Netflix | StockArchitect

Reblog: Steven Cohen: Investors Take Note! Model-Driven Companies Will Accelerate Away From The Pack Now That Software Has Become Ubiquitous

One of the investors we follow closely here at The Acquirer’s Multiple is Steven Cohen, founder and chairman at Point 72 Asset Management. According to their last reported 13F filing for Q2 2018, Point72 has $25.056 Billion in managed 13F securities.

Cohen recently wrote a great article together with Matthew Granade, managing partner of Point72 Ventures, at the WSJ which provides a warning for investors based on the impact that model-driven companies are having on the changing business landscape saying:

“Software continues to eat the world, but yesterday’s advantage is today’s table stakes. In the hunt for competitive advantage, model-driven companies will accelerate away from the pack now that software has become ubiquitous.”

Here’s an excerpt from that article:

The software revolution has transformed business. What’s next? Processes that constantly improve themselves without need of human intervention.

Marc Andreessen’s essay “Why Software is Eating the World” appeared in this newspaper Aug. 20, 2011. Mr. Andreessen’s analysis was prescient. The companies he identified— Netflix , Amazon, Spotify—did eat their industries. Newer software companies—Didi, Airbnb, Stripe—are also at the table, digging in.

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stockarchitect July 29, 2019

acquirersmultiple.com / Airbnb / Amazon / Didi / Netflix / Point72 / Spotify / Steven Cohen / Stripe / Tencent / Wechat /

Reblog: Top 7 Principles of Growth Investing

Investors have many different strategies that they can follow to build wealth in the stock market. Income investors tend to prize dividends above all else. Value investors seek to buy stocks that trade below their intrinsic value. Growth investors, on the other hand, aim to buy businesses that hold the greatest upside potential and tend to de-emphasize traditional valuation metrics that generally show a growth stock to be expensive compared with the company’s current earnings.

Growth investing is highly attractive to many investors because buying the right companies early can lead to life-changing returns. However, companies that promise huge upside potential usually trade at lofty valuations. That amps up the risk that they will fail in spectacular fashion if they don’t meet expectations.

So how can investors increase their odds of buying the next Amazon.com (NASDAQ:AMZN) instead of a Fitbit (NASDAQ: FITB)? While there’s no bullet-proof solution to this conundrum, I’ve found that buying companies with the following traits can greatly increase the odds of success:

A large and expanding market opportunity
A durable competitive advantage
Financial resilience
Repeat purchase business model
Strong past price appreciation
Great corporate culture
Talented leadership with skin in the game

Let’s dig into each of these principles in detail to see why they work.

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stockarchitect April 24, 2019

Amazon / Brian Feroldi / eBay / Facebook / FitBit / GoPro / Growth Investing / Investing / Netflix / Pandora Media / Skyworks Solution / Starbucks / Tesla / The Motley Fool / Tiffany's & Co / Walmart /

Reblog: How to Trade Trend Continuations using Remounts (Live Netflix Trade)

It’s so hard to buy pullbacks!

That’s what a fledgling trader told me there other day after I asked him why she doesn’t trade trends.

I can understand her dilemma. I mean, how many times have you bought on the pullback only to see the stock pullback further. You then get stopped out before the stock eventually does exactly what you thought it would.

Talk about frustrating!

Well, that’s why we don’t guess by trying to time the pullback. Instead, we let the pullback play out before entering.

How do we do that?

By waiting for the remount of a key range, like the 9 (ema) and 50 day moving averages.

This gives us confirmation that the pullback is over and puts a repeatable process in place that gives us easy steps to buy the pullback without fear.

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stockarchitect January 28, 2019

Bullsonwallstreet.com / Netflix / Paul Singh / Pull back / Remount /

Reblog: What To Do When Your Stocks Are Soaring?

Bull markets seem like they should be easier than the alternative but even dealing with gains can be challenging as an investor. Research shows that investors trade more often during bull markets because we don’t know what to do with gains, it’s difficult to hold winners, and there are constant temptations with even bigger winners elsewhere. This piece I wrote for Bloomberg looks at how to deal with big gainers in your portfolio.

*******Major stock indexes are hitting new highs almost daily, adding to the huge gains many securities have posted in recent years. For example, Nvidia Corp. has gained almost 1,800 percent since the start of 2013. Over the past five years or so, Netflix is up 1,375 percent; Tesla is up 835 percent; Facebook is up 590 percent, and Amazon has risen 380 percent. Bitcoin is up more than 900 percent in 2017 alone.If you’ve been fortunate enough to be involved in any of these equities or other market stars, you made the right choice. But investors would be wise to work through their options on how to handle these stocks. Large gains in your portfolio are a good problem to have, but the good news also comes with psychological baggage. Continue Reading →

stockarchitect August 22, 2018

Amazon / awealthofcommonsense.com / Ben Carlson / Bitcoin / Enron / Facebook / Netflix / Nvidia / Peter Bernstein / Tesla /

Reblog: Bill Nygren: Value Investing Principles and Approach

Bill Nygren is a fund manager at Oakmark Funds. He is also Chief Investment Officer for U.S. Equities at Harris Associates. He’s particularly well-known for being a value investor who doesn’t fear the technology sector.

This post summarises key takeaways from his talk at Google in December 2017. While he reinforces many core value investing principles, he also challenges us to think differently.

The difference between gambling and investing

A value investor recognizes there are different ways she can put capital at risk and the difference between gambling (negative expected value) and investing in stocks (positive expected value)

Buying stocks like you would buy groceries

Bill observed the way his mother shopped for groceries by buying more of something that was on sale and deferring her purchase of something that wasn’t yet on sale

Smart money is not always smart

He spent two years as a research analyst at Northwestern Mutual Life where he pitched ideas of companies that he found were trading below their asset values. However, the portfolio managers chose not to buy such stocks until after they were recommended by 2-3 Wall Street analysts, by which time the price had moved to above asset values.

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stockarchitect July 18, 2018

Bill Nygren / George Soros / Harris Associates / HBO / Michael Steinhardt / Netflix / Oakmark Funds / Paul Tudor Jones / thecalminvestor.com / Warren Buffet /