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Media companies have admitted they have a Netflix [stckqut]NFLX[/stckqut] problem. What isn’t clear yet is which one will be first to step forward with a solution.

Licensing content to Netflix and other streaming services such as Amazon.com’s [stckqut]AMZN[/stckqut] Prime Instant Video has become a fast-expanding, high-margin source of revenue for the biggest content owners, including Walt Disney [stckqut]DIS[/stckqut], Time Warner [stckqut]TWX[/stckqut], 21st Century Fox [stckqut]FOX[/stckqut], CBS [stckqut]CBS[/stckqut], Viacom [stckqut]VIA[/stckqut], Discovery Communications [stckqut]DISCK[/stckqut] and AMC Networks [stckqut]AMCX[/stckqut]. But it is clear the presence of their shows on these platforms is hurting traditional TV ratings, which drive ad revenue, and making it easier for pay-TV subscribers to quit.

While pulling content from Netflix may be the right thing to do for media companies, the situation poses a classic prisoner’s dilemma: Who will be first to forgo short-term profits for the good of the industry?

Time Warner suggested recently it may be a candidate, if only because it didn’t appear to be shying away from short-term pain. Its stock took a hit after the company lowered its outlook for 2016. It is also investing more aggressively in content, technology and the consumer experience to help better position it for the future.

Source: The Netflix Problem: Which Media Company Will Solve It?

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wall street bull photoI have chosen 15 stocks to finish 2015. These stocks are, in my opinion, some of the best companies to invest your money for the next three months.

I split my portfolio into two parts. I describe the first part in the majority of this site. It is a list of Good Companies that I keep on my Watch List. I invest in these companies using the techniques that I describe in my book, The Confident Investor. I will move my money from companies that are showing bearish tendencies to companies that are currently bullish. You can see my current list of companies on my Watch List and follow this site to watch me add or delete stocks from these companies.

While it is not unusual for my Watch List to not have a certain market segment, the overall list is fairly balanced, and an investor that wants to diversify can do so by using this list. I do not specifically worry about diversification as a strategy only because I believe that an investor should watch the investments like a hawk. If a stock is not doing well: sell it and put your money where it will work for you.

I also keep a certain percentage of this portfolio in index funds. I describe this technique in my book, The Confident Investor, and my current allocation is about 28%. I am only 53, so I need my portfolio to continue to aggressively beat the stock market. The index funds simply give me a bit of a base.

The second part of my portfolio is much more aggressive and is the reason for this post. In this portfolio, I select 15 of the fastest growing and currently best-performing stocks on my Watch List. I evenly divide my investment capital of this portfolio between the 15 stocks. Every three months, I re-analyze the list of 15 stocks, sell the ones that don’t make the new list, buy the new additions, and evenly rebalance the entire group of 15 stocks.

I need to caution the reader that this second portfolio, while easier to manage, is much riskier than the previously described portfolio. Because of this risk, it often returns a higher growth, but it also is susceptible to faster drops. The first portfolio that I described is more cautious simply because I move out of stocks that are dropping. In a general market drop, I will be almost 100% in cash for my principle. This second portfolio doesn’t get touched except for four times per year, so it is open to general downturns as well as stock specific downturns.

The first portfolio that I described above is a “buy to hold” portfolio and I completely describe this portfolio in my book, The Confident Investor. The second portfolio is a “buy and hold for three months” portfolio.

I do not expect that each of these 15 stocks will beat the general market. I do expect that the 15 stocks together will significantly outperform the market. In general, these 15 stocks represent the absolute best 15 stocks on the market today. They are in industries that are doing fairly well. Their management tends to be extremely competent, and each company has a history of being well run.

You can purchase my book wherever books are sold such as Amazon, Barnes and Noble, and Books A Million. It is available in e-book formats for Nook, Kindle, and iPad.

My top 15 stocks for Q4/2015

Symbol Company name
ABMD ABIOMED, Inc.
BWLD Buffalo Wild Wings, Inc.
CBPO China Biologic Products, Inc.
EXR Extra Space Storage Inc
FB Facebook, Inc.
GTN Gray Communications Systems, Inc.
MIDD The Middleby Corporation
MNST Monster Beverage Corporation
NFLX Netflix, Inc.
REGN Regeneron Pharmaceuticals, Inc.
SBUX Starbucks Corporation
STZ Constellation Brands, Inc.
SWKS Skyworks Solutions, Inc.
THRM Gentherm Inc
UA Under Armour, Inc.

 

Photo by Arch_Sam

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Apple [stckqut]AAPL[/stckqut] is planning to unveil its new Apple TV set top box in a little over a week, and it looks like the company may be considering funding its own TV shows to go with its big play to dominate the living room.

The iPhone maker has held preliminary conversations in recent weeks with executives in Hollywood to feel out interest in Apple spearheading efforts to produce original entertainment content, according to a new report that claims Apple is ready to take on Hulu, Netflix [stckqut]NFLX[/stckqut], and Amazon [stckqut]AMZN[/stckqut] Prime video.

Source: Apple wants to take on Netflix with its own original programming | Cult of Mac

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Google Inc. [stckqut]GOOG[/stckqut] on Thursday rebuffed the European Union’s demand that it change the way it ranks online comparison-shopping services in its search results, setting up a potentially drawn-out legal battle between the search giant and a regulator empowered to levy billions of euros in fines.

In a formal response Thursday to antitrust charges the EU filed this spring against the California company, Google argued the bloc’s antitrust regulators erred in their analysis of the fast-changing online-shopping business, misconstrued Google’s impact on rival shopping-comparison services, and failed to provide sufficient legal justification for its demands.

In particular, the company argues that the EU’s charges—detailed in a document called a Statement of Objections, or SO—fail to take into account the fast growth of companies like Amazon.com Inc. [stckqut]AMZN[/stckqut] and eBay Inc [stckqut]EBAY[/stckqut]. Google executives have said these firms pose a new competitive threat, which undercuts the case that Google has harmed comparison-shopping companies like Nextag and LeGuide.

Source: Google Rebuffs European Union on Antitrust Charges – WSJ

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I am not a big fan of Radio Shack [stckqut]RSHCQ[/stckqut] and have never invested in them in all my years as a profitable but personal investor. I saw this ad recently on another site and think it is a great example of how their business model struggled to evolve.

Every product on this Radio Shack advertisement has been replaced by today’s smartphones. Let’s take a quick look:

  • Stereo
  • Alarm clock
  • Headphones
  • Calculator
  • Intel 286 based computer (today’s iPhone’s are far more powerful)
  • Mobile cellular telephone (evidently this is the main reason for having a smartphone but don’t tell that to a teenager)
  • CD player (Okay, this one isn’t a direct replacement but instead an evolution of the music industry)
  • Radar detector (not on a standard smartphone but there are apps that will alert you to the presence of a police car on the side of the road)
  • Desktop scanner (via an app or the Internet)
  • CB (citizen’s band) radio (not directly but messaging has evolved)
  • Answering machine
  • Phone (this one is for a home, but many people are simply dropping their ‘home line’)
  • Tape recorder
  • Video recorder
  • Speakers

Obviously, Radio Shack was not selling a lot of these products recently, and the company evolved its business model. But did it evolve it quickly enough?

I am often asked why I don’t recommend young and hot companies, and I never suggest that a Confident Investor should invest in an IPO. It is simple; I want my investments to be in companies that have been around long enough to have survived multiple levels of competition. I want the company to be successful in the majority of a decade in order to prove that the management knows how to adapt to new technologies and new competition.

Radio Shack did fine for many years. However, they fell in love with their business model. They fell in love with the small store with smart people behind the counter. They fell in love with gadgets. The problem is that they loved their business model so much they didn’t throw it away when it was obvious that the model was hurting the company. They didn’t understand Amazon [stckqut]AMZN[/stckqut] and, ultimately, Amazon destroyed them.

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