Ask Doc More than $1 million...
That's how much our publisher paid a single company to help us manage our sales and customer relations in 2019.
And if we had to... we would likely pay double that price. It's that vital to our success.
The company we paid all that money to is called Salesforce.com (CRM).
Many of you have likely heard of Salesforce. But if you haven't, it's the top developer and seller of customer relationship management software.
Salesforce's software isn't the only reason the stock is up nearly 1,000% over the past decade... It's also because of how the company delivers its software.
Back in the old days, you paid for your software upfront... a big one-time expense. And you installed it on all the computers that would need to use it. With Salesforce, you access the software over the Internet. It uses the "cloud," meaning it's installed on the company's own computer servers, and you pay an ongoing subscription fee to access it from anywhere, on any device with an Internet connection.
Salesforce is simple to use. It's perfect for this new age of professionals who work from home.
And it's great for the company, too... When you provide a product that can be accessed anywhere and is simple to use, you'll have a lot of renewal revenue. Plus, the subscription money keeps flowing in steadily every month, whether you find new customers or not. Nearly 95% of Salesforce's revenues come from subscriptions.
Salesforce's business model is called Software as a Service (SaaS).
We've already seen some incredible gains with SaaS companies like Salesforce. In my Advanced Options service, we've made a lot of money by trading cloud and SaaS companies, including 67% on Zendesk (ZEN) and 52% on Okta (OKTA).
Many states are imposing tighter restrictions as the number of COVID-19 positive tests remains high. Employees will continue to be at home for the foreseeable future. And that will drive ongoing demand for cloud products.
Of course, the biggest gains won't come from investing in companies like Salesforce that investors already own. The key to investing in SaaS stocks is to put your money in them before they hit the mainstream media.
With the help of two experts who have worked in this industry, you can do that right now. In fact, they've identified three tiny and essentially "hidden" opportunities in this powerful sector... which are just beginning this kind of growth.
In fact, all three of them could rise as much as 10-fold in the coming years.
Now, let's dig into this week's Q&A. As always, keep sending your questions, comments, and suggestions to [email protected].
Q: This may have been written about and I have just missed seeing it, but can you make a stop-loss order on a stock that you already have or do you have to do that on the original order? If you can, how do you go about it? – Q.S.
A: Most brokers give you the option to enter your stops "into the market" using stop-loss orders or trailing-stop orders.
However, we advise you to never reveal your stop loss to your broker or anyone else.
Entering your stop price into the market might seem convenient, but it leaves you vulnerable. Investors or brokers who see your stop might be tempted to move the share price to push you out of the position. So never enter your stops into your brokerage account as part of your order. Track them on your own or through a service like our corporate affiliate TradeStops.
Q: My wife (who has Type 2 diabetes) recently heard somewhere that bananas were no good for her because of their high sugar content. Is there any truth to this? – P.L.
A: Fruits are tricky... The main problem is that people with diabetes react differently to fruits. One person might be able to eat a banana without a problem, while another could see a spike in their blood sugar. We've written more about this – including why a banana could spike your blood sugar more than a cookie – right here.
Q: Because of the CARES Act, those of us required to take an annual RMD from our IRA accounts received a waiver and did not have to make any withdrawal in 2020. Now I'm curious to know what happens for 2021. Schwab has sent us our annual target but it appears to be based on the sum of the 2021 number plus what was not taken in 2020. I can find no tax guidance on this point, but the Schwab approach seems a bit harsh and unreasonable. Having missed a year, it would seem more appropriate to redo the actuarial computation we had to do at age 70½ based on expected lifespan, spreading the missed RMD for 2020 out over all the remaining years instead. Can you please help locate any tax law guidance on this point? – D.F.
A: You won't have to double your required minimum distribution ("RMD") for 2021 to make up for not taking it in 2020. We experienced a similar situation a decade ago...
The Worker, Retiree, and Employer Recovery Act of 2008 waived the 2009 RMD to help folks through the Great Recession. In 2010, when things when back to normal, the RMD was calculated the same way it is every year – using your previous year's accounting balance and dividing it by your life expectancy factor.
It's important to remember that your RMD is going to be higher for 2021 than it was for 2019 for a few reasons – your account balance grew over the past year thanks to the rising stock market, you didn't take a 2020 distribution, and you're older.
Editor's note: Our offices are closed for Martin Luther King Jr. Day next Monday. After our Health & Wealth Review weekend edition, expect your next Health & Wealth Bulletin issue on Tuesday, January 19.
What We're Reading...
- Did you miss it? Now is a great time to travel. No, seriously.
- Something different: Sea shanties are taking over TikTok.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
January 15, 2021