The Oscar Goes To...

With the market averages showing great resilience last week ending with small gains of 0.6% for the S&P 500 Index and 0.7% for the NASDAQ due to continued progress on China/US trade talks I thought I would take this opportunity to dedicate this commentary to the Academy Awards of last night even though I only watched the first half of the program. In my own tilted fashion I will award Oscars or stock awards to several of the companies you own in your accounts. So without further ado the KRS Capital Oscar winners for 2019 are listed below.

Best Picture---This Oscar goes to a technology company I have mentioned in the last two commentaries that is a major player in many current and future technology movements that will shape the future in 5G communication, internet security, and internet of things connectivity. Cisco Systems is playing a role in shaping and collaborating with other technology giants to basically provide the plumbing to allow these technologies to flourish and spread throughout the globe. Plus, it is financially strong with a huge cash reserve and pays a growing and material dividend.

Best Supporting Actress---This Oscar goes to Saleforce.com which is another outstanding technology company that provides informative and meaningful communicating technology allowing companies to collaborate with their customers about products and services. It is growing quickly on a global scale based on cloud or (off premise) platforms. This company continues to add major clients and push more products and services into existing client work processes.

Best Director---This Oscar goes to Microsoft and could easily flip/flop with Cisco Systems for Best Picture. Microsoft has been astutely positioning itself to be a dominant enterprise, consumer, gaming, and cloud platform over the past several years under the leadership of CEO Satya Nadella. Again, strong financials and platforms that will be around for decades to come places Microsoft in a prime position to participate in every major technology innovation and developmental trend. Microsoft is also collaborating wisely with other technology companies to provide technology solutions to global companies.

Best Foreign Film---This Oscar goes to Alibaba, the giant China based company that is a combination of businesses that are capturing huge market share and revenues in China and Asia that is a Chinese version of Amazon, EBay, and PayPal all in one company. The stock has been moving up nicely thus far in 2019 due to the progressing China/US trade negotiations. While the ultimate outcome of the trade talks is likely months or years away, Alibaba should continue to grow rapidly as it builds out its own technology platforms and takes advantage of any new stimulus measures put forth by the Chinese government to stimulate their economy.

Best Animated Film---While it seems every major media company wants to be a big player in streaming movies and television programs I believe only one major company has an opportunity to be good if not great in films, television, and entertainment and that company is The Walt Disney Company. Starting with a great collection of picture companies such as Marvel, Pixar, Lucasfilm, and Touchstone in combination with the theme parks and resorts, ABC TV Network, ESPN, including the new addition of 21st Century Fox studio the company has built a terrific direct-to-consumer business that is hard to duplicate by Netflix, Comcast, or any other competitor.

In summary, I could go on about many more great companies that you own in your portfolios but the message is straightforward. We strive to select the best companies in leading fields of endeavor to provide long term winners that will produce consistent cash flow and growing dividends. Over the long run I feel confident that your portfolios are well diversified in financially strong companies that will deliver increasing capital returns for years to come.

Have a great week,

Roger N. Steed

February 25, 2019

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