Brenda Lee's "Rockin' Around the Christmas Tree" is unseating Mariah Carey's "All I Want for Christmas is You". I LOVE TO SEE AND HEAR IT! Never been a fan of Mariah’s song because no all I want for Christmas is not YOU!
What I want is Money, Ego, Dollars, Cash-money. Just saying.
Welcome back to the Rambling Mind Newsletter. This is your Market Update.
Summary of Topics:
Shein (A COMPANY I HATE) is going public
How you are lighting money on fire by shopping on Shein
Lucky Investment in CrowdStrike
Stats of the Week
Charlie Munger, investing legend, dies at 99
49,449 people committed suicides in 2022, the highest ever in the US
$12 Billion spent on Cyber Monday
$319 Billion donated to charity in 2022 but that is BAD NEWS
Sports
Man U lost AGAIN! How surprising 🙄😒
NBA In Season Tournament is a SMASHING SUCCESS
Florida State gets the middle finger
Extras
Ugliest Car Ever is finally available - Tesla Cybertruck
Amazon ships more packages than UPS
Markets
November was one of the best November ever in the history of the Stock Market. Every single index gained at least 8% for the month. Since 1928, the S&P has gained 8% in the month only 10 times. Hopefully, this rally will continue giving as we are in the season of giving. We are 5% away from a new all-time high for the S&P 500.
Year-To-Date Returns
This newsletter is 2,100 words a 10-min read
Tale of the Tape
Economy
One of my most hated companies, Shein, has filed to go public in the US next year at a valuation of more than $90 Billion. It would make it more valuable than Lululemon and H&M combined.
Why The Hate?: Because it makes trash clothes and encourages horrible consumeristic behaviors.
But: From a business perspective, this company is a GIANT! Shein now commands more than 50% of the US fast fashion sales. Overtaking giants like H&M and Zara.
By the Numbers: It has over 150 million users
Made $23 Billion last year and will make over $40 Billion this year
How?: Social media has been its ultimate weapon for growth. I know we have all somehow seen videos of #SheinHauls on either TikTok or Instagram. Those videos which are mostly FREE MARKETING have translated into Billions of Dollars for the company (side note: realize that most of the influencers who do those videos never pay a dime for them).
By using cheap materials, it can undercut all competition to sell clothes for ridiculously low prices.
The cheap prices inspire people to buy clothes for one-time use, throw them away, and repeat the cycle as often as possible.
Takeaway: Investors will rush to get their hands on this company, regardless of the controversy surrounding the company from environmental concerns to forced labor lawsuits. Investors love those revenue growth numbers.
My Takeaway: I HATE THIS COMPANY. On the surface, it appears cheaper to buy your clothes from them but that is never the case. This company is fashion’s version of dollar stores. 90% of the things you buy from them will be in the trash within a week. It costs you 10x more to continue buying clothes from them.
However, no one wants that. My generation wants to look rich rather than be rich. We want the feeling of what we see from celebrities at red-carpet events. Never be seen in the same outfit twice. We think we are being economical when in reality we are lighting our money on fire with every checkout at Shein.
Earnings
This will be a different earnings call debrief. I will talk through my specific investment in this company rather than just the company’s earnings.
By The Numbers: Revenue increased 35% from last year to $786M.
Net Income (Profit) increased by 105% from last year to $199 million.
Stock Move After Earnings: After hours, the stock ripped 8% higher. Continuing its unbelievable ascent this year, up 125%. CrowdStrike announced that it will beat its estimated revenue for the year, investors loved that!
My Investment: Over the last year, my stake in this company has grown incredibly fast. It is now my 3rd largest single stock position behind Amazon and Google. This growth has not come from additional buys of the company but rather from appreciation of the stock. I have invested:
$4500 in Google; now worth $4500
$3300 in Amazon; now worth $3700
$2200 in CrowdStrike; now worth $3500
This has been my best investment to date and it has been my luckiest investment ever. I started buying this company in 2021 (~$50/week) after seeing multiple companies and government entities get hacked in 2020. I was sure cybersecurity was something that would be needed.
I watched maybe 2 or 3 videos about the industry. I landed on two companies that seemed to be best positioned to lead the industry outside of Microsoft. I had a friend who was working for a competitor in the space (Palo Alto Networks), and I asked her a few questions. She raved about CrowdStrike. I then read three in-depth articles from Brad Freeman of Stock Market Nerd and Francis of The Software Analyst.
From the articles, CrowdStrike and SentinelOne stood out. I decided to split my bets between the two companies. After the crash of 2021, I decided to sell SentinelOne (tax loss harvesting BABY!) and focus on CrowdStrike. Turned out to be a great move to prepare for the 2023 rally.
SO?: I share all of this to say, I got SUPER LUCKY!
The same process that made me money (so far) on CrowdStrike is less than the process that lost me money on Lemonade, SentinelOne, Intel, Airbnb, Alibaba, Ally, Roblox, Shopify, Jumia, Spotify, Dropbox, Tattooed Chef, and so many others. Yeah I'm not so good at this investing thing lol
This is why I don't listen to anyone about how good they are at investing anymore. Anything can and will happen. A good company can still be a horrible investment and vice versa. Luck is a big part of this game.
The gems I have now could become coals tomorrow. So I do not spend a crazy amount of time on this.
Plus my total single stock portfolio of about 10 stocks makes up less than 10% of my total net worth. Most of my net worth is in boring index funds within my 401(k) and IRA. I do this mostly for fun and to learn about businesses. DO NOT COPY MY INVESTMENTS!!
BUY MORE?: As much as I would love to buy more of this company, I cannot. It is currently trading at 50x Free Cash Flow (which is my simple and lazy method of deciding if I will invest in a company or not) which is a bit too expensive for my taste. I should have been buying this name back in January (I bought Google, Amazon, & Disney instead 😔) but I am unreasonably cheap. My limit is about 25x Free Cash Flow for a company this good. If for some reason the stock falls into the $190 range, I will buy more. For now, we wait!
Question: Would you like me to share more about my stock investment portfolio?
Stats of the Week
Charlie Munger, one of the greatest investors of all time and right-hand man to Warren Buffett, dies at age 99.
Two of my favorite quotes from him:
Envy is a really stupid sin because it's the only one you could never possibly have any fun at. There's a lot of pain and no fun. Why would you want to get on that trolley?
The first $100,000 is a b***h, but you gotta do it. I don't care what you have to do – if it means walking everywhere and not eating anything that wasn't purchased with a coupon, find a way to get your hands on $100,000. After that you can ease of the gas a bit
The US had a record number of suicides in 2022, according to the CDC. For every 100,000 people there are 14.3 suicides. Men are 4x more likely to commit suicide than women. Suicides have seen a continued increase since the turn of the century with a major uptick since 2020, especially among the younger population.
According to Salesforce, 79% of all shopping traffic from Black Friday and Thanksgiving was on a mobile handset. In combination, Americans are using Buy Now Pay Later at an accelerating pace. It grew over 47% from last year. However, store-branded credit cards are dying off. New car registrations were down 37% (THANK GOD). These are usually the highest-interest cards you can get and have the worst rewards.
BUT: The Era of free shipping returns is OVER! Many of your believed stores to overspend money in, have begun charging shoppers for shipping items bought online (you can still return in-store for free). Return rates have almost doubled in the last 3 years and it is costing stores a lot more to manage.
Americans spent $12.4 Billion on Cyber Monday according to Adobe Analytics. It is now the biggest shopping day in US history.
We may spend a ton in the United States and give a tiny bit. In 2022, individuals gave over $319 Billion (this was a down year). It was the lowest proportion of disposable income donated since 1995 at 1.7%. Since the pandemic, giving has been continually declining year over year. It dropped 11% from 2021.
However; even with all that, the United States remains the most generous nation on Earth. But that has more to do with the fact that the US is the richest nation on Earth. 1% of a massive pie is gonna be massive.
The number of barrels of crude oil per day that the US is now producing. It is double the volume from 2012. The US is now the world's largest producer of oil. Saudi Arabia produces 13% of global oil, the US produces 21%.
Looking Ahead
This week is all about JOBS. On Tuesday, we will get the JOLTS (Job Openings and Labor Turnover Survey) report. During the pandemic, people were switching jobs at a high clip but that has since reversed course. The number has been hanging around 9 million for a few months now.
On Wednesday, we will get ADP’s private payroll report. It is expected for employment to be 200,000 job additions in November. This slowed down from the 233,000 jobs that were added in October.
On Thursday, we get the nonfarm payrolls. This gives us the official unemployment rate, which is expected to remain at 3.9%.
Sports I Love
Man U loses AGAIN
Man U never stood a chance during this game. They never looked like they had a chance to challenge Newcastle. This game should have been 3-0 or more but Newcastle missed a ton of chances. Man U looks like a team devoid of any spirit or will. If anything goes wrong in a game, they completely fall apart. It is sad and painful to watch.
In November, NBA games averaged 1.48 million viewers on ESPN and TNT. It is a 19% increase from last year. This is all thanks to the In-Season tournament, which is an implementation of football’s various in-season tournaments like the Champions League.
This is the perfect time for this growth because the media rights deal will expire at the end of this season. With growth in viewership, the NBA can demand more money from various Production or Tech companies.
College football Rankings
For College Football fans, you all will understand when I say this image is a giant middle finger to the ACC. How a 1 loss Alabama got in over an undefeated Florida State, I will never understand. However as an SEC Fanboy and an Alabama sometimes fan, I love it!!
Extras
Amazon delivered more packages in the US in 2022 than UPS. This makes Amazon the largest delivery business in the United States.
The Ugliest Car Ever is Now Available
Tesla's Cybertruck has finally delivered its first few production cars. It is just as ugly as you thought it would be and it is much more expensive than anyone expected.
*I am a tiny shareholder in this company.