New Insight Into Retail Investors

 | Jan 13, 2014 | 6:00 AM EST
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When you sign books for people, you learn an awful lot about what the public is banking on and what stocks they care about. The results are surprising to me, and the theses much more considered than what you would expect. You don't get a lot of questions, say, about 3D Systems (DDD) or Stratysis (SSYS), the super red-hot 3D-printer names. People aren't all that focused on Tesla (TSLA), or Solar City (SCTY) or even Twitter (TWTR), three huge cult stocks

The term "cult stocks," by the way, isn't meant to be nearly as scornful as so many people on Twitter take it. We have a simple truth that some stocks can't be valued by any metric, so what are we supposed to call them? "The New Blue Chips?" Or how about "The Wild Ones?" I used to call them the "Red Hots," and maybe I should return to that appellation. There's nothing wrong with flagging the oddity of stocks that are selling on buzz alone, and not on any ratio -- to sales, or to earnings, or anything else. That's the legacy of 1999 and 2000, and it can't be forgotten.

So what stocks are people asking about the most? The No. 1 name was Bank of America (BAC), a very conservative choice if there ever were one. What do people like about it? Here's a typical comment -- by a man who bought Get Rich Carefully at Costco (COST) on Long Island: "Doesn't this one have to catch up with the other banks?" I sat back and said, "Totally. It is still way behind the group." After all, we know this stock is still behind where it was a couple of years ago, even as most bank stocks are well beyond those levels now. This is something that makes the whole group attractive going into earnings, even if the yield curve is not yet ideal.

What did the questioner follow up with? "Can they put through a big dividend?" I said this wouldn't happen immediately, but that is certainly what we are ultimately looking for. Isn't that a remarkably thought-out wish for a retail investor whom Wall Street would typically scorn?

Lots of people mentioned stocks that just don't get talked about, yet which have been remarkable in their consistency: Express Scripts (ESRX), AmerisourceBergen (ABC) and McKesson (MCK), three healthcare-cost-containment plays that many people are picking as big winners off of the Affordable Care Act. Some people asked that I do segments on these for Mad Money because they want more knowledge.

Lots of people wanted to know if Yahoo! (YHOO) could keep going higher, and how much of the gain has been from Alibaba, and how much has been from actions taken by CEO Marisa Meyer. Instead of answering, I asked what they thought -- and they all, to a person, said it was because of the burgeoning Alibaba stake and that the rally could therefore continue.

Many wanted to know if Google (GOOG) could go higher and whether Apple's (AAPL) better or worse than Google. You don't have much time to answer the question before the line starts surging, but I plaintively say these names are different: Apple is a value play, and Google is a momentum story, albeit one of the cheapest of that ilk out there. No one complained or tried to change my mind.

Finally, many own Celgene (CELG) or Gilead (GILD), two stocks that I have been behind for many years, which some describe as "core holdings." Again, so much for retail investors not knowing how the professional game is played: Both of these stocks have been winners without super-high valuations. Many, of course, said they wanted to find the next Intercept Pharma (ICPT), the stock that rallied 400 points last week. Sorry, I don't have one, I answered.

Sure, there were plenty who asked if Rite Aid (RAD) and Sprint (S) were "still good." I responded that Rite Aid could just keep powering higher as part of a strong trio that includes CVS (CVS) and Walgreen (WAG). Sprint, I think, is way overbought for the short term. But, with the help of Softbank, I think the combination of bountiful spectrum and deep pockets will mean there could be a longer-term triumph.

Sure, the group might be self-selective, as I am sure the turnout will be Wednesday night at the 92nd Street Y in Manhattan, where Stephanie Link and I will spar after that night's Mad Money. There were, indeed, a lot of "booyahs" to start each interchange. But I think the signings, touching about 1,000 people, forged a bit of a bridge between the empirical and the anecdotal: The investors want solid stocks that can go up for years -- not days or, alas, minutes, as so many pros seem to crave.

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