Chris Hill: Aaron Bush, what is a stock -- or an industry; you can go broad if you want
-- in terms of upside for investors? Let's face it, it's been a volatile couple of months here.
We're looking for some upside. What do you have? Aaron Bush: I'm going to go big and then narrow down.
Software-as-a-service.
The past two years have been huge for emerging software companies.
But I do think this is an instance in which winners will keep on winning, and a lot of
these stocks have been beaten down in the recent turmoil, too.
Unlike the consumer-facing innovation, which is occurring mainly in startups and the massive
tech companies, there are tons of great options to invest in small and mid-cap software companies
with lots of room to multiply. Some of these will turn into the next Oracle or Salesforce.
A basket of three stocks that I have super high conviction in that I think will do well
in 2019, definitely beyond: Twilio, which is a leading communications platform;
Alteryx, which is a leading data blending and analytics platform; and MongoDB, which is a next-gen
database services company.
All of these companies are growing super-fast, are dominant in what they do, have very little competition.
At scale, they're going to be producing ridiculous amounts of cash flow.
I’m super excited to see what these companies do, even though they've already been hyped
in the past years. Hill: Also, a fun basket of names.
It's fun to say Twilio. What about you, Matt?
Matt Argersinger: I’m going to jump way out and talk about an entire sector.
Real estate has really underperformed recently thanks to, as you'd expect, higher interest rates.
Homebuilders especially have been really hit hard.
But the sector itself is what you want to have some exposure to over the next few years.
Despite what the conventional thinking might be, real estate actually does quite well in
periods of higher interest rates, higher inflation.
One safe, cheap way to play it is to buy the Vanguard Real Estate ETF, ticker VNQ.
It pays a nice 4% dividend yield, gives you a broad exposure to a bunch of publicly traded
real estate companies and REITs.
I think it has a real chance of outperforming the S&P over the next few years.
Hill: On the other side of the spectrum, it can be a stock to avoid, or maybe just one
to have on a really short leash. In terms of that category, Aaron, where are you?
Bush: I think the marijuana industry is super interesting, but it was so hyped in 2018,
I think 2019 is going to bring disaster to investors investing for the most part in that industry,
but especially in the companies that were the most hyped, like Canopy Growth,
Tilray, Aurora Cannabis.
If you're investing in those, watch out, 2019 is almost definitely going to be a rough year.
Argersinger: It was funny, Aaron and I talked back in the fall. We both said, watch out.
As soon as cannabis gets legalized in Canada, which was mid-October, you could almost draw
a straight line from that point on. That was the peak of a lot of these stocks.
They're down huge since then, even more so than the market we've seen.
It's funny, it was one of the easiest calls I think you could have made.
And it still has more to go.
Hill: It was interesting in part because it wasn't just individual investors who were excited about this.
We saw major companies, consumer brands that everybody knows, investing hundreds of millions,
and in some cases billions of dollars. Argersinger: Coke, Philip Morris. Amazing.
Hill: What do you have on a short leash? Argersinger: You can probably guess.
I'm going to say Facebook needs to be kept on a short leash, if not avoided altogether.
All the problems I mentioned regarding the social networking space... the stock price looks cheap.
You can call it that.
If you assume that they're going to continue to grow their advertising revenue at a similar pace,
or even slightly slower pace, yes, the stock looks very, very compelling.
I just think there's going to be a big reset in expectations across the space.
I have big questions about whether Facebook can effectively monetize Instagram and WhatsApp
without damaging user experience.
And I’m not even getting into the leadership questions you have to have right now around
Mark Zuckerberg and Sheryl Sandberg. I just think you can do better elsewhere.
Don't try to catch Facebook, even though it's a snazzy name with now a cheap valuation.