tv Barrons Roundtable FOX Business December 29, 2019 9:00pm-9:31pm EST
jack: welcome to a special edition of barron's well roundtable i am jack otter. this week when the investment lessons of 2019 and three important things investors should be thinking about as we head into the new year. retail closings. thousands of stores shut down in 2019. is the carnage over urschel we expect more in 2020? the consolidation of asset management and brokerage industries is the changing investing landscape. what you need to watch out for. an impeachment, trade or concerns, and no earnings growth. the s&p 500 is on pace for a fantastic year. we'll next to be just as good? on the barron's roundtable tonight ben levinson beverly goodman and jack how. jack i will start with you. it's an ugly year for retail. is the light at the end of the tunnel? >> or an oncoming train? in terms of spending, spending was a great, we are ten years into a bowl market and within expansion, and yet we had 5000 net store closings, after subtracting for store openings, that is double what we had the year before. so the issue here is we are just over stored in the u.s. we have 23 square feet of
selling space. person in the uk that they have five. we got a little nuts in the 1980s building chains bigger than they had to be. and some of these stores we saw massive closing of palos, gymboree, dress barn. we can all think of chains and do we really need this store? will we needed ten or 20 years from now. i am asked that question about jcpenney's. we wrote about macy's, it's much better financial condition but then got stores and strong malls and weak balls. they don't need as many stores as they need now. jack: jcpenney stocks was used was just over dollar now. >> am pretty sure i was : i was a kid and this is the cool place to shop. i got my church and school close from here. imagine how far this company is fallen. jack: so tell me this day and age what is the hallmark of a successful brick-and-mortar operation? >> for spot has to be working right now. i don't want to talk about
turnaround stores that this part in the county. i look at target and i say every time one of these chains closes, if there is overlap with what target cells, it gains a shares burn its gaining shares in housewares, toys, lots of other things. so target has the rest be right, that is accompanied is going to succeed. jack: another area very different arab disruption in 2019 was the brokerage industry. yes and that has been mostly good for investors. i mean the long investing history has been good transaction costs of come down, they practically plummeted everywhere. the price of mutual funds, their annual cost of come down dramatically. technology has made every thing easier. and regulations have improved transparency and provided trade trader. but this longing to supinated consolidation is happening in full force and 2019 is good change the competitive arena. jack: was on the mind for
investors will just keep getting better? >> companies are less and less able to compete on price. coke and pepsi don't compete on price anymore, it's going to be about service and that this could be a good thing for some investors, but ultimately these companies are going to have to make money they can't give everything away for free. so investors should be kind of wary about new products and different ways they may be charged. jack: one thing to look at is the interest rate that the company is paying you on what's called the sweep account. so when you get dividends for your stock it just goes into cash account. some companies are paying 1100th of 1%. >> exactly, and even that is kind of an effort for them. so as interest rates start to arise, most people expect the rates of their money market funds and sleep accounts to rise along with them. that may be an area where you don't see as much movement because the companies are trying to recoup a little bit of their own costs. jack: that's why you need to do comparison shopping i bought one half percent or what that going rate is and don't settle for less.
>> a lot of people thrilled with one half percent. but a lot of the products they are offering is technology make things easier. and as some of these new rollouts likes may be robo advise, are different kinds of trading platforms could come with these. jack: it of course we are all gonna demand better technology. you want to get your account and your information on this phone. ben eyman to go to you, a lot of scary headlines this time a year, last year, but yet we had a wonderful year in the market. >> if someone told you all the things that were gonna happen in 2019 that the ú-letter curb would invert, that donald trump would really ratchet up the trade work, that earnings would be about as they have been, you'd say my god this is to be a terrible year for the market. but yet we are up almost 30%. and it really teaches you not to -- the market is forward-looking and you have to look at your beliefs and your fears and negative do what's going on in the market but you can leave a ton of gains behind on the morrow
market. but the same time you don't do the same thing go falling forward. you don't have to say everything's going great and i don't have to worry about the market dropping because it might do just that. jack: for one thing investors also want to think about what's going wrong but you should be thinking what else to go right? interest rates are superlow there's some things are not in a trade war, we think we know it's gonna happen in the senate with the impatient. so what else should we look at? >> so that's part of the problem here some much is what is starting to turn in the right direction. the economy may start retarding to turn around. the fed started to cut rates, and there's a lot of good news episode starting to be reflected in the markets. said this part i would probably start worrying a little more the beginning of last year. jack: are you seeing anything out of this can make you worry? >> of course idea and. jack: question are you are been. >> of course i'm starting to worry bergen to see the bottom, there since crack starting to show in some of the data. not in the overall payrolls, we just had that blockbuster
number. but some of the pmi's, and the manufacturing. starting to see some weakness there the hiring intentions are not what they were. so what that is something to pay attention to going ahead. but for right now were getting it summer gains. jack: 's investors ought to go into 2020 with her eyes wide open. coming up how can investors prepare for the innovations coming in the next decade? but first we are and shines a stop spotlight on the ten biggest stock winners of the past decade. that is
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dominate. the only one of those is netflix and that is the top of your list. the best performer for the last ten years. and the fangs if you want ia or to a netflix and google and facebook and apple, the others were just too big already at the start of the decade. they have done quite well, but there are others that have done better. if you put $10000 into netflix, you turn into $400,000. the at least of these top ten you turn into more than $100,000. with got the s&p 500 but you still got a great decade bathed them while they stocks. >> and netflix return 309 earned 72%. obviously did that partly because it's such a great disruptor. and there are others on your list that her disruptors as well. yeah i'm just gonna hit a starting.for netflix was humble it had no original back then. hollywood is called the shots. and now has a ton of originals in hollywood scrabbling to follow its lead. so the other disruptors market
are market access holdings. stock trading went electronic long time ago. that's just now happening to bond trading and then is one of the most bond trading platforms. >> that's really revolutionary, everything i said earlier about how the investor friendly has been focused on stocks. their 7 trillion-dollar bond market has been ignored. they have cut costs for investors in half. >> and united rental, this is construction equipment. so it's people used to buy heavy equipment and then nowadays it's more popular to just use it, to rented as you need it. >> nobody wants to have these things on their balance sheet, so it's better to rent in my uri habit. >> align technology this is crooked teeth. used have to go get braces or even if you went for the invisible line, you had to get the goop in your mouth, he had to get the mold. now you go get a low "star trek" light scan and they are
gaining tremendous business. and the last one is also beauty, i'm not going to lie to it's been a while since i've had my hair blown out style, but they do salon stores mostly makeup they have taken share from drug chains, mass merchants, and things like that. so there's just dropped her there. >> there's another category roll ups. there's three of those on your list. >> we call some one a serial acquirer but that's not that flattering. but three of these are serial acquirer's transit dime, that's a components for aircraft. it's the components they are the sole source so their margins are twice as high as a group average. some of the semi conductors are not the sexiest ones out there, these are not intel type chips but they have very high gross margins and old dominion freight line, they do trucking, they built the record of being on time, their customers like that. they don't chase low price business, they don't chase volume in any areas. >> when you consolidate a
business and you run it well, the skies the limit. >> the last two mineral technology and drugs. these can be booms or bus for companies like this into the booms are a biomed which makes a little pump for heart surgery and regeneron which is a big hit i drug. jack: those are basically dangerous investments either when bigger lives big. >> and you quickly build up a portfolio with other hits. jack: said the important question jack are there any visa looks cheap to you still? >> i am favorably about broad come, i still think that is quite sheet. i fill very comfortable to trend dime, regeneron used to be a darling stock in terms of valuation is come way down, they might have another hit on their hand this drug for eczema. it's headed for a couple billion dollars. it could be a 10 billion-dollar drug. jack: are there any others you just a far away from? >> on this list, they say by
which you know, so i don't know anything about the mockup by. of course i'm about i have had big run up so they started to come down a lot but i want to see where that settles. sold her out to me looks a little expensive. abby omitted, i'm not the leading authority on pumps that get inserted to see your heart during surgery to keep blood flowing, we don't want to rely on one product. that has been a little bit of a backlash for a couple of studies that were covered recently at a medical convention. simon wade and see on that one. jack: and united rentals selling it eight times? that's cheap. jack: ideas awakened you right now to improve your portfolio. looking ahead at 2024 innovations and trends that will help shape this
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jack: let's get our time machine and jump ahead to 2030, what innovations and trends will dominate the decade and how can investors prepare for these upcoming opportunities? joining the roundtable to discuss nea venture partner been there us in. but i'm a go to jack first. you've been looking a lot of the automobile industry and how we are gaining electric engines. but we might be losing drivers. but just not as soon as every one? >> i am going to do a little pooh-poohing on this. i would've wanted to tell people all cars will be electric and they will dry themselves half the people i say say you're crazy it's not going to happen is i can happen it's can happen right away. recall can be driving electric cards next decade. i don't think, first of all there is a flood of electric vehicles coming on the market right now. and so someone is going to struggle to be profitable on
these vehicles. i don't see the infrastructure in place for all of these companies to do well right now. the charging infrastructure. i suspect that the decade might be dominated by a gasoline cards that have increasing electrification, increasing hybrid technologies, with people going out saying i'm in a buy a hybrid vehicle they will be called that they will be called the hybrid systems that are buried in there that gives you extra fuel economy and will eventually make our way to greater uptake at the end of the decade. jack: we had the ceo and he said his technology said it would drive help baton must vehicles but he said we are decades away. said the first 90% not harbor the last 10% not hard. and then what you see in the valley? >> i think were looking at decades not years. the highway miles are easier control call me if that allows variables, you are not worry about a dog running across the street. but having said that in having spent a lot of time, a lot of
people will have a pre-significant underestimate of how long it will take. now having said that on electric i would push back on that. i think every mary major cara said they would have won there's a lot of reasons to move to lecture, but obviously the same time it takes about 14 years for the use of a carpe diem a whole legacy of equipment that's getting older and older people are keeping their cars longer. >> and regardless of how quick it happens what happens to the residual value of these cars? a lot of people lease these cars if you want to make a good lease you have to note the residual value is good to be. it's going to go nuts of people not knowing. >> it was a really big problem in the beginning and i looked in the company investing that
is a trade only transaction. where the best deals? he said while tesla. because nobody is what they're worth. so nobody can have a steady market. you're going to have a lot of transitional time and basically not just a new model but, a new model of your drivetrain comes out of people don't have weight of value. whether prior cars are undervalued, i think the bigger issue, you have kept charging out there, there some core issues that have to be dealt with for a lot of reasons. like the fact that you have an extremely detrimental products called the battery that's an enormous side and there's no clear path to how one disposal. and people talk about that yet, but the time when that comes around people get to carry a lot. jack: bergen jumped to a different topic beverly you can look at the healthcare longevity industry and this is abigail's bh. >> 's can be huge bigger than most people expect. a hundred years ago the average lifespan was 47 today
it's 90. and it's rising quickly. it's more than just pharma it's more than finding a cure for cancer's antiaging drugs, gene therapy, machines that help with mobility free their injuries are just helping us get around longer, it's also housing, caretaking, technology is going to be a huge influence in all of that. personal care products. >> how can you invest in this? >> it's not easy. to think we're still the early railroad stager we know this is gonna be a revolutionary change that we don't know what the companies are leading it. it's a little etf's what has a ticker old, that are trying to kind of capitalize on this, that acf. said the other third is about senior housing, it's much more real estate. but fidelity select healthcare has a nice combo technology and healthcare vent to it, but i really think it's early days in terms of investments. jack: i'm gonna go get a very different topic. then, we love this easy money, i know ben you must let easy money in your business. but you say those things are coming to an end? >> yes leave had ten years of near zero interest rates and that is made impossible to invest for almost nothing into anything. and the companies that are getting that money, didn't even need to turn a profit. we are seeing an end to that, the swedish central bank has finally moved out of negative
interest rates. we're going to start seeing money get more expensive that means money that means companies that didn't have to turn a profit will have to turn a profit. it means growth companies companies that could just grow without having to turn a profit, they are not going to be valued the same way they are now. and it's going to be a big change even for the stock market which is god up on ten years based on this. because low interest rates, people are more willing to pay high multiples for stock. jack: been how the venture capital world deal with more expensive money would that pay real rates? >> it takes about 7% to pay off if you're a large company to pay off your pension plans. and you are not gonna get those in the foreseeable future is from traditional instruments like bonds. so this is force a lot of organizations to move to alternative assets which is how venture or private equity buyout. in i don't see that changing anytime soon. there's a massive amount of money in our marketplace. the money in the valley comes from everywhere. so its sovereign wealth comments massive companies, every time i turn around there's some new player with some ridiculous amount of
jack: and barron's tradition were gonna send you into the year ahead wit ready to make a big move. so ben, beverly, jack, give us one actionable idea. jack on one stock just missed your top ten for the past decade, amazon purity thicket might have a good 2020? >> amazon.com maybe some of you have heard of this. it's a topic for 2020. i think it's a good one, people like the free cash is coming they think it's still
narrowly profitable. $33billion of free cash projected for 2020. that figure could more than double in the next four years. if those estimates are right the stock is cheap. jack: and annual profit that would be huge. now beverly you've taken a long look at investing in what's called environmental social government manner. more and more money is flowing into their goldman just announced 700 billion in climate change. your fan. yes i am. this is not just going away. more than a million dollars of an inch of the funds it's more than triple is less than 2 billion the year prior. companies are doing more and more with this in terms of their own regulations. so it's not going away. the real winners are going away, the managers that can pick stocks headed here to this criteria. they can also beat the market. parnassus funds, do that in general, i like that equity in particular. jack: been real quick that's gonna get jack rao that.
>> its lows. this can outperform home depot this year looks i get into at this years gonna do it again next year. jack: with that jack beverly then thanks a much follow us on twitter weekend, maria's wall street was coming up next. >> from the fox cities in new york city here's maria's wall street. >> happy weekend everybody in my christmas everyone and analyzes the week that wasn't helps positioning for the week ahead. i am maria and coming up just a moment in my exclusive interview with the ceo of verizon, hans vess berg is here on the power of 5g technology. right take a look back at the key interviews with the best on wall street in 2019 is a representative of the year. but first what investors should expect in 2020 is the farmer is only mouth, me thanks for joining us. so it's b