Top Reads, Listens, Follows & Takeaways of the week
Picking Winners (product isn't enough)
Takeaways:
I recently heard a pitch to invest in Disney based on the strength of their product. It was enticing. Everyone loves Disney. Their intellectual property is arguably the greatest in the world and millions of people flock to their parks each year.
People routinely make the case for investments based on the strength of a company's product or service, in line with the adage of investing in what you know, but product isn’t enough when optimizing for investment returns. The truth about Disney is that the S&P 500 has given them a good beating over the last 3, 5, 10, 15, and 30 years. They lost $1.5bn in their direct to consumer segment (Disney+, ESPN+, Hulu, etc.) last year. This reality came as a surprise and made me think about other great consumer products/services that have been bad investments.
Carvana (CVNA): Making buying and selling a car incredibly easy. I had a great experience.
DoorDash (DASH): Food delivered quickly to your door for a $2 - $6 fee.
Allbirds (BIRD): Popular, very comfortable, and stylish shoes for in or out of the office.
Bird Global (BRDS): Who doesn’t love riding electric scooters around a city for cheap?
SVB Financial Group (SIVB): Known for great service, easy loans, even extending 50 year mortgages to the most preferred clients(?). This chart is now dated..
The Bottom Line: A great product or service isn’t enough to make a great investment. Since 1926, the top performing 4% of listed companies explain the net gain for the entire US stock market. Picking winners is hard. Proceed with caution.
Reads:
Lie Witness News, Bob Seawright on self-interpretation (here)
How a Penny-Stock Company Sold the Pentagon on Small Drones for Ukraine (here)
The hidden leverage of stock-based compensation (here)
When the tide goes out you discover the tightly-panted by John Wiegmann (here)
Who Blew Up Nord Stream? Investigators focus on Six Yacht Passengers (here)
Listens:
Lux Capital: Chatphishing, veracity and “two years of chaos and a reset” (here)
Private Equity Deals: TaylorMade (here)
Copper, Lithium and Electric Cars from the author of Volt Rush (here)
Follow, Watch & Other great content:
All Eyes On Zimbabwe’s Lithium Industry (here)
60 Minutes: Behind the scenes, What does the FDIC do when your bank fails? (here)