tesla motors popular stocksSuccessful investing is both an art and a science.

We can see this must be true because if investing was purely a science then the richest investors in the world would all be professors and academics.

Likewise, if it was 100% art, then the richest investors would all be musicians and poets.

This clearly isn’t the case. Which means successful investing must strike the right chord between scientific method and intellectual creativity.

It is not an easy balance to get right but one useful reminder whenever thinking about investing in shares for the long-term is to ask yourself, knowing all that you know at the time, would you buy the whole company?

This quote is attributed to Rene Rivkin, who was a notorious character in his own right. Nevertheless, it is a useful reminder when making decisions in the stock market.

When buying shares, ask yourself, would you buy the whole company?

– Rene Rivkin

5 Popular Stocks I’m Not Too Keen On

Although I’ve gone slightly off topic, the rest of this article will detail 5 stocks that I’m not too keen on. These are all very popular companies with a lot going for them. But for one reason or another, I do not feel like I want to own them.

#1. Netflix ($NFLX)

FANG stocks (Facebook, Amazon, Netflix, Google) have been very good to investors over the last few years and for good reason. These disruptive companies have been growing at a rate of knots and are changing the world with exciting innovations.

However, I’m not nearly as keen on Netflix as I am the other three.

Netflix is hugely popular and is changing the face of television.

But, Netflix has significant costs related to the acquiring and producing of content. There are also numerous competitors around that can dig in to Netflix’s market share.

In terms of economic moat, I do not think Netflix is in such a strong position and the lofty share price may be difficult to sustain.

On top of that, I’ve been using Netflix at home and I’ve been unimpressed with the design of the platform.

#2. GoPro ($GPRO)

Just like I use Netflix, I also own a GoPro and I don’t love it either.

Don’t get me wrong, it’s a decent camera and it does what is should do. But that’s all it is, a camera. It’s nothing special and it annoys me that you can’t see what the thing is recording.

GoPro’s success has basically came from good marketing. There are very low barriers to entry in this market which means competitors can easily come in, underprice and grab a piece of the pie.

Having said that, GoPro stock has fallen heavily since it’s IPO. I think I advised shorting it back then. I’m not sure.

#3. LinkedIn ($LNKD)

Yes, LinkedIn has also had a torrid 2016 so you could say that this is a tad late again.

However, I have never liked LinkedIn. I guess I have never really enjoyed the ‘corporate’ side of life and I don’t have much interest in networking online and viewing the CVs of other professionals.

Sure, LinkedIn is still a popular website and it probably has it’s place. But LinkedIn does not have the dominance of Facebook and it could easily get swallowed up in the fast-moving world of the internet. I would not be surprised to see LinkedIn shares continue to drift south.

#4. Twitter ($TWTR)

For many of the same reasons that I don’t like LinkedIn, I am not too keen on Twitter.

I have always been a bit unsure of Twitter. I can never work out whether it’s just a big distraction or whether it actually adds value.

Well, of course it does add some value. It’s a good for finding news and content if you are able to cut through the rubbish.

But will it be around in 5-10 years time? I’m not entirely sure. I think there will need to be some changes and so far management haven’t been able to come up with anything.

#5. Tesla ($TSLA)

Tesla is another company that I like a lot and Elon Musk is surely a genius. However, the stock is worth around $32 billion at current market prices and it’s valuation is based on a great deal of speculation.

According to the IB Times, Tesla has sold around 125,000 cars since 2008.

Compare that to General Motors ($GM) which sold 8.4 million cars and trucks in 2010 alone. Yet, GM has a market cap of $48 billion, only $16 billion more than Tesla.

All the major car companies are introducing electric models now so that could challenge Tesla’s success. And remember this is an extremely cost-intensive industry. Like the airline business, the automotive industry has a history full of bankruptcies.

All in all, a great company but a very risky investment. At the moment the stock seems driven by investor sentiment much more than fundamentals.

Round-Up

So that’s just a quick round-up of some popular stocks I don’t fancy getting on board. As you can tell, I didn’t do any real analysis here, just spoke some common sense. Sometimes that’s all you need.

 

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2 opinions

    • Mitch

    • May 30, 2016

    • 9:14 pm

    • Reply

    Hey JB, I love a lot of your content, but this article seems a bit rough. Kind of “I don’t like their product, therefore not a good investment.” You’ve oversimplified a number of quite large businesses that have been extremely successful, mostly based on your personal preferences and biases. It would be nice to see a lot more analysis and data to back up your personal points of view if you’re going to do these kinds of posts.

    • Hey Mitch.
      Seems like a fair comment, taken on board. If I get the time I will try and write a more in-depth follow up.
      Cheers

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