I take your tweets seriously, even the ones where more focus is needed by the tweeter. But most of them would be foolish to answer in 140 characters, because you would have to be sweeping with no nuance, and nuance defines the art of good stock-picking. So in the interest of being more rigorous in response to a typical tweet, let me show you what I would have written if I had 600 words, rather than 140 characters.
The tweet: "Best place to put new money: biotech horsemen, oil, cult, Amazon Netflix, Tesla semis?"
Obviously, no justice can be done to that, but that doesn't stop the correspondent from trying. So here goes, in a longer form.
First, let's take the easiest: the cult stocks, Amazon (AMZN), Tesla (TSLA) and Netflix (NFLX). I am going to do a EIL5 on this one, which is "Explain It Like I Am Five," from the reddit site that my eldest daughter taught me is her news page for all things news.
I don't like cult stocks. That's because, in the end, I am a classical evaluator of stocks: I like earnings per share and I don't like to value stocks just on sales. I like to have some grounding in traditional stock metrics, if only because I know that if and when the cult stocks start going down, there are no underpinnings to re-recommend.
Take Tesla. I love the car but I don't understand the stock's valuation. Before you hoot and holler, I don't understand it because it seems to be losing its momentum, particularly in China, and we are being asked to overlook important things like capital expenditures and potential 2016 competition, as well as a totally irresponsible attitude toward the process of securities analysis by a hyping CEO.
But I get that the car's cool, you think Elon Musk is the best at making cars -- he very well might be, and you are willing to suspend belief. I can't. Amazon and Netflix are harder for me, because I think Amazon could show profitability but it is too busy taking over the world, and I think Netflix should be acquired by a larger entity now that it is almost done with its build-out. I can justify owning them both on a market opportunity basis, but not on earnings. And that's a cult stock to a T.
The biotechs? We've just had a total housecleaning of the group and I have returned to my roots, recommending the four horsemen of big pharma apocalypse, a collection of stocks I have been pushing for years and years, but on which I have recently focused relentlessly. To repeat, Biogen (BIIB), Celgene (CELG), Gilead (GILD) and Regeneron (REGN). All four are terrific. To venture further out, I have liked Receptos (RCPT) and BioMarin (BMRN), but the latter has gotten away from us. I had been behind many others, but now I think the froth is worrisome and I am gun-shy about pushing them to you.
Oil? My trust bought Schlumberger (SLB) last week, betting that oil could bottom five dollars from here and that the stock price anticipates that. I also think that EOG Resources (EOG) can be bought. But I think it will be a terrible year for the oils, so I would only buy one or two, just in case a supply shock brightens the opportunities here.
Finally, there are the semis. I have endorsed at various times all of the companies that have linked up of late: Qorvo (QRVO), Avago (AVGO), NXP Semi (NXPI), all of which can cash in on the Internet of things, including connectivity in cars and homes. Skyworks (SWKS), a heavy Apple (AAPL) supplier can do the same. I was remiss in not including Cypress-Spansion (CY) in the roster, another terrific internet of all things combined company.
These are all good to go, and I would buy any one or all. There; longer than a tweet, and then, hopefully of some real use to those who search for difficult answers in simplistic forums.
