In this episode of MarketFoolery, host Chris Hill is joined by Motley fool analyst Jason Moser to discuss Johnson & Johnson's (JNJ 0.42%) one-shot vaccine getting the green light as the company prepares millions of doses to be deployed. Also, Netflix (NFLX 2.17%) cleans up at the Golden Globe Awards, while Disney (DIS 3.29%) has an opportunity to make a splash in April. Plus, we dip into the Fool Mailbag to discuss weighing positions in new stocks vs. existing positions.
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This video was recorded on March 1, 2021.
Chris Hill: It's Monday, March 1st. Welcome to MarketFoolery, I'm Chris Hill. With me today is Mr. Jason Moser, good to see you.
Jason Moser: Good to see you.
Hill: We have an investor's view of the Golden Globe Awards. We're going to talk allocation strategy, but we're going to start with the big news in the business world, which also happens to be the big news in the world in general. I'm talking about the fact that the Center for Disease Control has given the green light to Johnson and Johnson's one shot COVID-19 vaccine. Over the weekend, the FDA gave emergency use authorization and this week, millions of doses of J&J's vaccine are expected to be shipped out across the country, and this is good news to say the least.
Moser: Yeah, that's putting it very lightly. This really is big news in a number of different ways. Some key points I think to note for investors and just for individuals, clearly this is a vaccine that has been demonstrated to protect against COVID-19 related to hospitalization, death, there is the different variants aspect to it. This does seem to be a really promising option for a lot of folks. Johnson and Johnson is going to make it available on a not-for-profit basis. This is one of those things that you could sit there and criticize big firms for a lot of things, but the fact of the matter is Johnson and Johnson is going to be seen as a part of the solution here, and it's not something that's going to really be impacting their bottom line. For investors, maybe in the short term you're thinking, "That's not so good." Let's think about it a little bit longer-term and think about what they're doing and what it means they stand for, I like it.
To your point, they will be shipping a lot of that vaccine immediately, it sounds like they'll be delivering more than 20 million doses to the U.S. here this month, in March, and then the plan is to deliver 100 million of these single-shot vaccines to the U.S. during the first half of this year. Really, we're talking about over the next few months. The flood gates really should open now. This really matters for a lot of reasons. There are the obvious reasons, of course, more people can get vaccinated, but let's really dig down to what these big numbers mean, because I think while we saw a lot of progress of vaccines, I think the storage difficulties there were a little bit of a hurdle, the two shot deal is a little bit of a hurdle. We could get better on that and it seems like, with Johnson and Johnson, we have. If you look at our country today, the population is around 330 million people, round numbers. In 2019, around 16.5% of the American population was 65 years or older. Basically, about 55 million people. The reason why that matters is because according to the CDC website, 80% of the deaths from COVID-19 are in that 65 years and older demographic. So overwhelmingly, this is something that threatens older populations. If you have that 65 years and older population of around 55 million people, well then you can see very clearly through Johnson and Johnson alone, we could have more than enough vaccine to really help target the folks most at risk. All of a sudden, now, you start looking at the one-shot implications of being able to go so far beyond just that 65 year and older demographic. To put that in context, under 45 years old, that's just 2.5% of the overall deaths. This is clearly something that has impacted a specific cross-section of our society, and it sounds like we have the resources now to really help protect the most vulnerable. I think these next few months are going to be really optimistic from a number of different angles.
Hill: Just to broaden it from a stock perspective, it does seem like a crucial data point for anyone looking at what we've referred to recently as the great reopening. I look at shares of Live Nation hitting an all time high today. The optimism around this news from Johnson and Johnson is completely understandable.
Moser: Well, yeah, it really is. You're starting to see signs too that these vaccines definitely help prevent the transmission of this virus which that was the second big question was like, we knew that the vaccines would help prevent people from getting very sick. The other question was, will it prevent the transmission of this virus and its variance? It sounds like the signs are more and more pointing in the direction that yes, these vaccines in fact do. I think probably one of the bigger criticisms there for folks today, they may look at this Johnson & Johnson vaccine and say, "Well, the efficacy is only 65% or so." When you compare that to the other options out there that are 90%, 95%, well, I just don't want to take that Johnson & Johnson, what if I can get a vaccine that's going to protect me even more." Let's keep things in context here people. Because when you look at like the flu shot, for example a flu shot on average, it's again coming from the CDC site, they see that the flu shot, generally speaking, is going to reduce the risk of flu almost by 40% to 60%.
These vaccines that these companies have pumped out here are really, really special. I think you're going to have more than enough people in this country who would look at that Johnson & Johnson vaccine and say, "You're telling me I'm going to be 65%-70% efficacy and I just have to think one shot and I can knock this thing out?" I guarantee you you're going to have more demand for that shot than you have supply. All of a sudden now you're protected, not only the most vulnerable, but then think about the number of adults in the country versus kids. I think a lot of people were thinking we get to vaccinate 330 million people. No, you don't, because kids make up about 25% of that number. We can't vaccinate those kids with these shots. Really, we're looking at a specific swap of the population. Any way you cut it, this is tremendous news coming from a company like Johnson & Johnson. Johnson & Johnson you could criticize as an investment from a number of angles. It's not some kind of stock that's going to double overnight. But the longer you hang onto it, the more sense it makes. I was just curious, I was looking at the total price return of Johnson & Johnson over the last decade compared to the market and the total price return -- it's a dividend aristocrat. Obviously, this is one that you buy and you just hang onto. Over the last 10 years, the total price return on Johnson & Johnson shares is about 250% versus the market's 195%.
It may not be a stock that you own and feel like, "Oh, this makes a tremendous amount of sense in the near term." But if you buy the stock and just kind of tucked away and forget about it, I bet people who bought this stock 10 years ago are looking back and thinking, "Wow, hey, that's not a bad one to own." Then, think about this, I was going through the company's quarterly results here back at the end of January, and it's really impressive to see what this business has done to date. It has 28 different platforms and/or services within the company that each deliver $1 billion or more in annual sales for the business of Johnson & Johnson. So, think about that for a second. That's just tremendous. This is really one of the more important healthcare companies on the planet. I'm just super enthusiastic to see that they've been able to demonstrate such capability here. I think this is just going to be a real turning point not only for this country, but really for the world here in the first half of this year.
Hill: Our email address is firstname.lastname@example.org. You can also hit us up on Twitter, @marketfoolery is our Twitter handle. We got a question from Robin Firk, who hit us up on Twitter saying, "I invest a small amount every month in shares, both in the U.K. and the U.S. I have over 30 stocks now, but should I keep buying new stock or invest in shares already in my portfolio to increase my holdings? Love the show. Keep up the awesome work." Thank you for that, Robin. I love this question, because I think to me, it's a couple of things. It's the sign of an investor who is -- basically, Robin's the investor we all want everyone to be.
Hill: It's like Robin, it's like yes. Don't just hang it all on one stock. Look to build out that portfolio. When you're looking at 30 stocks, part of me wants to say, Jason, how much time do you want to spend on this? [laughs] There are smart people who will make a good case for, hey, you know what, 30 might be the outer limit of what you want to have in terms of individual stocks. There are other smart people who will make a good case for going bigger, look, build that up. Go from 30 to 50.
Moser: Yeah, I think you're right. It's a good question and I think one of the reasons why it's a good question, because it prompts discussion and debate. There's no one cut-and-dry answer. There's no hard and fast rule. It does depend on the individual, what stage of life you're in, your risk tolerance, what type of investor you feel like you are. I always tell people, just based on what I do for a living, I feel like I have probably a much higher risk tolerance than a lot of folks out there. I just do. To put that into numbers, just so that Robin understands better, I personally own shares in 29 different companies today. It's actually 30 if you count The Motley Fool, but we're not public. So that's not something that really I included. But when we talk about shares of publicly traded companies, I own shares in 29 different companies. To me that feels like a lot, but darn it, man, there are just so many great businesses out there that I'd love to own even just a little piece of. So not all of those positions are created equal.
But even I feel like I probably get a little bit more room because I'm sure they're going to be other businesses that I'd love to be an owner in. I think if you own too few, you're taking a chance. You're throwing maybe a little bit more risk out there than you might be comfortable with. If you own too many, then it can become difficult to keep track of. There's the risk of maybe dragging down returns, [...] capacity and just overall more or less matching the market. You do have to kind of figure this out on your own as you go along.
I think a while back, a lot of research out there said that 20 to 30 was a pretty standard answer. Most people were able to handle the portfolio of 20 to 30 companies and that was a reasonable number where you could manage it and really start trying to maximize returns and your transaction costs really aren't going to be too terribly concerning. Now, I think as time has gone on, we've seen the way the Internet has changed the game. It's made investing more accessible to everyone. Transaction costs are essentially nothing now. So, there's no real cost in owning more other than what you're able to handle. It sounds like nowadays that number that was 20 to 30 is able to go upwards of even 50 for some folks.
I think a lot of it depends on how much you think you can manage. I don't think 30 is too many. I don't think it's too little. I absolutely can see a world where owning more than 30 makes sense. I have a feeling that by the end of this year, I will own more than 30 myself and probably be looking to add even a little bit more. But by the same token, Peter Lynch I think put it beautifully. He said, "The best stock to buy is probably one you already own." There are a lot of great businesses out there where a good decision is just to add to a position you already have. I think a lot of folks will anchor and they'll say, "Well, I bought it five years ago. It's done tremendously. It's way more expensive now, therefore, I can't buy it." Clearly, I think we certainly have shown through the years here at The Fool that that's just not true. You can add to your winners. That can be tremendously lucrative because those winners are winning, because the businesses are doing well. [laughs] I think 30 is a neat number. I think you can go higher. Really, it just depends on how comfortable you are with it.
Hill: Yeah. It's also the sort of thing where whenever we get the question, "Should I sell this stock?" One of the answers to that is, well, you should sell a stock if you have a better place for your money.
Hill: When you've got a portfolio of 30 stocks, it can be pretty -- in some ways, freeing and easier to weigh new positions versus existing positions, because in that sense, it is a zero sum game. When we get the question, should I buy Home Depot or Lowe's? It's like, well, you can actually buy a couple of shares of both. [laughs] As opposed to the situation Robin's in or anyone who's like, well, I am thinking about this new position, but I'm also thinking about these existing positions I have. You can have a battle royale. You can basically do the pros and cons of each and then get it down to a single stock.
Moser: The other nice thing is that as time goes on, the longer that you invest, chances are you're going to have some positions in your portfolio that have done very well and perhaps a position that started out as just a 3% allocation in your portfolio has grown to 10% or 12%, or maybe even 15% or more. There's nothing wrong, even if you're still a big believer in that business. Good portfolio management would absolutely accept the argument of trimming a little bit from that winner and maybe diversifying that money away to another idea because just like you said, one of the reasons why you might sell is if you feel like that there's a better place for your money. Another reason why you might sell is just through straight up portfolio management. Perhaps the position has gotten a little bit large. It makes you feel a little uncomfortable. Maybe you're losing a little bit of sleep at night. It doesn't mean you got to sell the whole stock, keep that position. Maybe you just whittle it down a little bit and you take some of those gains and you put them into other new ideas. There are a lot of different ways to go about it.
Hill: The Golden Globe Awards were held last night. Netflix, the clear winner from an investing standpoint, Netflix taking home 10 statues, six in the TV categories, four in the film categories. This is one of those things we talk about all the time about Netflix and their cost of content. It's nights like last night that if you're a Netflix shareholder, you go, OK. [laughs] They're still doing a good job of investing that money. I was saying this to you and a couple of other people on Slack this morning, I watched the entire thing. I was struck by the number of times that someone winning on behalf of Netflix thanked Ted Sarandos, but did not thank Reed Hastings. It reminded me, Jason, of a conversation you and I had recently about Etsy. It was a few months back when the headline around Etsy was how much they were investing in their platform to help their sellers, to basically make it work for their sellers. One of the things you and I talked about was, yeah, if you're Etsy, you've got to make everybody happy. You got to make the customers happy, but [laughs] you got to make the sellers happy too. For the people in Hollywood, it makes sense. I don't know if anyone on Twitter or elsewhere is looking at this like trying to create some sort of fight between the co-CEOs. To me, it just made sense. Sarandos is the person at Netflix charged with getting the content.
Moser: I wouldn't perceive that to be a slight toward Reed Hastings at all. I would think that's probably a bit more of an out of sight, out of mind thing, because to your point, yeah, I think Ted Sarandos is the first point of contact for a lot of these people. So one of the things that Netflix, that Sarandos, and certainly Hastings has been a part of as well, what they've really aimed to do is to create an environment where people want to work with them. Content is their business, so they need to create an environment where people want to work with them. You and I have talked about it before with FX, which I always thought FX was a great proxy for this, because they have a reputation for just giving creative freedom with basically no questions asked and just saying, "Hey, listen, we want to be the conduit for all of these great ideas. We know we do something really well, and that's distribution and giving people a chance." Maybe you are not going to make the most money working with FX, but that's not necessarily always the primary goal, at least in the near term either. It's first and foremost to get that stuff produced and get it out there because that really can often just be the first step in the impacts of great content.
Hey, listen, I don't watch stuff based on the awards that they win, but that doesn't mean those awards don't matter. Those awards, that gives credence. That gives credibility to the work that you're doing and when you have people calling out an individual, specifically like Ted has been called out, that means he's doing something right. He created a place where people want to be, where people want to work. That matters, because that typically means they'll keep coming back and you can keep doing those same things. It doesn't feel like Netflix has some end goal of being world dominating and just being able to call the shots. It feels like they have this end goal of wanting just to be a place where people want to go make good content that they can get out to big audiences.
Hill: Two other smaller winners, I thought, from last night. One is Teladoc (TDOC 3.53%), just because [laughs] there were a lot of problems with the broadcast last night. They were trying to pull off a lot of different things and a lot of them didn't work.
Hill: But one of the few prepared comedy bits that did work was a really good bit where different actors and actresses were basically doing telemedicine visits [laughs] with real doctors. I might post it in the MarketFoolery Twitter feed just because it was funny. It was well done and I just thought the name brand in telemedicine is Teladoc, I feel like that's a tiny win that doesn't show up on the balance sheet. [laughs] But the other is Disney. Because Disney won a couple for Pixar for the movie Soul. Won best animation and I think it won best soundtrack as well. But also, Disney owns ABC.
Hill: ABC is the network in April where the Academy Awards are going to be broadcast. 20 minutes into the broadcast last night, I turned to my family and I said, whoever is producing the Academy Awards is furiously taking notes right now on the few things that are working and the many things that are not working. I feel like that's an opportunity for Disney to really out point Comcast, which owns NBC from last night.
Moser: I think you're probably right. It's been a weird time for everyone. I didn't watch the broadcast, but I would absolutely thumbs up posting that YouTube video of the telemedicine visits, because after you sent me that link I watched it this morning and it was very clever, very well done. It was funny. The juxtaposition of actors playing in the drama, along with real doctors trying to not be too glib, [laughs] it was really pretty funny. I liked it.
Hill: Jason Moser, thanks for being here.
Moser: Yes, sir. Thank you.
Hill: As always, people on the program may have interest in the stocks they talk about and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. That's going to do it with this edition of MarketFoolery. The show is mixed by Dan Boyd. I'm Chris Hill. Thanks for listening, we'll see you tomorrow.