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Stocks to Watch, Cool Tech From CES, and What's Going on With the Nasdaq

Motley Fool analysts Ron Gross and Jason Moser analyze what's happening with stocks, the potential for Federal Reserve responses, and the mindset investors need right now. They also share some stocks they believe are looking more attractive right now due to their underlying business strength and future potential.

Other headlines covered in this podcast include:

  • GameStop's (NYSE: GME) focus on NFTs
  • Hasbro's (NASDAQ: HAS) new CEO
  • Bed Bath & Beyond's (NASDAQ: BBBY) continued turnaround
  • Gen Z's affinity for Apple. (NASDAQ: AAPL)
  • Constellation Brand's (NYSE: STZ) new beverage venture with Coca-Cola (NYSE: KO)

Plus, they discuss portfolio strategies, what to look for in an S-1 filing, and some of the weirdest new tech introduced at the recent CES in Las Vegas.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

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This video was recorded on Jan. 07, 2022.

Chris Hill: Today on Motley Fool Money. One week into the new year and already the Nasdaq is down five percent. We've got thoughts to help you through it, as well as a few stocks that are looking more attractive at their current price. All of that and a lot more coming up right now [MUSIC] Everybody needs money. That's why they call it money. [MUSIC] From Fool Global headquarters, this is Motley Fool Money. It's a Motley Fool Money radio show. I'm Chris Hill, joined by senior analysts Jason Moser and Ron Gross. Good to see you both. We've got the latest headlines from Wall Street. We've gotten news out of the big CES trade show in Las Vegas, and as always, we've got a couple of stocks on our radar. But we begin with mixed signals from the big macro. US economy added just 199,000 jobs in December, far fewer jobs than economists had been predicting, but the unemployment rate fell to 3.9 percent and U-6 rate fell to 7.3 percent. Ron, we're going to get to the markets in a minute but among other things, this seems like one of those months that is going to get revised up in the future.

Ron Gross: That wouldn't surprise me if we saw that because this was definitely a weak number. Labor markets are tight right now, so maybe there's just not a lot of jobs to have but I don't see that because we see so many people requesting people come into the workforce, and that does impact the labor participation rate that you mentioned. But this was definitely a week report. Leisure and hospitality led the way, which is good. I was happy to see that we took a breather from that last report. Wages rose more than expected, good, but another sign of inflation, and as if we needed another sign. As you mentioned, the unemployment rate dropped to 3.9 percent. That's a pretty full number, full employment number, not bad. Labor participation holding steady at only 61.9 percent. Though, as you mentioned, the all-encompassing U-6 stands to 7.3. The economy's strong, labor market is tight, inflation's high, COVID still with us, supply chain's disruptions persist and that's where we are and that's what the Fed is faced with dealing.

What have they done? Investors had been preparing for the Fed to start hiking interest rates, tapered the amounts of bonds it buys each month and reduced the nine trillion dollars in assets that is holding. But investors didn't necessarily expect to get hit with all three at the same time in such an aggressive manner, the market can digest gradual, but too aggressive gets investors spooked. I think that's some of what we've been seeing with certainly some of the higher-flying stocks, selling off 10-year treasury yields, which informs so much about what happens in the stock market, pushed above 1.75 percent, ended the year at 1.51 percent. A pretty big pickup in interest rates. Stocks that rely on significant future growth get hit in a rising interest rate environment because it impacts the present value of future cash flows but it also increases the borrowing costs that are so necessary for those companies that are investing in innovation. You see the Nasdaq, you see the high fliers of 2020 get whacked. Nasdaq's around eight percent from its high but some individual stocks, specifically non-profitable highfliers, some that really benefited from the pandemic are down 40-50 percent or more. As a proxy we can see, that the ARK Innovation Fund is down more than 48 percent from its February 21 high.

Chris Hill: Jason, Ron talked about hourly wages going up the tight labor market. Among other things it seems like one of those times where it is more important than ever that the companies we are shareholders of are really good at hiring and retaining their employees. He talked about the Nasdaq, one of the areas of the market that you look at financials. This seems like a moment in the sun for financial stocks after a pretty rough decade or so. Our financials and area where investors should be looking right now.

Jason Moser: Yeah. I absolutely think so. It's the theme that Matt, Frank, and I talked a lot about in 2021. We knew this day was coming. Interest rates really had nowhere to go but up, we're hearing everything from 3-4, even you hear people talking about wait, what about five potential interest rate hikes during the year? Who knows how that ultimately shakes out? But it is worth noting that the financials have really had a tough time of it over the past several years in regards to profitability because of those low-interest rates. As those interest rates start to tick up, that benefits, the banks, the big financials, and the market is not stupid. It's a forward-looking mechanism. Some of that is being accounted for in the valuations today, but my guess is as the year goes on, as we see those incremental bumps up, we'll see the banks continue to benefit more and more. You couple that along with robust share repurchases with results that continue to be released as they played it more conservatively over the past couple of years. I definitely think the financials represents an opportunity for investors should keep their eyes on that space this year.

Chris Hill: Ron, how should investors be thinking about? I've got a couple of stocks that are down 60-70 percent from where I bought them. Is this a pack your lunch situation, where you just scrap it [laughs]. How do you decide what are the ones worth riding out and what are the ones that it's time to cut bait?

Ron Gross: Such a great question, and especially in this environment. Without meaning to be harsh, I want to say that it is irrelevant where your stocks were. Although it's certainly can play with your emotions and be pretty concerning to see your stock's down or in the red but honestly, the only thing that really matters is if you're happy with the company you own and you like the investment based on where the stock price is right now. Let's use Twilio as a great example. Great investment now maybe you think at $230 a share, but because you may own it at $400 a share, you get frustrated and decide to sell. You've just sold a stock that you admit looks good at the current price. What you should have done is either sit tight, pack that lunch, or possibly even buy more if it fits into your allocation strategy and your risk profile. It's really important to look forward and not backwards. Some of these stocks got ahead of themselves as a result of the pandemic. Now they're cooling down a bit. The good ones will continue to regroup and rise forward. Some of these non-profitable ones will become profitable and continue to grow into the future.

Chris Hill: Before we move on to some other stock news of the week, Jason, what is a the stock right now that is looking more attractive at its current price than maybe it did a year ago?

Jason Moser: Well, there are a lot of different ways to look at that, I think Ron keyed in on some of these good businesses that have pulled back significantly reasonably. Twilio certainly stands out as a shareholder myself and then being a stock that I recommended, that does stand out. I feel like this is a great time to really focus on those established companies that are profitable, that are growing, I mean they do exist, not every tech company out there is on profitable. You look at companies like Adobe. Adobe is one that really comes to mind here. It's not had the greatest stretch your down 13 percent over the last six months. I think that's a pullback that represents an opportunity for investors. I mean, to be clear, I own Adobe shares, I think it's a wonderful business and I think its business model is one that the subscription angle to it, it's such a sticky business, I mean it's a digital media company essentially at the end of the day, it is something that is going to be with us, I think for many years to come. I see Adobe as one that stands out, but then also back to financials, look at some of these more established players in the payment space. PayPal to me, this is just a no brainer in my mind, this pullback, I understand the growth concerns there as they continue to wean themselves of eBay, but ultimately longer-term, that is a good thing for this business. They have so many different avenues of growth within that business whether it's Zoom remittance or whether it's PayPal or whether it's Venmo, it continues to grow in pushed so much money through that network. Those are two names that really stand out to me today.

Chris Hill: Ron, you've got one.

Ron Gross: If you're relatively conservative, take the 8-10 percent pullbacks of wonderful companies like Microsoft and Apple. If you have a little bit bigger of a risk tolerance, look at the Cloud companies, specifically software-as-a-service companies, companies like Twilio that we mentioned, Zendesk, HubSpot, and don't forget, as Jason said earlier, add exposure to banks and I would recommend some exposure to energy as well.

Jason Moser: Chris, one thing I will throw in there too, because we're talking about, I know it's a difficult time for a lot of folks, particularly if they were buying into highs and now they're looking at it, 50-60 percent losses in some of these businesses that they own. One thing to consider, and this is something you can really only see in hindsight. You're going to have to trust me a little bit but the longer you remain invested, the more likely you are going to have winners in your portfolio that have done well and have compounded over time. I think we can all agree on that. They're not all going to be winners but the longer that you remain invested, you're going to have more winners and the longer the better.

When you are in that position, these types of sell-offs, they just don't hit as hard psychologically speaking. You see your DocuSign position has gone from a five-bagger to a three-bagger or maybe your Amazon position has gone from a ten bagger to a seven bagger. That's just much easier to stomach, particularly when you know these businesses are performing fundamentally well. That's why it's very important, we always talked about this, but just why it's so important for investors to start investing as soon as you possibly can and furthermore, to remain invested through thick and thin, you'd never going to own a ten bagger trying to treat in and out of that position. But the longer that you own those stocks, the longer you remain invested, it's just far easier to stomach times like these.

Chris Hill: Let's get to some Stock news. GameStop in the spotlight on Friday shares up on reports that the videogame retailers starting a new division to focus on crypto partnerships and NFTs. Jason, before the market open and shares of GameStop were up 25, 30 percent, that's settled down pretty quickly after the market actually open for trading.

Jason Moser: I'm glad.

Jason Moser: Meme-stock grades continues on. That said, I do think that if you are a believer in crypto and in NFTs, and for the record, I personally don't have any interest in them myself, but I also fully understand there is a lot of enthusiasm behind them but if you are a believer, I think this is really a smart move as management could make with this business. CEO Matt Furlong came in from Amazon so you have to imagine he was part of the culture there of innovation and experimentation, being encouraged to take risks like this. I think the gaming and entertainment, the metaverse these are the places where to me at least crypto and NFTs probably have the best opportunity to flourish, at least in the near-term. From that perspective, you can't fault them for trying and GameStop is still a business spinning it's wheels, trying to figure out a new direction. They have had decided to pursue this avenue. They are signing important partnerships to try to see what the opportunity in this space is and if it's one worth pursuing. Given what we've seen with this business over the past several years, I absolutely do not fault them for trying this and hopefully it works out for them [MUSIC].

Chris Hill: After the break, we've got a new survey and consumer tech and a new beverage partnership to wait your whistle, stay right here. You're listening to Motley Fool Money. [MUSIC] Welcome back to Motley Fool Money, Chris Hill here with Jason Moser and Ron Gross. Three months after the sudden passing of longtime CEO Brian Goldner, Hasbro has named his successor, Chris Cox has been heading up Hasbro's digital gaming division and he will move into the corner office in late February. So Jason, if anyone was wondering about the importance of digital and Hasbro's future, I think we have our answer.

Jason Moser: Yeah, well, the company has had a tough several years. The stock is up only around 25 percent over the last five-years. They're trailing the market significantly and so you talk about pivots, Hasbro in the past was just a toy company in this day and age is not going to cut it. You have to have a digital entertainment strategy and to be sure the business is steering itself in that direction and you look there on the investor relation site and it calls itself a global play and entertainment company committed to creating the world's best play in entertainment experiences. To me, I think this is a sensible move, lots of experience is there with Microsoft and the gaming market itself so I would be cautiously optimistic with this.

Chris Hill: The turnaround continues for Bed Bath and Beyond. The third-quarter results were hurt by continued problems with the supply chain. Bed Bath and Beyond also cut guidance for the full fiscal year and Ron more story closures are coming.

Ron Gross: It's interesting, shares initially sold off on this news pre-market and then that wasn't surprising because the headlines look pretty bleak but once investors digested the full story, the stock rallied also admittedly, it's possible we had some residual meme-stock short covering going on so might not have all been fundamentals. But relatively weak quarter some bright spot sales down 28 percent as a result of a 14 percent decline from divestitures and store closings. So that shouldn't have been a surprise, but also a 14 percent decline in core sales, seven percent comp decline but we saw improved momentum in November overall strong gross margins, the company was relatively quick to adjust pricing and promotions and product mix, which led to an adjusted gross margin rates significantly ahead of plan above 2020 and 2019 but supply chain disruptions still rearing its ugly head estimated $100 billion sales impact in the quarter. Buy Buy Baby was a bright spot, loyalty program, another bright spot they're continuing to cut costs, they are going to complete their $1 billion share repurchase program two years ahead of schedule. Still cash flow positive but they did lower their guidance only 12 times, the current EBITDA projection.

Chris Hill: Recently, Apple's market cap reached $3 trillion, leaving some to question how much more room that stock has to run but surveying out this week from Piper Sandler provide some color on Apple's strength among younger consumers, 87 percent of teenagers in the US own an iPhone and Jason, 88 percent of them say their next phone will be an iPhone as well. We've talked a lot about that ecosystem and it shows up in surveys like this.

Ron Gross: It's not really surprising. Generally speaking, it feels like what you start out with is more or less what you're going to stick with. So we know that iPhones have a tremendous presence here domestically but I think it's also represents an important opportunity for investors to think beyond the US and understand that we are only a small piece of the overall global pie. So while Apple remains very strong here domestically, it's worth remembering that Android represents essentially 75 percent of active smartphones around the world today. It's always worth keeping that in mind. Apple, a tremendous ecosystem, that closed garden, that walled garden I think works well for some, but it doesn't work well for all.

Ron Gross: Jason, am I correct that the iPhone subsidies are back? Was there a year or two where I was paying full-price for my phone and now I'm getting $500 off, $800 off, they're begging me to come in the carriers so they can get my business from the carrier perspective.

Chris Hill: You're not turning up your nose at $500. Are you?

Ron Gross: No, [laughs] I love it. I feel bad that I spent the full-price couple of years ago. I missed those subsidies. I'm happy to see them back.

Jason Moser: Ron, much like stocks, timing is everything, right? [laughs] Come on, price always matters.

Chris Hill: The third-quarter earnings report that Constellation Brands issued this week included news of a new product, Constellation's beer, wine and spirits company, with such brands as corona beer, Modelo, and Robert Mondavi wines. The company's teaming up with Coca-Cola to create cocktails under the Fresco soft drink brand. Fresco mixed cocktails are due to launch here in the United States later this year. Ron, I said this to Bill Mann earlier in the week. I think if you're a shareholder of either company, you have to be excited about the prospects for this.

Ron Gross: Yeah. We usually love to make fun of this stuff, but I'm having trouble. I think this is a good idea. It makes good sense. Great Fruit is a flavor that lends itself to perhaps not jerking straight in the carbonated way like Fresco was originally intended but as a mixed cocktail. I really like it. Coke following up on the success of Topo Chico Hard Seltzer, we have PepsiCo with their hard mountain dew in conjunction with Boston Beer. I like these partnerships here as long as the flavor profiles makes sense. So obviously the ken Cocktails business is pretty strong, somewhat over saturated in certain areas, but overall pretty exciting. I like this move, well done.

Jason Moser: All I can tell you Ron, if they do not find a way to incorporate Caddy Shack into this [laughs] offering, I am going to be sorely disappointed.

Chris Hill: That will be great. Little memo to the marketing folks at Constellation Brands and Coca-Cola. Alright guys, sit tight because up next, we're heading to sin city to check-in on the news from the Consumer Electronics Show. Stay right here. You're listening to Motley Fool Money. [MUSIC]. Welcome back to Motley Fool Money. Chris Hill here with Jason Moser and Ron Gross. If you've been listening to this show for a while, you may have noticed the change this week. Motley Fool Money has gone from being a weekly show to a daily show, and by daily, we means seven days a week. So please follow us on your favorite podcast app because on Saturday, we've got the co-founders of The Motley Fool, Tom and David Gardner talking about their approach to investing and what they look for in companies. On Sunday, we a one-on-one interview with Becky Quick, the co-anchor of CNBC Squawk Box. You are going to enjoy both of these conversations so please follow us on your favorite podcast app. This week in Las Vegas, CES, the largest consumer electronics trade show in the world was going on. Let's get to some of the headlines and new products being unveiled. Ron, in automotive news, we got a bunch. Sony showed off their new electric SUV, Stellantis, which is the company formerly known as Fiat Chrysler, announced a big partnership with Amazon. Amazon is going to be providing cloud services and software in the cars. Anything standout to you?

Ron Gross: Yeah. That Stellantis remains a terrible name. [laughs] But beside from that Chris, high die grace, there is a lot of cool stuff. I'm not necessarily a car guy, but there is some interesting tech going in here. As you mentioned, Stellantis is going to work with Amazon on the development of their smart cockpit digital platform, Amazon also is expanding its Fire TV integration to Ford and Lincoln because who needs more than a TV in your car, but thankfully, these things are disabled for the driver. I think we can allow the passengers to enjoy all the things that come with the Cloud and the driver can focus on the road. Google announced the new USB wireless adapter that can put wireless Android Auto into older vehicles. This one's a little wacky. BMW introduced a digital art mode so you got some digital art in the cabinet of your car, it changes the Ambient light, it changes the sounds to produce what they're calling a holistic user experience. That's a little too much, I'm not sure we need that, but SONY's electric SUV that we'll compete with the Tesla Model Y looks interesting to me.

Chris Hill: Yeah, Jason, we're going to get to some of the stranger products coming out of CES in a minute here. But it does seem like generally we've seen this larger presence from the automotive industry over the past decade or so at CES. Putting aside the holistic art show that's going to happen inside [laughs] some vehicles out there, it seems like a lot of the news we get in the automotive industry, out of CES are genuine upgrades. They make the case for buying new vehicles rather than pre-owned.

Jason Moser: I think that when you set foot in a new car these days and you still have the memory of an older car, 10-year old car, for example, it really does stand out how far vehicles have come along in really what is a relatively short period of time. We talk about these cars, and essentially, they're just computers on four wheels now and there's a lot to that, which is why I think you look at a lot of these companies in the semiconductor space, and I think they represent really attractive opportunities, not only because they're pursuing that automobile opportunity but because they had diversified businesses that pursue other opportunities as well, whether it's gaming or anything else in that line.

You look at companies like Nvidia with its DRIVE Platform continuing to advance there. If you look at companies like Qualcomm, they continue to grow that automotive offering out as well. I think, Tesla, to me, has always been a name that has stood out at the forefront in the EV conversation in just this computer on wheels conversation, but we're seeing more and more now, a lot of these businesses are starting to catch up. But I think it's really need to see what Ford is doing with that, what is it? The F-150 pickup? The demand there seems to be going through the roof, so it's very understandable that this is becoming a big theme at CES. I don't think that's going to be just this year, I think it's going to be for many years to come.

Chris Hill: Samsung unveiled a 110-inch micro LED television for the low low price of $150,000. Ron, let's just go ahead and stipulate that there's not a huge addressable market of people willing to pay that amount of money for a television. But it does lead to this question, is part of the case for televisions like this so that Samsung can boost prices of other television, and not just Samsung, anyone who is making televisions, if you're making the super high-end TV? We've seen the price of really good televisions drop dramatically over time. I'm wondering if this is an attempt to try and boost those prices back up again.

Ron Gross: They also have an 89-inch model, which I'm sure is much more reasonable, so if you are on a budget, you can check that one out. I think at the lower end, TVs have become commodities. But the really hi-tech commodities, which is so cool for consumers, it's really great. When there is a technological differentiation, then you have some pricing power and for a while, you can raise prices, keep them high right up until you can't because after a little bit of time, not very much everybody else moves in as well and then you have to stay a little bit ahead of the curve to get that little premium price point. I think, for the most part, this is a commoditized business.

Chris Hill: We love CES, Jason, not just for the cutting-edge tech, but also for the tech that makes us as investors ask, why would a company spend money to research and develop that? Let's get through a few of the actual products that were unveiled at CES this week. Invoxia, a company that showed off a smart dog collar that has a GPS but also a health monitor so you can track your dog's heart rate and respiration. Jason, you have dogs, can I interest you in what amounts to a Fitbit for your dogs?

Jason Moser: Well, you're right, Chris, I do have three dogs, I love them dearly. But I am going to take a pass on this. It's not that I don't care about them, of course, I love them, Chris, but there are certain things I just don't really need to know. I think Mark put it wonderfully just the other day. "Hey, a little mystery is OK. We don't need to know everything that our dogs are doing." Now, with that said, we're obviously having a little bit of fun here, I really do believe this is something that a lot of pet owners would buy into. There are folks out there based on maybe where they live or based on maybe their schedule that they hold where this would serve a lot of value beyond just the health benefits. The tracking alone, for the longest time, you ultimately, you could chip your dog, you could get the chip injected, which basically gave them that location, and a lot of places had really benefited from that technology. But this is taking it to the next level. My biggest problem here is we need another device to charge. I appreciate the fact that it charges and last for a few weeks, but really, you need another device to charge, and that's where I think maybe this becomes a problem. But as a pet lover, I do think it's neat technology and I absolutely believe that there will be plenty of folks out there wanting this.

Ron Gross: Speaking of charges, how about the charge to my credit card, the GPS feature requires a $12 and 99 cent-monthly subscription. There's love and then there's love, that's 13 bucks a month adds-up.

Chris Hill: Kohler, the bath and plumbing business, unveiled something they're calling the PerfectFill bath system. I guess you can integrate your bathtub into your smart home with this system so that on your smartphone, with just a touch of a button or voice command, you can order your bath tab to run a bath for you at the exact temperature you want. Ron, I think the addressable market for this is even smaller than the addressable market for the people willing to shell out 150 grand for new television.

Ron Gross: Chris, someone in my family, who will remain nameless, just yesterday said to me, "A good bath is underrated." Maybe that's true because I haven't honestly think of that in a really long time. But if I had all the money in the world, this would be pretty cool, but it's $2,700. As you say, that's a pretty small adjustable market, pretty cool technology, but pretty small.

Jason Moser: Ron, I think if you had presented this to me just before Christmas, I would've probably scoffed at it. As you, someone in my house who will remain nameless is a bath lover and we recently had our bathroom renovated, put in a great tub and everything. That's really been a wise investment on our part. I got a Traeger Grill for Christmas Ron. Now, grills aren't tabs, but I will tell you one thing that I have just been amazed by is the connectivity with the Traeger Grill. Now, I have the app on my phone that connects to my grill, I can monitor the temperature of the grill, I can monitor the temperature of the food on the grill, I can control everything just at the touch of a button there while sitting in my home, in the warmth of my home, watching my under $150,000 television set, and sipping on a nice beverage. If you asked me before Christmas, I probably would've scoffed that, now I at least get that. It all really depends on priorities and what's you love; if you're a bath lover, I could certainly see this paying off.

Chris Hill: Let's go to our man behind the glass, Dan Boyd, Dan, thoughts on the PerfectFill bad system?

Dan Boyd: Yeah. Chris, the worst thing about taking a bath is how long it takes my servants to bring up the hot water bucket by bucket from the boiler room to the Clawfoot copper tub in my sitting room. It's just a real hassle and also they get angry after a while. Water, after all, is quite heavy. I think this is a great thing for anyone who owns a mansion in the 1700s, so I'm all for it.

Chris Hill: Well, let's close with a product at a much lower price point, but ranks much higher on what I like to call the creepy scale. A company called Sengled introduced a heart-monitoring light bulb. That's right, it's a light bulb that tracks your sleep and monitors your heart rate while you're sleeping. Ron, they could give this to me for free and I still wouldn't want it.

Ron Gross: Not coming until Q4, no price information available. I'm really, really curious to see what it costs and I need to know if you accidentally dim the bulb, does it call 9-1-1? Does it get concerned that you might not be OK?

Jason Moser: Energy level is low.

Chris Hill: Dan, any interest in a free heart-monitoring light bulb that tracks your sleep?

Dan Boyd: Absolutely, Chris. I don't know about you guys and your marriages, but a lot of people in my house tend to argue about who snores and how much and I think this is the kind of thing that if installed surreptitiously, might be able to put paid to that argument.

Chris Hill: Up next, we will dip into the Fool mailbag and we've got a couple of stocks on our radar so stay right here. You're listening to Motley Fool Money. [MUSIC]

Chris Hill: 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 yourself stocks based solely on what you hear. Welcome back to Motley Fool Money, Chris Hill here with Jason Moser and Ron Gross. Our email address is Question from Jeff in Colorado who writes, "I'm curious how you think about rebalancing and adding to your winners. I have 25 stocks in my portfolio and five to ten of them are disproportionate in value since I've owned them for more than five years and they include big winners like Chipotle and Tesla. I'm torn between adding to these or rebalancing funding to be more balanced into others even though I still believe in them." Jason, the proverbial good problem to have. My winners are so big they're out balancing the others in my portfolio.

Jason Moser: I think a lot of us, we do like to let those winners keep on doing their thing. The flip side of that these dispositions can they can start to get big enough to where you might start losing a little sleep there, and I think that's going to be a different line for everyone. And if you reach that point, then it is worth considering rebalancing and exactly how you would do that may be you trim from those positions slowly. I would really emphasize slowly, to consider putting into new ideas. The reason investor, I think we all like to find more winners, right? So over time they become more apparent, and as you keep on investing, you in theory should get more and more winners. I think that really ultimately helps make this a little bit of an easier decision. So maybe now you have five to ten winners that you want to let do their thing but you keep investing and maybe in a few years that increases to 15 to 20 winters and so then rebalancing becomes less of an issue because you are better diversified with all of those additional winners and that goes back to that point I was making earlier in the show. Staying invested for longer periods of time. That really can't help make a big difference in perspective in psychology.

Ron Gross: I agree with all of that. Just one caveat, don't equate diversification with the number of stocks you hold. Because if you have two or three or four that are really outsized, you're actually not probably as diversified as you think you are. So be careful with that. Think about return potential going forward. Are those winners that you're adding to, do they have the same return potential or better than maybe something else you could put into your portfolio that is new? You always want to optimize your portfolio by owning the best stocks at any given time.

Chris Hill: Question from David, who writes, "I've heard you talk about the importance of reading a companies S1 before they go public. Is it necessary to read the whole filing or would you recommend sticking through a few important sections to get the whole financial picture? I hate to sound lazy, but they are really long." You know what guys, I'm with David on this one, [laughs] they are long.

Jason Moser: This gave me an idea. I mean, you the head cliff note is growing up for school, right?, I mean, maybe this is where you get the cliff notes for S1s.

Ron Gross: When it comes to my money, I try not to be lazy, but it's really difficult. I completely understand. I would flip through all of it, but I'd pay more close attention to the business description, the financials, the expected use of the IPO funds, and who is selling, that's important, the management team and the risks. There is a lot of other stuff in there too. You can flip through the rest of that.

Chris Hill: Also, if history is any guide, look at things like who do they list as their competitors, and what do they say is their total addressable market, and yes, I'm thinking about Uber, when they came out and said their total addressable market was everyone on the planet. Basically look for the nonsense, what for the things that just stands out as a red flag nonsense. Let's get to the stocks on our radar this week. Our man behind-the-glass, Dan Boyd is going to hit you with a question. Jason Moser, you're up first. What are you looking at this week?

Jason Moser: Yeah. Let's go back to cars. The company I've talked about before on the show, Cerence, ticker CRNC. Recently former CEO, Sanjay Dhawan, resigned from the company, seemingly out of the blue, and Dr. Stefan Ortmanns replaces him. Now Ortmanns has 20 years with the business serving as EVP and the leader of Cerence's core products business. He's very familiar with this business and its strategy. It was pretty amazing actually, the stock hit a low of $63 on the day of that announcement, understandably came out of the blue. But it closed just under $70 and seems to have recovered since then.

But just speaking of the CES 2022 show, they were just recognized by CES 2022 for their Cerence co-pilot offering, which analyzes the combination of voice, gaze, gesture, and touch input in information from the car's sensors. Ultimately giving the driver a more intuitive in connected experience. But even furthermore, it can control SmartHome and IOT; Internet of Things devices. So lighting in your house, appliances, garage door openers, payments, and even more. I mean, when we talk about cars being computers on four wheels, this is what we mean. So I think that it certainly is very understandable why automobiles remain such a big part of CES this year and going forward. Cerence is certainly a company to pay attention to in the space.

Chris Hill: Dan, question about Cerence.

Dan Boyd: Yeah. One of the most annoying things about getting out of the car is waiting for my coachman, you open the door for me, set the furnace going again, light the fire in my sitting room next to my, of course, Crawford copper tub so I can come inside and have it warm. So this to me, sounds like a great idea.

Jason Moser: Hey, listen first world problems, right, Dan? We all suffer.

Dan Boyd: Absolutely. Ron Gross, what are you're looking at this week?

Ron Gross: Oh my, Dan Boyd, I'm fired today. I'm taking a look at some of the high fliers that have sold off that we talked about earlier, and Roblox, RBLX, is one of them. Roblox as a gaming platform built by players who create virtual worlds that others can explore and enjoy. Within that platform, players pay real dollars in order to purchase Robux, which is the in-game currency. They spend the Robux to engage in experiences and buy stuff. The company shares with the developers a large portion of those Robux that developers then convert their received Robux back into real dollars. It's a very interesting business model. Roblox makes money on the portion of the Robux it keeps, as well as the difference between what it sells them for and what they redeem them for. Forty-nine million daily active users and growing pretty significantly. Not profitable yet, does generate positive cash flow, however. Shares are up 40% from their 52-week high as the Nasdaq sell-off continues. Friday announced that it's taken down its Chinese app to prepare for the next iteration, so I'm curious to watch that. I wonder if there's more to the news than meets the eye.

Chris Hill: Dan, question about Roblox.

Dan Boyd: Not really a question, Chris, but more of an observation. This sounds like a great way to launder money.

Chris Hill: What do you want to add to your watch list Dan?

Dan Boyd: As you know, I am a 17 hundreds mansions owners. So I'm going to go with Cerence because that coachman he's just so slow.

Chris Hill: Jason Moser, Ron Gross guys, thanks for being here. That's going to do it for this edition of Motley Fool Money. The show's mixed by Dan Boyd. I'm Chris Hill, thanks for listening. See you tomorrow.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Chris Hill owns Adobe Inc., Amazon, Apple, Bed Bath & Beyond, Chipotle Mexican Grill, DocuSign, Nvidia, and PepsiCo. Jason Moser owns Adobe Inc., Amazon, Apple, Chipotle Mexican Grill, DocuSign, and Hasbro. Ron Gross owns Amazon, Apple, and Bed Bath & Beyond. The Motley Fool owns and recommends Amazon, Apple, Chipotle Mexican Grill, Constellation Brands, DocuSign, Nvidia, Roblox Corporation, and Tesla. The Motley Fool recommends Adobe Inc., BMW, Cerence Inc., Hasbro, and Uber Technologies and recommends the following options: long January 2022 $1,920 calls on Amazon, long March 2023 $120 calls on Apple, short January 2022 $1,940 calls on Amazon, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.


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