3 Stocks Retirees Should Avoid

Motley Fool contributors offer insight into stocks retired investors ought to ignore.

By Todd Campbell

Studies have shown that long-term investing in stocks outperforms other investment strategies, but once investors reach retirement and risk becomes a bigger concern, it’s critical to be choosy about where you park your money. With that in mind, we asked some of our top Motley Fool contributors to highlight stocks they think are too risky for retirees. We discovered that the three companies below may not have what it takes to deserve a spot in retiree portfolios.

Daniel Miller
Let me preface this choice by saying I think Elon Musk is one impressive CEO and businessman. At Tesla Motors (NASDAQ:TSLA), he’s created a company that designed some crazy great electric vehicles in the Model S, Model X, and soon-to-be Model 3.

However, just because the young automaker has designed a handful of incredible products doesn’t mean Tesla is the right stock for retirees. Retirees should probably be looking for more stable companies that operate in a more predictable industry and have a consistent cash flow and dividend. While it may offer incredible opportunities over the next two decades, Tesla currently offers retirees none of those key qualities.

Let’s face it: Manufacturing vehicles isn’t simple, and it’s incredibly capital-intensive. On top of that, Tesla is practically on a one-man mission to build out electric-vehicle infrastructure in America and abroad, and the automotive industry is on the cusp of more change and disruption over the next two decades than it has seen over the past century.

Take a look at this slide from a recent General Motors presentation:


That’s a great illustration of how many companies are trying to change how the world moves. Will there be a spot for major automakers like Ford and GM in 20 years? Yes, almost certainly. Will there be a spot for Uber, Tesla, and other young automotive or transportation-based companies? Most likely.

But how exactly will it all come together? How will urbanization trends influence automakers? How will driverless cars impact the current business strategies? Nobody knows the answer to those questions yet, and companies that deal with that level of uncertainty are not suitable for a retiree’s portfolio. If retirees want to own Tesla, they should buy the product, not the stock.

Steve Symington
Though I generally subscribe to the maxim that “winners tend to keep on winning,” I hesitate to apply that to high-flying stocks whose underlying businesses face difficult or unsustainable economics — especially when we’re determining whether those businesses deserve a spot in retirees’ portfolios.

Take mobile gaming specialist Glu Mobile (NASDAQ:GLUU), for example, which primarily relies on revenue garnered from in-app purchases within its free-to-play games. And sometimes that strategy appears to be working well; in February, Glu mobile stock even skyrocketed nearly 70% after it surprised investors with a slim adjusted quarterly net profit of $2.3 million, or $0.02 per share, on revenue of $57.9 million, driven by ongoing traction of existing titles like Kim Kardashian: Hollywood, Cooking Dash 2016, and Deer Hunter 2016. At the time, analysts were expecting Glu to report a $0.03-per-share adjusted loss on revenue of $50.5 million. What’s more, it continued to rise after Glu Mobile launched another celebrity-centric title in Kendall & Kylie, which promptly rose to the top of the most downloaded apps in both the official Android app market and iOS App store.

However, keep in mind Glu Mobile is still unprofitable based on generally accepted accounting principles, and it turned in a GAAP net loss last quarter of $3 million, or $0.02 per share. In addition, the attention spans of consumers and popularity of titles within the free-to-play game space both tend to rapidly change. This past December, for example, Glu Mobile stock plunged more than 30% in a single week after gamers’ lackluster response to the launch of its Katy Perry Pop title. And despite a seemingly strong showing from its newest Tap Sports Baseball 2016 game — which was launched last week and currently sits at No. 10 among the most popular free iOS apps — Glu Mobile stock has retreated nearly 30% from last month’s highs as of this writing, even as the NASDAQ Composite Index climbed 6% over the same period. Add to that the fact Glu Mobile doesn’t pay a dividend as it strives for sustained GAAP profitability, and it becomes painfully obvious this is a volatile stock retirees should avoid at all cost.

Todd Campbell
Listeners of The Motley Fool’s Industry Focus healthcare podcast know that I’m often chatting about my favorite biotech stocks, but just because I’m partial to biotechs stocks doesn’t mean they’re right for retirees. In fact, I think retirees should pass over individual biotech stocks altogether. Why? Because no other industry is as prone to nausea-inducing pops and drops.

Whims and whispers related to clinical trials can move these stocks wildly, and far too often, once-promising medicines fall flat in confirmatory phase 3 trials. Biotech’s hit-and-miss nature makes it too risky for most investors to try picking the winners.

Nevertheless, if biotech is your “thing,” consider owning the iShares NASDAQ Biotechnology ETF (NASDAQ:IBB) instead of individual biotech stocks. The IBB owns 189 different biotech stock leaders and its three biggest holdings are AmgenGilead Sciences, and Biogen — three biotech Goliaths. Its 0.48% expense ratio isn’t too scary, and its 10-year 12.4% average annual return is compelling enough to satisfy even the growthiest investor.

Overall, retirees should skip this group, but if that doesn’t fit in with your investing style, owning the IBB as an alternative to individual biotech stocks may be the way to go.

The $15,978 Social Security bonus most retirees completely overlook
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known Social Security secrets could help ensure a boost in your retirement income. In fact, one MarketWatch reporter argues that if more Americans knew about this, the government would have to shell out an extra $10 billion annually. For example: one easy, 17-minute trick could pay you as much as $15,978 more… each year! Once you learn how to take advantage of all these loopholes, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how you can take advantage of these strategies.


Daniel Miller has no position in any stocks mentioned. Steve Symington has no position in any stocks mentioned. Todd Campbell owns shares of Gilead Sciences. The Motley Fool owns shares of and recommends Gilead Sciences and Tesla Motors. The Motley Fool recommends Biogen. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


You May Also Like

NAIOP South Florida Appoints Officers, Executive Board and Board of Directors for 2022

NAIOP South Florida, a Commercial Real Estate Development Association offering advocacy, education and business opportunities to its members, has announced the following officers for the 2022 Board of Directors: President:

Pride Week Festival Begins With Tribute to Pulse Nightclub Survivor

Miami Beach Pride’s week-long festivities will commence with a special tribute to the LGBTQ+ community honoring the victims of the tragic shooting at Pulse Nightclub in Orlando. A ceremonial “flip

Surfside luxury condo sees notable sales

Arte at Surfside is making waves. There’s, of course, the news that Ivanka Trump and Jared Kushner are renting at the 16-resident luxury condominium. And there’s the December penthouse sale

Up in the Air: A Discussion

In a dynamic region where residents are typically on the move, everyone is wondering about the health of the airline industry and the safety of airports and airplanes. Everyone is

Other Posts

South Florida Yachting Legend Passes

Robert “Bob” Roscioli, an icon in the South Florida marine industry, has passed away. Many recognize the name Roscioli from the widely-successful and world-renowned Roscioli Yachting Center, a full service

Four key steps

[vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column width=”2/3″][vc_column_text] What a crazy time we are all experiencing. Right now, getting back to basics is most important. It is not and

Pandemic adds to worries about hurricane season

An above-normal 2020 Atlantic hurricane season is expected, according to forecasters with NOAA’s Climate Prediction Center, a division of the National Weather Service. The outlook predicts a 60% chance of

The difference between leading and managing

[vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column width=”2/3″][vc_column_text] Leadership and management are often misunderstood as one in the same. They are not. Certainly, a good leader should be able

Drew Limsky

Drew Limsky



Drew Limsky joined Lifestyle Media Group in August 2020 as Editor-in-Chief of South Florida Business & Wealth. His first issue of SFBW, October 2020, heralded a reimagined structure, with new content categories and a slew of fresh visual themes. “As sort of a cross between Forbes and Robb Report, with a dash of GQ and Vogue,” Limsky says, “SFBW reflects South Florida’s increasingly sophisticated and dynamic business and cultural landscape.”

Limsky, an avid traveler, swimmer and film buff who holds a law degree and Ph.D. from New York University, likes to say, “I’m a doctor, but I can’t operate—except on your brand.” He wrote his dissertation on the nonfiction work of Joan Didion. Prior to that, Limsky received his B.A. in English, summa cum laude, from Emory University and earned his M.A. in literature at American University in connection with a Masters Scholar Award fellowship.

Limsky came to SFBW at the apex of a storied career in journalism and publishing that includes six previous lead editorial roles, including for some of the world’s best-known brands. He served as global editor-in-chief of Lexus magazine, founding editor-in-chief of custom lifestyle magazines for Cadillac and Holland America Line, and was the founding editor-in-chief of Modern Luxury Interiors South Florida. He also was the executive editor for B2B magazines for Acura and Honda Financial Services, and he served as travel editor for Conde Nast. Magazines under Limsky’s editorship have garnered more than 75 industry awards.

He has also written for many of the country’s top newspapers and magazines, including The New York Times, Washington Post, Los Angeles Times, Miami Herald, Boston Globe, USA Today, Worth, Robb Report, Afar, Time Out New York, National Geographic Traveler, Men’s Journal, Ritz-Carlton, Elite Traveler, Florida Design, Metropolis and Architectural Digest Mexico. His other clients have included Four Seasons, Acqualina Resort & Residences, Yahoo!, American Airlines, Wynn, Douglas Elliman and Corcoran. As an adjunct assistant professor, Limsky has taught journalism, film and creative writing at the City University of New York, Pace University, American University and other colleges.