Seeking Alpha

Just The Beginning? Tech On The March

by: SA Marketplace

Tech galloped ahead of the market again in 2017. Is this just how markets will work going forward?

Our panel calls out specific trends and drivers, including differing views on how blockchain and bitcoin matter.

There are plenty of ideas for top performers next year that go beyond the usual suspects.

2017 has been an exciting year in the markets. All-time highs seem to fall every week, the market has shaken off three Federal Reserve rate hikes as no big deal, and there is so much bitcoin to talk about that it makes a head spin.

It's also been an exciting year on the Seeking Alpha Marketplace. Marketplace is our platform for authors to offer investing services that go beyond what they can do in public articles. In 2017, we went from 75 authors on the platform to 155. Those authors have a wide range of expertise and backgrounds. And while 2017 has felt like a year where everything has gone in one direction - up - we wanted to draw on this diverse array of backgrounds.

So, we're doing a Year End Marketplace Roundtable series. Over the next 2 weeks or so, we will be featuring expert panels giving their outlook on 2018 in corners of the market ranging from Tech to Energy, Dividends to Alternative Strategies, Gold to Value investing. We hope you'll find these discussions useful no matter how you invest.

Today's discussion covers tech, as we look at whether the industry can maintain its momentum after a nearly 30% return in 2017, what the next big tech trend will be, and bitcoin, bitcoin, and more bitcoin.

Our Panel:

Editor's note - this interview was sent out in late November and answered in early/mid-December

Seeking Alpha: The Nasdaq is up nearly 30% year to date (as of November 29th), beating the S&P in an upward-moving market, and The SOXX semiconductor ETF is up more than 45% year-to-date. Can that momentum continue?

Bull & Bear Trading: Completion of the tax reform bill should carry the market to new highs on continued momentum for a brief time period. This market peak could represent a short-term top as most good news will have been priced into the market at that point. The long-awaited correction that ensues will be healthy for markets and present a buying opportunity for the future as lower corporate tax rates promise enhanced profitability.

John Rhodes: I have no crystal ball. Yet it's undeniable that the zeitgeist has been dominated by the promise of technology. Therefore, my suggestion is to consider the strength of several technical mega trends including but not limited to: Artificial Intelligence, Internet of Things, Wearables, and Autonomous Vehicles. I can also easily add e-commerce, cloud computing, nanotechnology, mobile computing, and more. And, I'm not even getting into biotechnology, space travel, renewable energy, human longevity, and the singularity. The point? More than ever, technology is eating the world and producing massive profits. I don't typically think in terms of quarters or years, but instead, I have tremendous confidence that this technical momentum will continue over the entire century. It's quite obvious because the capitalist system seeks to drive profits, embraces growth and is fully drunk on consumerism. And right now, almost nothing threatens capitalism. In short, the prevailing momentum will continue because technology is the primary catalyst for the #1 most important resource: The Creative Human Mind. And yet, if there's a crash, I suspect growth-oriented technology stocks will feel significantly greater pain than CocaCola (KO), Procter & Gamble (PG), Johnson & Johnson (JNJ), Altria (MO), AT&T (T), Wal-Mart (WMT), and so on. Therefore, outside of a very slowly growing crypto mini-portfolio, I'm making no outsized bets on technology because of giddy feelings, or this market momentum. One step in front of the other, carry on.

D.M. Martins Research: The stock market is getting quite a bit of support from an environment of abundant cash supply, economic strength, and low risk perception. I believe tech stocks could continue to rally well into 2018 for as long as the macro conditions remain favorable. But I think debating momentum in tech is much less important of an issue than a holistic discussion around portfolio risk balance. I will be no less bullish about tech in 2018 than I have been in 2017 - but I also believe it is crucial that investors remain as focused on downside protection, primarily through diversification to avoid getting caught by a correction that is also not out of question.

Tom K. Lloyd Sr.: I don't think so. The recent rotation out of technology into financials is an indication of what to expect in 2018. I think Western Digital (WDC) and Micron (MU) are the canaries in the technology mine. I think they will lead the flattening out of the enormous climb in technology stocks in 2018. Portfolio managers will be looking for stocks that are at the early stages of a long secular uptrend that is in the cards for financials. Of course, some top technology stocks will continue to provide good returns in 2018. We have Alphabet (NASDAQ:GOOGL) (GOOG), Facebook (FB), and Apple (AAPL) in our 2018 model portfolio. It is a ten stock, $100,000 portfolio.

ValueAnalyst: Unlikely. Given current information, I expect major indices to be up in 2018, but generally more volatile due to increased macro and political risks.

Damon Verial: Mean reversion and an ultimate cycle pullback will catch up to the market. Investors need to decide whether staying in at this point, where the potential gains are growing along with the potential losses, is worth the risk. In the end, it's a question of your risk tolerance. It's like we are in a nuclear reactor full of gold: You can stay inside and snatch up increasingly easily obtainable profits or run outside while you have the chance. If you're in this game for retirement or slow growth, I say you look to reduce your exposure in 2018. If you're in it to get rich, however, now's a great time to be a player.

Joe Albano: The momentum can certainly continue as fundamentals are just picking up in the last half of 2017. Even in the face of maturing, Facebook, for example, continues to outperform and sustain strong revenue growth. As far as semiconductors, Micron (MU) is seeing continued strength in memory prices but even more strength in its ability to catch up with competitors in terms of technology and node transition. Of course, fear of a cycle top will remain as many have only gone out to the end of 2018 in predictions for a strong DRAM market. However, many analysts, at the beginning of 2017, only expected memory pricing strength to top out two months ago, whereas today, that particular expectation has been pushed off for a hand full of quarters as memory pricing continues to climb against all expectations and estimates.

David Pinsen: Yes, that momentum can continue - momentum often does just that. Whether it will continue, I have no idea.

Enertuition: I do not believe much in calling direction of the overall market and instead focus on individual stocks and if their stories make sense.

Elazar Advisors, LLC: After 10 boring years, we finally had a breakout year not only in the market but fundamentals too. Earnings started picking up. Companies started beating earnings AND, more importantly, guiding higher. That's a change. Why? It's called a cycle because it cycles. The market moves early. CEOs see their businesses get a little better. Then they say, "Hey, you know what? I think I'll get a little more aggressive." And it cycles. I think next year can be potentially better than this one as CEOs look back at a decent '17 and say in unison, "not bad." Then, they will realize (in unison) they better invest in tech or get run over by some Amazon-type (AMZN) company.

Ryan Surber: I think 2018 has a real good shot at duplicating this year's gains in the semiconductor space - or even best it. Though we still see the PC market continue to shrink, which is the most traditional driver of the semiconductor market, it has been rapidly replaced by current revenue drivers in cloud computing, big data, artificial intelligence, industrial, cryptocurrency, and automotive.

Kenra Investors: The momentum may continue for sure but probably not for all the sub-sectors and companies that performed so well in the past 2-3 years. I think we are seeing increasing risks in many places of tech not just because valuations have reached sky-high levels, but because the conditions supporting the unconditional fast-growth in many sub-sectors are starting to fade away. There are many tech companies that have been able to exploit a "blue ocean" in their respective markets until recently, while competitive pressures are starting to ramp up and may become annoying in the next years. I think momentum will continue for many of the players that have been clear winners in the past years, but we will probably start to see more diverging trends within the tech space. It may be the case to be more selective going forward.

SA: What are the trends investors should look for in 2018?

B&BT: Increasingly, companies are seeking the ways and means to benefit from the rapid emergence of cryptocurrencies. AI-related trades will continue. Successful platform-based ideas such as CarGurus (CARG) and Stitch Fix (SFIX) will continue to demonstrate revenue growth and high margins as a more efficient business model for the future.

JR: My strongest advice is that intelligent investors should get their edge using a counterintuitive approach that I will explain in a moment. First, it's critical to remember that most investors get advice from the talking heads. Therefore, they are getting average advice from average people. You can expect average results. Imagine doing these two things instead. First, other than high quality sources like Seeking Alpha, think about what happens if you shut off all other media, all other channels, all other noise. Stop Facebook, stop Twitter (TWTR). The intelligent investor is forced to dig into source materials like 10-Ks, earnings call transcripts, technical presentations, industry trade publications, and more. Real knowledge, highly empirical, and data-driven rationality. Second, turn on the "human filter" and consider how any technology is connected to biological imperatives. And, filter ideas based on human psychology, including emotional drivers such as greed, envy, and lust. Remember: The best marketing ideas are connected to making money (starting businesses, getting a better job, keeping money safe), improving relationships (dating, parenting, caregiving, sex), and health (longevity, safety, pleasure, food). Use source materials and use these filters together and every year will get better for you as an investor. Point blank, the best trends are those that are at least 5,000 years old.

DMMR: In tech, I believe the key trends have been well identified: AI, VR, driverless technologies being some of the main ones, with cloud entering a more mature stage but still with plenty of fuel to burn. I believe these technological developments are irreversible, whether the stock market remains strong or not in the short- to mid-term. I favor a diversified approach to investing in some of the names that have been leading the way in the space, at scale: Facebook and Alphabet quickly come to mind, with Apple and Microsoft (NASDAQ:MSFT) likely good alternatives as well.

TL: Sector rotation is key. It takes portfolio managers a long time to accumulate their positions and a long time to unwind them. When they unwind, they want to be selling into strength, so they have to start selling long before price peaks and turns down. Think of the value players who bought Apple last year at $90 and now can sell into strength at $180 for a double. I expect 2018 to be very good for Apple, but can the portfolio managers wait until 2019 to start rotating out? I think they will be selling into Apple's rising prices during 2018. So what is there to worry about? Really, nothing, except Apple in 2018 will not do what it did in 2017, but it will still give investors a great return. Portfolio managers will be looking for down and out stocks that can do what Apple did in 2017. So will we and our system for selecting Daily Index Beaters.

VA: Money flow into energy, Fed policy, major shifts in automotive.

DV: The answer is the same as any year: No one knows until it is too late. If I had the answer to that, I'd be 100% exposed to that market. Instead, I can only hedge my bets. I mean, I could give you an obvious answer, like "Bitcoin," but that's a cop-out. Those who've made the most efficient bets in trendy markets have already done so. Buying something like Bitcoin now is a momentum trade; it's not getting in on a booming trend. Still, to give a proper answer to this question, I think hardcore gaming is an industry that will attract a lot of money. This does not mean I recommend stocks like Activision Blizzard (ATVI) or Electronic Arts (EA) but something like Steam going private - or exposure to Twitch via Amazon. As of now, there is no real answer as to how to gain direct exposure to this market, but if one appears in 2018, I will be heavily exposed, for sure.

JA: Keep an eye on memory (DRAM and NAND), cryptocurrencies, and iPhones. With 2017 having the great enlightenment of Bitcoin to the masses, 2018 could be a make or break year with more potential decisions about regulation and continued adoption in mainstream venues. Adoption for merchants of BTC could be a wise investment decision as a transaction worth $100 today could be worth $130 next week simply by "forex" between BTC and the dollar. With iPhones, it could be a key year to see how the iPhone X sells-through as well as how Apple decides to "one up" itself for the 2018 release season.

DP: It's not clear to me now. I'm not a macro guy, but sometimes trends emerge in the names that appear near the top of Portfolio Armor's daily rankings. Those rankings are based on price history and option market sentiment, and in the second half of this year, information technology and Chinese e-commerce names were common there for a while. But as of the time I'm writing this (December 4th), it appears to be in flux. Last week, there were a number of biotechs ranked among the top ten, and today, there was a homebuilder, industrial manufacturers, and transports among the top ten. This may have something to do with the pending tax legislation, which, as I understand it, may offer more attractive expensing rules for businesses, as well as a lower corporate tax rate.

ET: The key trend that we are monitoring from "Beyond The Hype" is autonomous driving. Waymo has the potential to be a big story of 2018. Tesla (TSLA) has the potential to be the biggest bust of 2018.

EA: Where are the hyperscalers spending!? Hyperscale, cloud companies right now are the biggest drivers of the entire tech food-chain. They are spending huge amounts of money. It used to be each company had to build out their own private network. Now, they can begin to lean on the cloud, pay monthly, and avoid the big risk and expense of building and managing a network. So, where are these cloud vendors spending? Therein are the big trends for 2018.

RS: Let's stick with the current drivers for the semiconductor industry. Consumer demand for more content per vehicle continues to grow - along with automotive wireless capabilities. Autonomous vehicles continue to be an inevitable reality, albeit maybe in less sexy applications than personal vehicles - instead finding initial adoption in mass transit systems, agriculture-based tractors and equipment and over-the-road hauling applications. All of these vehicles are quickly evolving from "vehicle" to "technological marvel."

The "cryptocraze" began heating up in late 2017, and I believe that this conversation is just getting started. The excitement in big cryptocurrency gains will move to a more sustainable (and equally exciting) conversation about the various use cases for blockchain technology - and ultimately how the "tokenization of everything" turns several different industries - if not every industry - entirely on their head. The S&P 500, NASDAQ, and DJIA all finish higher in 2018.

KI: The ongoing integration of digital capabilities in traditional sectors such as retail and restaurants is an interesting trend and can change the equilibrium between e-commerce and traditional stores.

Another interesting trend is the changing landscape in the streaming industry. Netflix (NFLX) is one of those companies I mentioned before. It exploited a blue ocean with its innovative business model but can start to face strong headwinds as competition from Disney (DIS) and other players intensifies. We also have the repeal of net neutrality and the uncertain effects it can have on a business like Netflix and several other companies in the internet industry. The way internet service providers will try to take advantage of the fall of net neutrality may change the competitive landscape and affect the fundamentals of many players - both the small ones and the big ones. Let's not forget that the ISPs industry in the United States is full of small regional monopolies where companies like Comcast (CMCSA) will have much more leeway without net neutrality.

SA: What was the big story or lesson learned for you in 2017?

B&BT: The IPOs of lower quality issues such as Snap (SNAP) and Blue Apron (APRN) combined with rampant speculation in low-priced and penny stocks has clearly signaled this aging bull market is getting long in the tooth. For me, the decline in quality of some IPOs has been reminiscent of the end of the boom. Also, the upcoming Chinese debt crisis is now becoming more of a reality with serious global implications. No nation can manipulate the dynamics and forces of markets forever. The longer the increasing size of the manipulation takes place the more severe the consequences as the scheme must eventually unravel. Markets cannot be censored, silenced, imprisoned, or dictated to by arrogant and dishonest individuals within the Chinese communist government endlessly.

JR: I'm a pretty conservative investor. I'm value-oriented. I generally stick with huge companies that pay me a growing stream of dividends. With that as the background, I stopped rejecting Bitcoin. I finally took a sober look at blockchain technology. I really started to go deep. The first revelation was that Bitcoin has fully captured the imagination, focus and energy of millions of people. The momentum is palpable. Far beyond the intense greed, there's genuine curiosity and sincere hope about the future. Second, blockchain technology changes the game; it's extremely disruptive. We're talking here about shifting the trust we've previously placed in our economic gods and financial monoliths over to the internet, and math. For what it's worth, this is also highly related to AI and autonomous vehicles. That's because we've started shifting our faith in squishy humans with their loose rules over to cold, hard, rational forces. Back on topic: If you listen, you will literally hear people talking about the fundamental nature of money itself, not just what it can buy or how much we have. My pithy summarization is that Bitcoin cannot go to zero; it's impossible, insofar as there's not an existential threat to the internet and humanity. Or, perhaps the government will fully exploit its strength via regulatory boiling oil, direct threats of confiscation, or unfriendly taxation.

DMMR: Facebook was an interesting lesson for me this year. I spent most of 2017 keeping my distance from the stock in fear of a significant slowdown in revenue growth due to decreased ad load. When the caution proved to be overly prudent, I bought shares after observing the quality of the management team and the robustness of the business model. Although I will unlikely abandon my value approach to investing, I will probably be much more receptive to buying quality (of the company and management team), even if it means paying an earnings multiple of 30x or more.

TL: Both momentum stocks like Amazon and value stocks like Apple did great. You can make money with both types of stocks, but our system prefers to pick stocks like Apple over stocks like Amazon. Our model portfolio will still over-weight technology in 2018, but not with aggressive growth, overvalued stocks.

VA: Markets are short-sighted; way shorter than I originally thought.

DV: I made most of my profits this year by shorting hyped stocks. No tech investor likes this answer, but it's true. Shorting the QQQ, Microsoft, NetEase (NTES)... These plays were highly technical mean-reversion pullback plays that were not anti-tech in thesis but based upon the idea that hyped "glamour stocks" often get too far ahead of the market and must pull back. Part of my interest in trading tech stocks stems from this fact. I seem to have a talent for finding peaks. Recall my calling the top of GoPro (GPRO), for instance - as a short-term trader, I'm more interested in unsustainable growth than sustainable growth.

JA: All the homework and research you put into curate winning picks can be disrupted by the market's short-term gyrations. If the story doesn't change, then your position shouldn't. Sticking with my winners proved to be the right decision as the market decided to take a roller coaster ride at times but ultimately returned to the station of fundamentals to bring the thesis to its rightful valuation.

DP: One was less a lesson than a reinforcement of something I already knew, and the other, somewhat related, was a surprise. Both relate to the hedged portfolio method I developed a few years ago. From backtests, I knew that portfolios hedged against small, single-digit declines tended to generate modest returns. I also knew that returns tended to increase as you took on greater risk. In 2017, I built a system to "fronttest" portfolios: to track the performance, in real time, of hedged portfolios I time-stamped on Seeking Alpha. One surprise for me was that some portfolios hedged against high single-digit declines were able to beat the market, net of hedging and trading costs.

ET: Elon Musk's ability to raise capital with increasingly fantastic stories should not be underestimated.

EA: Our service has many pros and tech industry experts. But we also have some newer investors. For everybody, it's a balancing act all the time. We constantly try to preach about risk management. The "buys" are the offense. They're great stories. But the only way we're going to win long term is by having defense; strict and realistic risk parameters so each investor can make this into a business for the long run. By working together and having sizing and stop-loss rules, I think we all have a much better chance to win no matter what the market has to offer.

RS: "Revolution" is a very acceptable term for what the blockchain offers the world citizenry, and the Seeking Alpha investor community is a unique, powerful voice within the investment industry that can be used to drive financial and investment education across the globe.

I have had a great year in the market, and a great year on Seeking Alpha. I retired as a financial advisor in 2012 after serving over 2,000 clients and their portfolio management needs. Though I've always enjoyed researching overlooked themes, trends, and stocks, I didn't have as much time to do it.

Now, I get to interview my financial advisory network to listen to their take on trends, and what their clients are talking about. I get to watch a little more financial news and dive into daily and weekly publications. I travel about 1/4 of the year, and I enjoy meeting with publicly traded companies (or often soon-to-be publicly traded companies) to get to know their current and future prospects in business, and what their largest hurdles are to their success. I find that living in Des Moines, Iowa, at the crossroads of America, gives me easy access to everywhere I need to get to - quickly.

I dove into the Seeking Alpha community and have gotten to know some great investors and some great people through the commenting on my articles, other authors' articles, and in my marketplace forum - the Covered Call Investor.

And lastly, the blockchain is here to stay - and here to bring efficiency to many industries while disrupting (or eliminating) many of the companies that get in its way. I believe this story is just getting started.

KI: Although it hasn't affected my operations much, I learned that when the market starts to apply ad-hoc rules for valuing companies, you need a strong catalyst to get back to a normal situation. A company can show clear signs of fundamental deterioration, miss every quarter, revise its guidance down, give evidence of deep fundamental problems, while the market can keep ignoring all those fundamental weaknesses and keep pushing the stock higher. The lesson I learned is to never underestimate the potential divergence between the value of a business and the price the market is willing to pay when wishful thinking dominates.

SA: What are you preparing for in 2018? Any big themes to watch out for?

B&BT: As previously mentioned, a correction is expected after the tax reform buying momentum becomes exhausted. This momentum higher could stall in days or months, but it will stall, and the market is long overdue for a significant correction. This will represent a buying opportunity. The biggest macro issue that must be constantly watched for are signs of the Chinese debt crisis being acknowledged by global markets. This crisis is already in existence, but the willingness of global markets to confirm its severity is the issue. Perception is reality, and markets are reticent to openly discuss the fraudulent nature of Chinese accounting and reporting that exists at every level of their economy. Do any of us really believe that the Chinese are telling the truth about their accounting and economy? Or should we believe that an economy of that size can simply be "managed" to deliver 6% GDP every quarter without exception endlessly.

JR: I'm shifting more and more of my time and attention to the ever-growing Digital coin Collective, where we'll continue to focus on Bitcoin, Ethereum, Litecoin, and other cryptocurrencies. I'll continue to dive into ICOs (initial coin offerings), blockchain investments and working 1-to-1 with crypto investors. All that said, I have a shocking revelation. Inside the Digital coin Collective my #1 priority will be looking for all the ways that Bitcoin and cryptocurrencies will be killed. I'm hunting down every single threat, every problem, every issue. I've decided to invert the thinking - I'm not looking for this to go to the moon but instead the grave! What kills this game? What is the widow-maker? This isn't meant to be macabre but instead life-giving and joyous. That's because if Bitcoin and crypto can stay alive, I have strong confidence that it'll keep going in the right direction. I believe in this unique space. Here and now, the opposite of death is wild abundance and radical growth... not a boring, mundane or average life. If the rocket doesn't explode, if the rocket doesn't get shot down, the rocket will continue flying to the moon. Therefore, safety is everything. I'm preparing for death because that is the path to an abundant life.

DMMR: In tech, I will continue to stay close to the companies competing well and at scale within the themes that I've highlighted above (AI, VR, driverless, cloud). I will likely continue to own Apple, Facebook, Alphabet, and consider Microsoft if the stock price presents me with a good entry point. But back to my earlier answer, more important than riding trends in 2018 will be my continued focus on risk diversification and downside protection. In my view, trying to cherry-pick good tech names is no more important than making sure that my fruit basket (i.e. portfolio) is robust to withstand potential headwinds.

TL: Bitcoin points to the beginning of a secular revolution. I don't think Bitcoin will be the winner. Something designed by a bank under regulation, or a credit card company will probably be the winner. Bitcoin is the first on the beach, but I don't think it has a moat. I am waiting for the competition. I am waiting for Amazon to create a cryptocurrency which it would immediately accept for everything it sells. Apple and Google are smart enough to compete with Bitcoin with a cryptocurrency of their own and provide the confidence a big name gives to any product. We need a legitimate cryptocurrency not wrapped up in illegal money activities. More practically speaking, IBM's Watson (IBM), artificial intelligence, Robo trading/investing, Virtual Reality, self-driving cars, Tesla trucks, all show technology has a brilliant future. Google has only scratched the surface. What is the next Google? Facebook?

DV: I am expecting a market crash/correction in late 2018 to early 2019. I will be watching my metrics in this regard. Tech-wise, again, I hope to see a hardcore gaming company such as Steam to go public or for Twitch to branch off Amazon as its own stock. Barring that, I'd like to see some Bitcoin or cryptocurrency ETF with decent liquidity pop up - I'd start trading it immediately. As for major tech stocks, I don't currently have any huge bets in the long direction, though I do have short positions on those I think will pull back, namely Priceline (PCLN) and (JD) at the moment.

JA: 2018 may be a pivotal year for data storage especially if NAND pricing flattens or weakens. NAND is expected to be elastic; as pricing decreases, demand will increase. This could be a catalyst for further AI development and massive investment into datacenters, servers, and cloud products. This could bring along AI development companies (Amazon, Alphabet, Microsoft, etc) as well as AI chip manufacturers such as Nvidia (NVDA).

DP: The hedged portfolios I present to my Bulletproof Investing subscribers are prepared for any eventuality because they are hedged. They'll continue to be comprised of securities my system estimates have high potential returns, net of the cost of hedging them. Rather than guessing what the big themes will be, we'll continue to look at the price action and option sentiment for the 4,000+ stocks and exchange traded products with options traded on them in the U.S., and go where the data takes us.

ET: Solar, batteries, BEVs, and autonomous driving are all the key areas of focus for "Beyond The Hype". I look forward to providing the highest quality coverage on Wall Street or Main Street in these segments.

EA: If anybody knows the famous baseball movie Field of Dreams Shoeless Joe said, "He's not gonna wanna load the bases, so look low and away.... But watch out for in your ear." "In your ear" means don't get hit by a 90 mile-per-hour fastball. We think we know what to expect. The trends are real and big. Data, cloud, the economies good. These things look like it can continue. The momentum's there. We know what pitch we're looking for. That said, every morning I come in with the attitude "But watch out for in your ear." That's why my job is work intensive. It's never sitting still. When I worked at hedge funds it's like "the stock's down 2% and you don't know what's going on? What's up?" So it's a little bit in my blood to make sure my subscribers are always going to be ok, hopefully. So while I'm pretty aggressive my "Buys" are the chiseled down cream of the crop, I hope. But watching out for "in your ear."

RS: I continue to watch companies that are best-of-breed companies (management and revenue creation) and technologies (perhaps younger unproven revenue or management with amazing technology) that are heavily exposed to automotive intelligence, artificial intelligence, and the blockchain.

I believe that strong revenues in 2017 will drive strong investment in 2018 and beyond.

Of course, there are risks to trends and short-term investment gains, and these themes include the current president's nefarious reputation by at least half of America, the November U.S. midterm election, our relationship with all the players in the dealings with North Korea, and the ongoing health insurance plight in the United States.

Any one of these headlines heating up in 2018 could damper investors' propensity to keep up new money inflows or even cause a major "flight-to-quality," or a shift from more risky investments (stocks and cryptocurrency) to less risky investments (bonds, CDs, savings accounts and cash).

KI: There are several interesting themes. One is the cryptocurrency bubble and the effects it will have on the stocks exposed to the industry. If you are a trader, you are riding the wave and trying to make money. If you are an investor, you are waiting for the bubble to burst to see whether any interesting opportunities arise. Another big theme is related to the fall of net neutrality, which I mentioned before. The way ISPs and other companies decide to play in the new environment can affect the economics of many businesses. For all those invested in internet stocks, it can be interesting to monitor the moves of players such as Comcast and its peers.

SA: What is one of your best ideas for 2018, and what is the story?

B&BT: Trader's Idea Flow believes that a degree of volatility will return to the markets in 2018. As a short-term trader, we are optimistic for an increased number of opportunities in the coming year. Specific stock ideas are long positions in Stitch Fix and CarGurus with a short call on Roku (ROKU). Best wishes to all for a safe and happy holiday season.

JR: My best idea is that you should invest in yourself, your best skills, your reason why, your greatest strengths. If something is critical or urgent in your life please be sure to make sure it's at least at an average level, or outsource it to get it to that level. Otherwise? Ignore your weaknesses and concentrate on the vital few. I say this in the context of Buffett's "Circle of Competence" and also in relation to Bitcoin, blockchain, and crypto. Especially if you're a technology investor, my very best advice is to punch and kick. Do some research. It ain't going away and will provide you with a special type of first mover advantage. Put another way, even if you completely hate Bitcoin, but you're a technology investor, find the time to see how the blockchain is already cutting deep into banking, logistics, security, networking, storage, health care, energy, governance, and far beyond. It's becoming the trust layer of the internet. It's rapidly becoming a key part of the techno-economic fabric. So go ahead and pick one thread. Grab even just one string, and pull. Then use your unique abilities to get an advantage here while you can because it's all happening now, and into 2018. Bottom line: You can say "Screw Bitcoin!" all you want but don't throw the blockchain baby out with the bathwater. You will regret it.

DMMR: In tech, I have recently bought PayPal (PYPL) into quite a bit of stock price strength - an unusual move for me. I believe the company has the right technology and scale to compete very well in a sub-sector that I find very attractive: payment platforms. The space is likely to become more crowded with companies like Amazon and Apple popularizing their own payment solutions, but I believe PayPal (with the addition of its acquiree Venmo) is a step ahead of the rest of the crowd. With the stock de-risking a bit in the end of November, I find the name a compelling New Year buy.

TL: I like Facebook, Twitter, and Square (SQ). For better or worse, Trump has shown what can be done with Twitter. Maybe Square should invent a cryptocurrency. I already indicated we have Apple, Google, and Facebook in our 2018 model portfolio. If I have to pick one, it is Facebook. Everyone knows the story. It is at the beginning of the Google run-up. Probably good for the next 5 years if not 10. All Zuckerberg has to do is copy Bezos or replace Amazon, the way he did Google.

VA: Tesla. The stock is currently valued as an automotive company that will never become profitable and will only grow to 500,000 unit sales by 2020, which was the company's plan until May of 2016. The company has since accelerated its growth plans, to which market participants have not yet adjusted. This will change in 2018.

DV: Cheap Chinese tech products have already brought up the life quality of the lower-middle class across the world. Much of the growth there is over. The Chinese tech market is overvalued. I expect a pullback in favor of more premium, unique alternatives. An example - just an example - would be a pair-trade that shorts Alibaba (BABA) in favor of AMZN. I don't have a specific trade I intend to actualize, although I am currently shorting FXI. Overall, I think 2018 and 2019 will be years in which short tech traders make more money than tech permabulls.

JA: Maybe surprisingly, I have a best idea in a non-tech industry and believe the offshore oil drillers will begin to recover, noting the sustained move for WTI as we exit the year. As oil moves higher, drillers will see a return of contracts at higher day rates from oil and gas majors. It's likely this will take the majority of 2018 and depends on the continued strength in the crude market, but this is the beginning of a recovery as oil has not been this high since the middle of 2015.

DP: I post my system's top 10 names on Bulletproof Investing every week. Although there tends to be some overlap from week to week, it's possible that the top names as of today (December 4th) won't be the top names when you read this. Since I don't know what the names will be, I can't tell you their stories, but what I can tell you is that the stories don't matter. Align Technologies (ALGN) was one of Portfolio Armor's top picks in April, and I didn't learn what they did (they make Invisalign braces) until I read a news headline about the company on Seeking Alpha 6 months later.

ET: AMD (AMD) could be the biggest winner next year. 2018 will show that David can indeed inflict pain on Goliath.

EA: I have multiple companies I like. Frankly I love them all. A good parent has to love all their children the same, right?

That said, for the wide gamut of styles and investors it's probably still Facebook. Depending on when this is published we have like 80% 12-month upside. Our earnings numbers include the "look Congress we care" jacking up of expenses to ward off future Russian political meddling. Even with that our EPS potential is still so so huge. Why? Because their top-line growth is huge, their margins are huge. But, oh you want a kicker? Oh my. Brief history. Remember some guy Mark Zuckerberg said way-back-when that mobile was going to be the next "mega-wave." Remember that? He nailed it, right? Well, he sees another mega-wave coming. Anybody care? It's called... video. So while they have everybody worried about ad load, that ad load is soon going to jump as they start pumping video through their site. Look out.

Good luck to all!

RS: Let's stick with the hottest conversation among worldwide investors these days - the conversation of cryptocurrency.

I just called Bitcoin to $90,000 both on Seeking Alpha (A Reasonable Valuation Methodology For Bitcoin - And Why It Grows 6X From Here and on Cheddar TV's dedicated cryptocurrency segment every Friday afternoon

Blockchain technology, and the epic technological shift of the "tokenization of everything" as Matthew Roszak calls it, is going to present opportunity, and risk, unlike anything investors have experienced. We can see that with 2017 cryptocurrency gains, but we're just getting started with this roller coaster ride.

KI: One of my best ideas is eBay (EBAY). This company used to be the king of eCommerce before Amazon took the crown with its aggressive business model. It's still the second most important eCommerce platform in the world if we exclude China. I think the market is underestimating the quality of eBay's business model, the power of its network effect and its potential growth. We have seen a series of new features and successful efforts to re-design the platform to improve customers' engagement, and I think the market didn't understand what kind of growth this business can deliver with its enhanced platform. Only in the past months, the company has replicated some of the most interesting and attractive features customers look for in e-commerce platforms, without any significant impact on the company's fundamentals. The company has found an effective way to highlight the best offers with free shipping, taking advantage of its huge sellers base and the variety of their offerings to compete against Amazon and the others more effectively. In addition to this, there is an increasingly aggressive marketing push that seems to be particularly effective and a series of additional growth catalysts that include huge improvements in the advertising system. I rarely see so many attractive characteristics and growth catalysts in a business trading at just twenty times earnings.


Thanks to our panel for joining us. We hope this gives you a good outlook for the year ahead in tech, and maybe some good ideas!

If you're interested in any of our panel's work, check out their profiles below, or their services:

We're wrapping up our Marketplace Year-End Roundtable series this week with three more editions plus a best ideas compilation. Follow this account to get those, as well as our regular Marketplace author interviews (the Roundtable) and news about what's happening on the Marketplace.

Tomorrow's Theme: Alternative Strategies

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: D.M. Martins Research is long FB, PYPL, AAPL, GOOG. Kenra Investors is Long DIS and EBAY.