Jul 28, 2020
Investing in the Pandemic What Are Zombie Co's?, & the Tech Stocks Rise w/ Robert Reaburn of LifePro Asset Mgmt
- BRT S01 EP25 7-26-2020
Guest: Robert Raeburn VP Wealth Mgmt, Life Pro Asset Mgmt
Robert’s Weekly Insights - https://www.lifeproassetmanagement.com/insights
LPAM YouTube Channel: Here
Guest: Denver Nowicz, President - Wealth For Life
https://www.linkedin.com/in/denvernowicz/
https://twitter.com/DenverNowicz
Denver is an advisor with nearly 20 years experience working with clients in investments and insurance, designing retirement plans with a combo of both. He takes us through different strategies for clients to get the best allocations for their money over the long term. It is the Combo Strategy of both Offense and Defense, the synergy of the mix, not ‘All or Nothing’.
Notes:
Topics – Stocks and Tech
Rise of the NASDAQ, dominance of tech stocks
Valuations of tech stocks
Comparison vs Dotcom bubble of 2000
Growth Stocks vs Value Stocks, has Value lost its cache
Rise of the NASDAQ, dominance of tech stocks
Valuations of tech stocks
Comparison vs Dotcom bubble of 2000
Growth Stocks vs Value Stocks, has Value lost its cache
“zombie” companies that barely earn enough to service interest on corporate debt
Zombie Co’s – how 15 – 20% of S&P stocks are Zombie Co’s
No growth, just borrowing $ cheap and meandering on
Zombie Co’s – how 15 – 20% of S&P stocks are Zombie Co’s
No growth, just borrowing $ cheap and meandering on
Zombie Co’s – how 15-20% of S&P are zombie co’s
Denver and Robert discuss this issue, problem with ETFs, and why invest in companies not index
Rise of Tech & Growth Tech Stocks
How it compares to dotcom bubble of 2000
Valuations on tech stocks – overvalued, Tesla, Amazon, etc.
Lots of Robert commentary
Growth vs Value Investing
Has value investing lost its way
Dominance of the Nasdaq
Even Buffet went hard into Apple stock few years ago
More Robert commentary
More on Zombie Co's:
Combined with near-zero interest rates, these actions have prompted a tidal wave of corporate borrowing. In the first five months of 2020, U.S. firms have issued over $1.12 trillion in investment-grade debt. That’s more the total borrowing amount for all of 2019. And remember, this is only investment-grade. If we included lower-rated bonds, the figures would be even higher.
As a result, we may see an increase in the share of “zombie” firms, or those whose “debt servicing costs are higher than their profits but are kept alive by relentless borrowing,” according to a report by Axios. Currently at 18.9 percent, the rate could soon rise past 20 percent, or one in five U.S. companies.
Tortsen Sløk, chief economist at Deutsche Bank, addressed the inherent risks in zombie firms in a note to clients this week, writing that such companies “are less productive, and their existence lowers investment in and employment at more productive firms.”
For this reason and more, I would be extra cautious and make sure I conduct due diligence if I were thinking of investing in corporate bonds at this time.
Link to Taxes Show on 10/31/2021 w/ Denver: Here
Link to Offense / Defense Show on 6/6/2021 w/ Denver: Here
Link to Shows, Denver was a Guest: Here
MB on AZ economy, Covid, Technology booming
Twitter security scandal
Tech stocks and NASDAQ strong in 2020
Disruption, future of work
ARK Invest – Cathy Wood Tesla stock at $7K by 2024, blockchain, bitcoin, genome research
Ark Invest's Innovation ETF managed by Cathie Wood.
Ark’s five platforms of disruptive innovation are: - DNA sequencing - Energy storage - Robotics - Artificial intelligence – Blockchain
ARKK – ARK TR / Innovation ETF
Invitae NVTA, Tesla TSLA, Square SQ, Crispr, ILMN,
2U TWOU, PRLB, Z Zillow, ROKU, SSYS
Gary Vaynerchuk - Vayner RSE investments in social media, tech co’s, and VR - Previously invested in FB, UBER, Snap
‘Best Of’ Topic: https://brt-show.libsyn.com/category/Best+of+BRT
Investing Topic: https://brt-show.libsyn.com/category/Investing-Stocks-Bonds-Retirement
More 'Best of Investing': Here
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