Call it the “Millennial Market.”
No, I’m not talking about how twenty- and thirtysomethings are affecting the market.
Instead, I’m talking about how we now measure the advance of the bellwether Dow Jones Industrial Average not by hundreds, but by thousands.
The Dow has advanced by 1,000 points by five times this year… so far.
In fact, it took just 30 days for it to reach 24,000 on Nov. 30.
That’s great news for just about every investor.
But the news is even better for investors like you.
For technology investors, the Nasdaq Composite set 69 new highs so far this year. It has gained 23.3%, which is 49.5% better than the S&P 500 and 15.7% better than the Dow.
Meanwhile, Bitcoin is up 1,075% in 2017 – and Ethereum has soared an amazing 5,371.4%.
And in legal marijuana, my premium Nova-X Report members have made triple-digit gains on several of the penny pot stocks in their model portfolio. To find out how to join them, just click here.
In other words, ground-floor trends like technology, cryptocurrencies, and legal marijuana are the driving forces behind the market’s historic gains.
But that doesn’t mean you can just blindly buy any tech stock out there and expect to make money.
While I know you don’t believe that’s true, some of you might buy into Wall Street’s hype machine – and believe you can make a fortune on some of the troubled tech leaders they’re touting as “turnaround” investments in 2018.
Don’t believe that hype.
Especially don’t believe any hype you might hear about these 2018 Tech Dogs.
These are the four stocks you want to stay as far away as possible from next year. They’re dangerous – all four of them.
Silicon Valley, Cryptos, and Legal Weed – Oh My!
Now then, let me be clear about something important right off the bat.
We still very much believe that the road to wealth is paved by ground-floor trends like Silicon Valley technology, cryptocurrencies, and legal marijuana. The Nasdaq’s and Bitcoin’s performances speak for themselves.
Nor am I saying that I expect a major correction in tech or the market in general. But when we have such a target-rich market, that’s when you need to be the most careful in selecting your investments.
As we’ll see in a moment, if you pick the wrong tech stock, you’ll be sitting on dead money – or maybe even wipe out your net worth.
In a market like this, it is much wiser to pursue ground-floor opportunities and proven winners than the so-called “tech turnarounds” that Wall Street is trying to sell you.
Especially these four 2018 Tech Dogs…
2018 Tech Dog No 1: GE
If there were an award for Tech Turkeys of 2017, General Electric Corp. (NYSE: GE) would definitely make the list of finalists – and it deserves to win.
Through Dec. 4, the Nasdaq Composite had gained an amazing 23.3% -while GE managed to notch a 43.4% decline.
All that seemed to be changing in early November as Wall Street awaited word from new CEO John Flannery on his comeback plan for the global tech-industrial giant.
But after Flannery laid out his plan on Nov. 14, even longtime bulls hoping for a true turnaround were disappointed. RBC Capital Markets analyst Deane Dray was especially outspoken.
Dray said Flannery offered “very little new or bold ideas,” adding that there were “no meaningful changes to the business model or quality of earnings.”
The analyst cut his price target from $25 to $20 and noted that the turnaround underway will take much longer than previously thought because of deep “structural problems.”
Flannery later told CNBC that he can fix the problems. That will mean selling several units. But the bad news for investors was stunning – GE is also cutting its dividend by 50% to improve its lousy cash flow.
2018 Tech Dog No 2: IBM
No doubt, Oct. 18 was a great day for shareholders at International Business Machines Corp. (NYSE: IBM). A nearly 9% rally was the stock’s single best day in nine years.
But it’s that last part – the one in italics and underlined – that should make you run far away from any IBM turnaround story you might come across. Simply stated, the slow and lumbering IBM simply missed out on one of the single best bull markets in history.
Over the past five years, IBM is down more than 24%. By contrast, the S&P 500 has gained 85% over the same period and the Nasdaq is up 126%.
In other words, during one of the greatest tech rallies of all time, global tech giant IBM was a no-show.
The problem here is simple: leadership. In the six years she has served as CEO, Virginia M. Rometty has presided over a series of sales setbacks even as she kept saying IBM is turning the corner.
In fact, the company has reported sales declines in each of the past 21 quarters, one of the worst track records in the tech sector.
Dear Virginia: Your company is a dog.
2018 Tech Dog No 3: Hewlett Packard Enterprise
Ordinarily, I view the announcement of a new CEO as a potential huge catalyst for a tech stock.
CEO Meg Whitman recently announced she is leaving Hewlett Packard Enterprise Co. (Nasdaq: HPE) – and that Antonio Neri, who has worked at the firm since 1995, will take over Feb. 1.
But I think the company’s future remains so uncertain that it’s a dog to avoid in 2018.
HPE has two big challenges.
- The first is technical. The stock’s chart looks like a roller coaster – and I almost always avoid any stock that is likely to cause investors heartburn.
- The fundamentals look weak as well. HPE announced weak fiscal fourth quarter earnings on Nov. 22, sending shares down 7%.
To be sure, one weak quarter isn’t all that bad on its own. But Whitman promised huge improvements when she announced a turnaround plan in 2012.
Not only that, but she oversaw the split-up of the old Hewlett Packard into HPE and HP Inc. (Nasdaq: HPQ).
HP Inc. has beaten the stuffing out of HPE’s stock. HPQ is up roughly 44% so far this year, while HPE is flat – following at least six failed breakouts.
Give this dog a wide berth.
2018 Tech Dog No 4: Teva
Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) CEO Kare Schultz, who took over the company in September, announced a restructuring plan two weeks ago that also included a management shakeup. But investors were disappointed.
See, Teva divides itself between generic and prescription drugs. To unlock value at the Israel-based firm, many investors had been hoping to see those operations split from each other.
Instead, Schultz said he is integrating them more deeply in a bid to improve efficiencies. There’s no reason to believe that Schultz’s plan will work out.
I certainly don’t.
Teva has racked up a lot of debt in recent years, has lost patent protections on a key branded drug, and has cut its earnings outlook twice in 2017. And last August, it wrote down $6.1 billion in its generics unit, leading to a roughly $6 billion quarterly loss.
Let’s not forget that Teva’s investors have been down this road before. Jeremy Levin, who served as the company’s CEO briefly in the early 2010s, announced a turnaround in 2013 that included layoffs of about 5,000 workers.
But Levin then found himself forced out of a job. See, Israel provides Teva with billions in tax incentives, and lawmakers there hate to see workers get pink slips.
So, as we prepare to close the books on a record-breaking year for ground-floor trend investments like technology and Bitcoin, this is a time to really focus on stocks that can greatly improve your net worth…
… And avoid the dogs that can destroy it.
That’s our mission here at Strategic Tech Investor – to find the winning plays that put you on the road a fully funded retirement… to paying off your children’s college tuition… to buying that sailboat you’ve always wanted… to freedom.
Rest assured that we’ll be talking about dozens of such plays in legal marijuana, Silicon Valley technology, and cryptocurrencies in the year ahead.
So make sure that your 2018 wealth-building action plan includes dropping in these twice-weekly chats.
I’ll be here for you.