Mark Twain – Dave Chappelle….I Like Making Memories

I watched Dave Chappelle get the Mark Twain award the other night and it was fantastic. It is heartwarming to watch people still in their prime get honored by their peers like this.

His writing partner at The Chappelle Show – Neal Brennan had a great speech and tribute.

John Stewart was hilarious.

Aziz Ansari tells a great story

Sarah Silverman was funny and I loved how she explained how Dave’s angles of attack were so special. In the start up world, great founders and teams do the same.

Finally, Dave took the stage and did what he always does…kill. I really enjoyed it. He believes no other country could produce this many comedians and had so many other on point insights.

Have a great day.

Fashology in China?

I was watching this Chip Wilson (founder of $LULU) interview yesterday and he mentioned that he had been selling down his 9 percent position in LULU and buying the Nike of China.

I did not know there was a Nike of China . I thought Nike was the Nike of China.

Chip was talking about Anta Sports , founded in 1994.

The stock trades on the OTC markets under the ticker $ANPDF.

I tore off my LULU pants, sold them on Ebay and used the proceeds to buy a few shares myself. The whole thing made me hungry….

I kid the Chinese…

But yes I did buy a few shares.

Here is the Chip Wilson interview.

Rachel Turns 22….Any Advice?

It was Rachel’s 22nd birthday yesterday.

She has been home from the holidays which means she has had to stare at me mostly on the couch recovering or had to visit me at the hospital.

As she always does, Rachel makes the best of things. She’s been really busy catching up with her cousins and friends and yesterday she had a bunch of them over to celebrate and watch the first episode of the new season of the ‘Bachelor’ while I hid out in the bedroom watching hockey and the first season of Dracula on Netflix (Ellen ran out to do errands).

Rachel is heading into her last semester in college and has so many opportunities ahead. I remember being 22 and not having any idea what I was going to do. I had an undergraduate degree and the stock market had just crashed (1987) so my first job at the stock brokerage was over.

If I were to give any advice to Rachel (and I do) it would be to spend less time on things that make her worry and more time figuring out ‘how to be successful at her career’.

According to crowdsourced shopping platform ‘Slickdeals.net’…even though most consumers (74%) say they have a budget, 79% of them fail to follow it.

First of all, there is NO way 74% of consumers have a budget or even know how to make a budget. Second of all, personal budgeting is most likely a plot by the drug companies to sell more anxiety medicine.

In my personal opinion, everyone should know how to create a basic budget so they have a basis of reality, but from what I remember of being hooked on Quicken and personal budgets in the 90’s was a major waste of time spent worrying and tracking.

I still think it is my job as a parent to take some of the stress out of Rachel’s budgeting to keep her focused on ‘how to be successful at her career’.

As for ‘how to be successful at her career’ there is advice she can get all over the social web, because it is 2020 and people with skills do share great stuff.

Just yesterday, Sam Altman of Y Combinator riffed on Twitter on the exact subject.

I will share it with her today so we can chat about it.

Happy Birthday Rachel.

Momentum Monday – War…What’s It Good For?

As a reminder, Marketsmith (by Investor’s Business Daily) is now a sponsor of the weekly show. All the charts you have been seeing in the videos and will continue to see are from Marketsmith. They are offering my readers a three week trial for $19.95. Click this link if you would like to try it out.

The headlines on Friday were all about war and Iran which got me thinking about the famous song by Edwin Starr which asks ‘War – What’s It Good For’?

The answer…

Absolutely Nothing.

Stock traders would argue – defense stocks – which hit all time highs on Friday as Iran moved from page 10 to page 1 of the news.

Ivanhoff and I did our weekly tour of the markets highlighting trends and momentum. You can watch/listen here.

Here is what stood out to Ivanhoff:

1. We saw a notable inflow in capital into emerging market stocks. The Chinese Internet ETF, KWEB gained more than 6% on Thursday and it managed to keep most of its gains during the pullback on Friday.
2. Crude oil had a big 3% gap which might be the beginning of a new trend, especially if the situation in the East escalates. Gold has also been on the rise.
3. Defense stocks ETF, XAR broke out to new all-time highs.
4. Interest rates are going down which is good news for the our debt-ridden economy.
5. Quite a few enterprise software stocks are setting up for a potential breakout: COUP, TWLO, AYX, etc.
Happy New Year and Thanks for watching/reading.

I am going to see how this new front page news moves the markets for a few days before I do much of anything.

Have a great week.

The Art of NOT Selling

I am an early seller.

Steven Wright – the comedian – tells a joke about being born by cesarian…he knows this because he leaves parties via the upstairs window.

Maybe I was 3 months born early. I’m always leaving the comfort of a great stock the first chance I get!

Ellen and I have always bought our houses right but selling them has been a mistake. We should have kept them all and eventually AIRBNB would have made holding a profitable way to keep them.

My current biggest stock positions are Apple and Google and LULU but since they are at all-time highs as I speak, all my sales in the past have been clunkers. I should have bought some more stock each time I was thinking of selling. I should also be adding to my position each time I buy their products.

What am I taking about?

Yesterday I read ‘The Art of Not Selling‘ by Chris Cerrune of Akre Capital Management and learned a few things.

On the power of compounding I enjoyed this anecdote.

An illustrative riddle

You are given the choice between two sums of money: one million dollars or a penny that will double every day for 30 days. Which should you choose?

Here are a couple hints. The penny that doubles daily would be worth $1.28 after the first week. After the second week, it would be worth $163.84.

You will probably reason that the penny would be worth more than the one million dollars. (Why, otherwise, all the theatrics?) By just how much, though, might surprise you.

It turns out that after doubling 30 times, the penny would be worth $10,737,418.24!

This is a terrific exercise because it highlights the not-so-obvious power of compound returns (in this case, the penny compounds at 100% for 30 periods).

I say not-so-obvious because you would have been better off taking the one million dollars until the 27th day. But in those final four days, the value of the penny increases from less than $700,000 to more than $10.7 million. Patience and a long-term perspective are required to give the power of compounding an opportunity to do its magic.

Most do not naturally grasp the concept of compound interest. It has been called the eighth wonder of the world (first by Albert Einstein, supposedly) for good reason. Most of us have to learn to appreciate it. And even once learned, we have to remind ourselves periodically of its wonder.

From this riddle, we learn the importance of holding on so that we allow our investments to compound uninterrupted for long enough that the compounding effects we saw in days 27 to 30 have an opportunity to play out in our portfolios.

Of course, even Akre believes there are times to consider selling…

Even with the power of compounding firmly in mind, there may be times when we believe it is appropriate and necessary to sell. These include, but are not limited to, when a business (1) is no longer growing at an above-average rate, (2) has had its competitive advantage impaired, or (3) has had an adverse change in management.

I am 54 and continue to have an open mind abut investing. While I continue to make ‘see early’ mistakes with favorite stocks in my own portfolio I have done better with helping friends and my own children. My kids have never sold down their Apple, Nike and LULU and it has made a huge difference in their portfolios. I have sold Facebook for Rachel a few times and that has been a mistake. This time we may not sell it so fast.

We all develop our own styles. Compounding is no doubt the biggest factor in growing your portfolios, but none of it matters if you don’t get started.

There are so many great tools to get you started investing today.

Have a great Sunday.

2020 Fintech Prediction Palooza

Some of you have noticed that I have already missed a day of the blog in 2020.

Unfortunately, I spent the last two days in the hospital with a bad infection of my colon. It is under control now and I am back home feeling good, but to be honest I was scared and not in the mood to write while I was getting all my tests and feeling terrible.

Let’s get back on track with a longer prediction post I have been working on.

I made a few predictions last week but today wanted to write about the area I focus on…fintech. Our fund (Social Leverage) has not announced a couple of our most recent fintech investments but will be doing so shortly.

In the last 10-12 years fintech (I started making fintech investments in 2006) has gone from a neglected category to a very crowded ‘can’t miss’ venture capital playground.

It makes sense as the financial crisis threw the banking world into chaos and while banks were figuring out fines, and how to survive post crisis, new leaders on the edge of regulated banking got a foothold:

Bitcoin
Coinbase
SoFi
Paypal
Visa
Mastercard
Stripe
Lending Club
Adyen (Amsterdam)
Ant Financial (Alibaba spinoff)
We Chat (Tencent)
Square
Robinhood
Chime
Vanguard

I mixed some public companies in here because we have learned that nobody is threatening companies like Visa and Mastercard, and others like Ant Financial and Paypal are now making huge global acquisitions themselves after being spun off by public companies.

Like I said, the year 2019 landcape in fintech is a lot different than the pre financial crisis landscape in 2006.

So where are we today and what is likely to happen in the coming years as these fintech startus continue to mature?

My eyeballs and gut say the current fintech landscape is way too crowded with me too startups that will not have enough capital to take on more established (well funded) startups and the banking incumbents that seem finally ready to take the fintech challenge of the last decade seriously.

Look no further than the free trading ‘free for all’ that started with Schwab dropping commissions a few months back and just yesterday Vanguard doing the same.

The Robo advisors like Betterment and Wealthfront may have gathered $20 billion in assets, but event at a generous 50 basis point in fees on 20 billion in assets…the revenue is just $100 million. Wealthfront and Betterment won’t be raising fees anytime soon. Take a look a this chart which shows where fees are heading. Maybe some acquisitions take place, but Vanguard looks stronger than ever.

You can’t just dismiss all the robo and non bank bank growth and activity. So far in this fintech cycle, it is estimated (using 3Q 2019 CB Insights data) that U.S. fintechs have taken 60+ million customers from banks across the budget, save, borrow, invest product spectrum.

The big question all predictions must answer in 2020 is ‘Can Fintechs Really Beat Banks‘?

I personally think we will see a lot more acquisitions (mega and small) as the banks come to terms with the 60 million accounts outside their direct reach.

My friend Julian Hebron does a great job summarizing this question – Can Fintechs Really Beat Banks – in his post you can read here.

I will be revisiting my post here and Julien’s a few times as the year progresses.

And of course…fintech entrepreneurs reading this or friends of fintech entrepreneurs, please keep sending me your pitches and ideas. I am always happy to read and share my opinion or try and match you with other capital. There are still many angle of attacks that will allow startups to succeed in this world of giants.

Have a great weekend.

Investing Is So Easy…

Last year, Apple and Microsoft accounted for 1/3 of the Nasdaq 100’s great 37.8 percent year. If you listen closely you can hear 1,000 hedge funds closing.

I was smart enough to own Apple but do not own Microsoft.

No wonder more and more people turn to indexing and simple asset allocation when it comes to public market investing. If you can’t beat ’em…join ’em.

Last week these two tweets appeared back to back in my timeline and caught my attention.

I am not recommending 3x leverage Nasdaq 100 as a buy and hold strategy (most of us would have been sick with the many 30-50 percent over the 10 year period), but you can see why fewer and fewer people want to pay 2 and 20 for access to hedge funds.

Today Vanguard Joined the ‘free trading’ club to start the new year.

We are all hedge funds now!

Happy New Year – 2020 Here We Come

I am excited about turning the calendar. I have no doubt that 2020 will be an interesting year.

I love writing every day on the blog. I am amazed at how far and wide the readership extends. In response to my story about my uncle Jack yesterday, I received this amazing note….

Hello Howard:

My son-in-law – an investing enthusiast – is a follower of yours. He just sent me the link to the story of your hero Uncle Jack. What an amazing story. I’m happy to know Uncle Jack is alive and well.

I thought you’d be interested in knowing that my father, ***** *****, took that photo of your uncle. He was working for the Toronto Star at the time.

I have a crate filled with Dad’s negatives & slides. If I ever come across this photo of your Uncle Jack I will get you a copy. Free of charge.

All the best in 2020.

Talk about a small world.

It always feels real nice to get nice emails from readers but this one stood out in 2019…

Howard, you never fail to amuse, inform, amaze and delight. Discovering you in 2019 was one of the highlights of my year!

Hoping for good health for you in the coming year. My wife and I have lifted you up prayerfully in the last several days.

When I started writing here on the blog (Google Blogger) back in late 2005, I had no idea what I would be writing about or what to expect.

Today, I can’t imagine not writing here daily and appreciate the constant surprises from the growing community.

I hope everyone has a happy and healthy 2020.

Uncle Jack – A Hero

My uncle Jack came by for dinner the other night. I have written about my aunt Rhoda before.

My uncle Jack is a retired dentist and he and Rhoda spend their winters in North Scottsdale.

Yesterday at dinner, his son Aaron was telling my wife and kids the story about how Jack tried to catch an armed bank robber in Toronto back in 1969.

My uncle Jack is a hero.

I know the story but Aaron (who was not yet born in 1969) had a lot more details and even some pictures.

In 1969, my uncle Jack was walking into work when he heard people yelling from the sidewalk and the bushes that an armed robbery had just taken place at the bank on the street. Jack saw two guys holding guns round the corner and his first instinct was to take off after the bank robbers. One of the robbers, stopped, turned around and shot my uncle Jack in the groin. That robbers name was Jim Bradley and they were both caught in the days ahead.

Jack was rushed to the hospital where he stayed for 10 days. After many surgeries they never did get the bullet.

Here is my uncle Jack at the hospital.

Most amazing is this picture is now owned by Getty images and would cost my uncle Jack $500 to get a copy. For those that don’t know, Getty Images is now owned by the Koch brothers. Ugh.

This chalk outline by the police looks like it was drawn by a 4 year old and we had a good laugh about that.

Back to the story, Jim Bradley escaped from prison and a city wide manhunt went on and Jim was the most wanted man in Canada for a short period of time before he was caught in a basement about a block from Jack’s mothers…my grandmothers house.

In 1969 Toronto there was a victim compensation committee and my uncle Jack went before it and was awarded $10,000. He used the money for a 50 percent down payment on a house in downtown Toronto (today that house would sell for north of $1 million).

Jack is 78 years old today and in great shape and health with three kids and 7 grandkids.

Momemtum Monday – Add A Little Froth To My Nasdaq Latte

As a reminder, Marketsmith (by Investor’s Business Daily) is now a sponsor of the weekly show. All the charts you have been seeing in the videos and will continue to see are from Marketsmith. They are offering my readers a three week trial for $19.95. Click this link if you would like to try it out.

Happy Monday everyone.

Ivanhoff and I did our tour around the markets and globe looking for momentum old and new. There are a lot of interesting setups and a lot of trends that are long in the tooth and due for a rest. You can watch or listen right here.

The reason I mentioned froth in today’s title is Orange Julius, our ‘Tweeter In Chief’ is absolutely giddy about the stock market. While not as good an indicator as when he hates the stock market, it might be a clue that a stock market rest/decline is around the corner. Either way, cool stat and chart:

One of the most interesting financial stories of the week was the partnership between Alibaba’s Ant Financial and Vanguard. Alibaba is back at all-time highs and now close to a $600 billion market cap.

Have a great week everyone.