Category Archives: Guilty Pleasures

Coming #Brexit vote highlights all aspects of the thematic investing approach

Coming #Brexit vote highlights all aspects of the thematic investing approach

Economics, demographics, psychographics, technologies, mixed in with regulatory mandates and other forces . . . it’s the intersection of these elements that highlight what thematic investing is all about. It’s hard to think of another example in recent history that results in all of these elements coming together at once than the coming Brexit vote and its impact on our Affordable Luxury theme.

A U.K. exit from the European Union could take a heavy toll on British luxury companies, but some of their rivals on the continent could stand to gain.

Source: European Luxury Brands Could Seize on ‘Brexit’ Turmoil – WSJ

Just when you thought you saw every ETF possible, here comes the Whiskey ETF

Just when you thought you saw every ETF possible, here comes the Whiskey ETF

Another step in the increasingly creative world of ETFs. This one touches on an aspect of our Guilty Pleasure, and while we find it lacking at least it attempts to connect the dots across the whiskey food chain. 

ETF Managers Group is releasing an ETF that plans to track the performance of the whiskey and bourbon industry, pending approval by the Securities and Exchange Commission.The ETF will track an index made up of companies “across a wide variety of industries that are involved in the overall ‘Bourbon and Whiskey Economy’,” according to a filing with the SEC. This includes producers of crops that go into the production, the aging of whiskey, by-product management of whiskey products, and more.

Source: Whiskey ETF – Business Insider

Will Scottish Regulations Upend the Alcohol Industry and Crimp Profits? 

Will Scottish Regulations Upend the Alcohol Industry and Crimp Profits? 

We’ve seen this or something like this several times before as regulations and mandates have been put into effect to curb smoking, soda and sugar consumption to name a few. While it may be helpful to individuals, it has the making of hitting Guilty Pleasure profits at companies like Anheuser Busch Inbev, Molson Coors, or Constellation Brands to name a few.

 

The industry is concerned that regulation passed in the home of Scotch could set an international precedent that could unleash a wave of regulation and crimp profits, similar to plain-packaging moves in the tobacco industry.

Source: Alcohol Makers Await Scottish Ruling – WSJ

Putting on Some Athletic Kicks and Grabbing Another Shot of Java Calls

Putting on Some Athletic Kicks and Grabbing Another Shot of Java Calls

Actions from this post

  • This week’s data onslaught is under way, and readings from Markit Economics on the global economy suggest the Fed is likely to hold off boosting rates later this month. We’ve got a slew of data coming today and tomorrow that could tip the Fed’s decision. More on that as the data comes together.
  • We are issuing a BUY on Under Armour UA Oct 2016 40.000 calls (UA161021C00040000) that closed last night at $1.85 as we place them on the Tematica Pro Select List. We would hold off buying these calls past $2.25 and we’re setting a stop loss to limit potential losses in what could be a volatile June market at $1.00.
  • We are ADDING to our Starbucks (SBUX) Oct 2016 60.000 call (SBUX161021C00060000) this morning and dropping our protective stop loss to $0.50 from $0.70.
  • Updates, Updates on Consumer Discretionary Select Sector SPDR Fund (XLY) and the Dec $78 calls.
  • We will continue to keep ProShares Short Russell 2000 (RWM), ProShares Short Dow30 ETF (DOG) and ProShares Short S&P500 (SH) on the Tematica Pro Select List.

In yesterday’s Tematica Investing, we mentioned there was a robust number of data points to be had before the end of this holiday shortened week. In the last 24 hours, we’ve gotten the May PMI manufacturing reports from what we call the four horsemen of the global economy: China, Japan, the eurozone and the U.S. All four of these reports posted month-over-month declines with the “pace of new business” — or as we like to call it, orders. — in some cases the declines could be considered more of an “easing”, while others see orders falling quickly:

  • China: May’s PMI published by Caixin/Markit slipped to 49.2 from April’s 49.4, marking the 15th month below the expansion/contraction line of 50.
  • Japan: May’s headline PMI fell to 47.7 from 48.2, with both production and new orders posting sharp sequential declines.
  • Eurozone: The final May manufacturing PMI came in at 51.5, down slightly from 51.7 in April, due to new export order growth hitting a 16-month low. What caught our eye the most was this comment in the Markit report:

New orders grew at the slowest rate for over a year as demand showed signs of waning both within the euro area and further afield. Not surprisingly, companies remain reluctant to build capacity and take on extra workers, lacking signs of any imminent upturn in demand.

  • U.S.: The May manufacturing PMI reading dipped to 50.7 from Aprils 50.8, but below that headline, new business growth fell to its weakest level in 2016. In our view, the following comment from Markit encapsulates the U.S. data rather well:

Manufacturers cited a range of factors acting to dampen client spending, including weak capital investment across the energy sector, uncertainty related to the presidential election and generally subdued economic conditions. Added to this, a marginal drop in export sales also weighed on overall new business growth in May.

In simpler words, manufacturing continues to be a drag on the overall domestic economy and the data do not point to a rebound near term.

With these four countries setting the tone of the global economy, it comes as little surprise that JPMorgan’s Global Manufacturing PMI, which it produces in conjunction with Markit, as well as the Institute for Supply Management and IFPSM, fell to a reading of 50.0 in May from 50.1 in April. On a global basis, the report shows that output, orders and exports all fell month over month, with exports contracting for yet another month.

So what does this tell us?

We are likely to see current-quarter GDP forecasts ratcheted back some. Today’s May ISM Manufacturing Index and its sister report for services, due out later in the week, will give a better indication as to what the degree of that revision could be. For those watching the Fed and thinking about a possible June rate hike, the data out yesterday, today and tomorrow (when we get the May Employment Report) are likely to give Janet Yellen and the other Fed heads ample cover to wait a bit longer.

Good for dividend-paying stocks like the ones in our recently added Consumer Discretionary Select Sector SPDR Fund ([stock_quote symbol=”XLY”]) positions as well as REITs and utilities, but not good for financials or those counting on the additional push for a stronger dollar.

As the market tends to get some indigestion when it comes to the Fed and how it interprets Fed comments, we will continue to keep ProShares Short Russell 2000 ([stock_quote symbol=”RWM”]), ProShares Short Dow30 ETF ([stock_quote symbol=”DOG”]) and ProShares Short S&P500 ([stock_quote symbol=”SH”]) on the Tematica Pro Select List

 

Getting into the game with Under Armour Calls

Earlier this week, Under Armour ([stock_quote symbol=”UA”]) trimmed its 2016 guidance to reflect what we can only call stepped up bankruptcy proceedings at The Sports Authority. More specifically, due to The Sports Authority’s proceeding with liquidation sales rather than Chapter 11 bankruptcy, UA now expects to only “recognize $43 million of the originally planned $163 million in revenues with The Sports Authority for 2016.” As a result, UA now sees 2016 revenue of $4.925 billion vs. the existing 2016 revenue guidance of $5 billion.

Clearly the market has been expecting an adjustment of this sort as UA shares fell just over 17 percent in May alone. While the company’s shares were hit on the news, it was far more muted than we’ve seen on similar bad news from other companies.

Reading between the lines, we see the $75 million cut vs. the $120 million Sports Authority shortfall indicating expected share gains in the back half of 2016, as new footwear and apparel hits a growing number of locations. We’d also note that even after accounting of the revised outlook, at 24% UA’s 2016 revenue growth is clocking well within the company’s multi-year target.

That bullish outlook was confirmed by data from SportScanInfo that showed strong athletic footwear growth year over year during the last month. The data showed a rebound in basketball shoes (up 15.4% year over year in the last four weeks), casual athletic footwear (up 23.0%), and walking/toning (up 17.2%), with increases in all other categories except Training/Fitness.

Digging into the numbers, UA continued to gain share as its footwear sales were up nearly 100% over the last four weeks compared with year-ago levels and compared to 3.9% for Nike ([stock_quote symbol=”NKE”]) over the same period. We’d note that was before the debut this past weekend of the new Curry 2.5 shoes at Foot Locker ([stock_quote symbol=”FL”]), an expanding relationship for UA.. With a price point at $134.99, the Curry 2.5 should help UA’s attack on the premium athletic footwear market as should the fall release of the Curry 3.0 line and other footwear models. (Steph Curry taking on LeBron James in the NBA Finals, which starts tonight, can only help too — assuming it pans out as expected to be an epic series.)

With a longer term view, we see The Sports Authority situation as a bump in the road for UA and its shares as it continues to execute on expanding its athletic footwear and women’s merchandise in more locations in the US and abroad. Pretty much the Nike playbook that is bolstered by UA’s rising brand, which makes it a Rise & Fall of the Middle Class company.

In the shorter-term, we see the pullback in UA shares as overdone and while it may be a few days until the shares settle down completely, we’re issuing a BUY rating on Under Armour UA Oct 2016 40.000 calls (UA161021C00040000) that closed last night at $1.85 . We would hold off buying these calls past $2.25 and we’re setting a stop loss to limit potential downside in what could be a volatile June market at $1.00.

Updates, Updates, Updates

Consumer Discretionary Select Sector SPDR Fund (XLY) & Calls

Monday’s Personal Income & Spending report that showed one off the strongest headline prints in Personal Spending in several years helped lift our recently added Consumer Discretionary Select Sector SPDR Fund (XLY) shares pushing them to $79, above the strike price of our XLY Dec 2016 78.000 call (XLY161216C00078000) calls.

Given the respective buy-in prices from last week, we’re up modestly in both and with the XLY Dec $78 calls bumping up against the $4.40 ceiling at which we’d no longer be adding to the position, we’ll hold steady near-term and look to use any weakness to improve our cost basis. We continue to have a stop loss at $2.30, however, as the XLY calls trend higher we’ll look to boost that stop loss.

Starbucks (SBUX) Calls

We shared a deeper dive on Starbucks (SBUX) shares yesterday when we added SBUX shares to the Tematica Investing Select List. One of the key drivers behind that addition was the more pervasive drop in key inputs than just coffee. After adding Starbucks (SBUX) Oct 2016 60.000 call (SBUX161021C00060000) last week at $1.00, the calls have moved lower and closed last night at $0.77. Given the benefits to be had from these cheaper input costs, which have only continued to fall, we’re going to use that price drop to improve our position in the SBUX calls. As such, we are ADDING to our Starbucks (SBUX) Oct 2016 60.000 call (SBUX161021C00060000) this morning and dropping our protective stop loss to $0.50 from $0.70.

Costco Wholesales (COST)

Our Costco Wholesales (COST) shares continued to climb over the last several days following the better than expected earnings report last week. An upgrade from Goldman Sachs (GS) yesterday to Buy from Neutral put the spotlight on the shares, which we continue to see as a core Cash Strapped Consumer company. Candidly, the Goldman note was pretty much a retread of our investment thesis on the shares, and Goldman’s price target on COST shares is $175 price target on Costco shares.

Late last night, Costco shared it’s May same-store-sales results: $9.23 billion for the month of May, an increase of three percent from $8.98 billion last year. In looking at Costco’s comparisons, the correct view strips out volatile gas and foreign exchange, and in doing so we find the company’s same-store-sales rose 4 percent year over year in May, with the US up 4 percent, Canada up 6 percent and Other International up 3 percent.

As we have seen the last few months, the soon to be published May Retail Sales Report should help put context and perspective around these Costco figures, painting them in a better light compared to the overall retail environment. We will continue to monitor COST shares with an eye to add an option position in order to capture greater upside.

 


Recap of Actions from this week:
  • Continue to hold ProShares Short Russell 2000 (RWM), ProShares Short Dow30 ETF (DOG) and ProShares Short S&P500 (SH). 
  • Issuing a BUY rating on Under Armour UA Oct 2016 40.000 calls (UA161021C00040000) that closed last night at $1.85  up to a price of $2.25.  Set a stop loss at $1.00.
  • Adding to our Starbucks (SBUX) Oct 2016 60.000 call (SBUX161021C00060000) which closed last night at $0.77 and dropping our protective stop loss to $0.50 from $0.70.
  • Continue to hold our Costco Wholesales (COST) position, with an eye to add an option position in order to capture greater upside.
Is SodaStream Offering You To Make The Tang of  Beer At Home?  $SODA

Is SodaStream Offering You To Make The Tang of  Beer At Home?  $SODA

Maybe it’s just us, but this potential Guilty Pleasure opportunity lost us at “adding Blondie concentrate.” Sure some may want to drink the Kool-Aid or Tang of beer, but we’re thinking if you’re going to reach for a cold one the last thing you want is some beer concentrate at the bottom of your glass. For now, we doubt other Guilty Pleasure companies like Anheuser Busch Inbev SA (BUD), Molson Coors (TAP) or Craft Brew Alliance (BREW) will have much to worry about.

The Beer Bar only makes one beer so far, a light beverage called “Blondie,” which contains 4.5% alcohol by volume and has “a smooth authentic taste, and a hop filled aroma,” SodaStream says.

The system works by adding Blondie concentrate to sparkling water, resulting in about three liters of beer per one liter of Blondie concentrate.

Source: SodaStream Wants You To Make Your Own Beer At Home – Consumerist

Champagne bubbles: reflect more than just the quality of the bubbly

Champagne bubbles: reflect more than just the quality of the bubbly

Talking about “markets” and “bubbles” is always a dangerous thing, but when it comes to these bubbles, it can be fun, particularly as it reflects part of our Affordable Luxury thematic . . .

Treated as a barometer of global consumer confidence, Champagne sales are a good indicator of whether shoppers are buying luxury or premium goods, and also whether they feel flush enough to invest in global equities or housing.

 . . . After eight years of post-crisis adjustments, it appears “demand for premium goods and services is finally getting back to the pre-crisis ‘normal’ . . . ”

Source: BBC – Capital – Why we’re drinking more Champagne than ever before

Potential Good News for Investors as Jose Cuervo Contemplates IPO 

Potential Good News for Investors as Jose Cuervo Contemplates IPO 

Nothing wrong with there being one more Guilty Pleasure investing candidate in the market… subject to due diligence of course!

According to Bloomberg, the world’s largest tequila producer wants to raise as much as $1 billion in an initial public offering slated for the third quarter.

Source: Jose Cuervo IPO – Business Insider

Drop in Coffee Prices create an opportunity for Starbucks (SBX)

Drop in Coffee Prices create an opportunity for Starbucks (SBX)

Actions from this post

Ratings changes included in this dated post

  • We are issuing a BUY rating on the Consumer Discretionary Select Sector SPDR Fund (XLY) given its meaningful exposure to Connected Society company Amazon (AMZN) as well as Disney (DIS) and Nike (NKE).
  • We are also issuing a BUY rating on the XLY Dec 2016 78.000 call (XLY161216C00078000) that closed last night at $3.80. We’d be comfortable buying these calls up to $4.40. On the downside, we’re setting a protective stop loss at $2.30.
  • We are issuing a BUY rating on Starbucks (SBUX) Oct 2016 60.000 call (SBUX161021C00060000) that closed last night at $1.03. We’d look to buy the calls up to $1.20 and are setting a protective stop loss at $0.70.
  • We will continue to keep ProShares Short Russell 2000 (RWM), ProShares Short Dow30 ETF (DOG) and ProShares Short S&P500 (SH) on the Tematica Pro Select List.

In yesterday’s Tematica Investing we added shares of Connected Society company Amazon (AMZN) to the Tematica Select List. Normally, we’d be tempted to add call options for companies that we consider to have strong upside in the share price over the coming months. For example, as consumers increasingly shift their purchasing online, we’d like to capture any and all key spending events, like Back to School, Halloween, Thanksgiving and Christmas holidays, that are likely to help spur that spending shift. The issue with Amazon calls, however, is the high sticker price associated with them.

With the end of trading yesterday, the AMZN October 2016 $710 calls closed at $54.67 and the AMZN January 2017 $710 calls closed at $72.44. Given the latter includes more of the year-end holiday spend, our preference would be for the January 2017 calls, but the price tag on both of those strike dates is essentially cost prohibitive if we were looking to have a position of size.

Another strategy is to look at ETFs that have significant exposure to Amazon. The one with the largest position size, clocking in at roughly 12 percent, is the Consumer Discretionary Select Sector SPDR Fund (XLY). In ferreting out XLY’s holding in AMZN shares, we also noticed the ETF has significant positions in Tematica Investing Select List holdings Disney (DIS) and Nike (NKE). For those that don’t want to go fumbling looking for which themes those two companies are benefiting form, they are Content is King and Rise & Fall of the Middle Class positions, respectively.

Other key XLY holdings, such as Comcast (CMCSA) and Home Depot (HD) are benefitting from spending on the experience economy. Rounding out the top 7 XLY positions is Starbucks (SBUX), which is benefiting from a strong drop in coffee prices and sits at the intersection of our Guilty Pleasure, Rise & Fall of the Middle Class and Fattening of the Population themes,  and McDonald’s (MCD), clearly a Fattening of the Population company if ever there was one.

All told, those top 7 positions account for nearly 43% of XLY’s holdings, and as you can see there are a number of demonstrative tailwinds pushing them along. As such, we’ll not only add the XLY shares to the Tematica Select Pro List, but also the XLY Dec 2016 78.000 call (XLY161216C00078000) that closed last night at $3.80. This strike data affords us the greatest exposure to all the major spending holidays through the balance of 2016, and the strike price is less than that for the XLY December 2016 80 calls.

Given the volatile nature of call options, we’d be comfortable buying this call option up to $4.40. On the downside, we have ample time to September strike and as such would look to build exposure on weakness. That said, we’ll continue to be prudent and that has us setting a protective stop loss at $2.30.

 

Getting a Shot of Starbucks

A few paragraphs above we mentioned Starbucks shares and the recent drop in coffee prices. In the below chart, you can see that coffee prices have fallen significantly year over year over the last several months. We’d point out that the data in the chart is for coffee spot prices. 

Coffe price chart

 

Turning our gaze to the future prices, we find they are demonstratively lower at 121.40-123.35 between July-September 2016 per ICE Futures. Furthermore, JM Smucker Company (SJM), a major US coffee retailer, announced it will drop prices by 6 percent for its flagship packaged coffee products , which include Folgers and Dunkin Donuts brands, due to falling commodity coffee prices.

This drop will surely benefit Starbucks as well, and looks similar to the move in the share price the last time we saw a significant drop in coffee prices. From March 2011 to November 2013, coffee prices fell 55 percent. During that same period, SBUX shares rose to $39.35 from $17.17 exiting March 2011. What’s different this time is Starbucks has stepped up its attack on the food and international markets, and is slowly making progress with its Starbucks After Dark effort.

Over the last month, Starbucks shares have shed more than 9 percent, with no discernible move in earnings expectations despite the move in coffee prices. In our view the move in the shares is overdone. Taking a longer view, consumers will continue to flock to this Guilty Pleasure company with teas and frappacinos during what’s expected to be another hot and humid summer. Come fall, people will be slurping down the usual kicked up lattes and other hot beverages. As they flock to these beverages, Starbucks will see the incremental leverage associated with those falling coffee prices.

Given limited downside and prospects for multiple expansion as the positive influence of falling input costs drops to the company’s bottom line, we are issuing a BUY rating on Starbucks (SBUX) Oct 2016 60.000 call (SBUX161021C00060000) that closed last night at $1.03. We’d look to buy the calls up to $1.20 and are setting a protective stop loss at $0.70.

 

Costco Wholesale Beats on the Bottom Line, Misses on the Top Line

Late last night Costco Wholesale (COST) reported May 2016 quarter earnings of $1.24 per share, beating Wall Street expectations of $1.22 per share and up 6 percent year over year. Total revenue for the quarter rose 2.6% year over year to $26.8 billion for the quarter, but fell short of Wall Street expectations that called for the company to deliver $27.1 billion in revenue.

Management will hold a conference call at 11 AM ET this morning, which will shed more light on the quarter, as well as offer insight on the current quarter’s tone. The initial read on May same-store sales saw an uptick in the all three reportable territories (US, Canada, Other International) month over month excluding the negative impacts from gasoline price deflation and foreign exchange. We continue to have a protective stop loss set at $135 for COST shares on the Tematica Pro Select List. Following today’s earnings call, should we opt to add to the position, we will issue a special alert spelling out the specifics.

 

Housekeeping

Over the last week, all the major market indices have rallied with the S&P 500 up just over 2 percent in the last five trading sessions. As you would expect this has weighed on our inverse ETF positions. The same move, however, has not only been on modest volume, but has occurred as investors have continued to pull funds from the market. This does not exude confidence in the recent market move. As such we will continue to keep our protective insurance positions — ProShares Short S&P500 ETF (SH), ProShares Short Dow30 ETF (DOG) and ProShares Short Russell2000 ETF (RWM) — in place for now.


Recap of Actions from this week:
  • Issuing a BUY rating on the Consumer Discretionary Select Sector SPDR Fund (XLY).
  • Issuing a BUY rating on the XLY Dec 2016 78.000 call (XLY161216C00078000)  up to $4.40. On the downside, setting a protective stop loss at $2.30. 
  • Issuing a BUY rating on Starbucks (SBUX) Oct 2016 60.000 call (SBUX161021C00060000) up to $1.20, setting a protective stop loss at $0.70.
  • Continue to keep ProShares Short Russell 2000 (RWM), ProShares Short Dow30 ETF (DOG) and ProShares Short S&P500 (SH) on the Tematica Pro Select List.
Set a Protective Stop on a Winning Position to Lock in a Gain of More than 20%

Set a Protective Stop on a Winning Position to Lock in a Gain of More than 20%

Actions from this post

Ratings changes included in this dated post

  • Changing our rating on USA Technologies (USAT) to “Sell”, booking a near 30% return since our “Buy” rating was issued.
  • Updating Kraft Heinz (KHC) to a “Sell” rating, marking a hefty double-digit percentage return.
  • Closing out Disney (DIS), Under Armour (UA), Netflix (NFLX), LifeLock (LOCK), American Airlines (AAL) and Fitbit (FIT) — updated all with a “Sell” rating.
  • That leaves Physicians Reality Trust (DOC), Philip Morris (PM), American Capital Agency (AGNC), AT&T (T) and Regal Cinemas (RGC) in the Tematica Select List — all of which have dividend yields between 4.6% (Philip Morris) and 14% (American Capital Agency). Given the nature of their businesses as well as those dividend yields, those shares are apt to drum up investor interest as people look for safe havens.Let’s continue to hold these shares and “clip our dividend coupons” along the way.
  • Also, we recommend investors add some protection in the form of the ProShares Short S&P 500 ETF (SH), which trades in the opposite direction of the S&P 500.

What began as a bad start to 2016 only has gotten worse over the last few days. There are a number of reasons behind this move lower as II see the stock market, at best, moving sideways through earnings season, but more likely to come under additional pressure as expectations are scaled back. When I say expectations, I mean those for global growth, oil prices, corporate earnings and so on. You’ve seen me write more than a few times about the aggressive earnings expectations for the S&P 500 this year and the revisions lower that I’ve been expecting have only just begun.

In an environment like this, it tends to be shoot first and ask questions later, particularly as growth expectations get reset. While it is tempting to weather the storm, my preference is to lock in existing gains, limit losses and, above all, preserve capital at times such as this one. I know times like now, when the market seemingly goes down day after day, can be frustrating, if not confusing. I would not be surprised if you were having flashbacks to March 2008, wondering if we are heading for a repeat of what happened from May 2008 to March 2009, a period of intense pain for the stock market.

The famous phrase, “better safe than sorry,” comes to mind. For us, that means exiting the following positons:

  • Changing our rating on USA Technologies (USAT) to “Sell”, booking a near 30% return since our “Buy” rating was issued.
  • Updating Kraft Heinz (KHC) to a “Sell” rating, marking a hefty double-digit percentage return.
  • Closing out Disney (DIS), Under Armour (UA), Netflix (NFLX), LifeLock (LOCK), American Airlines (AAL) and Fitbit (FIT) — updated all with a “Sell” rating. 
  • That leaves Physicians Reality Trust (DOC), Philip Morris (PM), American Capital Agency (AGNC), AT&T (T) and Regal Cinemas (RGC) in the Tematica Select List — all of which have dividend yields between 4.6% (Philip Morris) and 14% (American Capital Agency). Given the nature of their businesses as well as those dividend yields, those shares are apt to drum up investor interest as people look for safe havens.Let’s continue to hold these shares and “clip our dividend coupons” along the way.
  • Also, we recommend investors add some protection in the form of the ProShares Short S&P 500 ETF (SH), which trades in the opposite direction of the S&P 500.

Over the next few weeks, we could get a bounce in the market here and there, but I would feel much better putting capital to work with a strong conviction that the storm has passed. As such, I will keep one eye on the market (the indicator of price) and the other on our investing themes as I look for data points that show companies whose businesses will continue to perform regardless of what’s happened in the stock market over the last month or will happen in the next month or next few months. If you were with me while I write this update, you would hear me muttering questions like some of these:

  • Has the drop in the stock market changed the outlook for cyber attacks and related threats in 2016? Safety & Security
  • Despite the unseasonably warm temperatures in the eastern United States thanks to El Niño, has the California drought situation been eradicated? Scarce Resources
  • Has the shift toward streaming and other digital content consumption slowed because the stock market has lost close to $1 trillion in value, lessening the demand for content? Connected Society
  • By some strange hocus-pocus, have people been “de-aged” so that less than 15% of the population is over 65 years old? Aging of the Population
  • As if by magic, did all of those people with little to no retirement savings suddenly land on firm financial footing? Aging of the Population
  • Over the last few days, has the costly and deadly impact of obesity and the prevalent condition of so many people being overweight been reversed? Fattening of the Consumer
  • Have retailers, both brick & mortar as well as online, shifted to only taking cash and checks as payment for goods and services? Cashless Consumption
  • Are people all of a sudden smoking less in the last few days? If anything, I would argue those who do indulge in this guilty pleasure are probably smoking more and having an extra drink or two along with it. Guilty Pleasure/Affordable Luxury
  • Has the domestic middle class started to expand dramatically in January? Rise and Fall of the Middle Class

And so on… Foods with Integrity… Asset-Lite Business Models… Economic Acceleration/Deceleration… Tooling & Retooling

The bottom line is these investing themes of ours continue to benefit from the shifting and evolving landscape that is the intersection of the global economy, changing demographics, disruptive technologies, regulatory mandates and other tailwind drivers.

As I said earlier, the stock market is simply the indicator of price.

If you saw a great product on sale at the store, you would be excited, maybe even ecstatic, if it was one you had been looking at for some time. The same is true with stocks!

We tend to get caught up in the emotional response of the market moving lower, which usually is viewed as a bad thing, rather than an OPPORTUNITY to buy shares at an even better price. When viewed through that lens, who doesn’t love it when stocks go on sale… so long as the fundamentals and business drivers remain intact. To me, this says we’ll be able to buy back a number of the growth positions at the same or lower prices when the current market storm has cleared and things have settled down. Let’s be prudent and patient together.