In this podcast, Motley Fool analyst Bill Mann discusses:
- Johnson & Johnson‘s ( JNJ -0.99% ) rise regardless of decreasing steering.
- How J&J’s margins are higher than they seem.
- J&J’s 60-year streak of accelerating its dividend.
- DiDi Global‘s ( DIDI 0.58% ) upcoming shareholder assembly to vote on delisting from the New York Stock Exchange.
Motley Fool host Alison Southwick and Motley Fool private finance knowledgeable Robert Brokamp speak with Motley Fool bureau chief Kirsten Guerra about discover good monetary recommendation on TikTookay.
To catch full episodes of all The Motley Fool’s free podcasts, take a look at our podcast middle. To get began investing, take a look at our quick-start information to investing in shares. A full transcript follows the video.
This video was recorded on April 19, 2022.
Chris Hill: [MUSIC] We’ve bought a blue chip inventory, a Chinese firm within the highlight, and a take a look at monetary recommendation on TikTookay. Motley Fool Money begins now. [MUSIC] I’m Chris Hill and I’m joined by Motley Fool Senior Analyst Bill Mann. Thanks for being right here.
Bill Mann: Hey, Chris, how’re you?
Chris Hill: I’m doing nicely.
Bill Mann: Missed you final week.
Chris Hill: No, you did not.
Bill Mann: I did.
Chris Hill: You did simply high quality with out me final week.
Bill Mann: I did.
Chris Hill: I’m doing high quality as a result of I’m a Johnson & Johnson shareholder. I do know not all people is, however we’ll get to DiDi Global in a minute. But I did wish to get your ideas on Johnson & Johnson. This a type of occasions where-
Bill Mann: You simply need me to speak about how sensible you might be for holding Johnson & Johnson.
Chris Hill: No, under no circumstances. I used to be going to say that is a type of occasions the place, and I say this as a fan of the monetary media generally. But the headline on Johnson & Johnson is that they lowered their steering. Technically that’s true, though whenever you take a look at the underlying outcomes of this healthcare behemoth, pharma gross sales up 6%, medical units up 6%. This is a enterprise that’s simply quietly methodically chugging alongside because it has carried out for years now.
Bill Mann: The sixtieth straight 12 months that they’ve raised their dividend. They’ve raised their dividend by a bit greater than 6%, which the pennant in me would level out, trails inflation, however nonetheless, it is a fairly nice hike. Yeah, their outcomes have been high quality. They beat on earnings by a bit, they trailed on revenues by a bit, and so immediately, whenever you hear that type of factor, it’s best to suppose in your thoughts, their lower-margin stuff, the issues that they offered the place the realm that they struggled, and this could let you know why the steering does not matter all that a lot. Because the realm the place Johnson & Johnson struggled was in shopper well being. It’s the realm the place they promote essentially the most quantity, but it surely’s additionally the realm that is impacted essentially the most by international commerce and international provide chain issues.
Chris Hill: It’s additionally the half that they are spinning off.
Bill Mann: It’s additionally the half that they are spinning off. Here’s not our drawback anymore. The inventory is now, as of this morning, was at an all-time excessive up about 12%, and it is only a money circulate machine. It actually is. You’re getting an even bigger dividend, I’m going to say the whole lot else like I’m simply speaking to you, here is what you might be getting, Chris. You are getting a better dividend. You are getting a higher-margin enterprise, and the higher-margin half, as you understand, is the half that is being retained, which is why you made the choice to retain that half and ship the Global Consumer Health half right into a separate division.
Chris Hill: They did not ask me. They did not ask most shareholders on that.
Bill Mann: [laughs] They did not must ask, they knew.
Chris Hill: I do not wish to get forward of myself. But I’ve been saying for months on the present that we’re in an surroundings the place no firm is getting the good thing about the doubt, and Johnson & Johnson, well-known, bluest of the blue chips so far as I’m involved.
Bill Mann: Heard of that.
Chris Hill: Had quarterly outcomes that have been good however not wonderful, they usually had steering which was technically decrease and the inventory is up because of that.
Bill Mann: It’s the margins.
Chris Hill: It’s the half the place I do not wish to get forward of myself. Are we transferring out of this space, and now we’re seeing some extra nuanced thought on Wall Street?
Bill Mann: That can be good. I simply suppose that within the case of Johnson & Johnson, the truth that they trailed on revenues however beat on earnings confirmed that they have been extremely high-value earnings and high-value revenues. I believe that the numbers themselves, as you say, as a result of no quarter, particularly not in an age of COVID, and within the age of all of the macroeconomic issues occurring. No quarter is identical because the earlier quarter. You do not get to throw a stone into the identical river, and Johnson & Johnson turned in, to me, a dynamite quarter. It simply does not seem like it on the floor. It’s just like the outdated line about that Mark Twain stated about Wagner’s music, that it is higher than it sounds. This quarter was higher than it sounds.
Chris Hill: Let’s transfer onto DiDi Global, also referred to as the Uber of China. DiDi Global, like Uber into journey dealing with and meals supply. Their fourth-quarter outcomes got here out on Monday. Revenue was down from a 12 months earlier. We can speak about that. But I wish to begin with.
Bill Mann: Sure, no matter. [laughs]
Chris Hill: We can get to the precise outcomes. But I wish to begin with the truth that DiDi Global introduced they’re having a shareholder assembly in late May, to vote on delisting from the New York Stock Exchange. You and I’ve talked over the previous couple of months in regards to the SEC popping out with their up to date checklist of corporations that may get delisted. Is this the way it seems on the floor that an organization based mostly in China is voluntarily going to vote on whether or not or not they go away on their very own?
Bill Mann: DiDi’s habits because the second they got here public has been and it is solely been a bit greater than a 12 months. It’s been completely abominable. The Chinese authorities basically, however perhaps not clearly sufficient, forbid them from going public within the U.S., they usually did it anyway. The Chinese authorities has eliminated the DiDi app from the entire tremendous apps in China. It’s a enterprise that has been defenestrated. Now they’re on the level the place they’re attempting to determine what is going on to make the Chinese authorities joyful, and one of many issues that they consider was, if we undo this American itemizing, that may assist. But they don’t have any plans to go public someplace else. There’s going to be a vote which can or might not move. After which era, if it passes, DiDi’s shares will go darkish and there is no actual plan to have them commerce someplace else. It’s wild to me.
Chris Hill: What occurs in the event you’re a shareholder of DiDi Global moreover the truth that your inventory is price half of what it was only one month in the past?
Bill Mann: You understand how all people actually needs to attempt to get in on pre-IPO corporations in a really weird method, that is what’s about to occur. You do not lose your possession in an organization by advantage of the inventory now not buying and selling, you completely retain your possession, however you would be retaining your possession in a non-public firm with no actual path to realize any liquidity from it. As a person investor, that is not a spot that I might wish to be. But but you are holding a pre-IPO firm at that time.
Chris Hill: Is there a situation the place as a result of I can think about at the least a couple of buyers wanting on the inventory crushed down the best way it’s and pondering, it is low cost and [LAUGHTER] if it will get within the good graces of the Chinese authorities, then perhaps it is a steal at this worth.
Bill Mann: Yeah, these folks have been additionally the individuals who love leaping onto the backs of bulls.
Chris Hill: Just for the thrill?
Bill Mann: For the thrill. Like, so I’d break a bone or two. Just remember that DiDi had all these warnings from the Chinese authorities after they held their IPO. They have had a 12 months now the place they might have discovered buyback the shares, to go have a standard going personal transaction, it occurs on a regular basis. Where you truly go in and you purchase you the corporate or the corporate with buyers buys the shares from minority shareholders and also you shut it out that method. That’s not what they’re doing right here. What they’re doing is that they’re like, in the event you vote for it, we’ll shut the doorways and it is unconscionable habits to me. It’s OK, if you wish to maintain a non-public firm, you most likely should not be a person investor. You ought to most likely be an institutional one the place you have got the capability to commerce with different massive shareholders. But as a person shareholder, I believe you are risking quite a bit. I believe you are risking to proudly owning an organization that has not behaved very nicely for a really very long time.
Chris Hill: A reminder that amongst different issues, setting your expectations accordingly in the identical method that you just take a look at Johnson & Johnson and also you suppose, if I’m shopping for shares of this I’ve bought the bluest of the blue-chip shares. I’m not getting plenty of development, I’ll get a dividend that is going to extend year-after-year. [MUSIC] If you wish to leap in on DiDi Global, simply know you may be shopping for a non-public firm and never getting that cash anytime quickly.
Bill Mann: That’s proper. The brownest of the brown chips, if you’ll. [laughs]
Chris Hill: Bill Mann, at all times nice speaking to you. Thanks for being right here.
Bill Mann: Thank you, Chris. [MUSIC]
Chris Hill: TikTookay is on the market in China, the U.S., in addition to 150 different international locations. TikTookay has over a billion customers and a few of them are utilizing the platform to get recommendations on investing. How do you separate the nice monetary recommendation from the downright horrible? With extra, right here is Robert Brokamp and Alison Southwick.
Alison Southwick: Over the final couple of weeks we’re joined by Ron Lieber. He’s the best-selling writer and a author for The New York Times. We talked to him about how do you speak to your children about cash. If you were not impressed to speak to your children about cash and investing, as we speak we’ll helpfully scare you into it. A 2021 research by Wells Fargo discovered that 45 p.c of teenagers grew to become extra interested by investing after the rise of meme shares, like AMC and GameStop. When they requested teenagers the place they realized about cash over half stated their mother and father, which is nice, however in addition they pointed to different sources. In reality, nearly half stated college and over a 3rd stated social media. That means in the event you aren’t speaking to your children about cash, they’ll study it on the road. By which I imply that mouthy and unjustifiably assured pal of your child, you understand the one I’m speaking about, and locations like TikTookay, Reddit, Discord. TikToks with the hashtags like cash talks, inventory speak, Fintalk, have billions of views. The excellent news is that the recommendation is not all unhealthy, a lot of it’s stable, preaching long-term investing and the miracle of compounding returns. But becoming a member of us as we speak to speak about separate the nice from the unhealthy recommendation on-line is Kirsten Guerra. She is a Bureau Chief right here at The Motley Fool. Hey, Kirsten. Thanks for becoming a member of us.
Kirsten Guerra: Hey, Alison. Thanks for having me.
Alison Southwick: We invited you on since you are not any stranger to TikTookay. In reality, I consider you assist handle The Motley Fool’s personal TikTookay account.
Kirsten Guerra: I do. It’s a blast.
Alison Southwick: So Kirsten, what is the first form of unhealthy recommendation you are going to discover on social media?
Kirsten Guerra: Yeah. A number of the recommendation I believe falls below a bucket we are able to name unhealthy math, which is simply creators enjoying very quick and free with numbers in no matter method advantages their outrageous declare. This usually targets retirement accounts making half-baked claims in regards to the tax advantages which are supplied or this may be inflated tax charges or unreasonably excessive returns, unreasonably low returns. Again, it is no matter helps their narratives with none of the required context to raised perceive. For instance, here is a TikTookay with a creator discussing the Google inventory break up with a kernel of reality, however a little bit of an exaggeration.
MALE_1: What occurs is that the worth of the inventory goes down due to the break up, however then it shortly rises again up. I can anticipate Google to double right here within the subsequent 3-6 months.
Robert Brokamp: As Kirsten stated, there is a kernel reality to this. There is traditionally proof {that a} inventory goes up after a inventory break up. But he is saying that this firm, Google, goes to double over the subsequent 3-6 months which may be very troublesome to do for any inventory, not to mention a inventory that’s already price $1.8 trillion. Here at The Motley Fool, principally consider you possibly can’t actually predict what is going on to occur to a inventory within the short-term, anyhow. In reality, that is what’s occurred right here. This authentic TikTookay was printed on February 2nd. It’s now towards center to the tip of April and Google truly has not gone up, but it surely’s truly down 15 p.c.
Alison Southwick: Probably you have got an instance. This is one which I discovered notably terrifying.
Robert Brokamp: Let’s give it a pay attention, we could?
MALE_2: Say you wish to do some buying and selling, however you do not have some huge cash. You come and also you give me a greenback and me, the brokerage, I offer you $500. Now you are truly in a position to make some cash. You give me $1,000, I offer you again $500,000. You see the place I’m going right here?
Robert Brokamp: Here’s what’s attention-grabbing about this one. What this fellow is suggesting is definitely unlawful as a result of within the United States the Federal Reserve mandates, how a lot you possibly can borrow to speculate? It’s referred to as investing on margin. In the United States, you possibly can solely borrow half of the quantity you wish to make investments. If you wish to make investments $10,000, you must put down $5,000. That’s 50% fairness. What this [laughs] man is suggesting is you solely must put down a greenback to speculate $500. How is that this attainable? Well, to start with, he’s selling a dealer that is not within the United States, it is within the Caribbean. New York Magazine did an article on this fellow and it seems he is been concerned in a couple of different issues, resembling selling a cryptocurrency named Mando, as its Star Wars theme as a result of it is named after The Mandalorian. Another pretend crypto, Elongate, I suppose, after Elon Musk. Do a little analysis into the particular person to seek out out what else they’ve promoted prior to now.
Alison Southwick: Let’s transfer on and speak about among the worst offenders. In my opinion, they’re additionally essentially the most entertaining although. But once more, additionally doubtlessly essentially the most harmful for the youngest amongst us. Those are the people who find themselves hyping or mendacity about success on social media. Kirsten, what are these folks like?
Kirsten Guerra: Yeah, you stated it Alison. These individuals are hyping their success and sadly, most frequently they’re creating an phantasm of success that they do not even have. These folks will speak very confidently. They will share how a lot cash they make or their web price. They’ll present their accounts brazenly on display screen. They’ll movie themselves in entrance of fancy homes dishing out this recommendation. Unfortunately, it isn’t that onerous to do a few of these issues. I might movie in entrance of somebody’s fancy home that’s not my very own. I might additionally pull up an account proper now that has $1,000 in it and with some fast modifying and Google Chrome, I might make it seem like I’ve $1 million. Unfortunately for me, that would not truly change the amount of cash I’ve, but it surely might work to idiot you into believing that I do have that and that I’ve been wildly profitable. Now finally, all of that is for the aim of showing profitable in order that this particular person sometimes can attempt to promote you their course or their system and let you know how they have been so profitable and you may repeat it your self for the low worth of an excessive amount of cash for what they’re promoting.
Alison Southwick: Some of my favorites of those are sometimes, for example, guys of their 20s they usually’re displaying up in entrance of their lambos, can we name it raris? Is that what we name Ferrari [laughs] after they simply spell, R-A-R-I?
MALE_3: Five hundred thousand {dollars} for my Rolls-Royce, 750,000 for my Aventador, one other quarter million for a couple of different vehicles every. How do I’ve this at 22 years outdated? Let me let you know. It’s NFTs.
MALE_4: Let me offer you a brand new tour of my new $1.4 million home in Beverly Hills. First of, I’ve bought this big kitchen with tremendous good home equipment and that is bought my buying and selling station looking into the hills.
MALE_5: We have wager on essentially the most legendary working inventory market banking over $2 million in two days. Check this out. The insanity begins right here, have been we despatched [inaudible] responsibility for Facebook places. It went nuclear taking place $80 for our entry and altering plenty of lives, however wait it will get higher.
Alison Southwick: In the ultimate group of individuals on the road corners of social media is attempting to get your children hooked on unhealthy monetary recommendation is people who find themselves hyping crypto, meme inventory or penny shares. Kirsten, inform us about these folks.
Kirsten Guerra: Yes. These posts and movies are precisely that. They are all hype. There’s little or no substance in these movies. There’s no nuance in regards to the dangers. They’re sometimes introduced not as what the enterprise may do or enhance upon sooner or later however how a inventory worth will transfer. It will double in six months or it is going to 10x in 2022. It’s these outrageous claims which are centered on inventory worth alone. In reality, there’s fairly often no speaking in these movies in any respect. It simply this pumped up hype music and a listing of shares that some random particular person says will soar.
Alison Southwick: He’s often driving a Lambo. You bought to be giving [laughs] your scorching penny inventory suggestions out of your Lambo.
Kirsten Guerra: Otherwise, why would you consider it?
Alison Southwick: Did the inventory recommendation even occur in the event you’re not giving it out of your [laughs] wheel of your Lambo? Did the child nonetheless name it that? Let us hear a few examples.
FEMALE_1: Three penny shares that can go loopy this week. [MUSIC]
Robert Brokamp: What’s attention-grabbing right here is with this particular person, he was proper however most likely as a result of he talked about it, and that is the traditional pump and dump. So the three shares he highlights are small corporations with market caps of $100-$200 million. You can take a look at the worth of those shares and the amount. When you take a look at these three shares, the shares both went up 30-One hundred pc after he posted this video, and the amount on the shares went up 3 occasions to 10 occasions. The motive it occurred is as a result of he posted the video. What he most likely did, and I do not wish to accuse him of something, but it surely’s fairly attainable he purchased these very thinly traded shares, posted the video, which pumped up the worth, then offered since you wish to get out earlier than the suckers, after which the inventory comes down and that is what occurred. In reality, in every of those shares, all three of them are actually at a lower cost than when he initially posted this video.
Alison Southwick: Kirsten, how do you inform the nice recommendation from the unhealthy on TikTookay, social media, in all places?
Kirsten Guerra: Look, guarantees of big returns could be actually tempting on these platforms, and youngsters on TikTookay do not know any higher, adults on TikTookay do not know any higher. A number of purple flags you possibly can look out for or train your children to look out for is, first, and this can sound quite simple, however simply at all times ask your self, who is that this particular person? Influencers will come at you with plenty of confidence, however ask your self, why ought to I take heed to them? If somebody is attempting to promote you a course they usually don’t have any related certifications, their purpose might be to generate income off of you, to not educate you.
Robert Brokamp: Yeah, that is all good recommendation. Certainly, you wish to click on on the hyperlinks on their bios to see the place it takes you. Sometimes it is going to take you to a really thorough web site, typically it is going to take you to their WhatsApp quantity, so that you simply have to concentrate to that. Sometimes folks will say they’ve sure certifications they usually truly do not. For instance, I’m a licensed monetary planner and you may go to the CFP Board’s web site and search for and see that I truly I’m a CFP. But typically folks say they’re some type of knowledgeable monetary advisor, an accountant, lawyer, however they’re truly not. You can inspect that too. But additionally, search for folks. Basically, what are they attempting to promote? You will usually discover that they’re utilizing their platform to delegitimize, of their eyes, a wonderfully legitimate technique with a purpose to promote you one thing. One instance is you may see a number of movies of people who find themselves denigrating the traditional outdated 401K. They’re saying you should not do 401K, it’s best to do one thing else. What’s that one thing else? Often it is one thing very costly that generates a big fee, like life insurance coverage.
Kirsten Guerra: Another factor you possibly can search for is to arm your self or your children with some primary data so that you could assist determine these wild claims whenever you come throughout them. For instance, know that the inventory market returns 7-10 p.c per 12 months. Know that danger is proportional to reward. Then whenever you see one thing that guarantees to double your cash in six months, you may know that that’s past motive and extremely dangerous.
Robert Brokamp: I believe it is necessary to ask your self, what might go incorrect? What’s the dangers concerned with it? Has this particular person laid out the dangers? How possible is it, and may I deal with the results? We’ve talked within the present about leverage, for instance. Leverage is nice as a result of it magnifies positive factors, but it surely additionally magnifies losses. If you are going to use any leverage, you must perceive what’s at stake and may you reside with the draw back prospects.
Kirsten Guerra: Definitely. Similar to that, I might counsel that everybody at all times search for substance in these movies. Here at The Motley Fool, we at all times say that we spend money on the companies themselves, not the tickers, not the piece of paper that accompanies that. A video that goes into some enterprise evaluation may truly be price doing additional analysis into. But a video that merely makes a really constructive declare that they need you to observe, one thing like x inventory is about to double or x crypto will go to the moon in 2022, that is almost certainly a pump and dump.
Alison Southwick: Bro, what’s your parting recommendation?
Robert Brokamp: I might similar to to say that we at The Motley Fool bought our begin from a few 27s posting on the AOL dialogue boards again in 1993, which I suppose you might form of say, was the TikTookay of its day. Our message was, and nonetheless is absolutely, you do not want high-priced, fancily dressed Wall Street sorts to handle your cash. With a bit time schooling and also you do plenty of it your self with out all of the conflicts of curiosity and perhaps have some enjoyable alongside the best way. I do not wish to denigrate anybody who’s sharing monetary schooling on TikTookay, YouTube, Twitter, anyplace. I adore it. It will get again to the DNA of The Motley Fool. We nonetheless consider there’s plenty of worth and expertise that brings folks collectively to study from one another. That stated, you bought to watch out. Because of all of the warnings we talked about right here. Go forward on all these social media platforms, study as a lot as you possibly can. Just just be sure you do a great little bit of belief however confirm.
Kirsten Guerra: Yes, that is precisely proper. Something you alluded to earlier, Bro, I might simply circle again on, which is that these movies are by design, most of them 60 seconds or much less, which is an extremely tight window to share monetary recommendation [MUSIC] and to share the entire dangers and the nuance like we have talked about is required. Just know that going into it, use these platforms as a spark of inspiration for investing, for saving cash, all of this stuff, however go and do additional analysis. [MUSIC]
Chris Hill: That’s all for as we speak. But arising tomorrow, we’ll speak about investing in health. I’m not referring to your gymnasium memberships. As at all times, folks on this system might have curiosity within the shares they talked about and The Motley Fool might have formal suggestions for or towards, so do not buy or promote shares based mostly solely on what you hear. I’m Chris Hill, thanks for listening. We’ll see you tomorrow.
This article represents the opinion of the author, who might disagree with the “official” suggestion place of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even considered one of our personal – helps us all suppose critically about investing and make choices that assist us turn out to be smarter, happier, and richer.
