EVERYONE cites the Warren Buffet quote to be “greedy when others are fearful and fearful when others are greedy”, yet when the time comes the fearful voices beat would be buyers into inaction. You don’t have to look far to find a negative article about Snapchat or Under Armour. I don’t know why it is but people love to be haters. So why aren’t we being greedy now?
Just last night Snapchat revealed that they are partnering with Mark Brunett, the producer of Survivor, to create content for their company. This is something that nobody saw coming. As a result, the stock is now up 8.6% as of the time of this writing. This is only the beginning of Snap Inc’s dominance. Snapchat is buying real estate along the California coast, investing in AR and their spectacles are a bargain compared to the google glasses. People aren’t focused on this though. All of a sudden technical investors have turned into fundamentalists. They weren’t concerned with the balance sheet until recently.
The problem is that you have to be AHEAD of the news to make money. The only way to be ahead of this news would have been to hop in despite all the negative press. You don’t make money by pointing at success you make money by being there when nobody believed it was possible. That is when the shares are the cheapest and the potential gains are the largest. Be greedy now, not later after they have risen in the ranks. That’s if you want to make money.
Some people just want to look good and look like they are smart. You can do that by pointing at a winner after it has already won but if you didn’t benefit from said win you aren’t truly a winner. If you have followed this blog you learn that is not how I invest because I am not investing for capital preservation. And honestly, neither should you be. I am willing to lose 70% of the time to knock it out the park 30% of the time.
How this applies to Under Armour
We have seen multiple drops in UA over the last few quarters as they lowered their revenue guidance, much of which was a response to the closing of Sports Chalet, their biggest outlet. But in response to this, Under Armour has partnered with Khols to get their products in their stores. This was a genius move and we will likely see it pay off over the next few months.
Invest for the long term
The key is that when these stocks get hit they don’t go away, they react, adapt and come back stronger. They have not only the cash on hand but their credit worthiness to take on more debt to expand operations. Keep in mind that in this club, for the most part, we are aiming for growth and change. That comes from something happening that nobody has ever seen.
I always say this but the millions are made in the NEXT thing not the old, used up, and played out things. Apple might be sexy to big money like Icahn but little guys like us have no reason to be in something that might only generate 8%.
If you invest in 1 million in five companies and four of those investments fail but one pays off and you see your investment explode 500% you end up with an account worth 6 million. That is a 20% total return. Now, you wont see four of your holdings dissipate but there is a good chance you could invest in some idea that explodes 500%. We see those everywhere in NFLX, GOOG, AMZN, TSLA, etc.
The key though is to invest in a way that might look foolish to the fearful investor. This is the time to be greedy in stocks like UA and SNAP while the rest of the world is fearful. Do it now before all the profits have been eaten up. Join our club today by emailing us at firstname.lastname@example.org