☕ New highs are not an excuse for ignorance

Good morning! 👋  

Another day, another record. 

I love this! 

People view the markets with fear and that’s normal. 

What they don’t realize is that the same trepidation they feel really should be a driver. 

There are only two things an investor has to get right if he or she wants to be successful over time. 

Two. 

1. Buying the world’s best companies making “must have” products and services when nobody wants ‘em and selling when others can’t resist buying; and, 
2. Keeping risk as low as possible at all times. 

Here’s my playbook. 

1 – New highs are not an excuse for ignorance 

The S&P 500 closed yesterday at 4,927.93, its 6th record close of the year.  

It’s normal to be skittish or uncertain, but that's not an excuse to be ignorant when it comes to your money and to investing specifically. 

The markets are constantly making new highs. 

That’s how they work. 

My research shows that the S&P 500 has spent 83% of the time at or within new, all-time highs since 1927. What’s more, the markets have put in roughly 1300 unique highs over the past century, around 1 per month. 

Ergo... 

It's better to be “long” (meaning you own stocks) than wrong (because you don’t). 

MyPOV: The world’s best investors – think Buffett, Dalio, Templeton, Rogers, and Baron here just to name a few – constantly look for opportunity using a rigorously researched framework like the one driving One Bar Ahead®, my paid research journal. The go-fast crowd, on the other hand, relies on tip sheets, clickbait masquerading as financial research and top ten lists that miraculously find their way onto the Internet and into magazines (remember those) this time of year. 

2 – PFE: 85% of buy/sell decisions are wrong 

If you believe the Street, the company is done for.  

I don’t.  

Stocks like Pfizer roll with a predictable rhythm that plays out over long periods of time, not just at moments in time. Most investors have the attention span of a mosquito these days so, of course, they miss it. 

The public rarely buys at the right time which means better opportunities for those who do.  

Think about it.  

Respiratory diseases are on the rise, customizable medicine is right around the corner and AI is going to radically change human history. The odds of another, deadlier pandemic are 45-57% within the next decade. 

And no, I really don’t care if people think the CEO is a rat fink or are a fan of the latest conspiracy theory when it comes to vaccines, mismanagement, or anything else du jour. 

Great dividend, low beta, growing oncology portfolio.  

Reaffirmed guidance. 

I am not surprised whatsoever by today’s earnings report. (Read) 

3 – What the iRobot story says about Amazon’s C-Suite 

Amazon announced that it’s abandoning plans to buy iRobot because there is no path to regulatory approval. The company’s CEO, Colin Angle, is stepping down at once and the company is laying off 31% of its employees.  

Here is why you should pay attention.  

Amazon determined it was cheaper to pay a $94M breakup fee than buy iRobot for what would have been a $1.7B valuation.  

People think this is about iRobot but it’s really a powerful data point that tells me AMZN’s restructuring efforts are paying off internally and that some much needed focus is returning to the C-Suite. I expect both to be hot topics when it reports. 

This is the second time in a few weeks I’ve thought about picking up Amazon shares again; hmmm. 

As for iRobot... 

I have a tough time imagining that the company will survive, at least as we know it.  

Putskies and a fall to $5 or less. 

MyPOV: The thought has crossed my mind that iRobot could be a takeover candidate but that's not something I take seriously even at $10 a share. I mean, not for nothing, what can you do with such a singularly focused product? We love our Roomba but at least you can turn your unused Peloton into a laundry hanger.  

4 – Prime averts are here, unless you pay up 

Some years back when streaming was in its infancy, I let rip with a thought that all but caused a riot at the conference where I was speaking. Eventually, I said, streamers are going to start charging extra for an advertising-free experience. 

“No way” said dang near everybody in the room. 

The streaming wars were being launched by promising an advert-free, a la carte viewing experience to those who fled cable. 

Now along comes Amazon which is going to start charging an additional fee to Prime members who don’t want to be bombarded. (Read) 

Team Jassy claims that you will see “meaningfully fewer ads” than the competition. 

In my best Dr. Evil voice, riiiiiiiiiggggghhhhhht. 🤦‍♂️ 

MyPOV: The public is reaching saturation with the constant in your face advertising we see from the moment we wake up to the moment we go to bed. I think Google and Facebook are in deep kimchi as a result. Amazon to some degree, save the shopping. 

5 – Musk strikes again – first human chip implanted 

Love him or hate him, he is a visionary leader who is more than willing to change the rules and the game at once. 

Unlike many who think this is a huge negative, I was thrilled to learn that the first human has received a Neuralink brain implant. (Read) 

Imagine what this is going to unlock for those who have lost their abilities or were even born without! 

Longer term, it does raise an issue we've talked about before. 

The legal system isn’t ready for chip-equipped humans who could be better than their non-chipped counterparts. Everything from labor law to criminal law will be impacted as this develops. 

I’d love to buy Neuralink shares but the company is still private, and I have no interest in Alphabet which holds a position via Google Ventures. 

Bottom Line  

The markets have a very pronounced upside bias over time.  

Many investors find it hard to believe because they are focused at moments in time but true investing success comes from learning how to focus on what happens over time. 

Just sayin’. 

As always, let’s MAKE it a great day – you got this! 

Keith 😊