The investment advice business is often thought of as a conservative and relationship-based business, in which long-time trusted counselors look out for their clients’ interests.
Now, however, millennials are changing this idea with their preference for using automation and software to manage their money.
Such technology is viewed as a lower priced alternative to advisors’ actively-managed investments and leads to a preference for exchange-traded funds and other index products.
As for individual equities, in my opinion, the massive valuations of Amazon (AMZN) and Tesla (TSLA) versus established blue chips like Wal-Mart (WMT), Target (TGT), Ford (F), and General Motors (GM) have gone too far.
In my view, there may be buying opportunities among these traditional players.
Yes, I believe that Amazon is a juggernaut and well- positioned for continued growth.
Having some 50 million customers paying $100 a year for Amazon Prime is just the online version of the Costco membership model.
It’s a steady revenue source and supplements Amazon CEO Jeff Bezos’ investments in voice-activated services, drone delivery and big investments in India and the Middle East.
Still, rivals such as Wal-Mart, Target, Best Buy (BBY), and Costco are sitting up straight and are fully engaged competitors, in my opinion.
Amazon and Tesla face stiff competition, but have yet to prove they can deliver sustainable cash generation.
If you own their shares, I say better you than me.
Photo Credit: David Blackwell via Flickr Creative Commons
Any investments discussed in this presentation are for illustrative purposes only and there is no assurance that the adviser will make any investments with the same or similar characteristics as any investments presented. The investments are presented for discussion purposes only and are not a reliable indicator of the performance or investment profile of any composite or client account. Further, the reader should not assume that any investments identified were or will be profitable or that any investment recommendations or that investment decisions we make in the future will be profitable.