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Kelvin Beachum Jr, Offensive Lineman for the Arizona Cardinals & 2022 Walter Payton Man of the Year Nominee, on Investing, Leveraging your Network, and Parenting with Intention

Panic with Friends – Investing for Profit and Joy
 

I am very excited to have Kelvin back on my podcast, this time in person. Most important I got him to say the ‘secret words’ …multiple hottubs.
Kelvin is a great guy with an awesome sense…

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Panic with Friends – Investing for Profit and Joy

 

I am very excited to have Kelvin back on my podcast, this time in person. Most important I got him to say the ‘secret words’ …multiple hottubs.

Kelvin is a great guy with an awesome sense of humor who refuses to arm wrestle me. We have golfed and it cost me $45,000 in golf balls.

Unfortunately, the Cardinals lost to the Rams in the playoffs this week.

It is Arizona Cardinal Kelvin Beachum Jr’s second appearance on Panic with Friends, but he also holds the distinction of being the first in-person guest in our brand new studio! Kelvin is now in his 10th season in the NFL, and he’s an investor at heart. He caught the bug early in his NFL career from teammates; there were many locker room conversations on traditional investing, real estate, and of late, even NFTs. He’s into startups too, always looking for what’s new and innovative. Basically what’s next, whether that’s crypto, web3, or the metaverse. Kelvin continues to build an incredible network in the venture capital world. I hope you enjoy our conversation.

You can listen to the podcast here on Spotify or Apple podcast and now all the episodes are on my YouTube channel as well.

You can also listen right here on the blog:

Guest: Kelvin Beachum, Jr.

Profile: Offensive tackle for the Arizona Cardinals

Where to Find HimOfficial WebsiteTwitter

Kelvin Konnects, is a STEAM initiative designed to increase minority access to careers within the Science, Technology, Engineering, Arts and Mathematics disciplines. If you want to learn more, check out the “Works” section of his website.

What’s Kelvin Panicked About?: My wife heading in to Med School.

Previous Appearance:

Kelvin Beachum Joins Me On ‘Panic With Friends’ and We Talk Investing and Life as an NFL Player During a Pandemic (October, 2020)

The Takeaway:

The career span of an NFL lineman is two to maybe two and half years. Kelvin’s already beat those odds. He’s in his tenth season with the NFL. He’s in his second year with the Arizona Cardinals and spent four years with the Pittsburgh Steelers, one with the Jacksonville Jaguars, and three with the NY Jets. He’s caught the investing bug, and has been at it for a couple of years now. As he spends more time in the industry, he continues to build relationships. Even though he plays sports, he’s not the guy you want to send those deals to. He’s been looking at fintech, financial services and enterprise technology; he sees a tailwind in data, particularly now as more athletes are owning their own data. Fans are eager to consume this data when it comes to Fantasy Leagues and Sports Betting. He’s also taking a look at design and collaboration software. Emerging from the pandemic has us gravitating towards a remote work environment. Today’s workforce is about how fast things are moving and how collaborative things need to be moving forward.

Show Notes:

  • (1:56) – Introduction to Kelvin
  • (4:26) – Best locker room in the NFL
  • (8:55) – Information overload / Filter failure
  • (10:04) – Joe Montana leverages the Valley
  • (13:53) – Watching your favorite quarterback
  • (15:39) – Let’s talk about investing
  • (17:26) – When the deal flow is on a roll
  • (21:02) – The importance of relationships
  • (24:20) – Being “leveraged” from all points on the planet
  • (25:12) – Looking over the shoulders of digital natives
  • (27:46) – As a parent we just have to be intentional with whatever we do
  • (29:29) – Let’s don’t bring up golf dude!
  • (31:33) – Career longevity
  • (35:04) – Everybody’s punching up because that’s how social works
  • (36:16) – Sleep is fitness
  • (48:15) – Closing thoughts

 

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Economics

Recession Proof Industries That Can Protect Your Money

The current economic environment is as unpredictable as it has ever been. Let’s examine a few recession proof industries.
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The current economic environment is as unpredictable as it has ever been. Inflation is at its highest rate in decades. There is a war in Europe that shows no sign of getting resolved anytime soon. And, there is still no telling when the lingering effects of COVID-19 will wear off. In times like these, many investors switch their mentality. Instead of trying to generate the highest yearly return possible, they focus on simply losing as little money as possible. If the overall market returns -20% but your portfolio breaks even then you’re technically coming out ahead. With that in mind, let’s examine a few recession proof industries that will protect your money.

Recession-Proof Industries

Real Estate

Real estate is traditionally one of the most recession proof industries out there. I say this for two reasons:

  1. Housing is a necessity: Housing has a fairly inelastic demand. No matter how expensive homes/rent gets, people need a place to live. If you invest in residential real estate then there is a good chance you can stay afloat through any recession. Of course, it ultimately depends on what property you own, the market it’s in, and the way you structure your financing.
  2. Inflation-protected: Real estate is also insulated from inflation. When inflation rises and profits start to erode, landlords can just increase the price of rent. Each year, they can increase the rent to keep pace with inflation. This is why owning real estate is so valuable.

There are dozens of ways that you can invest in real estate. To start, you can take out a loan and buy a property yourself. Or, you can use a third-party site like Fundrise. Fundrise is a site that owns a portfolio of real estate. It then allows you to invest in the properties that it owns.

Finally, you can invest in shares of a real estate investment trust (REIT). A REIT is a company that owns income-producing real estate. Each month, it pays out 90% of its income to investors.

There’s also one more stock you can buy to get exposure to recession proof industries. Let’s take a look at my favorite recession proof stock: Airbnb.

What makes Airbnb Unique?

Airbnb is in an incredibly unique position. Around the world, Airbnb owners are probably increasing the rates of their Airbnbs to compensate for rising inflation. In fact, we’re already seeing evidence of this. In a letter to shareholders, Airbnb said that Q1 2022 rates were up 39% when compared to 2019 levels. There is a good chance that this trend will continue, especially as we head into the summer months.

Remember that Airbnb mainly generates revenue by collecting a percentage of each stay. Hosts usually pay a flat fee of around 3% to list their property on Airbnb.

Over the coming months, hosts should continue to raise their rates to combat inflation. This will instantly translate to increased revenue for Airbnb. The best part is that Airbnb doesn’t even need to do any additional work to earn this income. Not only is Airbnb inflation-proof, but it might actually perform better.

Consumer Staples

Another one of the safest recession proof industries is consumer staples. Consumer staples are any product that consumers are unable to cut out of their budget. This could be anything from food to toilet paper.

Even in the middle of a recession, people still need to spend money on food, water, and hygiene products. For this reason, consumer staple companies can expect fairly consistent revenue in the coming months. Compare this to a company that sells luxury goods. If the U.S. enters a recession, people are much less likely to splurge on a $1,000 watch or handbag.

There are plenty of ways that you can invest in consumer staple companies. But, the easiest is to buy stock in the world’s largest CPG company: Proctor & Gamble.

Proctor & Gamble

There’s a chance you might not have heard of Proctor & Gamble as it’s not a consumer-facing brand. But, you’ve most definitely heard of the brands that P&G owns. To name just a few, Proctor & Gamble owns:

  • Gillette
  • Pampers
  • Downy
  • Tide
  • Bounty
  • Head and Shoulders
  • Old Spice
  • Febreze

For many Americans, these types of brands are still a necessary expense. With this in mind, P&G should continue to see consistent profits even if we enter a recession.

In 2021, P&G delivered annual revenue of $76.12 billion. It also reported a net income of $14.31 billion. On top of that, it has a dividend yield of 2.58%. P&G stock probably isn’t going to 2X over the next year. But, it’s got consistent, reliable profits and pays a dividend. This makes it a relatively safe place to park your money during a recession.

The only downside to P&G stock is that it owns a lot of premium brands. For example, Gillette razors tend to be much more expensive than other brands. The same is true for Bounty and Tide. There’s a chance that consumers might stray away from P&G products in favor of cheaper ones. If this happens then there’s a chance that they are probably visiting a discount retailer to do so.

Let’s take a look at one one of the final recession proof industries to invest in.

Discount Retail

With inflation sitting at nearly 8%, the American consumer is getting squeezed. With less spending money, consumers are more likely to shop at a discount retailer. For example, instead of stocking up on goods at pricey Whole Foods they might swing by a Walmart. Walmart is the premier example of a discount retailer. However, there’s one other retailer that might be better positioned.

Dollar General

Dollar General operates 18,216 discount stores in the United States. In 2021, it reported annual revenue of $34.22 billion and a net income of $2.4 billion. It also pays a dividend yield of 1.17%. If we enter a recession, consumers will likely clamp down on their spending. They’ll cut out everything but the essentials from their budget. During this time, most retailers will probably experience depressed sales.

On the other hand, Dollar General might actually get a small sales boost. It could experience an influx of shoppers who are suddenly budget-conscious. Basically, lots of people might start shopping at Dollar General that do not normally shop there.

I hope you’ve found this article valuable in learning about three recession-proof industries that are safe to invest in! Please remember that I’m not a financial advisor and am just offering my own research and commentary. As usual, please base all investment decisions on your own due diligence.

The post Recession Proof Industries That Can Protect Your Money appeared first on Investment U.

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Government

“Civilization May Not Survive” – George Soros Tells Davos Crowd, Defeat Putin (And Xi) Or Else

"Civilization May Not Survive" – George Soros Tells Davos Crowd, Defeat Putin (And Xi) Or Else

In his first appearance in person at Davos…

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"Civilization May Not Survive" - George Soros Tells Davos Crowd, Defeat Putin (And Xi) Or Else

In his first appearance in person at Davos since Slamming Trump as a "conman, narcissist" and claiming Mark Zuckerberg was conspiring to get him re-elected in March 2020 (and warned that "the overheated US economy can't be kept boiling for too long"), billionaire George Soros unveiled his traditionally anticipated annual address, taking aim squarely at China (nothing new there) but adding Russia to his hit list.

The 90-year-old puppet-master is certainly not getting any younger (looking older than 98-year-0old Henry Kissinger who made headlines earlier in the day), warned that Russia’s invasion of Ukraine has rattled Europe and could be the start of another world war.

“Other issues that concern all of humanity -- fighting pandemics and climate change, avoiding nuclear war, maintaining global institutions -- have had to take a back seat to that struggle,” Soros said,

“That’s why I say our civilization may not survive.”

Taking aim at the leaders of both Russia and China, Soros said:

The two leaders have made “mind-boggling mistakes,” adding that,

“Putin expected to be welcomed in Ukraine as a liberator; Xi Jinping is sticking to a Zero Covid policy that can’t possibly be sustained.”

Attacking China is nothing new, as in 2019, the former hedge fund manager warned of the “mortal danger” of China’s use of artificial intelligence to repress its citizens, a theme he hit again in his speech today.

“AI is particularly good at producing instruments of control that help repressive regimes and endanger open societies,” Soros said.

“Covid-19 also helped legitimize instruments of control because they are really useful in dealing with the virus.”

But his concluding thoughts were ominous to say the least as he added Russia to his shit-list, warning that, loosely translated: defeat Putin or we're all going to die...

"Therefore, we must mobilize all our resources to bring the war to an early end. The best and perhaps only way to preserve our civilization is to defeat Putin as soon as possible. That’s the bottom line"

*  *  *

Full Address below: (emphasis ours)

Since the last Davos meeting the course of history has changed dramatically. 

Russia invaded Ukraine. This has shaken Europe to its core. The European Union was established to prevent such a thing from happening. Even when the fighting stops as it eventually must, the situation will never revert to what it was before. 

The invasion may have been the beginning of the Third World War and our civilization may not survive it. That is the subject I will address this evening.

The invasion of Ukraine didn’t come out of the blue. The world has been increasingly engaged in a struggle between two systems of governance that are diametrically opposed to each other: open society and closed society. Let me define the difference as simply as I can. 

In an open society, the role of the state is to protect the freedom of the individual; in a closed society the role of the individual is to serve the rulers of the state.

Other issues that concern all of humanity – fighting pandemics and climate change, avoiding nuclear war, maintaining global institutions – have had to take a back seat to that struggle. That’s why I say our civilization may not survive. 

I became engaged in what I call political philanthropy in the 1980s. That was a time when a large part of the world was under Communist rule, and I wanted to help people who were outraged and fought against oppression. 

As the Soviet Union disintegrated, I established one foundation after another in rapid succession in what was then the Soviet empire. The effort turned out to be more successful than I expected. 

Those were exciting days. They also coincided with a period of personal financial success that allowed me to increase my annual giving from $3 million in 1984 to more than $300 million three years later. 

After the 9/11 attacks in 2001, the tide began to turn against open societies. Repressive regimes are now in the ascendant and open societies are under siege. Today China and Russia present the greatest threat to open society. 

I have pondered long and hard why that should have happened. I found part of the answer in the rapid development of digital technology, especially artificial intelligence.

In theory, AI ought to be politically neutral: it can be used for good or bad. But in practice the effect is asymmetric. AI is particularly good at producing instruments of control that help repressive regimes and endanger open societies. Covid-19 also helped legitimize instruments of control because they are really useful in dealing with the virus. 

The rapid development of AI has gone hand in hand with the rise of social media and tech platforms. These conglomerates have come to dominate the global economy. They are multinational and their reach extends around the world.

These developments have had far-reaching consequences. They have sharpened the conflict between China and the United States. China has turned its tech platforms into national champions. The United States has been more hesitant because it has worried about their effect on the freedom of the individual. 

These different attitudes shed new light on the conflict between the two different systems of governance that the US and China represent. 

Xi Jinping’s China, which collects personal data for the surveillance and control of its citizens more aggressively than any other country in history, ought to benefit from these developments. But, as I shall explain later tonight, that is not the case. 

Let me now turn to recent developments, Vladimir Putin and Xi Jinping met on February 4th at the opening ceremony of the Beijing Winter Olympics. They issued a long statement announcing that the cooperation between them has “no limits”. Putin informed Xi of a “special military operation” in Ukraine, but it is unclear whether he told Xi that he had a full-scale attack on Ukraine in mind. US and UK military experts certainly told their Chinese counterparts what was in store. Xi approved, but asked Putin to wait until the conclusion of the winter Olympics. 

For his part, Xi resolved to hold the Olympics in spite of the Omicron variant that was just beginning to spread in China. The organizers went to great lengths to create an airtight bubble for the competitors and the Olympics concluded without a hitch.

But Omicron established itself in the community, first in Shanghai, China’s largest city and commercial hub. Now it is spreading to the rest of the country. Yet Xi persists with his Zero Covid policy. That has inflicted great hardships on Shanghai’s population, by forcing them into makeshift quarantine centers instead of allowing them to quarantine themselves at home. This has driven Shanghai to the verge of open rebellion. 

Many people are puzzled by this seemingly irrational approach, but I can give you the explanation: Xi harbors a guilty secret. He never told the Chinese people that they had been inoculated with a vaccine that was designed for the original Wuhan variant and offers very little protection against new variants. 

Xi can’t afford to come clean because he is at a very delicate moment in his career. His second term in office expires in the fall of 2022 and he wants to be appointed to an unprecedented third term, eventually making him ruler for life.

He has carefully choreographed a process that would allow him to fulfill his life’s ambition, and everything must be subordinated to this goal. 

In the meantime, Putin’s so-called “special military operation” didn’t unfold according to plan. He expected his army to be welcomed by the Russian speaking population of Ukraine as liberators. His soldiers carried with them their dress uniforms for a victory parade. But that is not what happened. 

Ukraine put up unexpectedly strong resistance and inflicted severe damage on the invading Russian army. The army was badly equipped and badly led and the soldiers became demoralized. The United States and the European Union rallied to Ukraine’s support and supplied it with armaments. With their help, Ukraine was able to defeat the much larger Russian army in the battle for Kyiv. 

Putin could not afford to accept defeat and changed his plans accordingly. He put General Vladimir Shamanov, well known for his cruelty in the siege of Grozny, in charge and ordered him to produce some success by May 9th when Victory Day was to be celebrated. 

But Putin had very little to celebrate. Shamanov concentrated his efforts on the port city of Mariupol which used to have 400,000 inhabitants. He reduced it to rubble, as he had done to Grozny but the Ukrainian defenders held out for 82 days and the siege cost the lives of thousands of civilians.

Moreover, the hasty withdrawal from Kyiv revealed the heinous atrocities that Putin’s army had committed on the civilian population in a suburb of Kyiv, Bucha. They are well-documented, and they have outraged those who saw the pictures on television. That did not include the people of Russia who had been kept in the dark about Putin’s “special military operation”.

The invasion of Ukraine has now entered a new phase which is much more challenging for the Ukrainian army. They must fight on open terrain where the numerical superiority of the Russian army is more difficult to overcome. 

The Ukrainians are doing their best, counterattacking and penetrating Russian territory. This has had the added benefit of bringing home to the Russian population what is really going on. 

The US has also done its best to reduce the financial gap between Russia and Ukraine by getting Congress to allocate an unprecedented $40 billion in military and financial aid to Ukraine. I can’t predict the outcome, but Ukraine certainly has a fighting chance. 

Recently, European leaders went even further. They wanted to use the invasion of Ukraine to promote greater European integration, so that what Putin is doing can never happen again. 

Enrico Letta, leader of Partito Democratico, proposed a plan for a partially federated Europe. The federal portion would cover key policy areas. 

In the federal core, no member state would have veto power. In the wider confederation member states could join “coalitions of the willing” or simply retain their veto power. Mario Draghi endorsed Letta’s plan.

Emmanuel Macron, in a significant broadening of his pro-European approach, advocated geographic expansion, and the need for the EU to prepare for it. Not only Ukraine but also Moldova and the Western Balkans should qualify for membership in the European Union. It will take a long time to work out the details, but Europe seems to be moving in the right direction. It has responded to the invasion of Ukraine with greater speed, unity and vigor than ever before in its history. After a hesitant start, Commission President, Ursula von der Leyen, also has found a strong pro-European voice. 

But Europe’s dependence on Russian fossil fuels remains excessive, due largely to the mercantilist policies pursued by former Chancellor Angela Merkel. She had made special deals with Russia for the supply of gas and made China Germany’s largest export market. That made Germany the best performing economy in Europe but now there is a heavy price to pay. Germany’s economy needs to be reoriented. And that will take a long time.

Olaf Scholz was elected Chancellor because he promised to continue Merkel’s policies. But events forced him to abandon this promise. That didn’t come easy, because he had to break with the hallowed traditions of the Social Democrats. 

But when it comes to maintaining European unity, Scholz always seems to do the right thing in the end. He abandoned Nordstream 2, committed a 100 billion euros to defense and provided arms to Ukraine, breaking with a long-standing taboo. That is how the Western democracies responded to the Russian invasion of Ukraine. 

What do the two dictators Vladimir Putin and Xi Jinping have to show for themselves? They are tied together in an alliance that has no limits. They also have a lot in common. They rule by intimidation, and as a consequence they make mind-boggling mistakes. Putin expected to be welcomed in Ukraine as a liberator; Xi Jinping is sticking to a Zero Covid policy that can’t possibly be sustained. 

Putin seems to have recognized that he made a terrible mistake when he invaded Ukraine and he is now preparing the ground for negotiating a cease fire. But the cease fire is unattainable because he cannot be trusted. Putin would have to start peace negotiations which he will never do because it would be equivalent to resigning. 

The situation is confusing. A military expert who had been opposed to the invasion was allowed to go on Russian television to inform the public how bad the situation is. Later he swore allegiance to Putin. Interestingly, Xi Jinping continues to support Putin, but no longer without limits. 

This begins to explain why Xi Jinping is bound to fail. Giving Putin permission to launch an unsuccessful attack against Ukraine didn’t serve China’s best interests. China ought to be the senior partner in the alliance with Russia but Xi Jinping’s lack of assertiveness allowed Putin to usurp that position. But Xi’s worst mistake was to double down on his Zero Covid policy. 

The lockdowns had disastrous consequences. They pushed the Chinese economy into a free fall. It started in March, and it will continue to gather momentum until Xi reverses course – which he will never do because he can’t admit a mistake. Coming on top of the real estate crisis the damage will be so great that it will affect the global economy. With the disruption of supply chains, global inflation is liable to turn into global depression.

Yet, the weaker Putin gets the more unpredictable he becomes. The member states of the EU feel the pressure. They realize that Putin may not wait until they develop alternative sources of energy but turn off the taps on gas while it really hurts. 

The RePowerEu program announced last week reflects these fears. Olaf Scholz is particularly anxious because of the special deals that his predecessor Angela Merkel made with Russia. Mario Draghi is more courageous, although Italy’s gas dependency is almost as high as Germany’s. Europe’s cohesion will face a severe test but if it continues to maintain its unity, it could strengthen both Europe’s energy security and leadership on climate.

What about China? Xi Jinping has many enemies. Nobody dares to attack him directly because he has centralized all the instruments of surveillance and repression in his own hands, but it is well known that there is dissention within the Communist Party. It has become so sharp that it has found expression in articles that ordinary people can read.

Contrary to general expectations Xi Jinping may not get his coveted third term because of the mistakes he has made. But even if he does, the Politburo may not give him a free hand to select the members of the next Politburo. That would greatly reduce his power and influence and make it less likely that he will become ruler for life.

While the war rages, the fight against climate change has to take second place. Yet the experts tell us that we have already fallen far behind, and climate change is on the verge of becoming irreversible. That could be the end of our civilization. 

I find this prospect particularly frightening. Most of us accept the idea that we must eventually die but we take it for granted that our civilization will survive. 

Therefore, we must mobilize all our resources to bring the war to an early end. The best and perhaps only way to preserve our civilization is to defeat Putin as soon as possible. That’s the bottom line.

Thank you.

Tyler Durden Tue, 05/24/2022 - 13:59

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Economics

5 Tech Stocks to Avoid in 2022

With a recession looming, some stocks will weather the coming months much better than others. Here are five tech stocks to avoid in 2022.
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Thanks to rising interest rates and high inflation, tech stocks have experienced one of the worst starts to a year ever. The tech-heavy Nasdaq is down nearly 30% to start 2022. Even traditionally invincible FAANG stocks are feeling the heat. For example, Apple is down 25%, Microsoft is down 25% and Meta Platforms is down 40%. With a recession looming, some stocks will weather the coming months much better than others. With that said, here are five tech stocks to avoid in 2022.

Top Tech Stocks to Avoid

No. 5 Affirm (Nasdaq: AFRM)

Affirm Holdings Inc is one of the most popular Buy Now Pay Later (BNPL) companies. Thanks to record low-interest rates and stimulus checks, these companies soared in popularity in 2020-21. Now, Affirm’s stock is down nearly 85% from its all-time high. But, it might get even worse in the next few months. This is because Affirm could get set up for failure over the coming months.

Right now, inflation in the United States is hovering around 8%. This stat alone is already pretty bad. When you look at individual categories, the situation gets much worse. Rent is increasing between 20-40% in some parts of the country. The price of gas is also up to over $4.50 on average throughout the country. It’s no secret that the American consumer is getting squeezed.

With more money going to rent, gas, and food people will have less spending money. BUT, they still need to buy goods to an extent. This makes Buy Now, Pay Later services like Affirm’s very attractive for consumers. With Affirm, consumers can buy the things that they want for a fraction of the cost. Suddenly, people can get the new pair of shoes that they want for only $20…even though the shoes still cost $100.

There’s a good chance that people start heavily leaning on Affirm’s service in order to afford goods. But, that doesn’t mean that these consumers will be able to pay off their loans in two to three months.

Keep reading for more on tech stocks to avoid.

A Mini 2008?

During the 2008 Financial Crisis, home loans became very easy to get. Lenders essentially handed out home loans to anyone who wanted one. During this time, plenty of people got approved for loans that were well outsideb of their budget range. This ultimately led to a mass nationwide mortgage default, which almost crippled the financial system. Although it probably won’t be as severe, there’s a chance that something similar could happen with Affirm.

Essentially, when people get easy access to credit they usually abuse it. It’s just human nature. People take out loans that they have no means to repay. If Affirm isn’t careful, their easy credit policy could actually put them out of business.

No. 4 Teladoc (NYSE: TDOC)

Teladoc is a virtual healthcare company that connects patients with doctors via smartphone. But, this competitive advantage is fairly easily copied. To differentiate itself, Teladoc acquired a Livongo Health for $18.5 billion in 2020. Livongo health was a fast-growing chronic-care management business. At the time, this probably seemed like a good acquisition.

Unfortunately, Teladoc hasn’t been able to replicate Livongo’s success. It’s been so bad that Teladoc had to record a crushing $6.6 billion impairment charge related to its Livongo acquisition. So basically, last quarter Teladoc reported a net loss of $6.67 billion on revenue of just $565.35 million. This alone is reason enough to consider Teladoc one of the main tech stocks to avoid in 2022. But, there’s one more factor to consider… the competition.

CVS Health is the 4th-biggest company in the United States. It also operates MinuteClinics out of most locations. Following the COVID-19 pandemic, most of these clinics now offer virtual visits. This basically erodes most of Teladoc’s competitive advantage. Now, Teladoc will be directly competing with CVS.

No. 3 Peloton (Nasdaq: PTON)

Many stocks got overhyped during the pandemic. Peloton, as a stay-at-home fitness company, was leading the pack of pandemic stocks. Now it’s leading a different pack: the top tech stocks to avoid. Peloton made one major flaw that spelled its demise. It mistook pandemic demand for real demand.

In 2021, Peloton’s sales were soaring. But, this was mainly just because people had no gym access. Peloton’s management, instead of prepping investors for a sales dropoff, started scaling quickly to compensate. It spent tons of money to scale its business, only for sales to plummet in 2022. This is part of the reason that its stock has tanked.

Granted, Peloton is taking steps to correct its mistakes. So far, it has hired a new CEO and laid off 2,800 employees. But, it could take years for Peloton to really turn the boat around.

No. 2 Paysafe (NYSE: PSFE)

Paysafe is a payment solutions provider that has been around since 1996. But, there’s no telling how much longer it will be around. At the least, it’s one of the main tech stocks to avoid for the coming months.

Paysafe reported a 2021 annual revenue of $1.49 billion and a net loss of $110 million. In the first quarter of 2022, it reported a net loss of $1.17 billion. This type of loss might be acceptable for a 5-year-old high-growth tech company. But not for a 26-year-old payment processing company. There are also two elephants in the room to talk about: Block Inc and Paypal.

Block Inc offers roughly the same service as Paysafe but posted a 2021 annual revenue of $17.66 billion. Same thing for Paypal, which posted a revenue of $25.37 billion. On top of that, the most valuable tech startup in the U.S. is Stripe. Stripe is another payment processing company that’s valued at around $36 billion.

All three of these companies are much more widely accepted than Paysafe. With no major discernible competitive advantage, it’s just hard to see Paysafe catching up anytime soon.

Tech Stocks to Avoid No. 1 Opendoor (Nasdaq: OPEN)

Of all the stocks on this list, Opendoor actually has the most potential. Opendoor is a company that lets people buy and sell homes virtually. It is revolutionizing the home buying process by making it easier than ever. The company is also growing incredibly quickly.

Opendoor delivered Q1 2022 revenue of $5.2 billion. This was up 590% year-over-year. It also posted a gross profit of $535 million compared to just $97 million in 2021. This all sounds pretty good. So why is Opendoor one of the five tech stocks to avoid in 2022?

Well, Opendoor also has an inventory balance of 13,360 homes. These are homes that Opendoor has bought but not sold yet. It pegs the value of these homes at $4.7 billion. As a digital broker, Opendoor is trying to buy and sell as many homes as it can. It then collects a percentage from each deal.

What Happens to Opendoor When these Home Prices Come Crashing Down?

Home prices jumped 20% nationally from Mar. 2021 to Mar. 2022. This is the largest jump on record, according to CoreLogic. The national housing market has been on fire in recent years. However, interest rates are rapidly increasing. This could put homes out of reach for many buyers and rapidly cool the market. If this happens, there’s a chance that Opendoor could suffer a massive decline in the value of its inventory balance. This might not hurt Opendoor’s long-term prospects, but it will definitely cause investors to re-evaluate the company. Most likely, this will result in a massive paper loss of Opendoor’s assets.

I hope you’ve found this article valuable in learning about the best tech stocks to avoid in 2022! Please remember that I’m not a financial advisor and am just offering my own research and commentary. As usual, please base all investment decisions on your own due diligence.

The post 5 Tech Stocks to Avoid in 2022 appeared first on Investment U.

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