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• 2015 Thoughts
• 2015 Stock Picks
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2015 Thoughts
This statement from last year holds true for 2015:
"Technology is driving continuously faster change to the way we operate with respect to communication, commerce, and education. People are more connected to each other and they can buy anything they want, pretty much whenever. Video has made it easier to disperse educational materials. And more powerful and easy to use devices—phones and tablets (Apple, Google, Samsung) at lower prices have increased the convenience and utility of access to enabling information/data. 2014 is marked by this transformation where technology has truly hit the mainstream, across all levels, and, arguably, has 'made life better'."

In 2015, the biggest area of disruption will be centered around new ways for mainstream customers to consume Television/Video content and the connectivity options for Internet, Cable, and Phone that they'll have. On a broad level, TV & Video entertainment is changing as Music has been in the past two decades. What's different in 2015 is the acceleration of change is happening faster and with different players. Consumers are sick of paying too much for Phone, Internet, and Cable; monopolies, primarily Comcast and AT&T own the pipes that deliver communications and the content programming (curation) that goes with them.

Early adopters have been changing their habits; subscribing to Netflix for on-demand movies and using over-the-air antennaes for local news and network content (or just forgoing completely by getting their news online-or tuning it out completely). Though the vast majority of consumers (myself included) have been content with "paying what they bill us" and "watching what they tell us", pricing pressures and choice prove once again that competition is good for the customer. Consumers are getting wise by questioning the real benefit of these entertainment utilities. In response, AT&T and Comcast have been bombarding us with new packages that include Phone, Internet, and Cable with the added bonus of "home security". The truth is, these four things are actually one; a bigger fatter Internet connection to your door. Consumers who hang on to the idea of keeping a phone line "in case of an emergency" may not know that their new and improved home phone line (which actually sounds worse) is really voice over IP; meaning phone off your Internet -- it is not an old-fashioned, earthquake-proof, dedicated analog line. Home security is an interesting application from the "Internet of things" but I'm not sure that appealing to fear is the greatest marketing strategy.

Bottom line: existing users are being sold a big fat pipe of data to your house that can be accessorized, made more indespensible with more features, to reduce your desire to switch for something else. But they are not sure they are getting their money's worth.

So who is going to dirsupt connectivity? And why do you think Google and Facebook have been making big investments in drones and satellites? They claim it is to bring "Internet connectivity to unserved third world countries". Wrong -it's to upseat AT&T and Comcast. By providing connectivity, they can bypass "the infrastructure tax" of providing their content over those third party services. A Satellite (and drone?) connection goes directly to the IP address of the end user, bypassing the "last mile" from the central office to your door. The motivation? Google and Facebook are trying to capture adverstising dollars that TV broadcasting has traditionally commanded --which TV networks still own. By controlling the access to content, they can also dictate the content and advertising. This is the key component; TV has yet to be usurped as the primary method to increase advertiser's brand awareness no matter the advances in Search (Google) and Mobile/Social (Facebook) advertising.

But what is video content? Video can be bucketed as instructional/how to (YouTube), entertainment (YouTube), movies (Netflix/Cable companies), local and news, and weekly programming (networks). YouTube and Netflix own the first two but weekly programming is the sweet spot that converges advertisers, content producers, and providers. Weekly programming provides ritualistic/habitual/reliable content to mass audiences. It is predictable for consumers and, therefore, predictable for advertisers. Netflix, Amazon, and others have realized this and are now providing new original (and expensive) weekly programming to lure users away from network programming.

But what about curation? Forever, we've been told what to watch by the content providers that programmed the content. But curators told us when and what. TV Guide told us what was on TV and, for decades, enjoyed the largest circulation of any magazine. Local radio told us what music to listen to. And, until recently, Yahoo! told us what web sites to visit. Now there are new curation methods; Pandora makes music recommendations based on "social signals" while Netflix sponsored a million dollar contest for their recommendation engine for movies. This said, Netflix doesn't yet have robust weekly programming at their disposal. There is a big opportunity for the next Curator.

So what's next? There will be a change in how we get content delivered. To gain acceptance, it will have to be easy to set up, cost less, and be curated.

Direct TV has been a pioneer in satellite for content delivery. And Netflix is best positioned to provide the ability to stream weekly programming. Google, Facebook, Apple, and Amazon will compete to partner or buy these companies.

2015 Stock Picks

Google and Facebook. Both are safe bets with Google likely having a large upside in 2015. Both will continue to innovate on ways to monetize and what they will do with content delivery and infrastructure remains to be seen.

Apple. Apple equips the world with the devices to consume our content. Who knows, maybe iTunes will become the modern version of TV Guide as well. Apple may start to take massive share of the corporate desktop market as their operating system is far less complex than Windows and most employees would prefer an Apple laptop. 

Amazon. Keep in mind Amazon's stock went up 60% in 2013; their poor performance in 2014 should take that in to consideration. Other things: Amazon may buy the US Postal Service; they have already contracted with them for Sunday package delivery. Additionally, UPS and FedEx are now charging dimensional weight for ground shipments. Meaning they'll charge the greater of the dimensional weight vs actual weight. You've likely received Amazon shipments where the box was much larger than necessary; this change by the carriers is meant to reduce this kind of waste. Amazon will likely take a few quarters to adapt. Regardless the stock price seems relatively low and who knows what this amazing company will do. This said, Alibaba is a better indicator of world-wide e-commerce and should be considered as well.

DDD. Three-D printing was was overhyped in 2013 and the bottom fell out in 2014. HP is way behind in 3-D printing however; I predict HP will buy DDD in 2015

Netflix. This is a nototoriously volatile stock but they really have changed user behavior for content consumption.

DISH Network. A different take on content delivery with an incredible infrastructure. I think they will be bought.

Tesla and Solar City. Tesla’s market cap is 1/3 that of General Motors. How is this possible? Regardless, their cars are truly amazing and consumer adoption has been incredible. Solar City, Elon Musk’s other company, is building the charging stations that will make Tesla’s viable for long distance travel. Both of these stocks are extremely volatile but could be great buys at the right price.

Garmin. Same as last year; Garmin is a leader in GPS technologies and devices. They are well-placed to be a partner for the “wearable” market. And they are diversifying into the action video camera space dominated by GoPro. The stock is wildly volatile, though, so use caution. Remarkably, they pay nearly 4% dividend.

Chevron. Oil. You and I don't know enough of what is really going on. All we know is that oil is ultimately scarce and prices will go back up. Buy Chevron because of their big dividend.

So here are the picks for 2015. Good Luck!