5 Sectors I’ll Never Invest In (And Neither Should You)
Avoid these industries like the plague...
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In this week’s episode we discussed:
How the latest tax bill affects your portfolio,
The two assets every investor should be holding in size in 2025
My outlook for Bitcoin including an updated price target
My reaction to Trump's latest tariffs threats against Apple and the EU
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A little-known fund manager named Chris Hohn made waves last month when he said something that most of Wall Street thinks but never says out loud:
Only about 0.1% of the market is truly investable.
Let that sink in. He’s not saying 10%, or even 1%. He’s saying 99.9% of publicly traded companies aren’t worth your time. Too cyclical. Too unpredictable. Too poorly managed. Too much noise, not enough signal.
That may sound extreme, but if you’ve been in the investing game as long as I have, it 100% rings true.
Now, I don’t agree with everything Hohn says—he runs one of the most aggressive activist hedge funds in Europe—but I absolutely agree with his core idea: most stocks are uninvestable.
And in my experience, that thinking also applies to entire sectors. There are some industries I just won’t touch, no matter how “cheap” the valuations look, or how bullish the headlines sound.
Here are five sectors I avoid like the plague—and why they’ll probably stay off my buy list for good.
1. Airlines: The Illusion of Scale
Warren Buffett—arguably the most successful investor of all time—once said the best thing that could’ve happened for investors was if someone had shot down the Wright brothers at Kitty Hawk.
That was before he bought into the airlines in 2016… and then dumped them all in 2020.
Buffett learned the hard way (again) that airlines are one of the worst businesses you can invest in. Why? Because they’re a fixed-cost, commodity service at the mercy of fuel prices, labor disputes, and weather events.
Airlines have zero pricing power. If one cuts fares, they all do. Add in huge capital costs, unionized labor, and low customer loyalty, and you get razor-thin margins and frequent bankruptcies.
And the price speaks for itself. Just look at the performance of the US Global Jets ETF (JETS) over the last decade:
You’re better off buying lottery tickets than investing in this sector long-term.
2. Oil & Gas: The Cyclical Trap
I know this one will be controversial. There’s always someone who swears by oil stocks for their dividends or "undervalued" nature (even though you should know cheap stocks are cheap for a reason).
But here’s the thing: oil and gas is the definition of a boom-bust sector. You’re not investing in companies—you’re speculating on commodity prices. When oil is up, these stocks rip. When oil’s down, they get obliterated.
I prefer businesses that can control their own destiny. That means pricing power, recurring revenue, and secular growth trends. Oil & gas companies don’t offer any of that.
And over the long-term, these stocks have severely underperformed. While the S&P 500 is up 350% in the last two decades, the iShares Oil & Gas Exploration & Production ETF (IEO) is up one-sixth of that:
Even worse, they often overextend themselves during booms, only to slash capital expenditures and lay off workers when prices fall. It’s a cycle I’ve watched for 15 years. I’ve learned to stay away.
3. Biotech: The Storytelling Trap
Biotech might be the most seductive sector of all.
It’s where the “10x in 12 months” stories live. It’s where young investors get drawn in by dreams of curing cancer or reversing aging. And yes, there are real breakthroughs. But the odds are brutal.
And as someone who worked as a small cap biotech investor analyst for three years, I can tell you this is one of the hardest markets to make money in. Most biotech companies - especially small caps - are burning cash with no revenue. Their entire valuation hinges on a clinical trial going right… and the FDA giving them the green light.
That’s not investing—that’s gambling.
And even the large ones - like those in the iShares Biotechnology ETF (IBB) - are stagnant in terms of investing returns. While the S&P 500 has doubled in the last five years, this ETF that holds large cap biotech companies like Gilead Sciences (GILD), Amgen (AMGN), and Regeneron Pharmaceuticals (REGN) is actually in the red:
I want to invest in businesses with earnings, pricing power, and a competitive moat. Not binary outcomes based on Phase 2 trial results. Unless you’re a doctor with a background in biotech R&D and a stomach for volatility, this is a sector best left alone.
4. Automotive: All Revved Up, No Place to Go
On paper, car companies look like they should be amazing businesses. They have huge brands, sell big-ticket items, and operate in every corner of the globe. But when you peel back the layers, the auto industry is one of the most unforgiving, capital-intensive sectors out there.
This is not a software business. You’re dealing with factories, unions, raw material costs, recalls, and multi-year development cycles. And you’re trying to manage all of that while selling a product that people only buy once every 6 to 10 years—often with borrowed money.
Margins? Low. Customer loyalty? Fragile. Competitive pressure? Relentless. Ford is a textbook case—the stock is flat since June 1987. That’s nearly 40 years of going nowhere despite revenue in the hundreds of billions.
And now you have a brutal EV price war underway. Companies are bleeding cash to compete with Tesla, which itself has seen margin compression in the process. Legacy automakers are stuck between two worlds: old-line gas-powered infrastructure and the capital costs of transitioning to electric. That’s not a race I want to bet on.
5. Telecom: The Yield Trap
Ah, telecom. The sector where dividends go to die.
Companies like AT&T and Verizon look attractive on the surface. High dividend yields, tons of subscribers, and wide network coverage. But underneath that stable-seeming exterior is a business that’s been eroding for years.
This is a utility in disguise—with none of the benefits. Telecoms are constantly spending billions on infrastructure (5G rollouts, fiber expansions) just to stay competitive. They’re also in a brutal price war that kills margins and erodes customer loyalty. Want to switch carriers? Takes five minutes online. There’s no moat.
Add to that the crushing debt loads—AT&T (T) alone has nearly $130 billion in debt—and you realize these are slow-growth, capital-intensive, debt-ridden businesses in long-term decline. They’ve underperformed the S&P 500 for years, and in many cases, even the dividend doesn’t make up the difference.
In short, telecom is the yield trap of the century. You’re not buying stability—you’re buying stagnation.
Don’t Shoot the Messenger
I know this list may upset some readers. There are always exceptions. A great management team can overcome a bad industry. A unique product can beat the odds.
But my goal isn’t to swing at every pitch. It’s to wait for the fat pitches—the ones with asymmetric upside and limited downside. That includes a stock I’ve been loading up on in the TikStocks Portfolio that’s already up 30% in a month (if you want to take advantage of our Memorial Day sale, click here).
And from what I’ve seen, the five sectors above don’t offer that. Not consistently. Not without a lot of luck.
So I’ll keep looking elsewhere. Because as Chris Hohn says, the real opportunity often lies in the 0.1%.
Stay safe out there,
Robert