Investing Lessons from 8 Hours on the Road

Accelerating Dividends, Defensive Investing, Diversification

Dear Investor,

I write this after spending a long day driving from the Reno, Nevada, area to Las Vegas, where I currently am as a speaker for the MoneyShow investors’ conference. It’s a 440-mile drive, so I had plenty of time to listen to CNBC on Sirius/XM radio.

Eight hours of listening to the financial news network without any distractions (okay, there were burros on the road in Beatty, but that was it) allowed me to listen and focus on what the various pundits and investment professionals had to say. Of greatest interest to me were the discussions about whether to own particular stocks. Each expert had their own list of reasons.

Car dashboard with radio.

Here are some of the highlights from that day, as per one or more of the TV experts:

It is doubtful that former high-flying, but now unprofitable, tech stocks will recover. These companies remain overvalued and cannot raise the capital they need to fund growth.

With the U.S. stock market in correction territory, there was a lot of discussion on looking for stocks with attractive valuations. Value investing is back.

Speaking of corrections. One guest noted the U.S. stock market had experienced 33 corrections since 1980. A correction occurs with a 10% drop in the major market indexes. The average decline was 185. The S&P 500 is down just over 10%, and the Nasdaq is off 19%.

There was almost universal agreement that energy stocks should continue to outperform. Energy company stock prices are far (40% or more) below the valuations that were in effect the last time crude oil traded for $90.00 per barrel.

I like the royalty trust stocks to profit from higher oil. I have one on my Dividend Hunter recommendations list. Unfortunately, it’s a small-cap stock, and putting the name in the wild could quickly push up the stock price.

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The on-air discussions were entirely about well-known, large-cap stocks. Professional money managers with large portfolios are forced to stay focused on the large, highly liquid stock names. That leaves a lot of opportunities in the smaller cap stocks for individual investors.

My favorite moment of the day was when a portfolio manager with a conservative approach to investing confessed that she was excited by the market correction. She noted that many stocks on her watch list were approaching attractive valuations. She mentioned Compass Diversified (CODI), a small-cap stock with an attractive yield.

I’ll do some digging into that one, and will report back sometime in the future. In the meantime, don’t forget about one of the better ways to invest in stocks, funds, and special managed portfolios: Magnifi. Click here to learn more.