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As we head into Christmas, I wanted to go through some of my best stock picking systems and present a few holiday gift ideas for everyone.
I'm going to go through the very best models and give you an idea or two that could help drive your investment profits much higher in 2020.
Nothing says "Happy Holidays" like ideas that can produce double- and triple-digit returns over the next year.
Let's get started…
Use the Numbers to Demystify Tech Investing
I'm going to start the season off with my tech dividend strategy.
Most traditional, value-oriented investors eschew tech stocks basically because Warren Buffett once said he doesn't like them. The phrase "circle of competence" comes up in every discussion among Buffettologists.
I find it laughable that not knowing exactly how the technology works means tech is outside our circle of competence.
I'm pretty sure Warren doesn't know how to drive a train or mix up a batch of Coca-Cola, either, but that hasn't stopped him from owning soda companies and railroads.
Like it or not, technology has become a more significant part of our world.
Discussing how tech is outside your body of knowledge is laughable when you're having the conversation on a smartphone while staring at a small box on your desk that's a million times more powerful than the computers we used to put a man on the moon.
You don't need to be able to build a computer to understand its importance to society and the economy.
Since all my systems are quantitative, what I need to know isn't much more than the fact that the stocks in the tech dividend portfolio have the characteristics that have combined to crush the stock market like Auburn crushed the hopes and dreams of Alabama fans over the weekend.
I first debuted this approach back in October with two stock picks.
Owning companies and assets that throw off cash is going to be critically important over the next several years.
Given where earnings and asset multiples are in stocks and the very low level of interest rates, returns on stocks and bonds are likely to be lower than we have enjoyed over the last decade.
For that reason, owning assets that produce cash will provide higher returns, even in fast-growing industries like technology.
Beaten Down Blue Chip
After lowering its guidance, shares of Cisco Systems Inc. (NASDAQ:CSCO) have fallen in the past month. Over the last six months, the stock is off by around 12%, even as the stock market went higher.
The stock has been a victim of the short-term obsession with quarterly reports and guidance, resulting in a fall to the point that the stock now yields a little over 3%.
Without Cisco and the networking equipment it makes, there is no Internet.
Its products are and will continue to be at the forefront of data centers and cloud computing.
Even after returning capital to shareholders via dividends and buybacks and going on an M&A spree, Cisco still has more than $33 billion in cash available.
In fiscal 2019, the company produced almost $16 billion in operating cash flows.
About the Author
Tim Melvin is an unlikely investment expert by any measure. Raised in the "projects" of Baltimore by a single mother, he never attended college and started out as a door-to-door vacuum salesman. But he knew the real money was in the stock market, so he set sights on investing - and by sheer force of determination, he eventually became a financial advisor to millionaires. Today, after 30 years of managing money for some of the wealthiest people in the world, he draws on his experience to help investors find "unreasonably good" bargain stocks, multiply profits, and build their nest eggs. Tim tirelessly works to find overlooked "hidden gems" in the stock market, drawing on the research of legendary investors like Benjamin Graham, Walter Schloss, and Marty Whitman. He has written and lectured extensively on the markets, with work appearing on Benzinga, Real Money, Daily Speculations, and more. He has published several books in the "Little Book of" Investment Series and a "Junior Chamber Course" geared towards young adults that teaches Graham's principles and techniques to a new generation of investors. Today, he serves as the Special Situations Strategist at Money Morning and the editor of "Max Wealth" and Heatseekers.