Part of covering emerging stocks is traveling the conference circuit, meeting companies, and talking with CEO's and lenders who fill out the conference circuit. Most participants are telling their story to a larger audience and making elevator pitches in bars and hallways. Market awareness is a long tough road for these CEO's and they realize after a few years on the job that they are cheerleaders for the companies and shareholders walking the thin line of revenue and business model leap of faith.
Equities hosted a dinner after the LD Micro Conference held in Los Angeles. It is a perennial "must attend" for many CEO's, so they can press the flesh with investors,fund managers, and journalists who can get out the story to expand their shareholder base. It is a never ending project where they keep moving the finish line. I know CEO's who have waited 10 years to get traction and often a shift in acceptance of what they do makes all of this work worthwhile.
FinTech (Financial Technology) is changing because social media opened the flood gates to a larger investor group. This change is manifesting itself in many silos within financial services—specifically the way our children make trading decisions—and I can tell you it has little to do with a broker from Charles Schwab or E.F. Hutton. It all has to do with accessing fractional shares they currently do not have access to.
I would be angry if I watched the MegaCap Sector over perform the rest by 20% and felt like I was locked out. It would feel like an investing opportunity had been missed. The reason this demographic feels locked out is that no one can afford to buy Google/Alphabet (GOOG), Amazon (AMZN) or Priceline (PCLN) because they do not have enough $ in their brokerage account.
Here is the mindset which causes many to miss investment opportunity. It is difficult to pay $1259 for 1 share of Priceline (PCLN) because on the surface it seems too insignificant, causing many investors to look elsewhere. The only ones who can profit are the fund managers they see drinking at the Standard Hotel.
Young investors may have a great job writing code at Hulu or SnapChat making $150k, but they can't invest in those high-priced stocks. So, what they do is by pass the normal broker who would tell them to buy General Motors (GM) or General Electric (GE), and they toss $500 a week to a Robo Advisor whose algo is hitting the mark getting them the 20% and a better bottle of Wine.
The conference circuit has changed because these same investors now scrutinize smaller emerging stocks (we just did a piece on Cannabis Stocks that go a huge response) and learn how to read filings and understand all the hijinks that can go on. The young investor today has a larger network of checks and balances, and many I know have - decent trading instincts—not the traditional buy and hold that their parents were all about. They want a life similar to the one they grew up with where summer is a verb that means you will be heading to Wisconsin from July to October, and they won't get this unless they take some risk.
I had a co-worker walk up to me the other day and say,“I think I want to be an Equity Analyst; I think it is something I can make my life's work." He is 23 and paying attention. He is not your run-of-the-mill work at Starbucks and drive for Lyft to pay the rent type. He has a Master's Degree in Political Science from a great school here in California. The world is changing around us quickly, and it is no coincidence that my parents ask my nephew how to load an app, fix a printer, or hook up Chromecast. The world is a sea of change.
I think it is the right time for emerging public company CEO's.They have a much larger audience than they think, and many of the millennials will let the Robo Trading Algo get them some fresh return. But with some portion of their funds, these same millennials will buy a large chunk of shares in the companies I had dinner with on the conference circuit. They will listen to the conference calls and ask a question in the Q&A. Then, they will text a friend to get approval or maybe even ask them to Google a product or service just to make them feel confident about their investment. But they never, ever call a broker.It would be like answering a cell phone call from your Dad while at a movie on Friday night.
The market is bifurcating in a strange and unusual way, and in my 30 years of following emerging stocks, I noticed things have taken a turn on the back of social media and technology transforming FinTech into the coolest kid on the block!