Equity Crowdfunding Is Hitting Its Stride

As regular Early Investing readers know, I’m not bullish on U.S. stocks as a group. There’s far too much debt, buybacks funded by debt, sky-high executive pay and lofty prices.

I prefer to invest in businesses with bright futures. And right now, that means I’m mostly looking for early and fast-growing U.S. startups. There are a few good opportunities in smaller cap stocks, but I avoid the indexes like the plague.

Yes, I do own some stocks – mostly in tech and cannabis. There are still good opportunities to be found. But too many large publicly traded companies today seem to have fundamentally unsustainable businesses.

I don’t own any defense companies or Big Pharma stocks, for example. I don’t see either of these groups as sustainable in their current form. Big Pharma has too much debt, and it relies too much on charging crazy prices to the government and insurance companies, which is in turn dramatically pushing up insurance prices. It’s not sustainable in the long run. There’s a reason these guys trade at such “cheap” valuations compared with the rest of the market.

In terms of defense stocks… our military budget will have to drastically shrink eventually. You can’t keep running up trillion-dollar deficits forever, after all. Defense spending is projected to be more than $1 trillion by 2020, according to The Washington Post. So defense stocks may have a few good years left, but not many. There’s a reason defense stocks also trade at low multiples.

Those are just two examples (don’t get me started on big banks). We can’t ignore that unsustainable practices – like piling up debt – have spread across all industries. It’s not an isolated problem.

In addition, many of the old guard companies are not making the transition to modern digital technology well. Maybe they’re in too much debt, or maybe their software isn’t good enough. Either can be a death sentence.

1 2
View single page >> |

Disclaimer: Nothing published by Early Investing, LLC. should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are ...

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.


Leave a comment to automatically be entered into our contest to win a free Echo Show.