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Episode 512Straight from Wall Street to you on Main Street

FRANKLY SPEAKING AUDIO TRANSCRIPT

Frank Curzio Howrsquos it going out there Itrsquos Friday April 28th and Irsquom Frank Curzio host of the Frankly Speaking podcast where I answer all of your questions about the market stocks comedy sports and anything else you want to throw at me I created this podcast to answer more of your questions that you were sending me through my Wall Street Unplugged podcast which I host every Wednesday

If you have any questions you want answered just send me an email at frankcurzioresearchcom Thatrsquos frankcurzioresearchcom Be sure to put Frankly Speaking in the headline and you never know your question may be the one I read on this podcast

The question from Larry it says

ldquoHey Frank I found your podcast to be interesting and educational Irsquom now a lifetime subscriberrdquo Thank you very much I appreciate it He goes ldquoThis note concerns your comments to Jose about his long time investing horizon since hersquos only 24 years oldrdquo So hersquos referring to a question I answered in the past and Jose was 24 He was asking me what he should do income and stuff like that So Larry goes on to ask ldquoI have a situation with an even longer time horizon that I hope you can comment on My situation involves IRAs for my children that are 13 and 16 years old They inherited them from their grandfather and they have around $12000 each Currently they still get a Christmas check from grandpa Once my kids have part time jobs I plan to take distributions from these IRAs equal to their earnings and move them into Roth IRAs Itrsquos been psychologically difficult to sell stocks in inherited IRAs but I have sold half and considering your recommendations

Given position sizes at 5 will result in $600 positions I currently have a few recommendations But should a large portion be kept in low-cost mutual funds until future opportunities are available Or do you have any other suggestions Since you also commented about average subscriber age being around 67 years which is true the average subscriber is 67 years old do you also have suggestions for grandparents setting up grandchildren as IRA beneficiaries Thanks for your insight views and vesting stock market Larryrdquo

2All content Copyright copy 2017 Curzio Research All Rights Reserved wwwfrankcurziocom

Frankly Speaking - Episode 512

Well let me start with the second part I guess they have suggestions setting up IRA beneficiaries You can set a beneficiary for Brianna Curzio B R I A N N A my daughter which would be perfectly fine You can deposit whatever you want in that to her But when yoursquore looking at setting up grandchildren IRA beneficiaries I would probably leave that to the financial planners because itrsquos more of a stock show

But I will go ahead and answer the first part of it because here yoursquore talking about different stocks and what to put into the portfolios long-term If you read my recent alerts since yoursquore a subscriber to Curzio Research Advisory take a look at the compound calculator that I mention on the stock Irsquom not gonna give that stock away when I was talking about it But when you look at this and this is something I also mentioned with Jose back then when I answered that question When yoursquore young and yoursquore investing and you keep investing and reinvesting compounding those capital gains and dividends

When you look at the numbers again guys you donrsquot have to take my word for it look at Google compound calculators you put $100 in there a month $5000 investment $3000 investment whatever it is $600 maybe yoursquore putting $50 in a month When you look at the numbers when you get past 20 years itrsquos insane You get to 30 years 40 years and I know 40 years is insane itrsquos such a long time But when yoursquore in your 20s I wish somebody told me this my dad did tell me this 100 times I didnrsquot listen to him But itrsquos the easiest way to become a millionaire If you really look at it you just keep adding and putting money in this In the stock market the SampP returns the average returns are around 8 with dividends dating back and thatrsquos annually dating back to the 1950s What you want to do is try to have stock picks that are better than that Itrsquos hard If you got to find my newsletter believe me Irsquoll find great ides and Irsquoll probably offer you better returns than the market At least thatrsquos my job

For example therersquos only a few stocks obviously we just launched Curzio Research Advisory But if you look letrsquos just say DOW components some of the largest companies in the world they always go through a rough patch And itrsquos up to you to really analyze why itrsquos going through a rough patch whatrsquos going on Like IBM I think IBM is a steal down here Yeah they reported not so great earnings but theyrsquore transitioning their business Theyrsquore paying you a 35 dividend to wait And theyrsquore probably in the third inning of getting out of all the terrible business and getting into cloud and Irsquove covered this so many different times and big



data analytics social and itrsquos working Itrsquos accounting for 35 40 of their sales now when it was 5 10 when they started this four years ago It is happening itrsquos going to happen

Look at Apple Applersquos in the 140s today it was 95 Look at so many names Caterpillar that got destroyed ATampTrsquos another name at 32 33 34 I thought was steal which is around 40 now 5 yield If yoursquore looking currently you could look at Nike I think Nikersquos gonna make a nice comeback thatrsquos one I warned you about but itrsquos still down about 7 8 over the past 12 months theyrsquore really gonna turn around their operations Exxon has been an under performer Verizon

So you really want to try to pick up these businesses when theyrsquore not doing as well And Irsquom talking about the largest companies in the world have been around for 30 40 50 years that always have a history of decades of increasing their annual dividend Even McDonaldrsquos McDonaldrsquos was below 100 and I thought it was even gonna go lower turned around came back and now look at it All time high Gonna get a question on that in a little while But if yoursquore looking at these companies they seem to always Walmartrsquos another example Two years ago one of the worst years in itrsquos history and came back one of the best performers the following year

And itrsquos not so much the dogs of the DOW because I wouldnrsquot take the lowest ten performers Irsquod pick and choose three or four of them but your want to be able to buy these companies when theyrsquore not doing so well because some of them are cyclical theyrsquore gonna go through times where things arenrsquot good and period when things are great But the bottom line is you want to be able to buy these things and make sure theyrsquore paying you a dividend make sure that dividend is safe and thatrsquos how Irsquove been able to find some really great large cap ideas Some of them Irsquove been wrong on but most of them Irsquove been right Wersquove had exceptional returns And yoursquore going to see a lot of these show up in Curzio Research Opportunity for those of you that are subscribers

Even Delta Just buy Delta Yeah it was 50 now itrsquos 45 they recommend I think at 33 34 Look at the airline industry theyrsquore gonna be generating billions of cash flow billions of cash flow every year going forward forever Theyrsquore business model is finally unbelievable It used to be a horrible business model now I went to the Boeing facilities no onersquos starting an airline anytime soon Too capital intensive therersquos no way The barriers of entry



are very very high They have pricing power They can raise their prices people still have to fly Businesses are going to pay for their employees to fly Itrsquos a fantastic business where yeah itrsquos not doing so good and you look at the columns compared to the year before and theyrsquore down a little bit and PRASM and all that stuff per seat But if yoursquore looking long term 5 10 years and yoursquore buying Delta here at 45 I think in 3 4 years itrsquos a $90 stock

These are the stocks you want to try to invest in long term when you have a 10 20 year time horizon which I know is difficult Wersquore talking about the stupid debt ceiling for the 19th time everybody gets worried the headlines are crazy Think of some of the headlines that have come out of all the risks Keep in mind guys stocks are trading at all-time highs All the risks that you heard of over the past 5 10 years all of them stocks are at all-time highs Could they decline Of course they could But you shouldnrsquot let those headline risks worry you if yoursquore an investor looking to buy stocks for 20 30 40 years

You brought up another Larry should you buy low cost mutual funds Yeah buy the SampP 500 for now until you find some really good ideas Yoursquoll find a lot of good ideas in the newsletter Again therersquos probably one out of the three new recommendations that fit this strategy where itrsquos gonna be a dividend payer where you can compound they raise the dividend annually for years and stuff like that Yoursquore gonna see a lot more of these names make their way into the portfolio but itrsquos important to buy these stocks at the right price Like we did with JP Morgan Recommended that stock at 52 and itrsquos 87 today Again another stock that just has fallen itrsquos just buying at the right time

Itrsquos very very important because people say ldquoWell I bought this stock 20 years ago And that stock 30 years ago The dividend has been raised every yearrdquo Guys itrsquos not the dividend thatrsquos not the reason why yoursquore a millionaire today because you hold that stock over 30 years The reason why is because the capital gains on the stock coupled with the dividend Which means you have to buy these stocks at the right price Which is difficult right now because again a lot of these names are trading at all-time highs But as you see in the market like Nike Exxon Verizon Coco Cola Fisor you have IBM Procter and Gamble Wal-Mart A lot of these stocks even in Coco Cola and Verizon I know are down over the past 12 months Exxon as well Nike

Not every company is at its 52-week high or all-time high right now Yoursquore gonna find some of those big names that are just having a terrible time and theyrsquoll figure it out Because they can pay



people to figure it out their balance sheets are amazing theyrsquove been through these cycles 10 15 20 times because theyrsquove been around for decades And they usually figure it out So thatrsquos my advice on how I would set up those portfolios

Remember itrsquos long term yoursquore not talking about short term where Ebola is Irsquom trying to think of the Zika virus What happened to Zika Remember People were missing the Olympics because of Zika Even though that itrsquos winter in it was winter time right Still warm but itrsquos winter time which drastically lowers mosquitoes in Brazil By the way I went to Brazil Irsquom alive Irsquom okay Nobodyrsquos talking about Zika anymore But just all the risks that you see in the market place North Korea right now and the debt ceiling tax reforms and Trumprsquos an idiot Whatever it is Long term itrsquos about earnings And if yoursquore buying these companies and hold them 10 20 30 years try to ignore those headlines Especially if yoursquore investing for your kids when theyrsquore this young and yoursquore IRAs at least thatrsquos what I do And thatrsquos the best strategy I can offer you So hopefully that helps

Next questionrsquos from Chris ldquoSay Frank just wanted to let you know how much I enjoy the podcast and the newsletterrdquo I appreciate that I really do ldquoItrsquos good to hear interviews and picks from somebody who doesnrsquot try to make it sound more complicated than it isrdquo Itrsquos kind of funny you say that Chris because whenever I have someone on the podcast especially if itrsquos a new guest and I know that theyrsquore brilliant I love them and theyrsquove got great information I always tell them too I say ldquoListen especially in the money industryrdquo because sometimes these guys talk about geology Irsquoll fall asleep in two seconds I donrsquot want to see charts and maps and infrared please if I see that in a presentation the first thing I tell a CEO is eliminate that because nobody cares The analysts yes you want to see that in a geologist but if yoursquore presenting that in a presentation yoursquore gonna lose everybody okay Talk about the exciting stuff And then when they dig deeper then they go into geology Anyway

I try to make these people itrsquos the first thing I say to my guests is ldquoHey remember these people are not experts in a particular field Yes they have money to invest Some have a lot of money to invest But make sure yoursquore explaining all these terms thatrsquos how you get people to invest in your stock when they get to understand your company I appreciate that yoursquore noticing

ldquoMy questionrdquo and this is Chris ldquoMy questionrsquos about stops You recommend hard stops but when I go out and put it in place on my options their only options are trailing stop loss percentage



and trailing stop limit percentagerdquo So hersquos saying those are his only options for his brokerage firm ldquoFor the life of me no matter how many times I read into the difference there seems to be none Which one should I be usingrdquo

Chris herersquos the deal Whenever something says trailing itrsquos trailing That means that the stop is gonna trail itrsquos gonna go higher as the stock goes higher So if yoursquore trailing if itrsquos 20 stop on a $10 stock itrsquos 8 thatrsquos a hard stop If itrsquos a trailing stop if you go to 11 that stoprsquos gonna go higher Thatrsquos a trailing stop Trailing stops are cool you can use them But more important to this point donrsquot put these stops in the market If yoursquore putting the stops in the market theyrsquore there for everyone to see

I always use analogies like playing Texas Hold lsquoEm and Irsquom showing you my two cards Thatrsquos what itrsquos like Irsquom showing you exactly what I want to do Now times that by 10000 some guys out there have 100000 subscribers and say if yoursquore like ldquoHerersquos my stock pick and if it goes from 10 to 750 I want everyone to sellrdquo And all 100000 people put their stops in the market at that level What do you think a traderrsquos gonna try to do An expert trader working wherever at a huge firm Because if hersquos really good hersquoll want to trigger that to make sure all those orders are gonna get destroyed and push that stock down to 5 where he can probably buy Or he can short it before those even get Therersquos so many different things they can do without even buying or selling the stock just by putting orders in they could do this

And I hear this from the best traders too because Irsquove worked for large newsletter companies And they have amazing followings even I had a huge huge huge following when I worked for some of these bigger publishers And traders used to tell me ldquoBe careful putting your stopsrdquo thatrsquos why yoursquore not gonna see me put the exact price I put a percentage on there like a 35 hard stop I wonrsquot even put the price at all Irsquoll let someone else figure that out

But keep track of this You can do it through trade stops is a way has a system where itrsquoll alert you when the stock hits a certain price and you can go in your brokerage account But try not to put them in there But a hard stop is just a hard stop Itrsquos an exact number So if itrsquos 30 stop at $10 itrsquos $7 If it closes below 7 then you would sell Thatrsquos a hard stop instead of trailing But I will use trailing stops as well Just right now for a lot of positions most of them are hard stops So hopefully that answers your question

Moving on Markrsquos gonna ask me a question about McDonaldrsquos I donrsquot know if anyonersquos ever asked me anything about McDonaldrsquos



I mean I was so wrong on their stock But this is pretty cool He goes ldquoHey Frank Irsquove been a relatively new listener to your podcast and Irsquom a new subscriber to your newsletterrdquo And he says ldquoFor liferdquo I appreciate that Mark I donrsquot know if thatrsquos good or bad since yoursquove got to listen to me forever Which is really cool but I appreciate it He goes ldquoIrsquove been in and out of McDonaldrsquos over the years however after reading your weekly update I thought lsquoCould McDonaldrsquos be an internet of things stockrsquordquo Internet of Things is one of the things Irsquom covering in my newsletters itrsquos gonna be one of 10 15 trends major trends Irsquom gonna be covering in my newsletter Irsquom not giving anything away here If you listen to the presentation and didnrsquot subscribe yoursquoll still see Irsquom talking about the internet of things

But this is what I want to do with you guys is try to Not even try but Irsquom gonna show you how to make money off the biggest trends in the world what stocks to invest in and give you a whole watch list of hundreds of stocks and stuff and those special reports on each trend Theyrsquore gonna come out every single month

So hersquos talking about the internet of things talking about McDonaldrsquos He says ldquoMcDonaldrsquos when it comes to them the mobile ordering and payment system theyrsquore deploying company-wide in the US is bound to be a big data source for them to streamline and make more efficient their supply lines to the individual locations Then after the challenges and addressed and met deploying the system worldwide can add to their bottom line like no other plan The customer as the ultimate sensor Keep up the great work look forward to all the interesting and valuable content advice ideasrdquo

Mark I wouldnrsquot say McDonaldrsquos is an internet of things play Because itrsquos not What I will say is theyrsquore one of almost every company in the SampP 500 tons of them that are basically using IOT to better their businesses Itrsquos pretty scary when you think about it because you say ldquoIOT itrsquos privacy issues rdquo I hate to tell you this guys if you donrsquot know If you have an email yoursquore being watched Yoursquore being watched they know everything you do Therersquos a reason when you search for something anywhere when you go on another website no matter what it is that Google ad is gonna say what you were just looking for It was a vacuum cleaner no matter what it was if it was a sandwich whatever it was if it was Jimmy Johnrsquos therersquos gonna be a Jimmy Johnrsquos advertisement and a Dominorsquos advertisement They track and follow everything Is it scary A little bit because it opens a door to privacy issues and hackers and stuff



Which wersquove seen Almost every single company has been hacked And the ones that havenrsquot told you just have been hacked and are lying about it And believe me I know this for a fact because I have friends that are very very big hackers One in particular is a good friend who was asked to hack the Pentagon And he hacked it in ten minutes which I think is pretty interesting

But when you look at the details and the internet of things every companyrsquos employing it What they want to do is basically understand you better track what yoursquore doing what are you going to McDonaldrsquos when do you go what time you go to better target you And thatrsquos gonna increase their margins But if yoursquore looking for specific IOT plays I can tell you therersquos actually an IOT fund Itrsquos SNSR and if you look at it they list their holdings So itrsquos Global X Internet of Things ETF Again itrsquos S N S R If you look at their holdings these are the pure play IOT plays Your question for McDonaldrsquos as an IOT consideration I wouldnrsquot McDonaldrsquos is gonna be more about same store sales itrsquos gonna be more about restaurants fast food thatrsquos gonna impact their sales where IOT is a component thatrsquos going to generate better margins for the company Theyrsquore not a pure play on IOT theyrsquore using it to benefit themselves Just like so many other companies in the SampP 500

Now if you go to this ETF and you look at some of their holdings they have ST Microelectronics Mobileye Garmin Sensate Broadcade Communications Dexcom Again you donrsquot have to write these down guys but Cypress Semi Johnson Controls Interdigital Rockwell Automation Itron They also have bigger names like Honeywell and IBM which are not pure plays either but Umberello Anecky Arambus so Irsquom going fast through these companies If you want to look at it SNSR if you want to punch it up on Google theyrsquoll give you all of those names But do a lot of homework and research on them because a lot of these names are trading at 52-week highs Even ETF is at a 52-week high itrsquos all-time high actually just like the rest of the market

So yoursquove got to be very very careful because these are technology companies and theyrsquore trading expensive valuations and they have a lot of market risk So if the market does come down these things are probably gonna come down a little bit more than the market because they outperform the market on the way up So itrsquos just something to think about But those are the pure plays

But yoursquore gonna see and I canrsquot tell you And you bring up a good point here Mark how many conference calls that Irsquove listened to Irsquove probably listened to 40 so far Irsquod say 80 of them



mentioned IOT Irsquom not even kidding you And I started cutting and pasting and yoursquore talking about almost every semi-conductor company yoursquore looking at almost every technology Samsung mentioned it how itrsquos driving property Skyworks mentioned it how wersquore well positioned forever

This trend is just in its infancy Yoursquore looking at smart cities where CNBC came out with a report $41 trillion market smart cities All these cities therersquos barely a handful of cities that are smart cities where theyrsquore saving Look at Barcelona look at these statistics guys things that I mention in my presentation when I was selling my newsletter Curzio Research Advisory Unbelievable the amount of money therersquos just Dimming lights when people arenrsquot around and when they are around theyrsquore bright The perfect time to water parks and stuff Itrsquos amazing when you add it up theyrsquore saving hundreds of millions of dollars And if you times this by every single city which Chicago is doing New York San Francisco

Again this trend is in itrsquos infancy where everything is gonna be connected and when that happens these companies their margins itrsquos gonna be even better Even the government is gonna be saving tons and tons of money and thatrsquos where this trend is heading Mark to play it Irsquod go into the pure plays before I buy McDonaldrsquos Buy McDonaldrsquos because theyrsquore doing very well now sales are going higher But I wouldnrsquot be buying it because theyrsquore implementing IOT so much which is gonna help margins I think that the better play is on IOT the pure plays which are the ones that I just mentioned

Okay moving on here Jack has a question which is pretty cool He goes ldquoItrsquos been a while since you talked about sports Still upset about Kansas losing in the tournamentrdquo Got to bring up Kansas you had to go there He goes ldquoWhat are your thoughts on San Antonio winning the NBA championshiprdquo Irsquoll take one sports question

For me Jack Irsquom not sure I know I have a lot of San Antonio fans out there they email me a lot but right now theyrsquore basically a one-man team Kawhi Leonard playing exceptional unbelievable player great guy too Never talks trash just does his business just really cool But if you look at the rest of the team Aldridge is terrible Not a big game player in terms of playing well in the playoffs ever Tony Parker and Ginobili are probably combined a hundred years old each Much slower Great players used to be much much better players Theyrsquore really good defensively especially with Danny Green he used to be lights out from three



points but for some reason he just canrsquot shoot anymore You have Pau Gasol no longer a go to guy and gets beat badly by almost any center or forward that hersquos guarding most of the time centers

And with that said I think theyrsquore gonna have a tough time San Antonio but I donrsquot think Golden Statersquos a sure thing Durantrsquos still not 100 but hersquos getting there But I wouldnrsquot discount that Steve Curr I donrsquot know I donrsquot want to get too much into basketball here guys I know Just one question But Curr may be out for the playoffs he has something with his back where itrsquos draining Irsquove never even heard of it before and I was talking about it with a couple of friends But apparently itrsquos really really bad to the point where he might have to retire next year And hersquos missing a few games thatrsquos a huge deal

Players win championships but coaches make huge decisions that could impact possessions And I know because I used to be a basketball coach And a licensed basketball referee And when yoursquore looking at playoffs one possession is a huge deal You can go back to San Antonio Popovich maybe the great NBA coach of all time Probably up there with greatest coaches in sports of all time But he decided to take Tim Duncan out who is one of the greatest rebounders of all time took him out of Game 6 in the 2013 finals So the Spurs were up 5 with less than 30 seconds I donrsquot know if you remember that game they took of the yellow tape They were up 3-2 and played at Miami I believe It was unbelievable The game was basically over I have no idea But the last possession Pop takes out Tim Duncan and Bosch grabs the rebound and Lebron missed kicks it out to Ray Allen and he hits the crazy 3-pointer with four seconds left Miami winds up winning Game 6 in overtime and then wins games 7 and wins the NBA championship But if Duncanrsquos in one possession Bosch who got destroyed by Duncan in that series likely is gonna grab that board and the Spurs are champions I really believe that Itrsquos not farfetched

One possession is a very big deal without Kerrzaps I know Mike Brownrsquos a decent coach but I think Kerrs could be a factor And then yoursquove got the Cavs of course and LeBron turns up in the playoffs like we saw last year you gotta look out Hersquos playing with more confidence than ever since hersquos the greatest player in the world and arguably ever if he wins a few more championships Hersquos been to six straight have you guys seen the records hersquos breaking right now Unbelievable So six straight with three teams Irsquom a Michael Jordan fan but man I donrsquot know if Michael Jordan couldrsquove went to three different teams and took every one of those



teams to the NBA finals Itrsquos pretty crazy

But I know LeBronrsquos been playing with more confidence than ever since hersquos gonna finish what fourth in the MVP race this year Behind Westbrook Harden and Kawhi Those guys had great seasons but theyrsquore not even in the same league as James not even close So I know itrsquos got to be motivating him So San Antonio I donrsquot know I just donrsquot see it Golden Statersquos still the favorite but not a convincing favorite to me with the Cavs playing their best ball this season right now I think hopefully we get that final again with the Cavs and Golden State because I think itrsquos gonna be pretty cool But I donrsquot think San Antoniorsquos gonna be there based on how they played Memphis

All right letrsquos take one more question get back to stocks here guys And this one is from Johnny Ho Full disclosure thatrsquos not his name he asked if I wonrsquot mention his name so Irsquom gonna respect that But he goes ldquoHey Frank quick question What are your thoughts on L Brands symbol LB Seems like the stock is getting crushed along with all the mall retails but it seems very cheap at current levels Trading 14 times PE has over 5 dividend yield positive sales growthrdquo Which is low single digits ldquoGood margins generating $900 million in free cash flow every year iconic brand in the market with low price elasticity of demand and not a lot of competitors Thank you for all that you do Looking forward to your newsletterrdquo

I have to say some of this I could tell just by the way you frame this email that you own it right Because yoursquore talking about the positives When you look at a stock herersquos what I want you to do Everybody listen to this When you look at a stock that you love because I know that you love this stock which is cool Try to find the negatives Whatrsquos gonna make you wrong Why am I telling you this Because I do the same thing Irsquoll find stocks that Irsquom like ldquoWoah this is a stealrdquo And Irsquom forcing myself to say ldquoOkay let me read other peoplersquos opinions Let me see if I can find something on the web why do people hate this stockrdquo

And Irsquom gonna break it down to you The stock is not necessarily as good as you think And you highlight a lot of cool stuff Itrsquos trading a little bit higher itrsquos a higher P Itrsquos 15 16 PE And if you look back the past 12 months itrsquos trading at 13 times earning So if it has a higher P what does that mean It means that higher forward P it means that earnings are declining Earnings are expected to decline If yoursquore looking at sales they have very very little sales growth very little And in a market where sales are growing 7 right now for the average SampP 500 company so theyrsquore growing



earnings and sales slower than the market Which is not a red flag but you want to dig a little deeper

Now everything that you mentioned here and I try to teach this lesson to everybody when it comes to certain stocks and certain sectors itrsquos not earnings Itrsquos not sales all the time Sometimes itrsquos Netflix subscriber growth Same with Comcast How many streaming clients are they getting When it comes to retailers even when it comes to say Las Vegas Sands and Win itrsquos growth in Macao not Las Vegas Sands When it comes to retailers itrsquos one metric Itrsquos same store sales Thatrsquos where the biggest focus is the same store sales Sale from stores that are open for at least 12 months And when you look at that same store sales are down 10 I know the whole industryrsquos getting crushed I get it but thatrsquos the metric thatrsquos destroying the stock If yoursquore looking for the reason that the stockrsquos at 80 to 52 itrsquos same store sales

And itrsquos not getting better Positives Theyrsquore working off inventory which is good Seeing slight margin improvements But if yoursquore looking at earnings long term earnings are going from Theyrsquore gonna decline significantly through 2019 Theyrsquore gonna fall off like a cliff Again that explains why the PE is higher going forward when usually itrsquos supposed to be lower because theyrsquore supposed to be growing those earnings Yoursquore seeing earnings decline at least through 2019 which is a headwind And guys just to bring you in on L Brands they own Bath amp Body Works and Victoriarsquos Secret Inside Victoriarsquos Secret is a brand called Pink which was itrsquos fastest growing brand three billion out of whatever the fourteen billion of revenue or something And that is starting to slow So you have to worry about that as well

Then you said something that therersquos not a lot of competitors Yoursquore wrong Bath amp Body Works Come on therersquos like 20 shops that you can get almost the same products in Yeah maybe a little different but still Therersquos tons of places where you can buy all that stuff I canrsquot even walk into those stores because I immediately get a headache And I know because sometimes Irsquoll go with my wife and Irsquom like ldquoI gotta get out of hererdquo And it seems like therersquos three or four of those stores that shersquos walking in and theyrsquore not all Bath amp Body Works Victoriarsquos Secret too has competitors now They do have competitors Also yoursquore seeing slower growth

So when I look at these brands they do have a lot of competitors the dividend appears to be safe But again earnings are declining So you have to worry about that because if they decide to say ldquoHey wersquore gonna have to close stores We want to start reigning in those expenses letrsquos cut our dividendrdquo the stockrsquos gonna fall



15 immediately Even though the companyrsquos doing the right thing to try to save money Theyrsquore not there yet They may be there next year But more important yoursquore buying a stock in a declining industry Thatrsquos a concern Whyrsquos it a concern Because what would have happened in 2013 if you bought the best mining stock You wouldrsquove lost 60 at least No matter how great that stock was the industry was terrible It was crap for three years

Right now retailers and malls I tried it with JC Penny I thought it was a steal they were gonna have a great holiday season They reported better than almost anybody else and the stock fell anyway So I was wrong on JC Penny I didnrsquot think the whole industry was going to collapse the way it did And the way itrsquos doing now where store closures in general theyrsquore at higher level than they were at in 2008 2009 during the credit crisis So this isnrsquot close to being over They still have major inventory concerns a lot of these companies across the board So just be aware that yoursquore buying a company even if you like it

For me this company L Brands I would wait to see more evidence of a turnaround Until those inventory concerns are gone until we see maybe Pink turn around and start really growing faster again and Victoriarsquos Secret Yoursquore not really seeing that Yoursquore gonna see those comps same store sales down Again they compare them from last year theyrsquore down 10 from last yearrsquos comparable time comparable month Sometimes they do it every quarter But thatrsquos gonna continue They still have tough comps itrsquos gonna continue And look from the analystrsquos point of view itrsquos kind of coin flip Goldman Sachs believes the stockrsquos cheap here they have a buy and a $66 target on it and itrsquos at 52 Jefferies totally opposite Itrsquos a sell much more pain ahead 2018 19 huge earnings decline and therersquos really no catalyst and they have a $35 target on it Thatrsquos a wide range

Could the stock go hard Yeah They could just turn around next quarter and the expectations are so low and a lot of this may be baked in You can see it 10 15 Thatrsquos actually what we saw last quarter It actually bounced when they reported horrible results because a lot of it might have been priced it But for me I think you want to buy position while reducing your risk as much as possible and by doing that you probably want to see a little more evidence that the business is on better ground And itrsquos not right now Means that you have a lot of risk and I think itrsquos kind of like a coin flip For me I like it more where I like to see insiders buying here and theyrsquore not Thatrsquos one of the things I like to see when a stockrsquos getting crushed things are bad I love when the insiders



come in and buy And wersquore not even seeing insiders come in The stock was 80 a year ago and itrsquos 52 insiders are still not buying So if theyrsquore not buying why would you want to buy Thatrsquos just my opinion Again I could be wrong just trying to give you as much analysis as I can on the stock pick

Okay guys If you have any questions or comments about todayrsquosrsquo show or if you want to email in possibly have your question answered on this podcast just email me at frankcurzioresearchcom thatrsquos frankcurzioresearchcom Guys thatrsquos it for me Have a great weekend Letrsquos go Rangers Irsquoll see you in seven days Take care



Well let me start with the second part I guess they have suggestions setting up IRA beneficiaries You can set a beneficiary for Brianna Curzio B R I A N N A my daughter which would be perfectly fine You can deposit whatever you want in that to her But when yoursquore looking at setting up grandchildren IRA beneficiaries I would probably leave that to the financial planners because itrsquos more of a stock show

But I will go ahead and answer the first part of it because here yoursquore talking about different stocks and what to put into the portfolios long-term If you read my recent alerts since yoursquore a subscriber to Curzio Research Advisory take a look at the compound calculator that I mention on the stock Irsquom not gonna give that stock away when I was talking about it But when you look at this and this is something I also mentioned with Jose back then when I answered that question When yoursquore young and yoursquore investing and you keep investing and reinvesting compounding those capital gains and dividends

When you look at the numbers again guys you donrsquot have to take my word for it look at Google compound calculators you put $100 in there a month $5000 investment $3000 investment whatever it is $600 maybe yoursquore putting $50 in a month When you look at the numbers when you get past 20 years itrsquos insane You get to 30 years 40 years and I know 40 years is insane itrsquos such a long time But when yoursquore in your 20s I wish somebody told me this my dad did tell me this 100 times I didnrsquot listen to him But itrsquos the easiest way to become a millionaire If you really look at it you just keep adding and putting money in this In the stock market the SampP returns the average returns are around 8 with dividends dating back and thatrsquos annually dating back to the 1950s What you want to do is try to have stock picks that are better than that Itrsquos hard If you got to find my newsletter believe me Irsquoll find great ides and Irsquoll probably offer you better returns than the market At least thatrsquos my job

For example therersquos only a few stocks obviously we just launched Curzio Research Advisory But if you look letrsquos just say DOW components some of the largest companies in the world they always go through a rough patch And itrsquos up to you to really analyze why itrsquos going through a rough patch whatrsquos going on Like IBM I think IBM is a steal down here Yeah they reported not so great earnings but theyrsquore transitioning their business Theyrsquore paying you a 35 dividend to wait And theyrsquore probably in the third inning of getting out of all the terrible business and getting into cloud and Irsquove covered this so many different times and big
















































































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