Long-Term Trading and Investing

Link to MarketWatch article: MarketWatch

Suze Orman is a two-time Emmy Award–winning television host and the author of ten consecutive New York Times bestsellers on personal finance. She has been named twice to Time magazine’s list of the 100 most influential people and is widely recognized for her work in financial education.

She currently hosts The Women and Money Podcast, where she discusses personal finance topics, and is the co-founder of SecureSave, a company focused on workplace emergency savings programs. Orman’s career spans television, publishing, and entrepreneurship, with an emphasis on helping individuals manage money and plan for financial security.

When Orman was on Fast Money (CNBC) on October 24, 2023, she recommended Palantir (PLTR), Microsoft (MSFT), Amazon (AMZN), Shopify (SHOP), and Broadcom (AVGO). Since then, Palantir has soared over 848%, with Microsoft and Shopify up 54% and 166% and Broadcom up 235%. 

 In this recent interview, edited for length and clarity, Orman shares her top stock picks, her outlook for the market in August and September, the biggest investment mistake she’s made, and her take on cryptocurrencies. 

MarketWatch: Can you name some of the stocks and investments you like right now?

Orman: I continue to favor large technology companies such as Microsoft (MSFT), Meta Platforms (META), and Broadcom (AVGO). Palantir (PLTR) is my favorite stock, which I’ve followed closely, even though it’s controversial. I first recommended it when it was around $7 based on a suggestion from financial strategist Keith Fitz-Gerald. Beyond those big names, I own and still love Apple (AAPL), Advanced Micro Devices (AMD), IonQ (IONQ), and Coinbase (COIN). I also like GE Vernova (GEV), which I started buying around $100 to $150, and is now over $600. I’d also look at JPMorgan (JPM). 

For those who would rather own ETFs rather than individual stocks, the Vanguard S&P 500 ETF (VOO) offers a nice overall participation and allows for partaking in my favorite stock ETFs —VanEck Semiconductor (SMH) can be a good choice. Also, the ETF for bitcoin, iShares Bitcoin Trust ETF (IBIT), is for a small part of your portfolio. For REITs, I like CareTrust (CTRE), but remember that REITS should be held in retirement accounts. 

MarketWatch: For everyday investors, what’s a sensible way to allocate their money right now if they are looking for long-term growth? 

Orman: One simple approach is to dollar cost average and allocate a total of 50% into a broad index fund such as VOO. With the rest, you could divide your money among a handful of strong individual names such as Microsoft, Palantir, Meta, Apple, COST, WMT, Gilead, COIN, VOO, SMH, XBI, and IBIT FOR ETFS. That way, you’re diversified between the overall market and leading companies, rather than putting everything in one place. My broader message is that people should not be investing large sums all at once. Dollar cost average and invest for the long term, and focus on companies or assets you truly understand. 

MarketWatch: Do you have any caveats for investors? 

Orman: Yes, other than your retirement account, do not put one penny in the stock market that you might need within the next five years. Money that you need within five years is not money that belongs in the stock market, period. 

MarketWatch: Do you have any predictions for the stock market? 

Orman: Overall, the market is strong. I would not be surprised to see the S&P 500 cross over 7,000 by the end of the year. This is not your dot-com bubble. 

MarketWatch: Looking back, is there an investing mistake you regret or advice you wish you could take back?

Orman: The biggest mistake I’ve made was thinking I was smart just because I doubled, tripled, or even quadrupled my money, and then selling too soon. I used to believe that when a stock went from $7 to $50, like Palantir, it couldn’t possibly go higher, so I sold, only to watch it keep climbing. Then I’d have to buy back in at $70, which made no sense. The same thing happened with Amazon and Apple. If I had just held on from the beginning and continued to dollar cost average, the gains would have been extraordinary. That doesn’t mean you never sell. 

MarketWatch: You’ve mentioned crypto before. What are your thoughts on bitcoin and how do they fit into a retirement strategy?

Orman: With crypto, there’s a place for it, but only in moderation. Personally, I’d stick to bitcoin ETFs from well-known firms such as BlackRock. I don’t have a problem with that, but I’d want limits, no more than 5% of your portfolio. Otherwise, some people, especially younger investors, might go all-in. Are you nuts? That’s too risky.

MarketWatch: What is your outlook on bitcoin? 

Orman: Bitcoin has become too mainstream to ignore. Big banks such as JPMorgan are involved, and I wouldn’t be surprised to see bitcoin climb higher over time, perhaps $140,000 or $170,000 one day. But don’t forget the risks. If you buy bitcoin directly, you can make more than an ETF, but then you have to worry about storage and trust, especially after FTX collapsed. That’s why I’d rather use ETFs, or even stocks like Strategy (MSTR), which holds a lot of bitcoin on its balance sheet. Crypto can be part of a diversified portfolio, but it should never be your whole portfolio. 

MarketWatch: Some people argue that the market is manipulated or at least heavily influenced by large players. Do you think that’s true?

Orman: What I see is that when traders miss out and there’s trillions of dollars still sitting on the sidelines, the fear of missing out (FOMO) kicks in. At some point, the market tends to pull back, whether that’s natural or influenced, I can’t say for sure. But what often happens is that a sell-off shakes out the weaker hands of people who get scared when prices dip. That, in turn, creates an opportunity for bigger money to step in and drive the market even higher.

MarketWatch: You’ve often spoken about retirement accounts. Do you prefer a traditional retirement account or a Roth IRA? 

Orman:  If you’re eligible, I will always tell you: choose a Roth over a traditional. Yes, with a traditional 401(k), 403b, or Thrift Savings Plan (TSP), your money compounds tax-deferred, but don’t fool yourself. It’s not just compounding for you. It’s compounding for Uncle Sam, too. You’ve literally made him your partner, and one day, he’ll want his share.

In my opinion, the biggest mistake you can make with your retirement accounts is not having them in Roths. With a Roth, you pay taxes upfront—end of story. Every single penny of growth, and every single withdrawal in retirement, is yours to keep. Tax-free. Forever. As well as your beneficiaries. 

And don’t think you’re locked out just because of income limits. Regardless of what you earn, there are always ways to get money into Roth accounts. If you don’t, are you nuts? In the end, with a traditional retirement account, Uncle Sam will take a big bite out of your retirement savings and it will affect taxation on Social Security, Medicare Part B premiums, and your Required Minimum Distributions (RMDs). This is not true in a Roth, so don't make Uncle Sam your partner. (Editor note: If you want to hear more details, listen to Orman's April 21, 2024 podcast.) 

MarketWatch: What final piece of advice would you give investors?

Orman: Always trust yourself more than you trust others. After all, what happens to your money directly affects the quality of your life, not your financial advisor's life, insurance agent’s life, banker's life, but your life. Finally, don't let your fear of loss keep you from incredible gains. 

Michael Sincere is the author of books including “Understanding Stocks,” “Understanding Options," and “Help Your Child Build Wealth.”