July 22, 2020: Three Stocks for Three "Blue Ocean" Global Trends - Cabot Wealth Network

July 22, 2020: Three Stocks for Three “Blue Ocean” Global Trends

global trends

The webinar was recorded July 22, 2020

You can find the slides here.

Chris Preston [00:00:05] Hello and welcome to today’s Cabot Wealth webinar, Blue Ocean Blueprint for High Growth Markets. I’m your host, Chris Preston, Chief Analyst of the Cabot Wealth Daily Advisory and Managing Editor here at Cabot Wealth Network. With me today is Carl Delfeld, Chief Analyst of our Cabot Global Stocks Explorer advisory. Today Carl is here to talk about the concept of blue ocean global trends and blue ocean growth stocks, the places, markets or markets in the world where are most likely to find them and give you three of his best blue ocean growth stock picks. This is an interactive webinar, which means we’ll be fielding your questions after Carl’s presentation wraps up. So if you have a question, feel free to ask it at any time and we we’ll try to get as many of them as time allows, once Carl wraps up. Just keep in mind that we cannot offer advice in regards to your own personal investing situation or portfolio.

Chris Preston [00:00:55] First, let me introduce Carl. Carl received his Masters in Law and Diplomacy at Tufts Fletcher School, worked for the First National Bank of Boston, now Bank of America, in London, serving as director of the Japan and South Korea group, served as Vice President of the investment bank, Robert W. Baird and Co. developing new business in Tokyo, Hong Kong and Sydney. Was Asia advisor to the US Congressional Joint Economic Committee, the U.S. Finance Committee and the U.S. Department of the Treasury, wrote for Forbes Asia and the Far Eastern Economic Review served as a member on the U.S. National Committee on Pacific Economic Cooperation and the Japan U.S. Friendship Commission, was Chairman of the Asian Pension Forum and wrote a book titled Red, White and Bold The New American Century.

Chris Preston [00:01:42] Carl joined the Cabot team in January 2019 as Chief Analyst of Cabot Global Stocks Explorer where he boasts an average return of 91 percent among his current stock recommendations. Bottom line, Carl knows what he’s talking about when it comes to international trends and global investment opportunities. So let him tell you about a few of them. Carl, take it away.

Carl Delfeld [00:02:02] Thank you, Chris. And I want to welcome everyone. Thanks for joining this afternoon. I thought I’d begin with maybe just a very brief overview of the Explorer, what we’re trying to do and our strategy. Explorer, the mission of Explorer is basically to explore the world for the best companies listed in the U.S. that are on the on the edge of the new. By that I mean new industries, what I call blue ocean sectors. Some examples are clean energy, transportation. Emerging markets in Asia, of course, financial technology, medicine and science. Space rare resources and in digital payments and e-commerce. That’s just some of them. I try to each – we get – we have a new issue every other week with a new idea and an update. And then in between, in between weeks, we have an update on the portfolio. I try to keep the number of ideas in the portfolio to 10 or less just because I think that it’s harder to follow more than that and harder for subscribers to really pick amongst the 10. And so we try to keep it most, for the most part, they’re stocks once in a while. I offer more conservative investors an ETF, usually a sector ETF, so that they can either buy a more aggressive stock in a more defensive or conservative ETF or pick and choose either one. Primarily, as you can probably guess, it’s a growth product, although we do I do have value devalue ideas from time to time. As long as I can identify a catalyst that will unlock the growth in the value. So you might want to think of the Explorer as sort of like a barbell on one side. One side is extreme growth and the other side is extreme value, although it’s definitely at least 80 percent growth.

Carl Delfeld [00:04:15] So let’s get started. I have kind of three, what I call blue ocean markets and then some stock ideas and a couple of ETFs as well. So let’s start with with what a blue ocean market is. What I’m really looking for is a sector where, especially on the revenue side and growth side, it’s really quite wide open. And so there’s a chance for durable growth. And so let’s look at some other things I’m looking for here. I’m looking for stocks that are, you know, very strategically placed at the heart of these growth trends, these sector growth trends, and providing something that’s very much in demand, in vogue with a lot of momentum behind it. And I’m looking. Try to look as much as possible at a management team that’s very well qualified and experienced and also strategic shareholders that raise the odds that the venture will be successful. And I think you’ll see that running through all of the ideas today. And then something that’s really high growth, that has a growth trend that is deep and durable. And one thing I think Chris and I would would both agree on a big difference from when I got into the business, you know, in the 1980s is that profit and this – and I think everyone sees this since the since the March lows this year and the snapback in the big tech and big data – is that you don’t necessarily have to show profits, but you have to show, you know, top line revenue growth, user growth, subscriber growth. And that really is driving the stock market. And I know probably some of the old timers like me in this business are a little uncomfortable with that. But that’s just really the way the way it is now. So that’s something new. The other thing I’m looking for, if possible, we want to buy a stock in a in an uptrend. The stronger the better, although I, I do dislike really chasing stocks that have already been up, you know, 100 percent or or more. I try to catch them early if possible, but it’s nice to catch him in an uptrend. It’s nice to see them in a leadership position. And then sort of having home court advantage. We’ll see that in a couple of the ideas today as well. The last line here, a reasonable price. That’s the toughest one, because a lot of the ideas that are really moving now don’t look cheap at all from a price to earnings. And so you really I think everybody’s sort of like trying to twist themselves into a pretzel to justify the price of the stock. And so that’s why managing risk is so important. Now, normally what I do is we have a new recommendation and it goes up, say, 100 percent. I normally urge subscribers to sell a third to a half of their position just to lock in gains, because some of these – some – most of these are pretty aggressive, somewhat volatile ideas. So I really like taking some profits off the table. And then the other thing is you can do is when you purchase a new idea is to put in place twenty, twenty five percent trailing stop loss so that, you know, if something runs up and then comes back down, if it starts to lose momentum and goes through that 20 percent stop loss, you’re out and you’ve protected your profit and you have some cash to put into the next idea.

Carl Delfeld [00:08:23] OK, why don’t we get started? The first idea I have, really the reason I’m leading with this is I admit this is one of the best performing stocks in the portfolio right now. It’s called Sea, the symbol’s SE, Sea Ltd. And it’s a Singapore based company that really has three or four really strong trends behind it. And the first is geographic, as you can see by these two maps, Singapore in Southeast Asia is at the heart of what’s now called the Indo-Pacific. So Southeast Asia is oftentimes overlooked. Everybody wants to talk about China and India, but Southeast Asia is south of China and east of India. And you can see it’s a rather expansive group of countries, usually we refer to them as ASEAN countries. It’s ten different countries. But together they make up over six hundred and fifty million people. Which is, you know, almost double the US population. It’s a young population. These economies are growing fast. They’re very tech savvy in terms of technology. And they’ve been able to leapfrog, you know, with the smartphones. A lot of the old technologies. And so until they really have an advantage on some of the some of the more mature economies in the world. So so that’s the first plus behind this idea.

Carl Delfeld [00:10:08] Again, there’s Sea, that’s the company we’re going to talk about briefly today. And here’s their core markets, and this is really why it’s really done so well. So each one of these is a real what I would call a blue ocean market.

Carl Delfeld [00:10:25] The first one is online gaming. And that includes, you know, playing games and also watching, like eSports, watching games. And one of Sea’s main strengths is that its partnership with Tencent, many of you know, will know Tencent, an e-commerce giant in China. But they are also big in games. And so Sea has a licensing agreement. So all of Tencent’s games Sea can market in Southeast Asia. So that gives them a moat. It gives them product. And then on top of that, they develop their own games, which have done extremely well. Of course, they have higher margins. Then they have the online shopping, which, of course, in Covid-19 has skyrocketed and which is really doing well. Very competitive with Alibaba and Tencent. And actually gaining market share against Alibaba, which, as we all know, is the giant in Asia and China. And then the third driver is digital financial services or digital payments. And they’re on sort of a short list to get a digital banking license in Singapore, which will add a whole nother dimension to their. Their products that they can offer their customers and clients.

Carl Delfeld [00:11:58] Now, here’s a chart showing Southeast Asia – oh sorry, somehow I’ll get back there. Wait. Sorry. Here we are. So this shows the different markets, the major markets. And you can see the U.S., China, of course. You know, China, of course, population quite, quite large. But Southeast Asia, as you can see, is about, you know, more than half double the U.S. And then you have Latin America, which is also a market that’s often overlooked. And then you have the Internet users, which pretty much tracks the populations. But interestingly enough, Southeast Asia still has a lot of room to grow in terms of e-commerce. You can see it’s at a much lower percentage of total retail sales. So, again, that’s a big blue ocean market. And then e-commerce growth. Southeast Asia represents the highest of 31 percent growth, more than double the U.S. And even higher than China.

Carl Delfeld [00:13:09] OK, here’s the numbers. Sales up nine times in the last five years. E-commerce growth. Growing, you know, 70, mid 70s on a pretty consistent basis. They’re gaming, which is called Garena, is up 30 percent. And the whole the whole ecosystem, the digital economy has tripled in Southeast Asia over the last five years and it’s still growing fast. Now, the last bullet here is not that attractive, but it’s part of the package. It’s not making money despite those growth numbers. And a lot of it’s because they’re plowing money into the growth in terms of picking up new subscribers, developing games, building out their platform. So it’s a little bit like Amazon. I don’t know if many of you are probably Amazon holders. In the early years, everybody was frustrated because the numbers were good, but it wasn’t making money.

Carl Delfeld [00:14:08] So it’s sort of following that same strategy. But, you know, it’s lost a billion dollars over the last year. Twelve months. And it’s got a negative cash flow. But it does have ready access to financing. So, you know, this is a fast growing engine, but still not profitable. Now, the stock, as you can see, I think I started recommending this mid 2019, and it did very – it’s done very well, obviously, but it’s really taken off since March of this year. Got up to 115. And back to 107, and I believe it’s back to 115 today, trading at 115 today. So I don’t know if I would chase the stock right here. I would maybe nibble at it a little bit. You might want to buy some shares. My guess is you’re gonna be a little bit of profit taking here. But I definitely have this on your on your watchlist, your target list. And, you know, if it pulls back, you know, that’s when I would. That’s when I would build a half position in Sea.

Carl Delfeld [00:15:25] OK, let’s go on to the next Blue Ocean market, which is the commercialization of space. And if you look at space. You know, there’s a there’s a a number of big players here, but the first two I’m going to mention are private companies, which at some point probably go public. Of course, there’s Jeff Bezos Blue Origin, which basically takes commercial payloads into space. Using a reusable rocket. The second is Elon Musk, Space X, which is a very interesting company. Morgan Stanley believes it might be worth close to 50 billion dollars in terms of market value. It’s a private space company. The key the key driver is satellites. It has a star link. Satellites, they’ve launched more than 400 of them. They hope to launch to reach 800 by the end of the year so they can launch services from the satellites. And that’s the bulk of the value of the company right now. They’re also in to deep space exploration. But the main point is the satellite business. So but both of those are private companies.

Carl Delfeld [00:16:55] And here’s the. A company that I recommended very soon after it went public through something called a special purpose acquisition company or SPAC, it merged with another company. And so was able to trade quite quickly. It’s a it’s a fast way to do an IPO. And it’s done well. You can see Richard Branson, the flamboyant entrepreneur is a key player. And basically what they do is they.  They are into space tourism. But the big payoff is in the point-to-point hypersonic travel, which will be a big, big business. So this went public. I recommended about seven, seven, seven dollars and 30 cents. And it really took off because obviously it’s a very provocative, exciting idea. And I believe it went up 40 dollars, then pulled back and now it’s started another run and it’s up at twenty five dollars or so. And the plan is to have these spacecrafts and believe it or not, people pay two hundred fifty thousand dollars to go up in a 90 minute flight. It’s it’s the craft I believe right now. Can take seven at a time. So you can kind of do the numbers, one point eight million per flight. They have. Six hundred reservations, a very, very long waiting list. And they’re basically there’s they could they could go two ways. There are some people in management at first stated that their goal is as they get volume and more spacecraft, they’re going to drive the price down and then expand, you know, work through their lists. But there’s others that think with they may do this the opposite. They may raise their price. So we’ll have to see how that works. Their first flight was expect is still expected in 2020. But things have slipped a little bit with Covid-19, I don’t I don’t know if we can really say for sure if that first flight will happen this year. But Richard Branson wants to go on it, of course. And I think it’s going to be very there’s going to be a lot of fanfare and a lot of publicity around that first flight. They hope to get over 100 million dollars of revenue in 2021. And if they have, let’s say, five spacecraft doing one trip a week over the full year. They could they could reach 500 million dollars in revenue. But again, this is very much a concept stock. I would call it because it’s not really making money, but they’re doing a great job building up their business. Boeing is an investor and a partner. NASA is a partner partner. They’re training astronauts, they’re doing a lot of they’re doing all the right things. And on top of it, they just hired last week a Disney executive. Who has a lot of experience in market, his name’s Michael Colglazier and he’s going to be coming on like came on and actually this week to be the new CEO. He was president of Disney Parks International. The former CEO, George Whitesides. He’s a real pro. He’s moving over to stay in charge of the technical side as chief space officer.

Carl Delfeld [00:20:57] So I think I think that’s a big plus. The other thing beyond the space tourism, the big payoff, I think, and the reason Morgan Stanley and there’s two other investment banks that are following this stock have pretty high priced targets, is that all this will open up point-to-point travel by  hypersonic jets. So, for example, I think I have a next slide I have yet. That’s the big prize because that could really shake up the tourism here and cut cut the trip time dramatically. For example, you could go from point to point from New York City to Shanghai instead of 16 hours, 40 minutes. And you can imagine building that out around the world, even in the U.S. Morgan Stanley, of course, it’s a rough estimate, but they think that market could be worth eight hundred billion dollars. Because the you know, the air travel is almost a two trillion dollar business globally right now. So. That’s really where the big payoff down down the road exists. I’m not quite sure how far we’re from it, but it may not be as far as you’d think. There is certainly risk with Virgin Galactic, and you can probably guess the first one is that some of these spacecraft don’t work. I mean, they they hate to even bring it up. It’s pretty morbid to bring it up. But, you know, if they crashed, or, they don’t work properly or they have to return before completing their mission. That could definitely hit the stock. So you have to keep that in mind. So manage risk, don’t get carried away. But I, I’m comfortable still buying this stock in the mid 20s. But I would I would definitely probably put a trailing stop loss in place and be a little careful. And not go overboard. But space tourism, commercial space is definitely a blue ocean market. And here’s the chart, as I mentioned, yeah it reached. It reached over over 30, thought it reached a little bit higher than that and came down in March. And then it’s making its way back up and it’s just in the last weeks, gone from twenty one to twenty five. So this is a very interesting stock.

Carl Delfeld [00:23:39] Now, I mentioned sometimes I recommend ETFs, so you might say, well, you know, I like space, but I’m not sure I want to, you know, just pick one stock, you know, an ETF. I mean, I’ve been working in ETFs a long time, and sure, they’re not going to you’re not going to double and triple, you know, in six months or a year, at least not normally because they’re a basket of stocks. But it’s a good way to get exposure in a fairly conservative way. And so here’s one example. XAR, it’s got a basket of I think 25 stocks. And. It doesn’t weigh in a lot in a lot of these big Lockheed and Boeing dominate the basket in terms of weighting in here, they have a modified weighting so that Boeing is not like 20 percent of the ETF and now all sorts of technologies, they have small companies they get can get bought out. And all sorts of different companies. So I encourage you to take a look if you’d like or you can. Like I said, you can. You can do what I call the rifle and shotgun approach, where you can have Virgin Galactic and then side by side have this shotgun approach with this ETF. Some people like that approach.

Carl Delfeld [00:25:02] OK. The third area that I’d like to just talk about is financial technology, better known as fintech. And this is a really interesting area, and in, while I’m on the topic, I’ll mentioned that I’m going to focus completely on that in my Cabot Wealth Summit presentation in about a month. I’m sure Chris will mentioned this at the end of our presentation, but I encourage you to sign up to the summit. It’s online this year with Covid-19. But I’m going to drill down on financial technology because there’s so many great companies in this bucket. And we’re going to talk about one, maybe two today, but basically a good way to think about it is digital payments or e-commerce. But there’s cyber security. There’s a lot of different angles to financial technology. And the interesting thing is many young people have never stepped inside a bank to do anything. And they never will. Everything’s on their smartphone. And in Asia. In China. In Southeast Asia, as I mentioned, and even in the U.S. With the younger people, you know, they they really don’t need to go into a bank. And so I think just like filling up your gas tank with gasoline is going to be something you’ll have to maybe explain to your great grandchildren. Think, you know, probably going into a bank will be justice as an odd thing to talk about. Now, the smartphone, of course, has been a huge breakthrough in making financial technology work and also the software that’s being developed so that you can do transactions online safely and securely and easily, and at a very low cost. So the key issues are choice, cost, how convenient they are. And then, of course, security. And digital payments is really a key driver of this whole market. Now, this is a chart showing what’s going on. You can see China right there in the green rows there. They. They are really China and the U.S. is really the key rivals in this space.

Carl Delfeld [00:27:28] And I mentioned Tencents. You can see, you know, their payment is WeChat. China, Alibaba. Well, actually, it’s well Alibaba has a stake in it. Alipay. Alipay has eight hundred to nine hundred members or subscribers. An amazing number, and it’s it’s accepted in the U.S. It’s accepted in Europe, all over Asia. And while I’m on the subject Ant Financial, which is now called Ant Group is going public, splitting away from Alibaba. I’m not sure the timing. But they’re doing an IPO in Hong Kong and Shanghai, not in the U.S. So Americans won’t be able to to buy the stock on the IPO, on the IPO. But, you know, in secondary markets, you know, if your broker can buy Shanghai or Hong Kong stocks, which most of you can, I think they’re saying this could be the biggest IPO in history. And I would not be surprised in the least. Then on the U.S. side, of course. Amazon, Google, Apple, Facebook are all big players. Apple Pay. Google Pay. Amazon Pay. So this is these are just two just some of the big boys. There’s a lot of smaller players as well.

Carl Delfeld [00:29:01] So here’s an interesting one you may not have heard of. It’s actually listed in Australia. I think I have it on the next slide I’ll have the ticker for Australia. This, AFTPF is the OTC ticker in the US. It had decent liquidity, it’s getting better and better every day. But this was founded in Australia in 2017. So it’s a fairly new company. And it’s called Afterpay. In the U.K., it’s called Clearpay. And this is a very interesting concept, growing like wildfire. It started in Australia and New Zealand. Again, as I mentioned, it spread to the U.K. and now it’s in the U.S., and the whole idea is that you pay just 25 percent of the purchase price, online and increasingly in the store. And I’ll tell you more about the growth there in a minute. And Afterpay covers the rest. So you pay twenty five percent Afterpay pays the remaining 75 percent to the retailer, and then you pay the money back in a series of installments to Afterpay. Now, if you pay on time, there’s no interest charge. No issues. And so it’s a way for you to buy something with just 25 percent of the money upfront. Now, how does Afterpay make money? Well, they charge the retailer a fee, and I looked into this. So the retailer pays Afterpay, say, 4 to 6 percent. So one hundred dollar transaction, let’s say five dollars, the retailer pays to Afterpay, but they’re glad to do it because using Afterpay drives up their numbers, both the closing rates. When somebody goes online and looks at something, if they’re offered Afterpay, it’s an option. The numbers, I’ll get to the numbers in a second, but they really are impressive. And also the size of the transaction increases. Now, most people are using Afterpay tend to be younger, and one clear sign of that is that ninety five percent use a debit card. So. You can guess that those are younger consumers. So look at the growth. Forty eight thousand retailers have signed up throughout the world. And there’s eight hundred – eight point four million active users, meaning people buying products and services using Afterpay. Five million in America and it’s growing really fast. And as I mentioned, use off – a retailer offering Afterpay drives up conversion rates 20 percent in order values by 25 percent. And you can see the growth numbers here for Afterpay, you know, pretty, pretty impressive. Twenty three million. Hundred fourteen to two eighteen. I think that’s through June of this year. June twenty nineteen. And last quarter’s year to year revenue was up almost one hundred percent.

Carl Delfeld [00:32:29] So, oh, the other thing I wanted to mention is that Google Pay and Apple Pay are now accepting Afterpay. Either online or in the stores. You know, so you pay with your smartphone using Google Pay or Apple Pay you can use Afterpay. And so that’s you know, it’s not just a – it’s bricks and mortar as well as online, which I think’s gonna make it even more attractive. And I’ll mention one other company, which I used to have in the Explorer portfolio. It’s a similar idea to Afterpay in China. It’s called LexinFintech. The symbol’s LX. So it’s somewhat similar. It’s more. Yeah. You’ve know your loan. They loan the money and you you can buy things. You know, I think LX is only online, but that stock. It’s also an interesting idea, which I follow. OK, what about – OK. Here’s the chart, you can see it’s really done well in the era of Covid-19 and the online attraction of online ideas and fintech ideas. I really like this stock. I think it’s I think it’s going to do better. It’s come back a little bit here. Again, I wouldn’t go crazy at this price, but I definitely a little bit like, see, I’d have it on my list and maybe buy a little bit and then and then try to buy more on dips. But this is a very interesting idea.

Carl Delfeld [00:34:13] And then for the summit in August, I’m going to have I’m not sure. Probably something like four or five, maybe more ideas. All in this fintech sector from cyber to payments to online commerce, e-commerce. And so I encourage you to. Find that summit and sign up, if you could. Let’s see.

Carl Delfeld [00:34:38] OK. Again, using a rifle, an ETF approach. If you want to capture a basket of these fintech ideas. This is what I found. Got 33 companies in the basket. This is the oldest fintech ETF. So it’s got a little bit of a track record. It’s got 400 million dollars in assets. So it’s got good liquidity and it really has a good diversity of ideas. And it’s from around the world. So it’s ideas from the U.S., from China, Asia, Europe. And so it’s a really good a really good tool if you just want to get started in fintech and then you know what I encourage you to do? If you do invest in FINX take a look, you know, you can. You can go and look at the holdings and you can see all the companies in the basket. That’s kind of what I do. And so I then I do a little bit more research to try to pick which one of the companies in the ETF basket I might want to buy. So that’s another great thing about ETFs.

Carl Delfeld [00:35:48] OK, well, that’s – that’s my presentation today. I’m going to turn it back to Chris and I look forward to any questions you might have.

Chris Preston [00:35:58] Yeah. And thanks, Carl. And I see that we have a couple of questions rolling in. But if you have a question when I asked definitely now’s the time to ask it.

Chris Preston [00:36:08] First, let me just tell you about – Carl referenced the Wealth Summit, which I’ll get to in a bit. But first let me tell you about how you can sign up for his Cabot Global Stocks Explorer Advisory while we give him a chance to catch his breath. We have a special offer reserved exclusively for today’s listeners. You get the first month for just one dollar. And what you get back are weekly updates every Thursday on new development, developments affecting international investing landscape and his global portfolio. Access to the global stocks Cabot, excuse me, Cabot Global Stocks Explorer Web site and all its archives and back issues. Premium special reports that tap into Carl’s vast knowledge of the global marketplace and direct e-mail access to Carl to answer any questions you may have. And to sign up now again for just one dollar. For the first 30 days, you can go to the Web site that’s on your screen, CabotWealth.com/webinarspecial.

Chris Preston [00:37:07] Now, let’s get to your questions. Let’s see. Let’s start with one from Barbara. Barbara asked says, “Chinese stocks were out of favor for a while. Has that changed now?”

Carl Delfeld [00:37:24] Yeah, well, China’s stocks trading in the U.S. are, I guess there’s no other way to put it, under a little bit of a cloud because there’s – on Capitol Hill in particular – there’s some legislation which although it has a long fuse. So, you know, there’s – nothing would happen precipitously -There is  an issue regarding disclosure of Chinese stocks that trade on the New York Stock Exchange and Nasdaq as well as OTC. And the issue is somewhat complicated. But the issue is really when they go public – and it’s surprising that this was allowed to happen – but because of the different legal standards and disclosure standards and ownership issues for Chinese companies, they don’t have – they have not to this date had to meet the same standards of disclosure as U.S. stocks. So my guess is it’s working its way through. There’s going to be legislation to say, you know, you have to meet the same standards or you have to delist. But I think there’s going to be – it’s not going to be precipitous – but they’re going to obviously give Chinese companies some time to either meet the standards or delist. So, yes, that’s an issue. On the other hand, I think it’s going to be used carefully on a case by case basis. I mean, for example, Alibaba (BABA), which has been in the portfolio a long time. I mean, could it be forced to delist? Eventually it’s possible. I mean, you obviously would be. I mean, it’s not like you would lose all your investment. It just would you know, it just wouldn’t list on the U.S. It would only list in China. But I think I think it’s it’s very much an if and when situation. But, you know, that’s one of the reasons, you know, when I came on board in January of twenty nineteen, this product was very much a China product. And so I diversified it more to emerging markets. And now it’s a global product. So China, you know, China isn’t the core of it anymore. But I do obviously follow trends and stocks in China because, you know, it’s an it’s an important player in the world. So, yeah, I I would use a little bit of caution with Chinese stocks. And, you know, if you’re not comfortable, I wouldn’t I wouldn’t invest in them.

Chris Preston [00:40:16] Good answer. Let’s see. Here’s one from Andrew. Andrew asks, “What are the primary charts you followed? The hints, ideas?” I guess he’s asking maybe where you get or how you come up with these ideas. Is there something that you follow that allows you to find global ideas?

Carl Delfeld [00:40:36] Well, I’m a little bit you know – I don’t know if – Cabot has a reputation and I know some of the editors I’ve gotten to know some of the editors. They’re very I guess they’re very technical oriented, which is a good thing because the thinking goes that all the news, all the information out there in the public marketplace is in the chart, in the stock and the stock price and in the chart. So I my background is more on the top down macro fundamental side. So most of my ideas I get just by reading and I have all sorts of lists. I read quite a bit of what’s going on all over the world. And then I find an intriguing idea. And then I look at the chart. So I, I kind of do it a little bit different than probably a lot of editors at Cabot. But the chart definitely. So it’s sort of like fundamentally driven. And then chart checked. But the chart definitely is very helpful because it it shows, you know, prevents you from maybe chasing a stock that, you know, has gone – gone up so far, so fast that the downside risk maybe is a little bit high. But at the other hand, you don’t want one, that sort of the chart is broken down. So the momentum is broken down. And it’s going to be hard to reverse that momentum unless you find really powerful catalysts. So the main thing I will say is I try whenever possible to recommend a stock in an uptrend, some sort of uptrend. And so I don’t know if that’s helpful, but that’s kind of the way I look at charts and picking stocks.

Chris Preston [00:42:39] OK, let’s see. Oh and Carl, do you mind advancing to the next slide it just has our information about the Summit you were referencing. OK. Let’s see another question from Andrew. Without mentioning a couple of artificial intelligence stocks. Is this a field that may develop quickly or as quickly as tech stocks?

Carl Delfeld [00:43:06] Yes, I mean, artificial intelligence are also referred to as machine learning, I think is really a going to be a big blue ocean sector. But it’s you know, when you think of artificial intelligence, I’m not, you know, a techie by any means, but it basically means computers are going to be driving. Data analysis. And at a much more rapid pace than a human can. So it really isn’t a product itself. It’s more like an umbrella industry. And there’s going to be all sorts of products underneath it. So that’s the way I look at it. But I definitely artificial intelligence. I mean, the U.S.  and China rivalry is probably the most intense in this area. And from what I read, the U.S. and China are almost dead even in artificial intelligence. And so it’s going to spawn all sorts of companies. There’s a lot of federal funded research and, you know, state funded research in China. And it’s a race, but it’s going to spawn all sorts of products, so. So that’s kind of the way I look at it. I’m not sure you’re going to have so, you know, A.I. products, for example, even in FinTech. A lot of those products are driven and developed through artificial intelligence. So that’s kind of the way I look at it. I mean, I’m not sure there’s A.I. companies, but there certainly is going to be a lot of A.I. driven products and services.

Chris Preston [00:45:01] OK. Time for a couple more questions. Jerome had one early on before you revealed a couple  ETFs that you liked, asking what ETFs do you like? Are there others that you have your eye on right now, Carl?

Carl Delfeld [00:45:19] Well, there’s one mention which is actually in the portfolio, and the symbol is BUG. And it’s a cyber security ETF. So. And we also have, which I won’t mention, subscribers know I have an individual stock which is in this area which is doing very well. But BUG is a basket of cyber security stocks. So my thinking is this, that with online payments, e-commerce and everything else going through the roof. Of course, your problems with cyber security are going through the roof as well. And so you’re seeing the numbers of people buying cyber security services really climbing quite sharply. And so a bug is a way for you to grab a basket of these companies. You know, in one fell swoop, at a low cost with full transparency. So that’s one. And then another one I would mention is there’s, going back to Southeast Asia, I’m trying to think the symbol. There’s a there’s a Southeast Asia ETF. I want to say it’s a ASEA. So if you want exposure to Southeast Asia through a variety of a variety of country countries in the region and a variety of companies, you might want to pick up that kind of basket of Southeast Asian countries and companies. I’m pretty sure that said ASEA.

Chris Preston [00:47:09] Yeah. Yeah. Looks like that’s it – the Global X FTSE Southeast Asia ETF. ASEA. OK. I think we have time for one, maybe two more. Question from Dylan. Dylan asks, With a lot of fintechs such as PayPal and Square – how would you see a suitable price/time to start a position?

Carl Delfeld [00:47:39] Yeah. Square. Square has been unbelievable. I mean, I first first ran into Square when my kids in high school worked at a like ice cream shop. And this was a quite some time ago. And they had this square where you could just walk in with your credit card. I mean, it’s a very low cost way to start any business. And so I’ve been following Square for some time, but it’s just exploded, hasn’t it? So that’s a typical – it’s really a hard question when you buy it. Obviously, when you have a crack in the market like we did in the early part of this year with Covid-19, that was a wonderful time. And that’s why I know it’s it’s probably – you don’t want to – this is probably not the answer you want to hear. But I really encourage everybody to have, like on the back of an envelope, five or 10 stocks that they really like and square would definitely be there. Goldman Sachs. All these great names that if the market cracks, you know, you can start building a position quickly. You don’t have to think about it. But Square. I don’t know. I mean, you could you could buy it. Now, it’s probably an enduring trend, but it is pretty daunting to buy it, you know, to buy into a stock that’s gone up so, so much so quickly. And so my only my only advice is to kind of ladder your way in. Meaning buy you know, buy increments and build a position step by step. But I would be wary of jumping into either one of those ideas right now with a with a big position, especially given that the stock market, you know, has made a pretty good run here over the last four or five months. And, you know, there could be some retracement here. So, I mean, that’s that’s probably not the advice you were looking for, but that’s the best I can do.

Chris Preston [00:49:41] Thanks, Carl, and thanks to everyone for your your questions today and for tuning in. As you can see on the on the screen here, I wanted to mention, as Carl did earlier, we have although we don’t have a regular webinar next month, we will be hosting our annual eight annual Cabot Wealth Summit, August 18th through 20th. But this will be the very first one online. You can tune in from the privacy of your home. It’s a chance to hear from all of our analysts on all their areas expertize. Carl. Sounds like he has a fintech presentation cooking. To learn more about that and how to sign up, go to the website. It’s up there now. Go to CabotWealth.com/summit.

Chris Preston [00:50:27] That does it for us. For Carl Delfeld and the entire Cabot Wealth Network team. I’m Chris Preston and we’ll see you next time.


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