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Chris Versace has just launched a new investment advisory service, Tematica, which focuses on thematic investing. Here, he talks about his underlying strategy, some favorite stock and his new book, Cocktail Investing.

Steve Halpern:  Our special guest today is Chris Versace, a longstanding market veteran and growth stock expert and the editor of the newly launched advisory service, Tematica.  How are you doing today, Chris?

Chris Versace:  I’m great, Steve.  Thanks for having me back on.

Steve Halpern:  Now can you give our listeners an overview of Tematica, and I hope I’m pronouncing it correctly, and maybe explain its underlying investment strategy, which is based around your view of investable market themes?

Chris Versace:  Right.  You’re absolutely right; and you said it correctly.  It’s Tematica, and Tematica is actually Italian for theme, so it really resonates well.

For a long time now I have looked at this intersection of changing economics, demographics, psychographics, technology and some other sprinklings, regulatory mandates coupled with what we call pain points, disruptive technologies.

All of this is to get a lead on these pronounced tailwinds that are forcing businesses to change the way they go about what they do, whether they’re consumer facing or serving other businesses. 

We kind of look at these as investing themes or thematic tailwinds.  At Tematica we have Tematica Research, which is really long-only, just an investment newsletter, very similar to what I used to do at the Growth and Dividend Report. 

The only difference really being is that we’re writing more of an in-depth analysis, kind of like the way most institutional investors would get, but we’re bringing it towards the individual market. 

Then we have Tematica Pro, which is a trading service where we’ll use a combination of long and short strategies as well as options to really deliver more pronounced returns in a shorter period of time compared to say Tematica Research, which is again kind of long-only with a 12-month, 18-month, 24-month time horizon.

Steve Halpern:  Now to help our listeners better understand this idea of themes, can you discuss a couple of the themes that you cover and also touch on some of the new trends that you’ve added as you’ve expanded the new service?

Chris Versace:  Absolutely, I’d be happy to.  If we look around us in our everyday lives, we can see signs of a lot of these thematic tailwinds.  For example, we know that people are increasing the shopping online.  We see this reflected in Amazon (AMZN) -- not only its strong results but also in their stock price. 

Pick up any paper, surf any website, and you’re sure to hear about some latest cyber-attack, hack or identity theft.  That feeds right into our “Safety and Security” investment theme.

And then, too, you can look around and just look at the simple demographics of the population where we know that we’re not only unfortunately getting heavier, like I am, which we call fattening of the population.

We’re also skewing much older aging of the population, and this puts certain demands on goods and services that we haven’t really seen before. 

It could be, for example, a new round of assisted living.  It could be getting your financial house in order or saving for retirement.  There are about 30% of Americans that have no retirement savings. 

As we age, all of these things become far more important, and of course to the usual things you would think of, you know pharmaceuticals and healthcare as well. 

For some of the newer themes, Steve, one of the things that we’ve developed is “Content is King” that really focuses on content-driven companies; and we’ve seen companies like Amazon, Netflix (NFLX) move into the content space.

But when you look at some of the great, great content companies that can ripple their stable of characters through their other businesses, a great example of that would be Disney (DIS). 

Another would be “Affordable Luxury”, where people are buying these little things that make them feel good we could say.  It’s not just regular run-of-the-mill, but it’s something that you identify with kind of as a status symbol. 

Early in its career Under Armor (UA) might’ve been considered that.  The iPhone from Apple (AAPL) very early on might’ve been considered that.  It’s those types of companies that have these branded products that give status and appeal. 

Another one that we’ve added, Steve, is “Food with Integrity”.  We know that given the rise of alternative diets, paleo, gluten-free, but also concerns with GMOs, that people are shifting increasingly towards organic foods and food that they can trust, hence Food with Integrity. 

While it may not seem a banner child for that today, Chipotle Mexican Grill (CMG) once was and I think it will be again.

Steve Halpern:  Now, from a general market perspective, what’s your outlook looking ahead towards the end of the year. And also in line with that, how impacted are these trends from your general market; do you think these trends help you position yourself defensively regardless of what the market does?

Chris Versace:  There’s no doubt that the thematic trends really reflect a secular change in what’s going on -- compared to the regular market that tends to move along, these tailwinds tend to push these businesses ahead. 

Having said that, there are disruptions in the marketplace, and as you know, Steve, that when the market melts up like we’ve seen in March and April, they all tend to move up; and when the market tends to fall apart, they all tend to fall. 

We have to be cognizant of where we are in the market and when we should be buying any of these stocks or ETFs, to be quite honest with you. 

Yeah, I do have an opinion on where we are in the market.  Look, we’ve had a very strong run since February, but what have we gotten during that time? 

We’ve got economic data that continues to point to a slower economy.  I think that’s going to keep the fed’s hand off the wheels when it comes to interest rates. 

We’ve gotten earning expectations that have come down; and if we look at the second half of 2016 compared to the first half, it’s one of the most robust expectations that we’ve had in years, and quite frankly, given the economic backdrop, it’s very hard to see how we’re going to get there. 

I do think those earnings expectations will come out and come down throughout the year.  I think that will cap the indices. 

Having said that, I think these thematically-driven stocks can really outperform, i.e. it’s going to be a stock picker’s market; but remember too, Steve, we are seeing a growing number of uncertainties out there. 

Again, the speed of the global economy is one, earnings expectations is another; but let’s remember too we’ve got this presidential election that I think is going to heat up over the summer. 

I do think a lot of uncertainty; and you know, Steve, the market doesn’t like that.  I think between now where we are today and probably the next two to three months, as we’re in the middle of the summer, it’s going to be a very flattish market at best.

Steve Halpern:  Now, congratulations are also in order.  Along with launching Tematica, you’ve also published a new book Cocktail Investing, which has been published by Wiley.  Can you tell our listeners a little about the new book?

Chris Versace:  Oh, I would love to, Steve.  You know, Cocktail Investing is really the alpha and the omega of all that I do in terms of thematic investing because in order to do it you have to understand how to read the economy. 

You have to understand disruptive technologies, hanging points.  You have to understand where you’re going to get information, how you’re going to value a stock. 

It’s not just using one set of analytics, but really several.  You need a robust set of data that you’re going to want to track. 

The great thing about Cocktail Investing, Steve, is that we give you all of that; and the key tag here is if you’re just looking across that sea of gobbledygook that I just mentioned, you might sit there and you go, wow Chris, that’s a lot of stuff.

I can’t make heads or tails of all this.  That’s the big concern.  The subheading of the book really talks about being able to distill information and get signals from this sea of data that’s out there because that’s the key.

The last thing we want is people to look at all this information and suffer from what we call analysis paralysis. 

We show you how to really zero in on what matters, and the great thing, Steve, is particularly for newer investors we have 12 questions, 12, just 12 that you have to answer, in our view, before you buy any stock or ETF.  

I think that’s going to be a great resource guide, again particularly for newer investors; but you know it’s also good for existing investors to kind of brush up their skill set as well.

Steve Halpern:  What’s your website address so the listeners can learn more about your new service?

Chris Versace:  Sure, so let me give you two:  The first one for Tematica Research, the newsletter; it is simply tematicaresearch.com. But if you want more on the book Cocktail Investing, it’s also simple; just go to cocktailinvesting.com.

Steve Halpern: Again, our guest is Chris Versace of Tematica.  Thank you so much for your time today.

Tickers Mentioned: Tickers: AMZN, NFLX, AAPL, UA, CMG

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