Motley Fool Money - Big Banks, Big Opportunities, and What Did The Fed Chief Say?

Episode Date: January 14, 2022

Earnings season kicks off with the latest results from JPMorgan Chase, Wells Fargo, and Citigroup. Take-Two Interactive buys Zynga for $12.7 billion. Elastic's CEO moves to the CTO role. Virgin Galactic needs more money. Meta Platforms shuts down its dating service. Domino's makes changes to deal with inflation. Crocs makes a play for the luxury market. Maria Gallagher and Jason Moser analyze those stories, discuss why they're most curious about upcoming results from Pinterest and Etsy, and share two stocks on their radar: Adyen and Nvidia. CFP Malcolm Ethridge analyzes what Federal Reserve Chair Jay Powell said on Capitol Hill this week and why it matters to investors. Plus, he offers a preview of the 2nd season of "The Tech Money Podcast" and shares why he's keeping an eye on real estate, health care, PayPal, and UnitedHealth Group. Looking to get started investing? We’d love to help with a FREE copy of our Investing Starter Kit. Just click over to www.fool.com/StarterKit and we’ll email it to you. Stocks: WFC, C, JPM, TTWO, ZNGA, ESTC, PINS, AMZN, ETSY, SPCE, MTCH, META, DPZ, CROX, PYPL, UNH, NVDA, ADYEY Host: Chris Hill Guests: Maria Gallagher, Jason Moser, Malcolm Ethridge Engineer: Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

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It's the Motley Fool Money Radio Show. I'm Chris Hill joined by senior analyst Jason Moser and Maria Gallagher. Good to see you both. I see you too. We've got the latest headlines from Wall Street. Financial planner Malcolm Etheridge is our guest this week. And as always, we've got a couple of stocks on our radar. But we begin with the start of earnings season. Three of Wall Street's biggest banks sharing fourth quarter reports on Friday morning,

Wells Fargo's profits and revenue came in much higher than expected. But Citigroup saw a rise in expenses cutting into their profits. And J.P. Morgan Chase's results were overshadowed by lowered guidance for 2022. Jason, what's your headline for each one? Well, I mean, we talked about 2022 being a better year for the banks. I think it will be to an extent, but it's not like 2021 was a bad year. If you look at the numbers, JPMorgan's total return was just under 28 percent. Wells Fargo just right at 61 percent, both out pacing the market.

So, it wasn't a bad year. I'm sure some of that has to do with the anticipatory market pulling forward some of those expectations for eventual higher interest rates. But this was, I think, a quarter that really helped him set the table for 2022. And so let's start, let's go in order of tangible book value from highest to lowest, Chris, because I think that really follows the market sentiment here overall. With J.P. Morgan, I think at a time when it was very fair to question whether they would be raising guidance as interest rates start to take up, it's fascinating to me. They're actually lowering guidance.

And that is due in large part to inflationary pressures, higher costs, a tight labor market. With that said, the business continues to perform very well. They beat on both counts for the quarter. Consumers have been flushed. The consumer banking, average deposits were up 20 percent for the quarter and loans down just a tick. Profitability continues to drag there due to low rates. Wealth management, assets under management at $3.1 trillion. That was up 15%. Thanks to market conditions and inflows.

So generally speaking, good things for JP Morgan. Wells Fargo, I think honestly, this is a good story that just keeps getting better. And hats off to Matt Frankel, my colleague, their industry focus. We talked about this all last year. That was his bank stock for the year. And really, for as many problems as they were having, particularly with the culture, but really that bled into the business itself. Another quarter of Wells beats on both counts. They released another $875 million in reserves for those allowances for credit losses. I think a very similar

story to J.P. Morgan in a lot of ways. Home lending for Wells was down 8 percent, primarily due to lower mortgage banking income, which was driven by lower originations. And then, you know, you go to city and city, there's just not a lot to really smile about right now. I mean, the headline here is hit refresh, because that's really what they're doing. I mean, this is a bank in the middle. I don't want to call it a turnaround necessarily, but it is a refresh. They find themselves in a little bit of a different boat here. They continue to divest some laggards of the business, a big divest of their consumer banking business in Asia. That veiled what was modest earnings growth for the quarter. But I think when you, you know,

you look at the way the market is viewing these stocks today, with J.P. Morgan valued at 2.2 times tangible book, Wells Fargo valued well under two times tangible book. And then City valued well below tangible book. I think that really tells you what the market's thinking and what the market's expecting this coming year. For investors like me who don't own shares of any of the big banks, did you hear anything today that sort of provides clues to the broader economy? Yeah, I think generally the message was positive. I mean, J.P. Morgan noted in the release, and I quote, the economy continues to do quite well, despite headwinds related to the Omicron variant inflation and supply chain bottlenecks. Generally speaking, the consumer's in a pretty good

place, but I think the caveat there, inflation is real. It's something these banks are dealing with. Costs are going up across the board. Consumers will not be immune to that. So it'll be something to pay attention to this coming year. Let's move on to the deal of the week, which arrived on Monday. Take-2 Interactive announced it's buying Zinga in a cash-and-stock deal worth 12.7 billion. Take-2 gets a much bigger presence in mobile gaming, and Zinga shareholders get a pretty nice premium for their shares, Maria. So it's a really interesting deal. I think it's very logical, but I think it's important to look at the history of Zinga for a second. So it was founded 15 years ago as a poker game for

Facebook. And prior to its 2011 IPO, it was a huge deal. Farmville was massive. It was working with Facebook. So it was really a darling when it IPOed. The stock debuted at $10. It was up to $14 a couple times in 2012. But their growth really relied entirely on Facebook. And then Facebook limited their third-party developers from promoting their services that cut their revenue in half. Their stock was down 75%. And it still, to this day, has never recovered. Even with that premium that Take-2 is paying, it's still below their IPO price. So that's really interesting to me, if you look at that whole history of Zinga, who is known for games like Farmville, Words with Friends, Harry Potter games, Star Wars games.

So I understand the rationale. It's really establishing leadership in this mobile area, which is the fastest growing segment of the entertainment industry. It brings together your console and PC franchises. So I think it's a really high price point. It's pretty high premium. But I think it'll be interesting to see how they integrate and then what they can ultimately grow into to get that consistent customer and consumer appetite

for those games and those brands. Is that why you think shares of Take 2 took a little bit of a hit this week that some people think they're paying too much for Zynga? I think, yeah, I think a lot of times you see with these mobile games, it's really the fad of the time. There was a time everyone was playing the Kim Kardashian game. There was a time everyone was playing Farmville. So it's about getting a company that can consistently keep those consumers interested.

So, I think that maybe people aren't sure that Zinga can do that, and they're trying to see some clarity behind that. Rough week for Elastic shareholders. The Search Software Company announced that co-founder and CEO, Shea Bannon, is stepping down to assume the role of chief technology officer, shares of Elastic down 12 percent this week, and hitting a 52-week low, Jason. Yeah, it's always fascinating to me to see the market sort of reacts so quickly to news like this. from the longer-term perspective, it actually seems like it could be good news.

Ashkel Carney, moving into the CEO role, Shea Bannon and co-founder and former CEO, he will move over to the CTO role and also remain on the board. Now, I mean, if you have a CEO and he doesn't really want to be CEO, Chris, do you want him to be CEO? Because I don't, you know, I mean, I want to get people where they want to be. I want to get the right people in the right places. And it feels like that's what this ultimately accomplishes. The tech is where Bannon's passion is.

And this happens often for a company to get to that next level. Oftentimes, they need to make a pivot toward an operator to be able to do that. And so I would be cautiously optimistic with this, particularly when you look at the business itself, it continues to do well. Most recent quarter, they announced total subscriptions of over 17,000. That was up from 12,900 a year ago. large customers with an average contract or an annual contract value greater than $100,000 grew to 830 versus 650 a year ago and then buried in that press release at the very bottom.

I wonder how many people caught it, but management also announced that it now expects to exceed its guidance for revenue, non-gap operating margin and non-gap loss per share provided for the third quarter of fiscal 2022. So it looks like we've got some good results coming here shortly as well. All in all, I think this is a good business where the market's knee-jerk reaction could be opening up an opportunity for patient investors. Earning season just getting started on Friday and with so many companies reporting in the coming weeks. Maria, before we go to break, what is a company that you are especially curious to hear from? A company I'm excited to hear about and hear from is Pinterest.

So what we saw from them last quarter was a slowdown in growth for some users, a decline in monthly active users. in certain demographics. So that wasn't surprising to me as life was more in person, more active. Traditionally, summer and fall aren't their strongest quarters anyway. But I think it's important to see that these companies that had a lot of pull-through and new customers during 2020 to see if they're monetizing those customers as well, to see if those customers are staying. And especially around the holidays with Pinterest specifically trying to get more shoppable

to see if they saw any increase in that monetization effort and saw more engagement in users over this holiday season as they're trying to pivot to more of a shoppable app. So I think that Pinterest specifically, but those types of social media is something that I'm really excited to dig into a little bit more. And Jason, I would put Amazon on this list just because of how big the company is. Obviously, there are a lot of companies we want to hear from in the retail space about how the holidays went for them, but when you throw in AWS, all the different things Amazon has going on, I'd put it on the list as well.

What about you? Yeah, I like both of those. and I'll add Etsy to the mix here as well. A stock has essentially been cut in half from its 52 week high, but the company that generated $600 million in free cash flow over the last 12 months, I'd put shares now around 35 times trailing free cash flow. So, I mean, boy, howdy, Chris, it's getting interesting, I think, with Etsy. It's a stock I own, you know, I like it.

But we saw the report here in regard to retail sales in December. It looks like those numbers, obviously you exclude autos, those sales fell 2.3% online spending took the biggest hit of that, actually, and that's Ed C's bread and butter. But I look back to last quarter, some initiatives. They've been putting into motion here, particularly the holiday season. They were focusing on fulfillment, being more communicative in regard to the arrival of those shipments. They have a star seller program that's really helping merchants up their game and sort of rise

to that next level for their customers. And then also the new gift finder feature, which, hey, listen, I sifted through that during the holiday. Chris, it was pretty clever. It's very intuitive and very helpful. So all things considered, it really feels like this pullback in Etsy shares, given the initiatives they've been focusing on, I'm very interested to hear how the holiday season went and how 2020 is shaping up. After the break, we've got the latest news from restaurants, relationships, and the business of outer space. Stay right here. This is Motley Full Money. Welcome back to Motley Full Money. Chris Hill here with Maria Gallagher and Jason Moser. Shares of Virgin Galactic down more than

20% this week. The space tourism company announced plans to raise up to $500 million in debt. Maria, when they went public in October 2019, they said they'd be flying customers in 2020. Now Virgin Galactic is saying, it's really going to be the end of 2022. Yeah, they've had multiple delays in their spacecraft testing and development. They've pushed back its commercial services to later this year at the earliest. But they have sold seats ahead of the planned pace. Their ticket sales are at an updated price of 400. $450,000 a seat, which is very reasonable, according to them. They were targeting a thousand reservations. They've sold 700 out of 1,000. So they still have that customer appetite,

but they just need more money. They need to fund it. They need to get ready. So I'm not surprised with that pushback that they need more time before they can see consistent revenue generation. I'm curious to see what they end up using the money on. And also just if the commercial flights start taking place as planned. Yeah, we're not going to be surprised. if they push it to 2023, are we? I wouldn't be now. From space travel to the business of relationships, shares of Match Group down a bit this week, despite getting an upgrade from analysts at Goldman Sachs,

but at least Match Group has one less competitor to worry about. Meta platforms, the company formerly known as Facebook, is shutting down, sparked. The video dating service, the company apparently started last year. Jason, I've got to be honest, I really, forgot that Spark was a thing that Facebook was trying. I mean, the tone of your voice, I find that hard to believe, Chris, but nevertheless, I'm with you. I mean, you could be forgiven if you didn't realize this actually existed. But I'm going to harken back to May 4th,

2018, Chris, where I tweeted in regard to this very specific issue. I said on that date, I'm not a match owner, but I have a hard time seeing Facebook impacting their business much at all, long run. Zuck's got a long history of trying stuff like this to no avail, and he is very late to the game where online matchmaking is concerned. Fast forward to today's news. You can understand, I too am not surprised. I will give Meta Platform some credit because apparently when they were emailing people to tell them about this, and I'm quoting directly from the email, they wrote, like many good ideas, some take off and others like Sparked must come to.

an end. That's a pretty harsh take on something you tried to launch, but I give him credit for it. Earlier this week, Domino's Pizza was one of the companies presenting at the ICR Investment Conference. CEO Rich Allison said the company is making changes to its value offerings to deal with rising costs, among the changes, Maria, moving some items to digital-only orders and fewer chicken wings in orders. I feel like that second one. is going to get more blowback from customers. But interesting to see a leader in the restaurant space being pretty direct about how they're planning to deal with inflation and rising costs. Right. So what they're saying is they're cutting the number of chicken wings in the offer from

10 to 8. Their 799 carryout deal is now, like you said, online only. So this new offer is a three topping pizza or wings for 799. But what's really interesting about this is what we're seeing is something called shadow inflation, which is when the price of a good or a service stays the same, but the quality has gone down. So we see this a lot in hotels and restaurants. So hotels, for example, it might cost the same, but you don't get the daily room service or you don't get the buffet breakfast in the morning. Cleanliness is a huge one. Consumer sentiment on restaurant cleanliness fell 4% this year. And so what we're seeing is this is a little bit harder to track, but you see when you have inflation, you have all these different types that it impacts consumers

in lots of different ways. But this is one that people, people are talking about and people are noticing is they're paying the same, but the quality of the services significantly decreased or the amount of goods they're getting has decreased. So I'll be interested to see how other restaurants kind of follow this news with their own. Although when you think about the investments that Domino has made in digital and Allison being very clear about the fact that, look, when we're taking orders over the phone, that's more expensive for our business than when we're taking digital orders.

you know, this could be sort of a hidden win in some ways in the long run for Domino's. And I wouldn't be surprised to see other restaurant chains doing the same thing because ultimately, don't they want more people using their mobile app? Yeah, and online orders typically come with those higher average tickets than orders placed over the phone. So it's usually a better system for Domino's and for the restaurants. And so I think it'll be interesting to see. Domino's has that technology infrastructure.

they have those capabilities already built out. So I'd want to understand how that's going to impact, you know, some of those smaller restaurants that don't have those capabilities in the same way and don't have the scale Domino does to be able to pivot into this more profitable channel during inflationary times. Well, most restaurant chains could do far worse than just to follow Domino's blueprint with what they've done with mobile ordering. A quick thanks to a longtime listener, Aaron in Virginia, who wanted us to weigh in on a new product offering from Crocs that's going to be available in March. Crocs has apparently teamed up with luxury fashion house Balanchaga, I hope I'm pronouncing that correctly, to produce stiletto-heeled

crocs for just $625. Jason, let me say that again, $625 for three-inch heel crocs. What do you think? That's a lot of cabbage, Chris. I mean, listen, we can make fun of this all we run, right now. Long time shareholders can tell us to stick it because Crocs just wins, baby. I mean, that stocks up better than 1,600 percent over the last five years alone. And while these things may seem silly to us on the surface, you know, they also do keep Crocs in the conversations. I like the ideas. And I like how they form partnerships, right? I mean, I think they came out with a KFC shoe at some point. But you know what I want to see, Chris? And right as this weather starts to warm up. I want to see some grill collaboration this year. Partner up with Webery,

partner up with Trigger. I mean, what about big green egg crocks that are not only green, but shaped like eggs? I mean, the ideas are just out there, Chris. I'm presenting them for further deliberation. Just throwing it out there. Maria, you're in New York City. Will you let us know if you spot anyone on the street wearing these? I will let you know. I recently saw people with the ugliest shoes I've ever seen in my life, and then I looked them up, and they were $500 Yeezy's. So clearly I don't know what fashion is at this point.

All right. We'll see you later in the show. Up next, financial planner Malcolm Etheridge will analyze what the Fed Chief said on Capitol Hill this week and what it means for investors. Stay right here. This is Motley Full Money. Welcome back to Motley Full Money. I'm Chris Hill.

Earlier this week, Jay Powell testified before Congress. Here to help make sense of the Fed Chair and what he said is Malcolm Etheridge. He's a certified financial planner and an executive with CIC Wealth. And he joins me now from where else, his home. Good to see you. Thanks for being here. Yeah, it's good to be anywhere I can be virtually, I guess, at this point, like he said. There are a couple things I want to get to, but let's start with Jay Powell. He testified before the Senate Banking Committee at his confirmation here.

And look, I know he's a smart, qualified guy, and I know it's an important job, but I just did not care enough to watch. So did he say anything that caught your attention, anything that you think matters to investors? I think the commentary about J. Powell was more entertaining than the commentary from J.Pow. Someone referred to him as Goldilocks in a suit, which I thought was like the most hilarious way to put it. And it was very apt, too, right? It was perfect. He did say that he made the case that inflation and its impact on us is going to be longer through the year than people are, then he thinks people are thinking, I guess is the way to say. He made that very clear. And he made the case that like, you know, inflation at top 7% at the end of 2021.

And he sees that number as sticking around for longer than people probably realize. that was probably the most impactful thing of all of it, because if that's what the Fed is predicting, then that means that that's what you and I and the folks who rely on us for information about the markets, need to wrap their minds around. Right. And so for context, last year, we got the cost of living adjustment out of the Fed related to Social Security benefits, and it was at 5.9%. And we were like, wow, that's a whopping 5.9% cost of living adjustment. That's a pretty big deal.

They must be being overly generous in which we now have found out, no, they actually were somewhat on target. They undershot it by a little bit, but they were expecting this thing to be pretty significant. This thing being inflation to be pretty significant and also to hang around for long enough to give a full year's worth of additional benefit to people on a fixed income, retirees on a fixed income. So for context, the year before I think it was 2.7. And the year before that, it was like 2.3 was the cost of living adjustments incrementally. So we're talking double, more than double, right, for 2022 is what they gave as the adjustment. So all that to say, the government is taking inflation seriously. We as consumers need to also take inflation seriously.

I know we're only two weeks into the new year, but 2022 is not off to a good start for the market in general, particularly the NASDAQ, I'm sure I'm not the only one looking at some of the NASDAQ stocks that I own that are down 40% or more. What kinds of questions are you getting from your clients and what are you telling them? Yeah, so the two main questions I'm getting are, do I need to hurry up and do this refinance that you were telling me about for the last three years that I've been putting off? Right. And even though in a lot of cases I answer yes, they'll probably still continue to put it all. because just inertia and human nature. Like we tend to wait for whatever reason. And then the other question is,

why do I keep hearing so much about interest rates and why should I care? And the answer, in short, for anyone who this is your first time taking this class, it's basically, it's okay to invest in things like tech stocks that are going to take years upon years to actually show their real value, or to actually create real value,

when interest rates are super low and companies can borrow toward that growth for very cheap. But in years when interest rates are a little bit higher and to borrow as a corporation, it takes a little bit more money. It's less cheap to borrow. Now I need you to show growth sooner than you are anticipating so that I can actually have some return for these dollars that I'm handing you. That's one way to look at it. The other is as far as bonds are concerned, a lot of professional traders who trade corporate bonds are looking at the spreads on the yields from those bonds. And they're saying, if I can find an opportunity to earn about as much in the bond market as I can in the stock market for presumably less risk, why wouldn't I just buy those bonds?

And so as the spreads become more attractive in corporate bonds, less reason to buy into the stock market chasing growth. And so you have people selling off stocks, buying bonds, and those two things happening at the same time, create this perfect storm of January that you're referring to. I'm assuming that for someone with your job, 2021 was a year in which, among other things, you've got a lot of questions from people about newly public companies. When you think about the number of IPOs, the number of SPACs, do you think, particularly with respect to the SPACs and the way a lot of them played out and the tepid start to the year, is that going to calm

down in 2022? Are we going to see fewer public companies or companies coming public, particularly via SPAC? I think a good indication of that is going to be the number of companies who were public, and we see them now going private in 2022. For one reason or another, they just can't quite get off the ground. So, like, Rent the Runway is one that I'm paying a lot of attention to. It's a company that I looked at in 2021 and said, this company has no business trying to get public because they just don't have the financials to support it. Rent the runway turning into, once again, a private company will be a great leading indicator. Another one is WeWork, right? They're trying their hardest to get WeWork public while the opportunities still exist because people are

interested in buying into IPOs with really big splashy names. If WeWork can't make it public by the end of 2022, that'll be, again, a really great indicator that the party has ended. And we're the folks who are still looking at the SPAC market as their way to really allocate their dollars in the stock market. That's the way that I'm looking at those kind of leading indicators, companies that I peoed recently, and they turn around and have to go private again. I suppose the silver lining to the extent that there is one is that there are some good and in some cases, maybe even great businesses that are now available at a lower stock price. are the one or two stocks or just categories of stocks that you think are looking more attractive

right now? So, I really love PayPal. Obviously, not a super splashy name that anybody's unaware of, but to answer your question directly, I really love PayPal at the price it's at today. It's gotten whacked quite a bit because it really hasn't shown and proven anything. And one of the reasons that it's gotten, you know, it's been considered disappointing is because they didn't really do a lot in the buy now pay later movement that we saw come along with like the affirms as an example. And so a lot of folks, the sentiment was, well, PayPal is allowing a firm to take market share that it should be having. But we're seeing already the government making noise and saying things about their interest in the buy now pay later market and them wanting to come in and regulate it a little

bit more, which means that there's not a lot of opportunity left there for folks who are looking at that as a space they want to be investing in, which means that PayPal didn't really miss out on a ton. They just were now vindicated in avoiding that. In the meantime, they've said that they anticipate generating about $5 billion in free cash in 2022, which has got to go somewhere because PayPal has a history of aggressively growing inorganically, right? They're taking those dollars they have sitting on the sideline, and they're going and buying great businesses rather than starting up new business units internally. Because they already have a history of doing that and very aggressively,

I see them as being a great company that's poised to do more of that in 2022, especially in Asia, because they got a really strong foothold in Japan in 2021. they've announced that they identified two key targets in Indonesia in 2022 that they might be interested in, which just tells me they're going to continue to push into greater Asia for inorganic growth. So that's one I've really got my eye on. And before I let you get away, what else? I also really love real estate and health care. The two sectors specifically that we as a firm are focused on I as an individual and

focused on. I've got a ton of it in my own portfolio. A name I'll give you that isn't necessarily an underperformer that's undervalued and has a really attractive entry point, but I think they've got a lot of room to go is United Healthcare. So UNH is selling, you know, above $300, above $300 a share. It's pretty hefty, but we're looking at UNH as sort of, they'll be the biggest beneficiary of the pent-up demand for health services that, for the last. two years hasn't really been achieved. So you've got, you know, how many elective surgeries that people have been sitting on waiting to get done? You've got a lot of just general maintenance type health care that should have been done in 21, should have been done in 20 even for some people,

that they will now be going to visit their doctors in 22 as COVID starts to dissipate in the spring and summer and look like it's finally going to leave us alone, at least in a significant way. We anticipate a lot of people going to their doctors. UNH is one of the biggest beneficiaries of that just because of the market share that they have of the health insurance market. One last thing. In addition to your day job, because apparently you're not busy enough, you also host the Tech Money podcast. Season 1 wrapped up in mid-December. When can we expect season 2 to start? Glad you asked. It's January 19th. So we're right around the corner from, Season two launching, I'm really excited about it.

We actually, because of the feedback we got in season one and the way folks really loved the episodes that we did around equity compensation, there will be a ton more of that now going forward in season two. So a lot of experts on the equity space, it's becoming a way more attractive way to pay employees, especially younger employees, millennials, and jinz years. And so season two kicks off with quite a few interviews with founders and quite a few interviews with folks in the equity comm space. But I will say really quickly, taking that break in December allowed me to check out other podcasts that I am interested in. And I learned something

interesting about you that I didn't know before, as long as I've known you, which is that you are a fellow runner. And I, too, am actually planning to do the Richmond Marathon this year in November. I didn't get to go last year because of COVID, but I anticipate doing it this year in November. All right. Maybe we can plan to meet up down in the capital city. You can find find the Tech Money podcast wherever you get your podcast. Malcolm Etheridge. Thanks so much for being here. Thanks for having me. Coming up after the break, Maria Gallagher and Jason Moser return with a couple of stocks on their radar. Stay right here. You're listening to Motley Fool Money. As always, people on the program may have interest in the stocks they talk about on the Motley Fool

may have formal recommendations for or against. So, don't buy yourself stocks based solely on what you hear. Welcome back to Motley Full Money, Chris Hill here once again with Jason Moser and Maria Gallagher. If you are just starting out investing or you know someone who's looking to get started investing, we have a free investing starter kit. It covers everything from how to set up a brokerage account to 401k planning to buying your first stock. And it includes 15 stocks and five ETFs that were selected by our investing team. And it's free. Just go to fool.com. slash starter kit. That's fool.com slash starter kit, all one word. We'll put the URL in the show notes for this episode. Check it out. We got an email from Tyler Cheney. He writes, I'm 34 years old,

and I'm in a place in my career where I can invest more than I could previously. I have 47 stocks and four ETFs that cover growth, value, dividends, tech, and the broad market. How many stocks should I have overall. I really enjoy stock analysis as a hobby outside of work, but at this rate, I feel like I will have hundreds over the next 20 to 30 years. Should I just amass a huge quantity and see how it goes, or should I stick to a certain number or range? Jason, let me go to you first. We can't give specific advice. I like the question. I'd love to see that level of interest that's growing in anyone out there. So great to see you. So kudos to Tyler. But I understand his concern. Personally, I don't think I could follow that many stocks.

Yeah, I'm with you. I mean, we always enjoy talking about this because there's so many different answers and there's not one set correct answer. It does depend on the individual. I mean, myself, I own 34 different companies in my portfolio now. That's enough for me at this point to not know what is happening to any given holding on any given day. I will say that. A stock could be selling off, and I'm kind of like, I'm number wiser because I'm well-diversified. I kind of just take that longer view. So I feel like from that perspective, I have enough. It is to the point, I think I start adding more.

I'm not going to really be able to closely follow all of them, all of them either. So, man, I mean, it's just such a tricky answer because you can certainly do very well just amassing a big collection of hundreds and hundreds of stocks through the years. I mean, the counter argument to that is that you become a little bit more like your own little version of a fund that could ultimately drag returns down with underperformers. I think it's just always a good idea to revisit your portfolio annually and check in on those companies that aren't performing up to your expectations, because that can help you pull some of those weeds while watering some of the flowers along the way.

Well, and Maria, part of it comes down to the sleep factor. Like, if you're losing sleep at night because you're really, you're really, realizing I own too many stocks and I genuinely do want to be able to follow them, there's only so much time in the day. Yeah, I think having more than 40, 50 sounds very overwhelming to me personally. So what I like to do is I know that they said that they own some ETFs. And I think that if you see yourself kind of naturally going towards a certain area, a certain sector, seeing, okay, well, I actually already own 15 healthcare companies.

Let me look at some health care ETFs. and then you own the ETF, and then for me, that's less overwhelming. So you have some of the companies you really want to follow, the ones you really want to keep up to date on as your personal holdings. And then you have ATFs that well diversify you in other areas of interest that you can follow a little bit more passively. So I like to have a nice little balance of active and passive, but that's me personally.

If you want to go up to hundreds of stocks and you think you can sleep at night and you're excited about looking at them all the time, I would say go for it. But for me, I like to have a nice little balance. Let's go to our man behind the glass, Dan Boyd. It's time for stocks on our radar. Dan's going to hit you with a question. Jason, Moser, you're up first. What are you looking at this week? Sure thing. Checking out Nvidia, ticker NVDA. Certainly an aim. I know, I think many, many members and listeners know well. I do really like this pullback from recent highs. They're

coming off of another impressive showing at CES 2022, where they displayed a lot of really, really fascinating technology. Cloud gaming really starting to gain traction represents a growing opportunity in that $300 billion gaming market opportunity. They continue to invest in the autonomous vehicle opportunity with its drive Hyperion platform. The data center opportunity, of course, still exists. And we can't forget about the Metaverse. And I think while we hear a lot of talk about the Metaverse and what exactly it is and how companies will approach it, And, NVIDIA taking the approach with its omniverse platform, its real-time, three-d-design collaboration and virtual world platform.

Ultimately, what they call it is the Metaverse for engineers. So I think there's going to be a lot of potential there in the coming years as well. And the best of all, I mean, in this world of unprofitable high flyers, Nvidia makes cash and a lot of it. They chalked up $7.2 billion in free cash over the last 12 months. I think this pulled back really does look like an opportunity to add to this winter. Dan, question about Invidia? Absolutely, Chris. Jason, Invidia sounds like it has a lot going on, but in my brain, when I think in Vividia, I still think Chipmaker, you know, there's great graphics cards that a lot of people

love to put in their computers. How is the semiconductor shortage really affecting this company? Well, I mean, it's affecting all companies in the space, but I do believe it's also a situation where we're seeing the strong get stronger. This is a business that has, it's got its hand in a lot of different cookie jars, so to speak, pursuing a lot of different market opportunities there, which I think is ultimately to its benefits. And hopefully we'll see some legislation here in 2022 that eases some of that supply chain crunch. But for now, Nvidia being one of the strongest players in the space is still weathering it nicely. Maria Gallagher, what are you looking at? So I'm spending my time looking at Aegean, which is an over-the-counter company with ticker symbol,

A-D-Y-E-Y. It's a one-size-fits-all payment platform, both online, in-person payments, other services like fraud protection. They have customers like McDonald's at the eBay. Their revenue net income has tripled since 2018. So spending more time looking at the payment space, and then this company in particular is one I'm interested in. Dan, question about Ajan? This sounds suspiciously, Maria. like a war on cash stock. Did Jason feed you this company before the show? Because this is really the kind of thing that's usually right up his alley.

Jason doesn't have a monopoly on having a war on cash basket. This is one that I think is interesting. Okay. I'm sorry. Dan, what do you want to add to your watch list? I'm already an Nvidia shareholder, so I'm going to go with Adjin because I don't know much about the company.

And it's piqued my interest. Oh, that's great. You picked my idea. Oh, wait. Jason Moser, Maria Gallagher. Thanks for being here. Thanks for having us. That's going to do it for this week's Motley Full Money radio show. Shows Mixed by Dan Boyd. I'm Chris Hill. Thanks for listening. We'll see you next time.