We’re half-way through the year and so I thought it would be a good time to check back into my ROBO portfolio to see how it’s doing and if there is anything interesting going on. Three and half years ago I decided to try an experiment and find out for myself. I setup an account with one of the big Robo Adviser firms and invested $5000 of my own money into it. My goal was to go through the process and blog about my experience and more importantly, the results. I said that we need a good five years to really get a handle on how effective these services are compared to traditional wealth management services. Well, we're coming upon the 4th anniversary of my ROBO account, so in this episode I take a look at how it’s doing at the mid-year mark.
MGM has not been on my watchlist and I really wasn't thinking about getting into casino stocks but a recent Supreme Court decisions that essentially legalized sports gambling in the US I thought was a game changer movement that could really put gaming companies in a strong position to move. I did a quick scan and MGM appeared to be not the most producing gaming company but what drew me was management's foresight to build out sports betting platforms and services in the anticipation of the legalization of sports betting. In this episode I do a quick deep dive that lead me to the decision to buy some MGM stock.
As an Investment Coach, I spend a good amount of time working with people who are new to investing. Often one of the first questions I get from someone who is new to investing is "I want to learn how to invest are often in the form of: What stocks should I buy?" or "I have $10,000 I would like to invest. What stocks should I buy for the next 10 years?" I've been asking myself lately, why people believe that default position for investing must involve buying and selling stocks? The reality is buying and selling Facebook or bank stocks should not be your first thought when it comes to investing. In this episode, I try to figure out why people have this mindset and how it can have a devastating impact on your investing experience.
In Part 2 of my Investment Decisions series podcasts for March, (iTunes, Google Play, podcast, mind map video) I walk through the thought process that led me to my decision to buy some shares in Big Lots.
After the mini-meltdown in early February, stock prices boomeranged and made back a good chunk of their losses. In some cases the bounce was pretty big and it forced me to make a few decisions. There were a few days where the market tanked pretty big and I used them as opportunities to open some new positions. Like the previous month, I've decided to break down my decisions into 3 parts. In this post episode (blog post), I will review my decisions to buy more shares and sell some shares. The other two episodes will focus on my decisions to buy shares in Southwest Airlines (blog, podcast, mind map video) and Big Lots (blog, podcast, mind map video).
I've referred often to the stock market as the Teflon Stock Market because it seems that any small or major socio-political-economic event that gets occurs is casually brushed off by investors. Nothing seems to stick to this market. The day the Mad King got elected the market went down 1500 points but after digesting it, it went on to set record high's on an almost daily basis. I also think about how much technology has changed investing landscape and wonder if these elements are creating a situation where bear market cycles are getting shorter and shorter. Have we reached a point where we can say that we will have very little in the way of stock market "crash"? I offer some takes in this episode and try to dive in a bit on this concept.
It seems any conversation about stocks these days involves something about Amazon or Apple or Facebook. I remember back in the day when it was Walmart and Microsoft that were the toast of business. Like Microsoft and Apple, they were deemed to be indestructible and now even though they are still significant businesses, they don't carry the same level of cache. What happened to Microsoft and Walmart was nothing different for most companies. Companies, especially dominant one's lose their some of the mojo or comparative advantage. In this episode I share some of the reasons that cause companies to regress. They are worthy of keeping them in your back pocket if you are evaluating any of the big companies.
In this final instalment of my Investment Decision series podcasts, I shares my thought process that went into buying shares of Priceline (now called Booking Holdings) during the February mini-meltdown. When the market was going haywire in early February, I was watching to see if any stocks that I had on my wish list, were suddenly attractively priced. Priceline was a stock I've had on my wishlist for long while but I had never been willing to pull the trigger and get into it. During the mini-meltdown, the stock had made a big move downward, so I reviewed my notes to see if the fundamentals of the business were still intact. As always, for every stock that I am evaluating I utilize my 8 question framework. You can also read the accompanying blog post here as well.
Previous instalments of the series
Three years ago I decided to try an experiment. I setup an account with one of the big Robo Adviser firms and invested $5000 of my own money into it. My goal was to go through the process and blog about my experience and more importantly, try to find if using this type of service can generate better returns than if I did it myself or used a traditional adviser. I said that we need a good five years to really get a handle on how effective these services are compared to traditional wealth management services. Well, we’ve now crossed the 3-year anniversary of my ROBO account, so let’s take a look at how it’s doing now.
While my core investing ideology revolves around buying quality businesses, I also try to structure my portfolios to have exposure to certain business themes that are evolving in business. In the past, I've developed themes in the areas of water stocks, luxury/discount retail stocks, and even investing in a world of Trump. We live in a time where having the most market share does not necessarily translate into being the leader in the market. Market share is nice but if you can control the distribution channel in how products are accessed by customers, you can build a durable competitive advantage, which is something Warren Buffet loves. If you wanted to sell a product, you would need to go through the gatekeeper who would charge you a fee to get into their operating system (OS) or ecosystem. Traditionally that would have been a department store or some kind of physical retail store in a mall. This is changing. The distribution channel in the 21st century has become online. The Internet.
Whoever can offer a compelling online platform/ecosystem/operating system will have a durable competitive advantage as consumers will stick to and out of convenience be loyal to an operating system. Consequently, the stock market will put a premium on those companies that own the OS for a specific sector or industry.
In this podcast, I set out to try to figure out who the next great stocks are or could potentially be the companies that will own the OS for the Pillars of Companies I often refer to when I try to figure out what stocks to buy.
I came across this wonderful blog post by Morgan Housel of the Collaborative Fund where he shares his take on the 4 most important fundamental investing skills. It's a fantastic article (I've read 5 times already and I'll probably read it another 20!) in that it really reinforces a lot of the principles and ideas I've tried to develop in people who are getting into investing. In this episode, I review his article and offer some additional takes and perspectives.
I thought I would be done speaking to this passive investing (sorry I mean low-cost investing) versus active investing debate for while, but it just keeps pulling me back in!
After my recent episode where I tried to bring a bit of a reality check into the whole passive/low-cost investing, another revelation has been presented to us. This time by none other than Vanguard, one of the pioneers of low-cost index investing. Recently the company said that they would be releasing a new line of actively managed ETF's.
Wait...what! The company of John Bogle who has been firm, consistent crusader for index investing is now changing teams and going to the Dark Side?
If this is really going down then Bogle will join other passive-investing ambassadors such as Burt Malkiel and Rick Ferri, who have pounded the table (and sold a few books) about the virtues of low-cost index investing and now seem to be OK with the concept of picking stocks.
In this episode, I offer my takes into the latest passive investing flip-flop.
When I started my consulting business, my main work centred around doing investment analysis on Canadian stocks and companies. My main motivation at the time was that it was very hard to find credible, independent, and unbiased financial analysis. Back in the mid 90's, the investment industry was rife with conflicts of interest. Investment reports was more of marketing copy for investment banks to promote their IPO's. Sell recommendations were few and far between. It's been almost 20 years since that insanity. Some regulations were introduced after the Dot Com, Nortel, and Enron meltdowns. Has anything changed? Is investment research better now? In this episode I share some recent stats that appear to show that investment analysts continue to shoot blanks.
Passive investing has been the rage as more and more money has shifted away from traditional actively managed portfolios to portfolios that track broad based indexes. There's enough evidence that it can be an effective strategy, but is a passive strategy really that passive? When you look underneath the hood of ETF's or index funds, there is really not much that's truly passive about them. A lot of it has to do with the indexes that the ETF's are tracking and benchmarking to. It has changed how I look at passive oriented products and I will refer to them in the future. In this episode (iTunes), I'll take a deeper dive and try to give the straight, honest sh$t about passive ETF's and index funds.
The essence of my coaching practice is to teach people to make more successful investment decisions. Investing is about making decisions. Should I buy, sell, or hold a stock or ETF? At face value, successful investment decisions are a product of improved education of the mechanics of investing as well as continuous engagement. This is great however it does not on its own lead to making consistent successful investment decisions. There is another level of thinking that needs to go into the process and the great investors incorporate this level of thinking into their investment decisions. In this episode, Aman shares some insights into what is called Second Order decision making, which can when practiced consistently and implemented within an investment playbook can improve the probability of making successful investment decisions.
This episode is a total going down memory lane thing. 99 episodes ago, I dared myself to prop up my phone, open up Periscope and put myself out there for the world to see me um and ah'ing my way to babbling about investing. I thought I had maybe 3 clips of 3 minutes before I would run out of things to say. Somehow though, I was able to do it for a year before a colleague suggested that I try podcasting which from what I knew was a pretty labour intensive project, however it turned out the mechanics were much easier than I thought and the practice of doing Periscope videos gave me both a library of content as well some confidence. The next thing you know, I'm knocking on my 100th episode of Stock Talk. I honestly cannot believe and I honestly cannot believe the response since I switched over to podcasting from Periscope. It's been quite astonishing. So as I knock on the door to episode 100, I decided to look back on some of my favourite episodes and also some of yours based on your feedback. Thanks to all for your support. More to come!
It appears that central banks around the world are either engaging or leaning towards increasing interest rates. At a first level thinking, rising interest rates spell trouble for stocks in the short to medium term, however as we've been living in a prolonged era of excessively low interest rates, an increase interest rates is actually a welcome event in the long term. In this episode I share my thoughts on why higher interest rates are a welcome tonic for free market economies.
Since the financial crisis of 2007-08, there has been a big proliferation of dividend oriented investing strategies. There is vast inventory of material that has been shared by many that have benefited from adopting an investing ideology of investing in stocks that pay dividends. The two main drivers for the popularity of dividend investing has been uber low interest rates that has forced investors to seek riskier investment opportunities and secondly, just a basic fear to protect what's left of their savings. This is all well and good and I always say that there is no single investment strategy that rules them all, however what concerns me is that simply adopting a strategy of investing in dividend paying stocks can give people a false sense of security. In this episode Aman gives us a crash course on what dividends are all about and while they are a welcome source of extra income for investors, they can still expose investors to risks.
The cornerstone of my investment coaching practice is to teach and mentor people to make better investment decisions as it pertains to the buying and selling of individual stocks and ETF's. It’s one thing to teach this stuff. It’s another thing to model the behavior and it’s a totally different thing to actually demonstrate tangible results. In this episode I reviews my updated Last 100 list and shares my insights on my investment experience and pedigree.
With Mad King from North Korea and the Mad King from the USA trash talking using their nuclear weapons on each other, Aman tries to map out what that could look like and how it could potentially impact stock prices around the world. Suffice to say, it won't be good in the short term. What's more concerning is the impact it will have on how commerce is done around the world. As much as the rhetoric has been quite hot, these 2 "leaders" have a track record for talking a good game.