer had some statements through his outlook for 2017 what's going on that in the US markets once he turned him or Luis was he sending. For those of you who are familiar with Bob doll heat is. A this the chief investment officer of new being asset management he used to be the CIO of black rock. I knew it was pretty widely followed the guy has been right especially about the economy. And equities an awful lot over the last you know ten years or so I think people really listen when he speaks. He had. An assessment of the nearer term outlook for the US economy that insurer recently that I thought our listeners should probably here because frankly I think a lot of rings true and it's very very short here's what it is. First of all. He expects corporate earnings to remain solid after a strong Q1 well. Q1 we had 14% earnings growth in the United States. He you know overall FactSet thinks it's gonna be 10% I think its north at 10%. If you're double digit land that's our definition of a strong corporate sure works okay. Economic growth statistics have softened a little bit lately. And economic growth must remain on track for earnings expectations to be met we said that all along as we look at the underlying economic. Indicators as a precursor to the resulting earnings. And as a result if we start to see that at the economic conditions to start to soften up for high you know appreciate Lee. Then that's gonna certainly give us cause for pause as to what we think is gonna happen in the markets overall Merom are about spending on big ticket items well capital spending should pick up. And especially should be led by the tax sector if you think about it think all these companies that are dressing in cloud computing and I'm gonna absence talk about cloud computing in a few minutes in the shall. But. Think of all of the computer equipment their buying and and and all of the changes that are happening around us in mobile technology and everywhere else. This is all significant amount of investment capital has to be put into that whether it's in the new chips or chip making Titan Machinery and and so forth and so on so the tech sectors gonna lead the way and capital spending. Another thing that's really important is fundamentals. They matter a lot more to the economy and institutional investors. As opposed to being too focused on politics when we say it another way. Whatever happens in Washington with the shenanigans in Washington. As long as it isn't something absolutely huge. It's likely not gonna impact the economy and markets nearly as much as retail investors think it's going to. Okay and then finally the last one. Valuations are pretty full we all know that in other words prices are relatively high compared to the earnings that are being generated by those stocks. But at the same time. Markets are gonna need firmer fundamentals. To experience a real upside breakout let me say it another way there's not a lot of room from multiple expansion here. And earnings will have to grow up pre show bleak to drive prices up for earnings to grow ought to grow appreciable each day are going to have to have some new significant. Factor impacting them from an economic perspective. Another way to say it is if there's a big corporate tax cut if there's a big individual tax cut. More people well well while and literally buy more stuff stimulate more demand that's the kind of thing that could lead to the next break out in this market still over. Roll. Bob Dole. We'll look for the near term he thinks that took the overall environments is weakened just a little debt. But he still thinks that stocks are the best place to be and their better place to be than bonds or cash. Upon the financial. I'm sudden article Q did you talk about cloud computing powder and an article on. Competitors benefiting from investing cloud computing it tell us about that look we learn from. Well the context of this article the Financial Times on cloud computing and the reason I talk about cloud computing so much is because we believe that this is an incredibly important mega trend that is an investor we have been consistently taking advantage of this investing in it and frankly reaping the rewards of that strategy. But there are always winners and losers and the question is who were the winners and who were the losers if this is the trend that you foresee. And you know IB MI is a fantastic company. But I mix thinking happened recently in the last I don't know year or certainly last six months and that's. Warren Buffett backed off his position of IBM. And it he famously took a position and IBM a few years ago saying for the first time he was gonna invest in technology company he had been told and has he said I never invest in company that I don't understand what they make right but he finally got over that hump they are Berkshire Hathaway which is Buffett's company. Invested took a big degree in IBM but they've pared back there holding. And part of the reason that the Financial Times believed that he pared back is holding. Was because IBM is a distant force. It or will be a distant fourth in the cloud computing race compared to some very very strong competitors. And when you think about who are the competitors that IBM's competing with. Well you have to start right up top. When Amazon Amazon Web Services literally has six times the market share of the next closest competitor so they're the gorilla on the right and then you know who's number to Microsoft. They're pretty good company you know right and I BM right now is third but Google is coming into the market in a big way and Google is spending. Twice what IBM is spending. In the marketplace. So when you think about that you look and you say well my key competitors are Amazon Google and Microsoft. An arm that. Soon to be in fourth place and by the way the biggest international competitor. Is a little company called Ali Bob which is C fantastic. Chinese company that has the huge amount invested in this as well. Overall it means that IBM's got their work cut out for them and they have to. To try to figure out a way to make a cloud computing work for them so they can continue to thrive as a business. All we come back. Baron said an amazing story about Amazon will talk more about that when we return to supply contract financial four. This is tall Parsons president of planned strong investment management. And you're listening to them plans strong financial forum on WR KR plus news talk stations. If you like what you hear on our show and what they need to take a look at your investments and retirement plan called my office of 80889727526. That's 888972. Plan. Securities and investment advisory services offered through an extra two groove and remembered today as I can see classroom investment management and billions of mismanagement grouping that is located in Washington street and Massachusetts. Hi this is loving Nelson. People use different strategies to acquire enough money for retirement. Some try to do it themselves. Others buy insurance or investment products though sometimes will benefit the seller more than the buyer what makes sense is to hire an advisor with first rate credentials and why do investment management experience. Should have a fiduciary obligation to act in your best interest. And be paid the same amount the matter watcher invested in if these things matter to you. Call Paul Parsons at planned strong investment management to learn more call 888. 9727526. Hiring the right advisor could be your best investment. Or visit planned strong dot com. Securities and investment advisory services offered through next financial group and member Fulmer SIPC plans to investment management does not affiliate of residential roofing and is located and I need to Washington's. He did them yeah ground zero for your financial news and economic commentary. This is the plan's strong financial forum where all portions president of home plans strong investment management. The. I'm John carver if you could just along with Paul Parsons and called Maria mentioned before the break the Barron's Magazine had a story about. Amazon amazing story about an amazing company. It's just dominating and loosely I know they either Amazon or how do you fight Amazon and ignited the major themes that have been out there and it's. It's not just parents it's everywhere because you know Amazon is just such incredible success story can you think about it this way if you if you com. Stood put a high dollar down on Amazon when it went public twenty years ago. That would be worth 467. Dollars. Okay through no that's if you put a dollar in the stock market the S&P 520. Years ago it be worth three dollars today and okay. So thick that 467. Fold increase. In twenty years is just absolutely stunning. And what's even more interest thing about it is they haven't earned that much during those twenty years. So you sit there you go wait a minute this is one of the biggest companies in the world and they haven't really earned that much money yet. But curious what's happening it's almost becoming impossible for them to avoid earning a lot on this point. On an interest real look at it but it's because they continued to reinvest. And and they take all of their profits and they reinvest them in what ever else they wanted to send conqueror if you will from a business opportunities. And while you look. At all the businesses that there and it's absolutely. Stunning what they've what they've done let me just give you an example. First of all they're one of the top ten retailers worldwide. By record world why the okay. Com and their growing sales faster than 20%. Year so there Q among guests and their growing at an unbelievable rate 20% per year now any business would give their you know their hind teeth for that right so trust absolutely fantastic growth. But they're also shopping club with eighty million members are marketplace for 33 party sellers. Dick as have been talking about that this cloud computing behemoths and and you know cloud computing has such a fun little fact it's an incredible. Margin business they make so much profit. Out of that business. That it's almost unavoidably you look at at the retail business and you talk about pennies and you need your big you do you know what every your selling maybe make a buck a couple of blocks on it in cloud computing the margins are 203040%. Tight margins these are unbelievable margins. That's becoming a very very significant portion of their business. There are also an entertainment company. There are spending more on contents. Then NBC. And HBO I'll think about that. There do what they buy tomorrow for Amazon. So their program this spending more than the major networks. OK Derek gadget company. They make things like you were Amazon echoed that you asked right cars yes they do. On an and many other devices at the same time. And there are on line advertising content and so I wanna talk about all of us what you think about tests. You think to yourself oh my goodness they kind of do everything and they do wit big hill and they are literally changing the way we live and work and they truly are. If you will that the Wal-Mart. Of the 21 century Wal-Mart changed the way that America lift. In note though from the seventies to 2000. People went from shopping at individual stores and small chains. In their towns or regions they may be a guy went to a mall at some point but eventually Wal-Mart was on a presence there and if they had a incredible winning formula. And Amazon was an incredible success story too in that 32 year time frame from the not early 1970s to 2000. A dollar invested in in Wal-Mart stock became 912. Dollars thirty years later so again an incredible success story right. But what I'm the difference now is Amazon has done that in the 21 century and gas of one of the companies is it's actually been adversely impacted by Adam that's right sure Wal-Mart right of course right there. So it's incredible what he's successful competitor Amazon has been. And here's the thing that's really getting interest. They're even posing. A long term threat to brands themselves. And OK so if you think. On Coca-Cola. I'm Sheraton hotels on the ring at some whatever. I'm a car manufacturer. Pixar. What Amazon can do now is they have unvarnished. User reviews. And because of those. You know unveil added user reviews they can actually combine. Though was we its search algorithms to get people to the right product. Without the need for advertising. And this is the associated premium prices because you know if you did something without advertising will either have to raise your price to pay for that advertising. Don't need that if you've got Amazon because she lease your reviews along with a really good search algorithm. And you get that answer already in other words you get people to what they're looking for. And he didn't have to have a middle man with a advertising dollars in the same time it keeps prices lower. And it literally if you will destroys in some ways the value of a brand from. Because that's what a brand does people spend advertising money to bill old. Brand loyalty. For people say yeah I really like that I've heard about that so I'm gonna go that you don't meet that he's got a good search on him okay so. Overall. It is just an incredible company. And investors are valuing the growth and vision of the company over more traditional metrics say like earnings great. And they may not just get more growth but they actually make it more earnings to. While it sounds like Amazon's been a great investment opportunity for for folks whether they get an early or even just this year it's been up. 33%. Is not amazing really only 3% in the first five months of this year so are some of the some of the major investors of some of them done really well with Amazon. While some haven't some haven't probably the most humorous story around this was Warren Buffett and and what Buffett was actually quoted a couple weeks ago I had a a big investment conference call the sounds investment conference and he was asked why he specifically didn't own Amazon and he gave a one word answer you know what the one word answer was no stupidity. And it you know. Of course the stock isn't for everybody but it's been if you are very very good investment for a lot of people certainly those that got in early and even if you just put a dollar ran. You know in January 1 it's worth a dollar 33. Not five months later in our past performance doesn't guarantee future results but you have to be pretty impressed with that kind of stock performance and a very very formidable company. It's too late to get in early on Amazon Paul but are we looking for what the next Amazon might be is that something as easy to define it is. It's it's not easy but it's what a lot of people are trying to do because you know this is their goals this is really. What investment managers try to do they try to find things that are gonna outperform the market overall. But. Here's the difference. But the way starters come to market. On and now compared to waiting used to it means there's less opportunity Deke yet. A stock that can appreciate as much in valued you know why because the private equity firms and the venture capital firms. All who are typically the initial investors and his they're not letting them go public nearly as early in other words there are -- taking more risk they're staying on with it longer and seeing if it does in fact continued to accumulate growth and ultimately value but what that means that is for the that the retail investor they just don't get to participate nearly as to the same degree heat. As perhaps she could have earlier when Angel investors way and venture capital firms went private equity firms would be in for the initial stages but then they get out they dictate their winnings they get out and then retail investors would have a shot and that's just much less common now to date then it has been in the past. So it sounds as though retail investors out of your social Expos are great. Are going to be able to see the type of games they maybe did earlier from this kind of investment. Exactly right Kenny and you know as we talk about. You know companies like the Amazon's who's the next Amazon I did when I talked about one of their story about Amazon that came out this in the last couple weeks. And that was at Amazon announced a major push into furniture and appliances now I know a lot of you know to be Amazon already sells. Our furniture. Bought I have to tell you at Dave's redoubled their efforts. And now what they're doing is building at least four massive warehouse is focused on handling bulky items. Like furniture. And this can't be good news for way fair and pottery barn which by the way is owned by William Sonoma. Furniture. Is one of the fastest growing segments of on line retail. That's not lost on Amazon room. And only about 15% of all the furniture sales. Our Don online. You know why that is it's much harder for somebody to at first all touch it and also shipping it is a real. Problems sure and returning it becomes a problem and so I think people been more reluctant to do what. But way affair has done to a great degree. And waste they are reported very strong increases in Q1 sales this past. A couple of weeks. And the company's stock has rallied over 20%. To a new record high in the last few weeks. No wonder Amazon is all the sudden get a lot more interest a merger they see something like that they say I could have a little bit of that that looks pretty advertise. Interest and stuff we remind our listeners of balls to free number 8889727526. That's ABB 972 plan. And you can ask for the 2017 market outlook also good time to set up an appointment with ball ADB 972 planner online at plans strong dot com. You know one of the real reasons I like to talk about the Amazon's the schools the alphabet that's the Facebook's and so forth of the world. Is we talk about changes that are coming and at Warren Buffett's own admission. The fact that he wasn't familiar with something cost him dearly and I suspect that there are many people out there in the investing world to do the exact same thing. That say you know what I don't know what that is so unlock gonna get a knock and invest my money in that that's another reason why you hire an investment managers somebody who says. These things are almost unavoidable let me explain you why and let's take a measured. On exposure to some of them for the appropriate proportion within your portfolio that's what a good investment manager does for. To get in touch with Paul again eighty 89727526. Or planned strong dot com. Paul enjoy the rest of your holy weekend happy Memorial Day weekend we'll see you next week it's a planned strong financial form. This is tall Parsons president of planned strong investment management. And you're listening to them plans strong financial forum on WRKO. Dawson's talk station. If you like what you hear on our show and what need to take a look at your investments and retirement plan called my office of 808897275260. That's 888972. Plan. Securities and investment advisory services offered through metro metro group member to go as I can see classroom investment management is an affiliate of mismanagement ripping concluded that any Russian diplomats who threw six. And strong investment management is located 980 Washington street Dedham mass 02026. And can be reached at eighty to 89727526. 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