One of the most under performing asset classes so far this year has been German equities. As of this writing, German stocks were down over 20 percent year-to-date. Everyone complains about the weakness in the Dow Jones indexes, but the German markets have been in a serious downfall. This despite some of the most well-known and dominant global companies like Daimler Benz and Seimens. The German economy is the enginge of Europe and the opportunity to get exposure to that market at a 20 percent discount was appealing to me. I decided the best way to get the exposure was to passively own a basket of German stocks and that led me to evaluate some German equity ETF’s. In this podcast episode, I walk through my analysis of several German equity ETF’s.
Oil prices have been nose diving in the past few months and along with it oil stocks. I thought it would be a good opportunity to do some due diligence on some oil stocks to see if there were some opportunities to buy low. Instead, I decided to have a look at some ETF’s to see what if that may be a better road. In this episode I share my analysis and review of several energy ETF’s.
There was a fair bit of hand wringing going into October, a month where there have been historically some iconic stock market meltdowns. The market was starting to show some signs of fatigue. At one point the S&P 500 index crossed below its 200 day moving average which hasn’t happened in literally years. Interest rates keep tracking up. The Mad King continued to elevate the trade trash talking and investors were getting nervous and stock prices in the early part were trending downward, but nothing crazy that motivated me to look into buying. Sue enough on October 23, the market had a fit. Suddenly words like “crisis” and “turmoil” were being thrown around, when historically they weren’t even scratches. It’s times like this where having my investing playbook is critical as it gives me an anchor to check in and review my investing ideology and how should be executing. It makes me review my Wish List to see if there are any stocks I’ve liked are now more affordable. The last thing I should be doing is panicking and reacting. It’s these stress points where we need to be put all the upfront hard work and making thought-out decisions.
In this episode I walk through the various decisions I made during the month. With quite a few stocks that I owned had fallen in value enough that I thought it was worth jumping in and buying some more shares to lower my average cost down. There were also a couple of stocks/ETF’s that I had on wish list that had become a lot cheaper and thought it would be good to start building a position.
Bought more shares in Las Vegas Sands (Ticker: LVS)
Bought more shares in Activision Blizzard (Ticker: ATVI)
Bought more shares in iShares US Financials (Ticker: XLF)
Bought more shares in Nutrien (Ticket: NTR)
Bought more shares in Winpak (Ticker: WPK)
New Position: Bought shares in iShares Germany ETF (Ticker: EWG)
New Position: Bought shares in Electronic Arts (Ticker: EA)
With Emerging Market stocks taking a hit, I thought it would be a good time to explore building up a position in the sector. In this episode I evaluate several ETF's to determine which would be an appropriate one to add to my portfolio.
It’s a golden age for investors. Never at any point in history has it been this cheap to get into investing. Management fees and trading commissions have been falling over the past 20 years, thanks mostly to technology which have improved speed and efficiencies of transactions. In the last year or so, the competition over lower fees has been quite intense with ETF companies like Vanguard and Blackrock going back and forth lowering fees to almost zero. This has trickled down into traditional investment products like mutual funds which have lowered their fees, albeit less aggressively. Well the race to the bottom in fees has reached a new level.
Free. As in nothing. Nada. Rien.
It’s a great time to be an investor. Eliminating a focus on fees can allow more due diligence on the investment itself, however I’ve been wondering if these products and service offerings are really free and is free in the grand scheme of things a good thing for investors? In this episode I dive into the the illusion of free that the investment industry has been pushing on us.
Amazon has been one of the “It” stocks for the last decade. It has had an epic run. If we were to look at Amazon from a 1st level thinking perspective, the conventional thinking behind buying Amazon is that they are disrupting retail. Any space Amazon enters, be it grocery, streaming, pharmaceutical drugs, diapers is met with fear and doom by the existing players. 1st level thinking would tell us that in the future we will shop at Amazon only. I would consider Amazon to be a Fear of Missing Out or FOMO stock. Many have missed the moves up and feel compelled to jump aboard so they won’t miss out. In this episode I try to take a look at Amazon from a 2nd level thinking perspective.
I’ve owned Las Vegas Sands in the past and it has been good to me. I’ve also sold it prematurely because of some questionable financial reporting treatments that didn’t sit sell with me. With the stock down near 14 percent this year and at a 52-week low, I thought it may be worth revisiting it to see if anything with the company has changed. As from my position in MGM, many of the fundamentals with LVS are quite similar. The question is how are they performing. In this episode, I apply my 8 Questions framework and see if indeed an opportunity is at hand. This decision was also a very difficult one because there is also some politics at play here.
With summer done, I was thinking I may be due to make a few investment decisions, but it was quiet month with one selling decision which I wasn’t counting on making anytime soon along with one decision to buy more shares and one new stock I added to my portfolios. At the same time, I was faced with a decision that challenged some of my personal values and given the times we’re in, I don’t think I’m the only one that may be facing similar decisions. In this episode I walk through my most recent investment decisions from September.
Investment Decisions Made:
In Part 1, I shared some thoughts on a recent report by the Ontario Securities Commission (OSC) outlining the challenges the financial services industry is having in getting Millennials to invest. The OSC report had a great opportunity to address those investing pain points, but like so many financial literacy initiatives, the messaging is not clear, consistent, and understandable. The report identifies solutions, yet they are separate and not integrated and use a lot of industry jargon that people just won’t connect with. They emphasize processes over results. What is the outcome we want Millennials to achieve with investing?
In this episode, I’d like to share from my experience as Investment Coach and as someone who works with people to develop their investing competencies, some ideas that I found have better motivated people and not just Millenials into become more engaged with investing. They address the pain points people have with expressed about investing which include; being scared of investing, feeling overwhelmed by the process, feeling paralyzed when trying to make a decision, and not knowing how to start and take that first step. These are my takes and perspectives. They are by no means the most definitive and all encompassing.
My motivation in starting my own practice to teach and engage people on investing revolved around financial literacy. I thought that if I could improve someone’s financial literacy, they will have a better chance at becoming a successful investor. I was always a big supporter of financial literacy programs, especially in schools. It made sense and I thought it was the right thing to do.
The reality is over the years I’ve learned and witnessed first-hand that while noble and done with good intentions, financial literacy programs just don’t work. A revolving door of programs, a lot of them government and industry sponsored have been rolled out over the years, starting out with enthusiasm and then just petering away in obscurity. Here in Canada, we even have a Financial Literacy Commissioner that acts and cheers Canadians into becoming more financially literate, but to no avail. So much effort, again all with good intentions, has been put into improving financial literacy but it just doesn’t seem to stick.
So queue the latest attempt at cracking the financial literacy daVinci Code. A 42-page report commissioned by the Ontario Securities Commission and prepared by a dream team of consultants and personal finance thought leaders. The report attempts to answer why people, specifically Millennials are not investing and what financial institutions can do to get them to invest. In this first of a two part series, I walk through the report and highlight some of the good points as well why the industry continues to make the same mistakes when it comes to engaging people about investing. In Part 2, I offer some some solutions that I have developed from my own practice and from my own experience helping people make more successful investment decisions.
I continue on with my analysis of video game stocks with a quick dive into Take Two Interactive. They are known for their Grand Theft Auto franchise.
Continuing on in my analysis of video game companies is my review of Electronic Arts. EA is more known for its sports games such as Madden Football and FIFA Soccer. It seems like a natural fit for EA to leverage their sports expertise into the E-Sports domain. In this episode I do a quick mind map analysis to see if EA is worthy of adding to my portfolios.
When I was a kid I spent a heck of a lot of time playing video games. I’m totally dating myself here but I had at one point an Intelivision which as the time had the coolest sports games and also a Sega Genesis where I got my first look at Madden Football. Over time I ended up getting Playstation and a Wii but I hardly used them like I did back in the day. Beyond this, I really didn’t know much about video games, but wow have things changed. I had no idea how much of a following games have. The big reason is the ability to play the games online has allowed all sorts of competition. You can literally play anyone anywhere on the planet. To my surprise there are all kinds of tournaments and leagues that have sprouted up and the big one’s offer serious prize money. The other part that floored me was how many people actually will watch other people play video games. The Overwatch League finals were played at the Barclays Center in New York and the arena was sold out! The more I read about it, the more I looked into it. I evaluated a few of the big name game companies which you can find in my Mind Map video pages. I ended making a move and picking up some shares in Activision Blizzard. Here is my mind map analysis (podcast) that lead me to my decision.
UPDATE November 2018: As November wore on the stock kept tracking down and soon my loss position was at 25% which meant the stock would have to go up over 30 percent just to break-even. Given the negative sentiment I didn’t see that happening. I had the stock on a tight leash and so with the latest pullback I said that’s enough. As hard as it is to sell, I have to stay true to my investing playbook and when any stock crosses my loss threshold I have to sell regardless of how I feel about it. It feels painful right now but it is short term pain for long-term preservation of my savings. I still like the company and the whole video game/e-sports space, so I’m still going to keep Activision on my watch list and if the stock continues to track lower then I might jump back in if the fundamentals of the business remain intact.
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.
The cornerstone of my investment coaching practice is to teach and engage with people on how to educated and ultimately successful investment decisions involving stocks and Exchange Traded Funds (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. Several years ago I decided to dig up my past trading records and to identify the most recent 100 investment decisions I made and to see how faired. In this episode I review my most recent results for my last 100 investment decisions.
You can't go one direction in the stock market these days without hearing something about Tesla. It has become the classic retail stock. Their CEO has said a few things recently that have had the markets in a tizzy. I've never really looked at Tesla stock because just eyeballing it, it looked overpriced. Well I thought with all the hysteria going on that maybe this is a good time to dive in and have a look at the company. This is my mind map video on my quick analysis of Tesla to see if it may be worth picking up.
Just because it's summer doesn't mean you lift your foot off the investing pedal. I ended up making several moves in June as some of my positions had crossed my return threshold and I had to make some decision on whether to hold on or sell and bank the profit. I also made a decision to add another stock to my portfolio as well as remove a hedging position.
Bought more shares in Big Lots (BIG)
Bought more shares in Southwest Airlines (LUV)
Sold shares in Williams Sonoma (WSM)
Sold shares in Baidu (BIDU)
Sold shares in Gold ETF (CGL)
New Addition: Bought shares in Starbucks (SBUX)
Starbucks stock has been getting crushed the last few months. Weak forecasts, some not so great PR events started taking the stock down. It got me interested to see if it may be worth picking up as it seems to be out of favour by Wall Street. In this podcast I walk through my thought process that led me to buy shares in Starbucks.
Fitting into my theme of investing in companies that can own the OS, JD.com is positioning itself to become a real player in online retailing. It has been one of the big players in the China market and it is looking to branch out to other parts of Asia. It is very aligned with other players like Tencent and Walmart and aggressively building out its retail ecosystem channels. The stock has been falling and some say the US trade tariff sabre rattling has put pressure on China stocks. In this episode I share my mind map exercise that I used to evaluate and ultimately led to my decision to buy into JD.com.
UPDATE #1: Since I made the decision, some significant news has come out. It was announced that Alphabet had made a $550 milliondollar investment in JD. I think its a big deal in that it validates JD's value proposition. JD has now entered partnerships with Alphabet, TenCent, and Walmart. These are companies that are aggressively trying to build out online ecosystems to own the OS for distribution in retail. Whoever can control that online platform has a good chance at building durable competitive advantage. Whatever happens, JD has connections with all the main players. The Alphabet connection also signals that both parties are looking to take on Amazon.
Update #2: Since the Alphabet announcement, more events have occurred, specifically from the Mad King himself, who pondering restricting Chinese companies from investing in American technology companies. I wonder now if the JD/Alphabet partnership is now in doubt given the Eye of Sauron is now looking upon China quite aggressively. I cite the potential of a tariff tit-for-tat as serious risk factor that could negatively impact JD.com and other China stocks.
UPDATE #3: Sold shares in JD.com (Ticker: JD) for 28.5 percent loss (Net Forex). This was a tough one. I still think the fundamentals of the business are quite solid as they are aggressively positioning themselves being the OS for retail in China and Asia. They have aligned themselves with some heavy weights (Walmart, Tencent, Google) to build out a formidable retail ecosystem.
So what changed my thinking? Math. The stock fell through the $30 level and my loss position was well over 20 percent. Basic math tells me that the stock would have to pop back over 25 percent to just get to break-even, which given the volatile nature of the stock is quite possible.
The other factor comes to governance. Richard Liu the CEO was arrested for alleged assault and then released in the US in August. He since returned to China. The police said the charges could not be substantiated and so he was released. There have been rumblings that this is not the first time this has happened and so there is a serious cloud on the leadership. Adding to this is that the management structure has been setup so that Liu because of his significant ownership of shares can still run the company. This is a big distraction and I think this will stick to the company.
I was down 28.5 percent which means the stock would have to up almost 40 percent for me to break-even which I think will be pretty tough under this current dynamic. Following my playbook on managing with losses, I decided to sell now and move on. It’s a tough one as at one point the stock was trading in the high $40’s and so I was in a good position. That’s the way investing goes sometimes.
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.