Stitch Fix (SFIX) -- How Your Shopping Actually Helps My Wallet

 Stitch Fix reported quarterly earnings today and they blew their expected earnings number out of the water. The online personalization shopping experiment is here to stay for now. I tiptoed into this stock probably around the middle of May 2019 and the ride has been bumpy since then.  Being that I'm a bit old school, I actually like this stock for a simple reason...if my online personalization shopper (likely a combo between a computer and real person) finds something that works for me, I joke I don't even want you to experiment...just get me one of every color of that shirt. And comfortable pair of jeans, nope don't need new ones until these are worn out. Now I'm sure their tool is way more sophisticated then that but heck as long as they don't veer too far off from what works and fits well --- I think many people will give up the department store shuffle. Clothes off rack --- race to the fitting booth ---- damn how does a size smaller fit me in this designer and I need a size bigger with a different designer. 

I think the lazy habits of us all makes this an ideal play for measure me, I try it on, once you know what works --- bingo, keep repeating that model.  So back to the reason for my post. 

Stitch Fix is UP more than 30% and it just occurred after they reported earning. SFIX was one of the few retail stocks that was a downer in my portfolio and I'm surprised to say no more. I have a healthy profit and hope you do too if you've been following and stuck with the downers in my portfolio. Little tip, these are the stocks in the last few weeks that are starting to outperform. Don't remember those names, well just click here for SFIX and my retail stocks that are now soaring:

How My Defensive Stocks Are Now on Offense

Chart Game:

And yes if you eat Red Robin, by shoes from Foot Locker, use Kohls cash, buy Coach bags, watch CBS, ready USA Today or watch your local news station --- I'm a fan of your and appreciate you.

How Being Risk Focused Allows Me to Play Defense + Offense

Playing Offense - Embracing Technology to Be More Efficient

Being a cyber guy, I take a brutal stance to technology. I don't have Instagram, Twitter, or any other junk accounts to monitor my behavior, recognize my face, and tailor advertising JUST for me. Unfortunately, I have a Facebook account. But I'd be a fool to shun technology as I invest in them and understand how they attract the masses yearning for one simple thing --- human connection. I prefer to pick up the phone and chat, the most genuine form of communicating and being able to interpret the little things but we all have to adapt to the world around us. So you all would be proud of me, today, I wrote a majority of this post using a speech recognition service on my computer. In an effort to save time, I need am modernizing how I send emails and blog. I simply say open word pad and begin speaking. I understand computers, so slow and steady dictation spits out my thoughts while I work on other things or follow the markets. 

Playing Defense - When Defense Turns to Offense

For this post I wanted to talk about defense.  Being a risk manager, I often help companies play defense.  By playing defense and protecting your core assets from risk. I believe eventually, you'll hit an optimal point where you're actually playing offense.  I was recently reading an article that cited the great investor Bill Gross.  He was cofounder oOf the legendary PIMPCO bond funds.  I found what he said in this article very interesting.  To summarize, he was talking about playing defense.  He mentioned at this point there are not many investments areas to continue to make outsized returns. In my opinion, this is a dangerous place to be in a market when they're are not many investments remaining that can offer decent returns.

If you were to ask me what keeps be up at night, it would be just that --- as I evaluate most assets whether it be stocks, real estate, even precious metals they all seem to be moving in one direction...  and that's up.  I found it interesting that Bill mentioned tobacco, banks, and the geographical region of Europe as areas to invest. As I evaluate my portfolio, I believe I'm seeing a similar trend playing out.  When I filter for the stocks that have recently been increasing I find that my dogs or laggards in my portfolio are moving up nicely.  If you've read my blog in the past you'll notice that many of the stocks fall in the retail space:

RED Robin - Restaurants

Stitch Fix - Apparel

Foot Locker - Apparel

Viacom - Television and Advertising

TEGNA - Newpapers and TV stations Advertising (think USA Today and your local news)

AMC Theaters - Movies

NEWELL Rubbermaid - Consumer goods

Tapestry (Coach) - Luxury Bags and apparel

I find this trend surprising but I also welcome the frothiness of the market dissipating.  What keeps me up at night, is that these stocks are primarily  focused on the consumer. Similar to Bill's thesis of tobacco, banks, and Europe.  Let's take a quick look: restaurants, apparel, television, movies, and consumer goods. The resilience of humans is absolutely amazing.  With COVID and high unemployment still as the backdrop, you are seeing people yearning for a sense of normalcy so we do what we feel is normal -- the machine wants us to spend. And spend we are. I'm not sure if this is sustainable but I'd be a hypocrite if I didn't disclose my portfolio will do okay if these positions move up. While I hunker down, America is purchasing online I wish I owned Amazon, Target, Home Depot and Lowes but I am playing the ELECTIONS (with TV and advertising) and Gambling (Ceasars and DraftKings). Stitch Fix I was playing as a tech play but man holding on has been a long brutal wait. The rest, I can't wait to get out because like the Malls, I think the future of retail is owning the platform (Amazon, Shopify, etc.) and less the physical stores.

50c Candy Bars - My value Search

Finally, I always on the hunt for value or as my billionaire buddy Seth Klarman calls them cigarette butts. Me I called them the 50c candy bar deals. My spidy senses are looking at Viasat at these levels. Now comes the deep analysis of how to invest in a way that limits my risk --- haha finally I found something that won't keep me up at night :)

Stocks mentioned in this post: Tapestry (TPR), Red Robin Gourmet Burgers (RRGB), Stitch Fix (SFIX), Foot Locker (FL), Viacom (VIAC), TEGNA (TGNA), AMC Theatres (AMC), Newell Brands Inc (NWL)

Is the Stock Market "Weak"? or should you be "Right Here" (SWV Mix)

I get so weak in the knees I can hardly speak.

I lose all control and something takes over me.

In a daze and it's so amazing, it's not a phase.

I want you to stay with me, by my side.

I swallow my pride, your love is so sweet.

It knocks me right off of my feet.

I can't explain why your loving makes me weak.

    ~ Artist: SWV     Song: "Weak " 

I was jamming to some classics and decided I needed the help of SWV to describe how I and many others feel about the economy, stocks, and life right now. Yes, only the classic hits of SWV and that soulful rhythm and blues (R+B) sound of the 90s can really assist in what this market is doing and how it's making people feel. I won't spend much time on the backdrop but if you need a reminder I tried to signal what was to come back in March. Remember it didn't take a rocket scientist to figure out that the impacts of COVID-19 were going to be devastating. These simple facts were in front of us at the time:

- China and the Asia Pacific region had been shut down since early January and even Chinese New Year was canceled (something reported on each day from Beijing by Eunice Yoon and others)

- The market prior to COVID-19 was already near record levels. We hit those levels in my opinion around 2017 when I changed my investment style to ensure I wasn't holding stocks too long (which is contrary to what I believe in). While the market IMO wasn't overvalued, we were in the longest bull market ever recorded (if history serves me correct). Since then, the market continued to melt-up and made us weak in the knees that we could hardly speak. Truss 2019 was a great year, remember: Tesla, Okta, Sprint, Symantec Norton Lifelock, Audentes, Celgene. How good, I got rid of Tesla and Okta way to early. At the time, I was riding great gains, however; they continued to skyrocket further. I feel weak. To put things further into perspective Tesla and Okta aside...the remaining companies I named above ALL got bought out easily making 2019 one of my best years on record investment wise (and the worst personally as I lost my father).

- Finally, I was concerned about the US response to COVID-19. If you flip back to my March posts, I highlighted scenarios that are now playing out when there isn't much of a plan and poor tone at the top leadership --- I said you will get to a situation where US states would start to draw lines in the sand and say citizens from other states cannot cross state lines without strict conditions. Recently, the state of New York told people from 31 states you must quarantine for 14 days (IMO a statement basically saying don't bother coming). I was concerned about the US Lil Nas X culture of "Can't Nobody Tell Me Nothing" to an airborne respiratory disease... who knew that would seriously lead to daily fights about whether masks should be mandated.

So if the market is so SWV "Weak", why is the Nasdaq hitting highs everyday and my portfolio and your retirement plan feeling so good. Well that's where SWV "Right Here" comes in. The Federal Reserve and even Congress has been right here with STIMULUS. I don't have a running total but over $7 Trillion with a T has been pumped into the economy after it began tanking in March.  

Lately, there seems to be

Some insecurities

About the way I feel

Where I wanna be

Boy, you know it's with you

No one can do

The things you do to me

                                                                    ~ Artist: SWV     Song: "Right Here" 

haha The Federal Reserve came out swinging boy. Go back and look at the March lows and damn there were some insecurity about the way we felt. The things you do to us...well here is a list:

- Unemployment + $600

- Federal Moratorium on Foreclosures

- Stimulus Check

- Loans to Small Businesses (PPP)

- Economic Disaster Loans

- Purchasing Company Bonds

- $25 Billion Dollar Bailout to the Airlines

Was this response unexpected. Hell No, just look back to the Federal Reserve did back in the 2008 Financial Crisis. I wrote about it here and it even got its own name: the Tepper rally, for my dawg Billionaire David Tepper who laid out the investment thesis --- You DO NOT fight the Federal Reserve when they come in the big guns...they can print money longer than you can stay liquid (if you were betting the market would fall). And that's exactly what happened...they came in with helicopter money, making it rain.  Don't knock my hustle, read here how a strategy from a decade ago prepared us for what to expect:  Tepper - Don't Fight The Fed Reminder

I hope this wasn't complicated but I think you now get how to position yourself going into the end of year and 2021. As my friend said it best after reading my posts, the Federal Reserve and others won't let the machine fail (and this is capitalism👌).  Fast forward to today, the extra $600 unemployment boost IS NOT being renewed. A second stimulus check is coming but smaller and I believe going out to less people. The Federal Moratorium on foreclosures has been extended but what are you going to do if you are a renter...sign up for paying 1 year of back rent once you finally get a job?? This new stimulus package comes in at roughly $1Trillion which will put the government easily over $8 Trillion in newly printed debt...AND after this round I don't feel there is any appetite for more. With 2 new states recently surpassing New York in COVID cases (California, Florida) and states like Texas and Georgia never really shutting down and cases rising...I'm positioning myself for when the Federal Reserve stops pumping the economy full of steroids (whips I mean stimulus).  Delta and American have announced 25K + layoffs after their stimulus ends October 1st and I'm afraid many announcements like this will be coming if we cannot get the cases under control (basically a vaccine). I'll continue to ride the wave and not fight the Federal Reserve but I'll be sleeping with one eye open. Most of my retirement funds are in cash and I'm riding the wave from my personal investment account where I willing to take the risk. Don't get greedy.

My Free Trade Reveal: The stocks that haven't performed well in my portfolio. Notice the theme RETAIL:

COTY - Purchased @ $10  

AMC - Purchased @ $11

Foot Locker - Purchased @ $59

Kohls - Purchased @ 57

Tapestry (formerly Coach) - Purchased @ $30

Red Robin - Purchased @ $20

I was up at one time in all these positions except I believe Foot Locker and Kohls and decided to be aggressive. Lesson(s): manage risk, don't get greedy, and don't believe the hype. Restaurants and Retail are not doing well, bankruptcies are rising and I am working to get out of these positions.  Peace Out

2019 Year In Review - Mask On...Mask Off

Thank you Future - Mask On...Mask Off. Represent...I Gotta Represent

Mask Off - I am currently closing the books for 2019 and reflecting on a year of ups and downs.  Personally, I was rocked to my core this year as I lost my father. It was a deafening experience because he was an amazing father, husband, educator, community and spiritual leader. When it happened, many of us were stunned, discombobulated and grasping for balance.  

I use the word numb because I arguably experienced my best personal year I have ever had…and didn’t care.  I was very fortunate from a very early age my father taught me how to be strong, independent, and prepared to lead the family when that time came. So that is what I – what we all have tried to do, with him in mind.  Finally, this year marked my second daughter and 3 nephews being introduced to the world and my family and they are a big source of joy as we recover from our loss. 

Mask On - I get my strength from my family and push on to make a difference in this short life we are given.  I keep my eye on the prize and financial independence, being spiritually guided, and mentally woke is a powerful combination that NOBODY can touch.  So mask on and back to the lecture at hand: I ran the numbers and I turned in a pretty solid year. At roughly 23%, my personal portfolio that I manage did fairly well and IMO I didn't take on a ton of risk as I targeted value stocks.  Some are discarded gems, others I did detailed research and just saw a different story and narrative than many others.  I kind of like going against the grain...following the herd is NOT in my DNA ask Kendrick Lamar. .

Remember you all can do this. Need proof, the broader market turned in a similar performance and an event better performance was found in a technology based strategy like simply buying the NASDAQ index this year (to the tune of roughly 35% this year). I've got big goals this upcoming year and I will introduce them later but here are the remainder of the best picks I uncovered for 2019:

• Symantec / NortonLifeLock (SYMC)- Value Play; Part of the Business was bought out gave us a nice pop 
• Telsa (TLSA) - Value Play Doubled in 2019 
• Sprint (S) - Played options very well (now letting the profits ride on T-Mobile deal approval will be biggest gain if hits)
• Okta (Okta) - Cybersecurity trade that I sold too early but you live and learn
• Allergan (AGN) - A beaten down value play that finally payed off; This company make BOTOX and will be bought out by Abbvie
• Arconic (ARNC) - Pickup up some shares about the $19-21 range; value play that was dogged by litigation from a high-rise fire in London; Sold to early but it's all good
• Humana (HUM) - This stock ran up after a few big issues failed to damper healthcare stocks: 1) the Trump administration came down lightly on fines for not disclosing their negotiated rates ( a supposed game changer to bring down drug prices) and 2) Elizabeth Warren scaling back her Medicare for all plans
• Red Robin Gourmet Burgers (RRGB) - Pleasant Surprise; Stumbled on to an under performing value stock that is under pressure to change CEOs and deliver better results
• Cronos (CRON) - Surprised to see this one was so profitable; traded the Marijuana stock a few times. I have big hopes and so does the alcoholic beverage industry as they took a major stake in this company. One of the few companies I still hold a stake in
• CrowdStrike (CRWD) - Cybersecurity IPO stock that focuses on protecting your devices; They got absolutely crushed after a bag earnings and I was nimble and played this stock very well. I will be back in CrowdStrike this year
• JD. COM (JD) - My patience was rewarded; I calculated that America and China need each other. Trump removing the China tariffs caused this stock to take off from the mid 20s and now its in the mid 30s. This is a core holding for the future 

I want to wish you a very Happy New Years. Many blessings to you all and don't be afraid to dream but do it rationally, help others, take prudent risk, and take care of those who are good to you.

Here is my gift to you the rest of the best:

• VIX Index - I traded in and out of the VIXY; I'm waiting for volatility to return in 2020
• Zscaler - Plagued by earning's misses; I traded ZS in 2019 and expect to be more active in ZS and the Cyber stocks in 2020 as expectations and acquisitions are ripe for the picking
• Kohls - Between dividends and a small profitable trade, Kohls made my list but then turned into my achilles heel; I fell for their splashy venture with Amazon which was probably to cover for a bad earnings call to come. They got crushed and will need to bounce back  
• Century Link - No big notes here. They stabilized around the $10 range and it was a nice win
• Ceasar's - A good example winning and lose. I bet on Ceasars in 2018. Was happy when a deal was announced and thought I won big. No deal came and my trade blew up. I put the trade back on and benefited when El Dorado decided to buy Ceasars...so only a small gain comes from all this work.
• AVEO Pharmaceuticals - I had a small win but AVEO continues to have disappointing drug trials  
• RedHat - bought out by IBM wish I had a bigger position
• Novagold - Gold is back and being helped by Brexit and the recent attacks in the Mid East
• Anadarko - Bought out by Occidental Petroleum; I beat my buddy Buffet to this trade as he funded Occidental's purchase
• Facebook - Hard to fight the beast. They known everything and are selling it...ohh marketing it to anyone with cash
• Foot Locker - Hurt by the China issues, severely under-performed but Nike's resurgence may bode well for them in 2020
• Newell Brands - A value play that I think has bottomed. Let's see if we can trade this stock on the way up 

Clearly 2019's song of the year is HOT by Young Thug featuring Gunna and Travis Scott...

 my job is to keep it HOT in 2020...look out