Subscription is the New Location – Amazon, Spotify, Netflix, Apple and….Disney?

Before the internet, real estate investing made sense to me. Obviously it remains an incredible asset class, but other than our family home on Coronado and a small home in Phoenix, I invest in internet software companies.

In 2018, if you can figure out how to turn your internet business into a subscription business (and keep your customers happy), you will be rewarded with prime real estate asset prices AND extremely high multiples and valuations on all kind of new metrics built just for you and your ability to tell stories.

I own most of the great internet/media subscription businesses at the moment including (Tinder), Netflix, Amazon and Apple (they are all on my 8 to 80 list). I don’t own Spotify but it is an 8 to 80 brand as well and I plan to own it one day soon.

A few months ago I also recommended Disney to my Peloton Subscribers (just $80/year). I also added it to my 8 to 80 list even tough they have not yet launched their ‘DisneyFlix’. Yes they have a piece of HULU and I like HULU and yes they launched ESPN streaming, but the market refuses to pay Disney an internet business valuation until they launch their ‘DisneyFlix’ with a blockbuster early release movie. I front ran this happening and continue to believe Disney will nail the subscription business.

Yesterday, I watched this excellent interview between Scott Galloway and Derek Thompson and you should take the time to watch it once or twice this weekend if you care about these companies.

Enjoy and have a great weekend.

Facebook Dating…Because Ecommerce and Banking is Too Hard

Facebook sent Barry Diller and his holding company IAC into a tailspin today announcing a dating feature. The announcement alone created a crash in IAC stock and spinoff (Tinder), wiping out $4 billion.

Obviously Facebook can do (and does) anything it pleases, but color me skpetical.

Like you and I, they stare at charts and the chart has been a thing of beauty:

Technically, Facebook did a lot of damage today. Fundamentally, I don’t see the point of it all.

I think Facebook is being lazy.

Alibaba and Tencent have a better global domination strategy right now focused on Ecommerce and banking (this is a great read on their strategy).

Facebook should be attacking Ecommerce and financial services (worth hundreds of billions), not dating, which the original Facebook app already does.

For starters, Facebook could swallow Shopify and Square (including nice premiums about $50 billion or approximately 10 percent of Facebook’s market cap) and really make some bigger companies sweat it out.

Momentum Monday…and Big Changes to My 8 to 80 List

Ivan and I put together another ‘Momentum Monday‘ (click to watch). It’s a bit longer than usual as Ivan and I walk through a bunch of new ideas that seem to be working.

An extra added bonus today for readers are some changes I am making to my 8 to 80 list. A few weeks ago Ivan and I made a video about all the stocks on the 8-80 list.

The list has had a fantastic run (here was the December, 2017 update). I kicked out the laggard Starbucks in January (stuck in a 3 year base) and added Disney last month (optimistic about them playing the streaming game). Today I am kicking out Fedex and Microsoft and adding LULU and McDonald’s. There are now 15 companies on the list.

I want restaurant exposure to the list and McDonald’s is a best of breed. McDonalds’s is becoming a technology company and their delivery deals are great for them. I am a huge fan of their all day breakfast, grabbing a coffee and breakfast burrito once or twice as a week as a guilty pleasure.

LULU is having an incredible run after breaking out to all time highs a month back. My daughter Rachel bought it after a random joyful shopping spree, but I flinched because of the market volatility.

The last couple of months I have spent a lot of money in 10 different stores to get a feel for the brand again. They are crushing it.

LULU will never be mainstream, but that is ok. The brand will be global. I call them a ‘fashology’ (fashion and technology) company.

Something sneaky genius about the brand is that I can wear it without screaming that I am wearing it. There are no logos or words. I like knowing I am wearing LULU without others knowing I am wearing LULU.

Here I am today in a hat, shirt and pants – the ‘triple lindy’ of LULU:

There is only one Nike Swoosh and LULU seems comfortable in that world. They continue to take premium retail spaces near Apple stores which is smart.

As with all 8-80 stocks, there is no need to chase. McDonald’s is actually working through a correction so I think it is ok to add here. LULU will see it’s share of 20-30 percent corrections as it continues to expand. Fashion and retailing is very volatile. They must get better at online retail to smooth out the inevitable storefront retail problems.

Looking ahead for the list…I want more exposure to robots, marijuana, biotech and security but I do not see the right direct exposure in an 8 to 80 brand sort of way. Google, Amazon, Apple, Johnson and Johnson, Alibaba and Tencent will have to do for now.

Buy in May Go Away

There is an old saying in the financial world ‘Sell in May and Go Away‘.

May is around the corner so now would be a good time to mention that it’s a dumb saying (which means this year will be the first in six to actually be a good time to sell in May).

I am having a great year in 2018 but have no intention of selling, though I will be going away.

The markets are literally in the palm of our hands 24/7/365.

Do not switch your investing strategy because of the calendar in a globally connected mobile and social world.

I will keep finding great opportunities because of sayings like this. It seems that the dumber the investing world gets with ETF’s, fancy products and passive investing, the better it is for growth companies (mostly tech because of the leverage from software).

Be open to pouncing on investments and trades each and every day.

To The Sun?

I love sun.

This five year chart of First Solar looks pretty damn good.

Zoom out 10 years and the last 5 years look like noise:

At Stocktoberfest, my friend Charlie got a ‘perfect 10’ score for his ‘chart battle’ take on being long First Solar.

I’m with Charlie on this stock and will be doing some more research myself. In the meantime I bought a few shares for Rachel in her Robinhood to force me to keep an eye on the company, the trend and industry.

Any feedback is welcome as I do some work.

Amazon $1 Trilllion and Google Maps is Air

It is starting to look like Amazon will get to $1 trillion ahead of anyone.

Jeff Bezos announced his Prime numbers a week ago. He announced the $20 month price increase today so the analysts would be able to do the math and boost projections. If Amazon numbers had not pleased Wall Street, the announcement would have soothed Wall Street.

As I have suspected, Amazon Prime and Netflix have amazing pricing power, not just global growth. Time is money and they have stretched people’s day in a way they are getting credit for and the markets will keep awarding them higher market prices (for the time being).

My friend Michael Porat saw this happening a while back and I wrote about it last June on this blog (click here).

Next up…Google Maps is Air

How do you value a company who provides the air you breathe?

I had the pleasure of interviewing Chief Product Officer of Tinder, Brian Norgard, at Stocktoberfest this week.

We covered a broad range of investing and product topics because he has seen so much helping Tinder explode in all metrics.

We were talking about how his age group only get their markets/money advice and ideas from their streams, groups and friends and yet still make a lot of stock markets and private market investments at young ages.

I brought up a story about my son Max’s stress level when we shut off his iPhone apps and he pleaded for Google Maps so that he could leave the house one day.

Brian said ‘Maps is Air’.

There is likely no line item in Google’s quarterly financial reports for Google Maps. No Analyst’s questions about Waze and their continution to the bottom line.

‘Maps is Air’ is not a bad investment hypothesis in lieu of all the bad fundamental research for the simple BTFD (Buy The F***** Dip).

Stocktwits ‘Rooms’

Yesterday’s Stocktoberfest was fantastic.

I had a great time seeing so many old friends in the financial social web space and media business. Of course, there were also so many new faces that just love the community and came to put faces to the name and see some great speakers.

The highlight for me was seeing Ian, the CEO, announce ‘Stockwits Rooms’ which will ship next month:

It will be fun to let passionate traders and investors build and moderate their own real-rime communities (paid or free) around the tickers and topics they love.

More details coming soon.

PS – Scott Seinhardt created this funny clip about a drug called ‘BTFD’ (for sad traders) and convinced me to play the lead.

P&G – Proctologist and Gamble

An old blue chip – Procter and Gamble – is a mess these days.

Over the last 40 years the stock has always recovered from bear markets with all-time high prices. This recovery has left $PG behind (it never hit a new all-time high) and the stock is now reeling.

They are under assault from Amazon and the rise of the microbrands.

I believe it is overdone, but have not put on a trade here.

Amazon does not want to kill Procter & Gamble…at least quickly. There are a lot of advertising and promotional dollars Amazon would like to extract from them marketing inside/on Amazon.

Over the next 10 years, the Company can also buy 1,000 rising microbrands and go directly to the customers themselves.

The whole CPG (Consumer Product Goods) sector is going to see explosive deal action and volatility for the forseeable future.

The Best Time To Invest…NOW!

I continue to get asked the following:

Is it a good time to invest? and,

Where in the cycle do I think we are?

I can only answer these questions from the point of view for how I have invested the last 10 years with Social Leverage, my style of investing and ideas I have bled out on this blog, and how I am looking at the markets today?

We came out of the financial bubble straight into a social media bubble, a biotech boom..quickly into an AI, Robotic, Crypto boom/bust/ bubble and yet here we are almost 10 years after the 2008 financial crisis at or near record highs in technology stocks. Of course today may be the top for everything, but I doubt it. Even if it is, today is a great day to invest.

Let me share a few charts that provide me context for the possibilities of growth, opportunity and investing. This chart I saw in my streams really brought home the ‘public’ (findable, investable, tradable) opportunities open to investors over the last 20 years (click to enlarge):

There may never be another Bitcoin or just maybe, Bitcoin and the decentralized software world offers a possible future where hundreds of companies grow faster than the Facebook’s and Netflix’s of today.

I have covered the enterprise software opportunities over the years on this blog and these THREE charts will hopefully explain why I continue to believe big gains for investors can be found in the years ahead…

Great products get to scale of users and profits faster and faster. A global, mobile, social and possibly decentralized world only add fuel to the fire for the next batch of winners.

As for those that are paid the big bucks to find the new things and zig when others are zagging…hopefully this graphic is inspirational and keeps you focused on reading and digging and playing with all the toys that lead to the next big thing:

There is no BEST time to invest. There is just investing. There is doing it consistently. There is compounding.

The sooner you get started, the faster you find the right people to follow, the quicker you form a strategy that helps you stay in the market by owning the best companies (I call them the 8-80 companies), the better.