Fads and One Hit Wonders – Make for Poor Investments

“People can and always will make good money off these types of stocks but they will never make good income from them”

Fads and One Hit Wonders.

Not a viable place to Invest, at least for the long term investor.

Some stocks that come to mind currently are :

Gymboree – Gamestop- Fitbit – Go Pro – Groupon – Soda Stream- Telsa?-  Just to name a few. Of course I have to admit – I have been wrong in the past – I thought for sure Facebook would be another MySpace by now.  And it is entirely possible that some of these companies may expand into other businesses or product lines to sustain themselves but most will die and become nothing more than distant memories.

Whatever your point of view with these companies the point is that they have no place in the Portfolio of a Dividend Income Investor. These type of stocks are best left to traders and speculators. No matter how great a product is unless it is something consumers need or require on a regular basis it will eventually go into a steep decline. Let’s consider Go-Pro. There’s no doubt that Go-Pro makes some great camera’s but the truth is their market is saturated. Only certain people need or desire these cameras and the vast majority of us will never own one because we really do not have use for them. Out of those that do own one many of them have received them as gifts ( usually a one time thing) and many others will only buy the product once or at most every few years. Now certainly Go-Pro can survive with this model but in all probability unless they can come with more everyday products they will not thrive enough for investors and certainly not for Dividend Income Investors.

When considering stocks to add into your Dividend Income Portfolio you you consider:

  • does it pay a dividend( As a Dividend Income Investor it has to pay a higher yield ) and is it sustainable
  • Is it a product that people will want continuously – not just as a novelty or a gift.
  • Is it more than a Fad – something that will be wildly popular until the novelty wears off.
  • Can its products be protected or will other companies soon be copying them

People can and always will make good money off these types of stocks but they will never make good income from them. For Dividend Income Investors, stay focused !

Thoughts or comments?

 

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Elon Musk – Mad Man or Genius ?

“Has Elon Musk gone Mad or is he a Genius ?”

Has Elon Musk gone Mad or is he a Genius ? Time will tell, I’m sure of that but for now we investors are left to speculate. I am in the Mad Man camp but I also know that it takes a little bit of oddness to change the world but seriously his latest announcement has me totally confused.

Telsa’s latest and greatest idea ? Semi Tractor Tucks and Pick up trucks? What kind of battery will it take to power a 18 wheeled truck pulling large loads over long distances? Telsa is to reveal its semi truck in September of 2017 In a follow up tweet he announced a pickup truck would be announced in about 18 to 24 months. In a world where Telsa is yet to make any sort of profit and would most assuredly be completely out of business if it were not for government incentives for “Green” products this does not make sense to me at all.

Don’t get me wrong, I am not anti Telsa, although I do believe some of his followers are “Cult” like, I do wish to see Telsa succeed. Telsa continues to make new stock issues that dilute the current shareholders to fund his outrageous projects. I am puzzled though that the shareholders never seem to mind and continue to plow hard earned money into the stock. I just don’t see the logic in truck drivers and trucking companies paying outrageous sums of money for an electric truck. Even if the price is on par with other trucks there are still too many obstacles for me. Truck drivers make money by driving as many miles a day as they can. Stopping to find truck charging stations every 150 to 200 hundred miles sounds like a major hurdle to me.

I’m not alone – Here are some comments I’ve read on the internet:

“This is ponzi scheme. They fund current losses with capital raises for future projects.”

“Just to be clear, we’re talking about an “18-wheeler” semi, right? How big of a battery would something that size need carrying a heavy load? I’m sure a lot of truckers want to worry about finding charging stations and charging for an hour every 150 (doubt it’s this high) miles? Anything to dodge the fact that AP 2.0 and the model 3 are late to market, S and X sales are flat, and solar is a financial loser”

“A semi-truck when all the current products are bleeding profusely.ROFL”

As for me, I wish those of you that believe in Telsa and Elon Musk the very best but I will stay far away from this company. I am from the old fashion camp that believes a company should at least have the ability to generate income before investing in it.

What do you think ? Is Elon Musk insane or a Genius or just perhaps a Con Man?

Share your thoughts and comments below !