In this prerecorded episode of the Market Foolery podcast, Mac Greer talks with Jason Moser from Million Dollar Portfolio about what he's watching for in 2018. Find out how Twitter (NYSE: TWTR) has started to get itself back on course this year, a few of the biggest problems it has yet to solve, and why it's one that Jason is betting on for 2018.
Also, a few things that investors will want to remember before jumping into bitcoin, and why this trend might be one to watch from the sidelines; what we're looking out for in this year's new potential tax reform; why upcoming call-a-doctor company Teladoc (NYSE: TDOC) was on our watchlist this year and continues to be in 2018; and more.
A full transcript follows the video.
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This video was recorded on Dec. 26, 2017.
Mac Greer: Welcome to Market Foolery for December 26th. I'm Mac Greer and I'm joined by Jason Moser from Motley Fool Million Dollar Portfolio. Jason, we're taping the show a few days in advance here because of the holidays. How are you doing?
Jason Moser: I'm doing great. How about you?
Greer: I'm doing very good. December 26th is a special day. True?
Moser: Boxing Day! Yep.
Greer: Boxing Day, and what else is December 26th?
Moser: I believe that's also my birthday.
Greer: Well, happy birthday!
Moser: Thank you very, very much!
Greer: You don't look a day over 45.
Moser: [laughs] You know, Mac, you hit the nail on the head there. I can't believe you guessed my age exactly.
Greer: Jason, let's do something a bit different for this show. I want to talk about some big stories from the year that we've just concluded here, and I also want to look ahead and ask you a few questions. Let's begin with one business story that you're really excited about in the year ahead.
Moser: I love this time of year because you go back and look at all of the things we've talked about over the year on Motley Fool Money, on Market Foolery. The one that I'll call out, Twitter. The middle of the year here, we did our midyear review on Motley Fool Money, and Chris was asking us, not a reckless prediction for the rest of the year, for the back of the year, but a prediction for the back of the year. And I went a little bit reckless in saying that I thought, perhaps, Twitter might start gaining some momentum and turning this thing around, because it seems like they were doing some good things.
Greer: The stock has struggled.
Moser: The stock has struggled. For the back half of the year, though, it's done quite nicely. It's up around 35% since then, at least as of this taping. I think we're seeing a lot of the effects of the decisions that were made when Jack Dorsey came back on board in 2015. I think a lot of people expected immediate results when, the fact of the matter was, I think Twitter was set up behind the eight ball in a lot of ways when they went public. They didn't really have leadership that could green light new things. I think there were a lot of parts of the platform that were held sacred. Financially speaking, it was a very difficult balance sheet to deal with. And they have stock-based compensation issues. Dorsey has come back on board, and has really started to tie all of those things up and get this company pointed back in the right direction. So we saw a couple of callouts here at the end of the year. JP Morgan was one that really put Twitter up there as one of their top conviction ideas of 2018. I said the same thing, actually, with a piece I did for InvestorPlace, a contest they have for, choose a stock for 2018, and I chose Twitter. It's a little bit of a risky play, for sure, but I think we've seen the resilience of the platform. We've seen how important it is. And we're seeing that the management team, the leadership team, is making decisions based on data to help stoke engagement. I think we're seeing some signs of life there.
Greer: Here's my question about Twitter, because I'm a Twitter user and I am not a Twitter investor. And I'm going to call this the TripAdvisor (NASDAQ: TRIP) problem. I love TripAdvisor as a service, but I don't ultimately know how TripAdvisor is going to make money and more money than that, because I'm not transacting on TripAdvisor. I know they have ad-supported revenue and all that good stuff. And likewise with Twitter. How is Twitter going to make money, and how is Twitter going to make more money than that?
Moser: I think, primarily, it's an advertising play. That's what it's always been. It's a model that's based on advertising. The difficult part for Twitter initially was, it's not exactly conducive to good advertisements. The thing about Twitter is, it's a free-flowing, quick platform by nature. You're scrolling through the feed. It's not like you're going to see advertisements a whole heck of a lot as you're scrolling through those feeds. You're going to go past them very quickly. I think the key for them is this move they've made toward video, toward live streaming, this huge deal that they struck with Bloomberg in this 24/7 news station called TicToc. What they're figuring out how to do is how to get video advertising to be a bigger part of the business. Because once you can start inserting pre-roll, mid-roll advertisements in those videos, and they can demonstrate that people are watching those videos, that's where they're going to be able to really start monetizing a bit more on that side. And then, of course, exploiting that data that they get from users like us, who input tweets and stuff all day long, every day, figuring out new ways to exploit that data. They've recently opened up their developers' kits so that basically anybody out there can bring Twitter into their environment, the new app builders, or whoever want to integrate Twitter. So there are a lot of different ways they can do it. I think they're really just starting to figure that out now. And it looks like, from the channel checks that we've run over the year, it seems that big clients are budgeting more ad dollars with them for 2018 as they're seeing a bit more ROI on the investments they're making with Twitter.
Greer: OK, so you're bullish on Twitter for 2018?
Moser: Yeah. I'm a shareholder myself. We own shares in Million Dollar Portfolio. It started to turn around for us. We still have it on hold because we want to see how they do here for the fourth quarter, and how they look out for 2018 from there, in their own words. But yeah, I think that's one I'm going to be excited to pay attention to.
Greer: And as an investor, Jason, looking back over 2017, how about one takeaway, one thing that really resonated with you, one thing that jumped out at you, one takeaway?
Moser: I'll cheat here and actually throw in two things. One, it seems like we're in peak bitcoin mania. That seems to be the question on the tip of everyone's tongue, "How do I participate? What do I do? Should I do it? Should I even be investing in something like this?" And sometimes -- this is just me -- but you need to be content with just taking a pass on something because you know you don't know enough about it. And I understand the basics of bitcoin in that it's this virtual currency. I don't know much about how bitcoin is used, how it's mined. I don't understand why it matters. I mean, I get that the technology behind it -- blockchain -- I think it's actually more fascinating than currency. But for me, I don't know enough about it, and I'm skeptical by nature. So for me, that was a reiteration of a lesson that I've always lived by. Just know what you don't know.
Greer: Peter Lynch, you're going Peter Lynch on it.
Moser: Yeah. Know what you don't know. And it's OK to say, "Look, man, I just don't know enough." Otherwise, you're gambling. And the other one, I think oftentimes, the best action is inaction. And we see this a lot of times in Million Dollar Portfolio, because we're managing this real-money portfolio in front of members. And the challenge we have, it's a fixed-money portfolio, so we can't add money to it, so we always have to be aware of our holdings, we have to be aware of our cash position, and we have to be aware of the idea that we want to get in the portfolio, because a lot of times, if we want to add something, we have to sell something, or at least sell part of something. What we find often, after these big, long, two-hour stock-talk meetings that we have, a lot of times, the best action is to just kick back and not do anything at all. It seems to, generally speaking, work pretty well. I think it's easy to get caught in the moment and want to sell or buy something because it's right there, and you're falling prey to that recency bias. But oftentimes, as an investor, the best action is just to do nothing.
Greer: So that applies more to investors, right, because if I'm sitting at home and the kitchen's a mess and the house is a mess and the kids are running around, I can't just kick back and say, "Hey, the best action is inaction."
Moser: I think your significant other is probably going to use that one against you, so I would not advise it. I would not advise it.
Greer: OK, we talked about Twitter. How about one more stock, or one stock that you're bullish on in the year ahead. Maybe a stock that isn't a household name.
Moser: It's one that listeners are probably going to be familiar with. I've talked about it a lot over the past year-and-a-half since they went public, Teladoc. The ticker is TDOC. Teladoc is essentially taking healthcare to the internet. It's basically a business that is making use of the many, many times when, perhaps, you need something in regard to healthcare, but you don't necessarily need to go to the doctor's office to get it done. They're allowing you to get that done by just a virtual visit over the internet. So they have a big network of physicians and providers. They recently made an acquisition this year of Best Doctors, which really grew their network. So to me, when you look at this tremendous opportunity in healthcare, it's a phenomenally big market, and all sorts of big opportunities lie within it, and you also think about the fact that, generally speaking, healthcare is a pretty inefficient process from the insurance side to the doctor's visit side and everywhere in between. Teladoc is really trying to cut through the red tape, make it simple, bring healthcare to the masses, scale healthcare, which is a tremendous challenge, because historically, it's been a bricks-and-mortar type of thing where one doctor is seeing one person at a time. Now, you use the internet here to grow your network and offer those services all over. So a lot of health plans and employers are finding Teladoc's plan as a nice complement to the healthcare packages that they're offering. So it's a neat business. It's one I own shares in. I'm really noodling bringing it over to the watchlist in MDP because I think it has a lot of potential.
Greer: I love that idea. Really, it's all about saving me time, right?
Moser: Yeah, exactly.
Greer: I love the idea of CVS and the Minute Clinics, but my experience has been that the Minute Clinic usually takes more than a minute.
Moser: [laughs] So it's really a misnomer. It's false advertising.
Greer: Total misnomer! I go, I put my name on the list, I go get my Starbucks, come back, still not ready.
Moser: Well, you'll be happy to know, then, that Teladoc and CVS recently just struck a very big deal.
Greer: I love that.
Moser: So you're going to see more of their services in more places. For me, it's just a matter of seeing the regulatory environment changing and allowing more of these types of things to happen, whether it's e-prescriptions, or basically eliminating state lines and allowing services to span the country. Yeah, a really fascinating business. Very easy to understand. It's two revenue streams: subscription revenue from their clients, and a little visit revenue they get, kind of like a copay. There's no exposure to insurers, there's no question marks there. It's a simple business to understand. And I think they're really bringing a great value proposition to a market that's in dire need.
Greer: OK, Jason, as we wrap up here, how about your biggest question for 2018? Your biggest question for the year ahead?
Moser: I guess at this point in time, it sounds like this tax package is going to be going through in some way, shape, or form here. And it's supposed to be very company-friendly, very corporate-friendly. So I guess my question really is how that's going to play out for investors vs. employees. I know, generally speaking, the idea is, let's bring these taxes down so companies can invest more in their people, can raise wages, can give the working class a better wage and better lifestyle. I'm a bit skeptical that that actually results in higher wages. I do think what it will result in is companies buying back more stock. I think they'll also probably raise dividends along the way. I think, while it may not necessarily play out so well for Main Street, which is a shame, I really hope it does, I think it will work for Wall Street. And it's another reiteration for me that you have to be investing. Even if you're not going to see it in the form of higher wages, get it in the form of a higher stock price, or a higher dividend yield. You need to be invested. We talk about this all the time. You look over the course of five, 10, 15, 20 years, the numbers are there. They tell you what your money is doing. You can't just plunk your money in a savings account and think that's going to do it. You have to get it in these companies, or you have to put it in an S&P index fund and just participate and take that long-term outlook. I'm going to be really interested to see how this new tax package really plays out for companies.
Greer: Jason, Happy Birthday! Happy Holidays! Happy New Year. Let's talk stocks in 2018.
Moser: I can't wait!
Greer: As always, people on the show may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. That's it for this edition of Market Foolery. The show is mixed by Dan Boyd. I'm Mac Greer. Thanks for listening! We'll see you tomorrow!
Jason Moser owns shares of Starbucks, Teladoc, TripAdvisor, and Twitter. Mac Greer has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Starbucks, TripAdvisor, and Twitter. The Motley Fool recommends CVS Health and Teladoc. The Motley Fool has a disclosure policy.
