Motley Fool Money - A Fool’s Guide to Investing in 2024

Episode Date: January 6, 2024

New year, new you! Or maybe just a new portfolio.  Whether you’re a seasoned investor or just starting out, consider this your “start here” guide for Foolish investing in the year ahead. Mary Long talks with Asit Sharma, Meilin Quinn, and Matt Argersinger about:  (01:02) Fool Rules, (12:53) investing tools, (21:28) and what the year ahead might (or might not) have in store.  Claim your Epic Bundle discount here.  Host: Mary Long Guest: Asit Sharma, Meilin Quinn, Matt Argersinger Engineer: Tim Sparks, Dan Boyd Tickers mentioned: DIS, VINP, EPR, HSY Learn more about your ad choices. Visit megaphone.fm/adchoices

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Investors came in in 2023. They came into last year with a lot more caution. I think that's probably why the market was set up to outperform because when we even got a whiff of good news, whether it was, you know, good news on inflation or good news on the economy, it was kind of a surprise. And it said, wow, okay, things are better than we thought. Let's go buy stocks. Going into 2024, however, I think investors are a lot more optimistic. Obviously, we've had a great run in the market over the last few months, inflation's come down, a lot better feelings, right? I think, and I think a lot of that optimism is justified. I'm Mary Long, and that's Matt Argersinger, a senior analyst here at The Fool. To kick off the first Saturday show of the year, I rounded up Matt and a few other analysts

to put together a foolish crash course on investing in 2024. We talk about the fundamentals of a foolish portfolio, take a look at some of the investing tools that our analysts use in their own research, and examine the economic landscape for the year ahead. Been with us for a while you probably already know that we do things a little differently around here. We're not your typical investors. But if you're a new listener, we wanted to take a moment at the start of the year to let you know who we are and what we're all about. So first, I sat down with senior analyst Asit Sharma to talk through the full rules and the fundamentals of our investing approach. I got what I hope is an easy question to start us off with. What is foolish investing? And that's

Foolish with a capital F, mind you. Sure. So, Foolish investing, Mary, is in essence, identifying great businesses with long-term opportunities. We often have an emphasis on founder-led businesses. That's something that you will come across very quickly if you spend any amount of time with the Motley Fool. We also believe in long holding periods. I mean, this goes back to that first point. If you're identifying a great business with long-term opportunities or several, you probably need to hold that business for a minimum amount of time. We believe that period is about five years. We love diversification via at least 25 stocks, and I believe you have something to say about

this in a moment. Lastly, I'll say that foolish investing depends a lot on something that our co-founders, Tom and David Gardner, think that's very meaningful, that you can participate in, innovation in the greater economy. You can make a difference in the world. To put this in the words of David Gardner, make your portfolio reflect your best vision for our future. So some of this thinking invests our total way of looking at industries down to the stocks we invest in. Yeah, I want to kind of zoom in on some of those points that you mentioned. So you mentioned diversification and that we say a portfolio should have 25 to 30 stocks. Why did we land on that

number. Sounds pretty arbitrary, doesn't it? Well, actually, there's a lot of thinking behind this. We don't believe in diversification for the sake of diversification. That may not lead to better returns. But we have a concept that we hold dear. It's the Pareto principle. This is a principle that's found in many other disciplines, not just investing. Basically, the essence of the Preeto principle is that about 80% of the outputs from a process or a situation is always going to be determined by about 20% of the inputs. How does this translate to investing? Well, if you've got five stocks in your portfolio, odds are that 80% of the returns over

a longer period of time, I'll just ballpark that could be 70, it could be 90%, will be generated by one of those five stocks. So, why do we then look at 25 as a minimum number? Well, part of this has to do with probability. If you're an excellent stock picker, maybe you just have the talent to identify five companies that have held for a long time period will outperform or one of those will follow the Preeto principle. But all of this can go wrong.

Even the best stock pickers can make mistakes. So you increase the probabilities of the Preeto principle playing out if you bump up that sample size to 25 to 30 stocks, or even more in some cases, it's fine to hold more than just 25 or 30 stocks. You could own 100. I own probably 90 myself. But that's the reasoning behind it. And we've also found over time in our own experience, as we've built portfolios over the decades now, and have our flagship services like Stock Advisor and Rule Breakers, this principle, this approach to investing really works out at that minimum number of 25 to 30 stocks in an individual investor's portfolio. I think it's fair to say that we're realistic optimists

here at The Fool. You talked about David Gardner and the idea of building a portfolio that reflects the world that you'd like to live in in the future. But you know, you also mentioned that, okay, realistically, not every stock that we pick is going to be a winner. So when do you look at a company that you might love and really believe in the future of, but also understand that it might be the time to sell for a variety of factors? How do you figure out when it's time to sell? I think for most people, Mary, it comes down to what happens with that initial idea that pulled them into the investment in the first place. If it's an impulse by, then you're probably not that wedded to the idea if it starts to

break on you. But if you've put time to build an investment thesis and sort of understand why you think this company can outperform, what it's going to do within its industry to flow past competitors, to generate great cash flows, you'll be. able to hold that stock a little longer. If you see it drop five or 10 or 15 percent, in some cases, 40 or 50 percent. If that thesis is broken, though, then it may be time to consider, if you need to hold onto it, maybe you should trim. You talk about an investing thesis. How do you, Asit Sharma, build an investing thesis from the ground up? I'm going to tell you mine, but

really, Mary, just building the thesis is so important. I meet a lot of newer investors who really don't do this as a practice. So here's mine, really quick. First, the narrative. Like, what's the story with this company that I've stumbled upon? What does management think that the story is? What do other investors think? You see, let's call it a growth story,

a company that has landed in the marketplace with an amazing product. It doesn't need any effort to sell. I will then sort of start with the balance sheet first. I'm a balance sheet-oriented investor. Then I'll look at the income statement, the statement of cash flows, then the market, the products, and I'll do some valuation work a little bit. It doesn't have to be super sophisticated if I'm just looking at the company first blush.

In between all that, though, I'm taking peaks at different things. I want to know, is this founder-led, is there a passionate founder leading to business? Does management have a great ownership stake? Are they well-incentivized? What's the growth rate of the industry? Is the market missing a growth story here, or a turnaround story? Or maybe the market already sees it. Should I buy into this story, too? That's just sort of like a nutshell of my personal process. But again, having a process that you can use over and over is such a

great first step. Build that thesis, it's different for every investor regardless of skill level. So there's no right way to go about it. We love individual stocks here, but that's not the only thing that can make a strong portfolio. So what else should be in a strong investment portfolio? I think that investors should have small percentage trenches of different investments, Mary, even if you think that the stock market will have superior returns versus alternatives. I would say, ideally, investors should have 3 to 5 percent in hard assets. You can buy gold or silver or some commodity. There are ways to do that that aren't so hard to manage the assets.

There are investments out there that like you just sort of take a nominal ownership in a a certain asset. I think cash for most people is a given, try to build, I would say at least a 10% position of your net worth in cash, have some fixed income, maybe some bonds. I think real estate is another great way to diversify your total asset base. It's okay to consider your house as an investment, but remember, a house is a home first. Buy it for the reasons of having a place that you call your own. And then if you want to think of that in investment terms, that's okay as well. Also, I'd recommend that investors sprinkle in some alternative assets as they begin to accumulate wealth. This could be a number of things. You could invest

in art. You could maybe invest a little bit in wine or things of that nature. And finally, some risk assets. For many of us, this might mean investing in currencies, maybe the crypto market or similar investments. And these are interchangeable also with alternative assets, if that sounds to those who are really sophisticated, a bit confusing there. I think we've got to talk about index funds, too. Serious question for you. Why not just invest in those? Why should we or anybody bother with individual stocks at all? That's a great question, Mary. I want to start by saying, I love index funds and thematic ETFs or exchange traded funds that focus in on one theme. That's probably 25% of my

total investment portfolio. And I consider myself a stock picker. I've got so many stocks in my portfolio. But being able to participate with larger market action is such an easy way, a path of least resistance to building wealth over a long term. I think every investor should both invest in some index correlated funds and also more narrow ETFs that follow a certain idea or theme, as I mentioned. Maybe it's a country-specific ETF. Now, why would you even bother with stocks, if you're already investing this way, well, there is always the specter of systematic risk. So, systemic risk is when you invest in a stock or an industry and it blows up on you. Systematic risk is what happens when you only invested in the total market.

And the total market is down for several years. And we've been blessed not to have an extended bear market since the late 70s and early 80s, but man, they do come around. So the investor who does both, has some individual stocks in his or her portfolio alongside index investing, I think can prosper the most over the long term. Lastly, I do want to say that if you're only investing in market cap weighted indices that get more and more concentrated in big names like The Magnificent Seven, everyone talked incessantly about in 2023, that can be its own risk as well. So make sure you've got maybe an equal weighted investment theme. in your index investing. You can do an equal weighted S&P 500 index fund, for example,

if you've already invested in the market cap weighted version of that index. So, Austin, I'm talking to a few different fools today to kind of lay the groundwork for 2024. And I'm going to ask everybody this question, but we'll start with you, because we're talking now. What's one company that you're buying or eyeing looking to buy in 2024? And what makes it interesting to you? So, Mary, I'm going to go with the House of Mouse. I am eyeing Disney. I think there's so much negative sentiment on this company. It's really lost its way in a number of different areas. Just look at last year's film slate, a lot of duds out of a company that normally leads the film industry. That's just one Mistep Disney has had. And also, you know, they fought to come out of COVID. They are in this big battle between streaming companies to try to, to try to, you know, to grab market share and at the same time make money.

But what Bob Eiger is doing in this second go-round as CEO is to focus on the unit economics in every division, every bit of Disney, wherever they can find economies of scale. They're putting those in. He's pulling back the film slate to favor quality over quantity, and that's going to mean more efficient marketing dollars. I think that the market is missing a really strong, tremendous earning story that we're going see within the next three to five years. It looks like the point of maximum pessimism now. And sometimes that's the very best time to buy a company with a very strong brand and Ford prospect.

So that's one company that I've got my eye on. And I will also be buying a bit here in the first part of the year. These days, I'm all about quality over quantity, especially in my closet. If it's not well made and versatile, it's just not worth it. That's honestly what I love quince. The fabrics feel elevated, the cuts are thoughtful, and the pricing actually makes sense. Quince makes high-quality wardrobe staples using premium fabrics like 100% European linen, silk and organic cotton poplin. They work directly with safe ethical factories and cut off the middlemen, so you aren't paying for brand markups or fancy stores, just quality clothing. Everything they make is built to hold up season after season and is consistently rated 4.5 to 5 stars by thousands of real people like me who wear their clothes

every day. The Quince, Mongolian Kashmir Kro-neck sweater may be the most comfortable one that I own. It's light, soft, and it was a lot more affordable than you think quality Kashmir would be. Stop waiting to build the wardrobe you actually want. Right now, go to quince.com slash Motley for free shipping and 365-day returns. That's a full year to wear it and love it, and you will. Now available in Canada, too. Don't keep settling for clothes that don't last. Go to QINC-E.com slash motley for free shipping and 365-day returns. Quince.com slash Motley. Next, I talked with another one of our analysts, Malin Quinn. We pull back the curtain on her process and take a look at the tools she uses to find,

screen, and check up on potential stock picks. Malin, I hear you're one of the more avid chat GPT users on the investing team. Can I call that like an unconventional, a less traditional investing tool? How do you use that as an analyst? Yeah, it's definitely fair to call it unconventional, Mary, but I actually think it could end up being the norm. AI is such an important tool when it's used carefully and correctly. And I think over the long term, it could give investors in edge companies that are embracing AI and their operations are already gaining an edge. And I believe investors who use AI could also

get an edge particularly in making their research process more efficient and making it easier to keep track of their existing investments. I use it primarily for, summarizing things for simple applications for now. I'll ask it to summarize an article or I'll ask it to break down a highly technical concept to make it easier to understand companies with complicated business models or technology. For example, the other week I had chat GPT help me break down the hydrogen fuel industry. There are all these different types of hydrogen, blue, green, white, gray hydrogen. And when you're holding a diversified portfolio of more than 25 stocks, that's a lot of industries and products to keep up with and try to understand. And chat GPT is a great resource to

help simplify that process. And don't get me wrong, I also have those three page long prompts that can dive into things like analyzing management compensation when you give it a proxy statement. I haven't deployed these complex prompts much just yet. I'm still, you know, refining them. But even when I do deploy those, I think the best way to use them would be in tandem with still that human flare, that human touch. We still need to go in and fact check. The human component is also important for putting together pieces in a company's, you know, growth story, making those nuanced connections about a company. you could give Chad GPT an earnings call and a company's 10K to summarize it for you. It'll give you a good summary.

It'll maybe tell you that the company's earnings has been falling, but it may not reliably convey that maybe earnings have been falling because the costs associated with a recent acquisition. Maybe once the company integrates this acquisition, there will be significant synergies. The company will be able to scale better and earnings are set to grow much more over time. It misses important nuances like this and outsized returns and investing. It's often about finding what the broader market is missing in a company, what Wall Street is overlooking. Chat TPT isn't going to answer that question for you, but it will help you build a solid foundation and understanding of a business so that you are more prepared to dive deeper into the details and ask important questions, draw important connections. So overall, I would say it's a supplement, not a replacement for some good old due diligence. Yeah, it sounds like you're still doing a lot of the beginning research of pulling different statements,

different resources that you want chat GPT to help you distill. And then after that distillation process, you're again on the other end of that kind of finding, again, as you said, those more human, adding that human flare to the analysis. So before you turn to chat GPT and maybe before analysis of a company even begins, where do you start looking for a stock pick it all? It's different for every analyst. Sometimes I'll come across an article about a company in Barron's or Bloomberg that'll catch my attention. Maybe Morning Star will rank it highly in an article or maybe a prominent investor has recently purchased shares. Maybe there's a broader theme or trend that I'm following, maybe like weight loss drugs. I'll think about, okay, what companies stand to benefit from this trend.

Those are common ways to get stocks on my radar. I also conduct a lot of stock screenings. We have a few platforms that we use internally at the full investing team, but there are a couple of free ones, one called FinViz, and I believe Google Finance also lets you screen for stocks. And to give you an example the other day, I was screening for some high-quality growth stock ideas. So I put in a screener for companies that have less than $2 billion market cap, revenue growth above 30%, expanding margins, you know, debt to equity ratio, less than 0.5, and a few other criteria. So I use these screens.

I see what's out there, get stocks on my radar, and then I find a few that peak my interest, that I will go on to research further. So we're foolish. We'd like to do things a little differently. And as an example of that, we have some maybe unique indicators that investors might not see or hear about elsewhere. Tom Gardner talks about one of these indicators pretty often. It's called the potential growth indicator or PGI. Can you talk a bit about what this indicator is, what it shows us, how we measure it? Sure, the PGI indicator, in a nutshell, it helps us decide when to invest more or when to hold back based on broader market sentiment. It looks at the ratio of cash and taxable

money market accounts. It compares that to the total value of U.S. stocks to give us an insight into investor sentiment. So it's a gauge for how willing or hesitant investors are to put their money into the stock market. And when the PGI is above 11.5%, it suggests that investors are less eager to invest, This indicates a potential future upswing in the markets when they return to investing. So this could be a cue to invest more in your favorite businesses. By the way, right now, the PGI is at around 11.9%. So it's right where we want it to be. It's a great time to be investing.

We found that a PGI between 9.5% and 11.5% implies more of a neutral sentiment, maybe take a more cautious approach to investing. And the historical range of PGI has been between 8% and 20%. And of course, there have been a few extremes like 47% during the 2009 financial crisis. This is when investors were highly hesitant to invest into stocks. But yeah, it helps you gauge the overall mood of the market. A lower PGI might suggest waiting for a better opportunity, while a higher PGI could imply a good time for investing. So the PGI is kind of right where we want it, typically, as you said.

What is one company that you're buying or eyeing looking to buy in 2024? I'm eyeing a small cap company called Vinci Partners, ticker VINP. It's a Latin American alternative investment firm. I think it has a strong opportunity in Latin America's burgeoning private equity sector. It's a relatively underpenetrated market. get the penetration of private market assets relative to GDP in Latin America leaves lots of room for growth. And the market is growing fast as the availability of credit, employment, and disposable income has been growing in the region. Vinci has a solid track record doing what it does

well. It has impressive returns on capital, significant growth. It has further growth potential and expanding some of its asset management services. It also has a good balance sheet with minimal debt. I am a firm believer that 2024 will be the year of the growth stock, especially if the Fed cuts back on rates. And Vinci, to me, has the markings of a financially healthy, high-quality, small-cap growth stock. Sounds like a super interesting company to keep an eye on. Maylin, thanks so much for chatting with me today and giving us

an eye into the different tools that you use to find and continue to analyze stocks. Thank you so much, Mary. Last but not least, I tracked down Matt Argusinger to talk macro data, vibes, and which companies have him most excited about the year ahead. We are long-term buy-and-hold investors here at The Fool. And yet, Matt, today, you and I are talking about the macro landscape and kind of setting the table for 2024 and what investors ought to expect moving forward. So let's start with addressing that tension, perhaps, because if we're truly buying companies for the long haul,

why should we be paying attention to the landscape at all? Yeah, it's a great question, Mary, and it's great to be with you. Happy New Year. Yes, we are, we're most certainly bottoms up investors at the fool. But I think it does make sense to keep at least some awareness of kind of the macro landscape, the situation. For example, I look at a lot of smaller mid-sized companies that often have to rely on raising capital from the debt markets. These companies are going to be more sensitive to things like higher interest rates. They're also going to be more susceptible to things like inflation because they don't often

have the same pricing power, the same competitive positioning as larger companies that have just larger advantages, distribution, scale, the ability to pass on prices, for example. Smaller companies just often can't do that. I also spent a lot of time, as you know, looking at real estate companies. There's a lot happening in the housing market, in the office market, those macro-level challenges that kind of have an overall effect on valuations in the space. So I'm never going to let a single macro factor be an overriding, change my thesis or make my decision either way on investing in a business for the long run.

But I think the macro, if you understand the macro situation, the macro landscape and how it pertains to companies you're specifically looking at, you know, in your watch list or in your portfolio, it might help you find better times to look for opportunities, you know, understand the risks a little better and when it might be a good time to get out of a position, for example. So I think it's definitely informative to sometimes look at the macro landscape. I feel like we've almost been playing with the same story for the past few years when it comes to the macro landscape. 2022 was the year of the recession that wasn't. And 23 was kind of the same thing we were told at the start of last year that there were promises and predictions

of there being a hundred percent chance of a recession happening last year. Flash forward, didn't happen. In fact, turned out pretty well for investors last year. What are things looking like at the start of 2024? Well, yeah, first, you have to remember that, you know, I think part of the reason two Trump, 2020 was so good for investors is because, as you said, everyone was so pessimistic coming in. You know, we're going to have a recession. It's guaranteed. You know, I think the vast majority of pundits said there was at least going to be some kind of economic downturn. So investors came in 2003. They came into last. last year with a lot more caution. And I think that's probably why the market was set up to outperform

because when we even got a whiff of good news, whether it was, you know, good news on inflation or good news on the economy, it was kind of a surprise. And it said, wow, okay, things are better than we thought. Let's go buy stocks. Going into 2024, however, I think investors are a lot more optimistic. Obviously, we've had a great run in the market over the last few months. Inflations come down. A lot better feelings, right? I think, and I think a lot of that optimism, is justified. As I mentioned, inflation is moderating. The Fed is, I think, officially done hiking rates. They're probably actually going to be in a position to lower rates as early as the spring, especially if inflation keeps trending lower. And yeah, we talk about that recession.

I think we've dodged it, or at least it looks like we have. So fingers crossed, and you never know. So, you know, outside a small second of the market and mainly looking, you know, thinking about large tech companies, valuations in the market actually don't look very high either, certainly by historical standards. In fact, if you look at small to mid-sized companies that are profitable, valuations are actually below historic averages. And I even see big bargains in, if you look at like the financial real estate energy sectors in particular. So I think investors are more optimistic. We just had a great year. And that does make me a bit worried because maybe people are too excited. But, you know, most companies, especially again, those small mid-sized companies, haven't really participated in

this new bull market. So actually, that makes me feel pretty good for 2024. So, you know, you talk about optimism and pessimism and kind of these two different feelings. I think at the later half of last year, there started to be this story in the media about attention between how data said the economy was doing and then how people, maybe more so consumers than than individual investors, but how they felt, people felt like the economy was doing. And there's a great writer, Kyla Scanlon, who kind of coined this phenomenon, a vibe session, meaning that there's a difference between how vibes are and what numbers say vibes should be. Do you see these two camps, vibes and numbers aligning in the year ahead?

And does one have to win out? Or can we kind of continue to have this tension between the two? Yeah, it's an interesting conundrum. But I do like the vibe session, way of, We have talking about it. I mean, I can see why there are negative vibes. It's very easy for us as analysts or economists to say, hey, look, inflation is coming down. GDP is 2% better than expected.

The unemployment rate is 3.7% near historic lows. Why aren't people happy? You know, what work could they want? But one thing to keep in mind is, you know, even though something like inflation is coming down, it's not like prices are going to suddenly go back to where they were in 2019. I think that's probably the big misunderstanding when we see headlines saying, you know, inflation's moderating or inflation's coming down. There might be this perception among consumers that, oh, okay, that means prices are going to go down. Well, that's not really the case.

When we say inflation's coming down, it means the growth rate of prices is coming down, not that prices are declining. And so I think what's hard to understand for a lot of consumers is, you look, the price of eggs at the grocery store, they're probably not going to go back to $3 a dozen. Your Grande Starbucks latte is not going to be $4 anymore. used car prices, which have been on a tear, they're not going to go back to where they were in 2019. Things like apartment rents are up 20% from the start of the pandemic. Those certainly aren't going back to 2019 levels. Apart rents never go down, really. So life, for the most part, is just a lot more expensive these days.

And I think it's harder for people to recognize that, yes, things are more expensive. But my wages and salaries are actually up. My net worth is higher than it was. But people don't really factor that in. All they see is those everyday prices, whether they're at the supermarket, the grocery store, restaurants, if they're renting an apartment, if they're buying car insurance, everything's more expensive. So it's just not a good feeling when you think your money doesn't go as far as it used to.

Now I do think as the year goes on, and history does show this, especially if the economy holds up, people will start feeling better, people will start getting used to these new price levels and their vibes will be better. But it just might take several more months or maybe even the whole year before we actually get there. You're a real estate guy. And you talk a lot about the future of the office, state of commercial real estate, especially with Motleyful Money co-host, Deirdre Willard. We're now nearly four years, if you can believe it, out from when COVID turned the world

upside down. Where do things stand for the office, for downtowns, for commercial leases? And how does that outlook, whatever it might be, impact your investing mindset going into the year? Right. Well, I wish the situation could be better for, office properties, but it's not. I mean, if you look at traditional office buildings, particularly older buildings in kind of urban cores, I think there's a real existential crisis

happening. You know, you've got the work from home, that flexible work trend that we've been, we've had for the past several years, it's here to stay. It's not transitory. And that means there's just a, you know, far less demand for office real estate. And it, my biggest worry, it really puts cities in a very tough spot. If you have less demand for office, That means lower valuations. That means lower property taxes. Fewer commuters going into the city every day mean less demand for daytime retail, services, restaurants.

It also means less revenue for subways, buses, any kind of public transportation. And ultimately, that leads to lower revenue for city and local governments. In New York City, something on the order of 20% of tax revenue comes from taxes on commercial real estate. So imagine that getting cut by 30, 40, or 50% even. You know, that leads to less spending on services and transportation,

which then makes cities less desirable. It causes businesses and residents to leave. And then this cycle repeats, and you have kind of this doom loop for cities. It's got me a little worried. And really, as of now, there aren't really any near-term solutions. You know, if you look at the vast majority of traditional office buildings, they just really can't be converted to other uses. It's too expensive.

It's in many cases prohibited by existing zoning laws. the only real long-term solution is probably to knock them all down, which is also not a great thing. So it's going to be one of the great challenges of this decade. I think it's what to do with all this excess office real estate. That's probably just going to sit vacant in cities. So if cities are facing a doom loop, then this question might take us out of that sector. But whether it's within real estate or outside of it, what themes are you really excited about, particularly now? Right.

Well, yeah, there are bright spots in real estate for sure. Industrial real estate has been a real bright spot. if you think about warehouses, fulfillment centers, logistics facilities, the rise of e-commerce, the idea of bringing some manufacturing and inventory back home, nearshoring, onshore, however you want to treat it. That's been good for industrial real estate. Hospitality real estate has had a real renaissance. There's a lot of pent-up demand coming out of the pandemic. We've seen hotel evaluations come back. We've seen occupancy rates go back. And hotels seem to have really good pricing power. Data Centers is another area of real estate that's obviously done really well with the rise of,

you know, information needs, connectivity, artificial intelligence, all the above. So there are certainly bright spots within the sector. I would say I probably am most compelled by industrial because I think the valuations are still really good, even though the sector's had a great few years. But yeah, anything really out, even retail to a certain extent, anything outside office has proved pretty resilient. As long as the economy holds up, I think real estate can do just fine in 2024. Anything that feels a bit too overhyped to you? Probably, yeah.

I mean, probably if I had to pick one, it might be the data center area just because, gosh, there's been so much capacity built out. A lot of markets are seeing a lot of supply come in. And, you know, it reminds me kind of the early years of the Internet, where we're rebuilding out all that fiber and all that capacity. and eventually was used, but there was a lot of excess supply kind of built out in the early 2000s that proved to be bad investments at the time. It took a long time to get those kind of up and running and fully utilized.

That might be one area where there might be some access right now. Is there one company that you're definitely buying or looking to buy in 2024? I'll give you two, Mary. I see it. So one on the real estate side is EPR properties, ticker EPR. It's one I've actually talked about on the show over the past couple months or so. It's just, it's one of those real estate companies. It's mostly entertainment real estate.

It's got some movie theaters. It's got ski resorts. It's got restaurants. But it's really designed for, you know, the type of real estate that people are looking to, you know, when they go out of their house and going to, you know, eat good food or, you know, look for entertainment. It's that, it's one of those great property classes for that. And I think it's one of those stocks, the, one of those stocks. of the REITs that really hasn't bounced back a lot. It's valuations looks really good. It's got a dividend yield over 6%. So that's one company that I personally might be buying more of in

2024. The other one is one you're probably familiar with the Hershey Company. And I just looked at the, you know, the Hershey Company is just this wonderful historic business that's, delivered great returns to shareholders for years, decades, century now. And yet it was down about 25% in 2003. A lot of it had to do with kind of the rise of the, the, the, the weight loss drugs and what that was going to do for people buying chocolate and snacks. I think it's way overdone. I think this is one of the best times for the last five or so years to buy the Hershey Company. And that's one I'd like to, I'm going to keep my eyes on this year as well.

We talk about a lot of stocks on this show. But that's just a peek into the Motley Fool's investing universe. This year, we're rolling out a new offering. It's called Epic Bundle. The service includes seven stock recommendations every month, model portfolios, and stock rankings, all based on your investor type. We're offering Epic bundle to Motley Fool money listeners at a reduced rate. Just as a thanks for listening to the show.

For more information, head to fool.com slash Epic198. We'll also throw a link in the show notes for you. As always, people on the program may have interest in the stocks they talk about. And The Motley Fool may have formal recommendations for or against, so don't buy ourselves stocks based solely on what you hear. I'm Mary Long. Thanks for listening. We'll see you tomorrow.