Mary Meeker has been the voice of internet business since i first read her in 2010/11 when i used to write speeches for technology VP … her 2017 review is posted now. https://www.slideshare.net/kleinerperkins/internet-trends-report-2018-99574140
Here are my comments as i walk thru … bold are the most meaningful to me … it will take a couple more walk thrus
- slide 9 — user growth will be HARD; ARPU will be the key metric driving service business (way more so than our recent love of ‘new users’)
- slide 25 — Google hits 95% accuracy for voice — good progress, but the interaction requires much work imho, and i am VERY interested in voice input but just can’t deal w/ pushing buttons first … IA / machine learning is the backend (even if on device)and i think the interaction model is broken
- slide 31 — well articulated paradox and the companies i think that will really build ARPU will be those companies who HELP their consumer / client through that paradox, and not, like the recent FB example, leave it up to users to figure out (or government agencies after sh*t hit fan)
- slide 39 — what is it about US companies? Where are the Chinese innovators? (not yet in MSCI – this could be a misleading data set)
- slide 41 — WOW – can i infer that R&D leadership builds market leadership?
- slide 49 — the digital retail journey; who can build that journey (w/ great UX) across different platforms? — that seems like a big win
- slide 62 — Amazon is competing w/ Google for product searches … an interesting turn that i had not anticipated (though should have)
- slide 71 — reminds me of the billboard promotions on busy highways, but the product purchasing rates are VERY high -> common marketing strategy: go to where bunches of people are congregating and with clever means tell them what they need to buy (rinse and repeat)
- slide 75 — this is a golden slide that prompts the following questions
- what will be the next ‘platform’ for marketing / promotions after social media efficacy falls to too slim returns on investment (or cost)
- what will be the impact to advertiser platforms, e.g., Google, FB, etc (their margins)
- slide 76 — echos back to my first comment wrt ARPU and user acquisition costs
- slide 82 — SPOT and subscriber growth; the next step is to transition this to profit or ARPU
- slide 84 — you retail geeks (especially those w/out digital presence) should pay attention to this trend
- slide 91 — Alibaba is a beast … i do not care what metric you use, Ali is just amazing
- slide 94 — and if you think Ali is sitting in China rich and happy, … guess again
- slide 103 — scary
- slide 119 — ok all you MacMansion owners; time to get w/ the rest of the world
- slide 136 — the unintended consequences of shifting the burden of healthcare spending – brilliantly stated here
- slide 143 — hard to get head around this at any detail level; adoption rates are lightning fast
- slide 163 — simply stated and so true – i am perfect example
- slide 165 — this is where there is HUGE fear and as well opportunity (on demand labor unions so to speak – wage and benefit protection without losing the benefits of ‘on demand’)
- slide 184 — cloud computing declining costs — the defacto standard for start ups and new businesses — cheaper costs, flexible, lower capital required
- slide 191 — is there a silver lining of better customer service when business knows more about you? — seems so
- slide 199 — AI for rent via AWS
- slide 200 — the same from Google
- slide 201 — look where CIO folks want to spend their money … networking equipment (assuming NFV and IaaS) was surprisingly high
- slide 209 — USA data privacy laws written in 1974 – really? do you remember what you were using / viewing / sharing in 1974?
- slide 210 — china is serious about their intent to use data (it does not map well to our cultural norms and expectations) … this will in time will test our assumption that a ‘free’ society grows better / faster … i am buying more and more China company stocks, ETFs w/ China exposure, so i am not convinced that assumption is correct
- slide 211 — Cisco’s comment should get your attention — cybersecurity is not just for money anymore; it’s war
- slide 218 — the size of internet companies and their values are staggering
- slide 223 — relate this back to slide 210 – the chinese people seem to be more willing to share their data too
- slide 227 — college degrees in engineering degrees — in undergraduates USA trails signficantly, but then much of world comes to USA for grad school (if they can)
- slide 243 — look at the growth in data use in China … WOW
- slide 253 — the ecommerce growth rates of S Korea and China exceed the rest of the world … see my comment above wrt slide 210 – while not causally related there is a huge growth story here that will continue
- slide 278 — USA, Inc. A great section and worth the time to read thru
Shadow rates rather than any published or discussed rates as a recession predictor? Probably as good as any other crystal ball – the specific timing is of course hard, but i did focus on the timing for different types of equities – watch for value to pick up larger buying interest once the last top (rate increase path) – build quality positions before hand is this author’s recommendation – https://www.marketwatch.com/story/heres-how-stock-market-investors-could-be-surprised-by-a-peak-in-rates-2018-05-23
The Actions Taken (last week’s plans)
- Covered 3/4 of my short position in MWA for minimal gain – did not want to hold the full position over the long weekend. The resiliancy of MWA run after earnings has been a surprise,
- Traded in and out of ACBFF and CRON for ~10% gains; still hold small position in each as in my ‘big 4 Canada Weed’ stocks
- One comment on ACBFF – my sale was really broken up into small lots (<100) … for most of the day, this and its cousin, APHQF, trade in small lots with larger trades coming in the last 10 minutes or first 5 minutes of market. Taking large positions >500 seems like a liquidity risk and i will focus mostly on CRON and CGC to see if liquidity is better.
The Clues this Week
- Equity / Stocks
- A couple of posts on Canada Weed companies this week here a bit helpful, especially the second on on the different province-level legal structures for retail distribution
- https://seekingalpha.com/article/4176516 – From one of the better technology analysts on Seeking Alpha, a review of AAPL. While his take on AAPL is worth the read, his methodology is even better. Thinking of DCF as a floor for some companies is an interesting approach, but for me i would want to include a larger set of DCF methods like https://finbox.io provides.
- https://seekingalpha.com/article/4175850-american-gridlock – an often read author posted something that is a bit political and may distract people from the key message – the next cyclical downturn in US economy will be different than anything post WWII given the structural changes to demographics, economics, jobs and government social safety nets.
- Actionable take-aways include: a) Non-US investments (Canada, China and India are my current targets); b) high quality corporate debt (Apple, Berkshire, Microsoft); and c) multinational companies w/ global product / services reach, and d) small US companies with superior products / services (IOTS is an example).
- https://seekingalpha.com/article/4176193-pattern-energy-group-go-wind-blows#alt1 – A good valuation study on PEGI. I am over extended on PEGI in several accounts. My goal is to collect the dividends for the intermediate term as i do not see material downside risk to capital ($17.00 would be an extreme macro event imho), and closer to end of year can make better tax management decisions on the range of positions.
- S&P week was quieter than last week
- A very busy ‘news and data’ week; ISM and jobs will be the ones most likely to spark irrational movements
- Jeff Miller’s weekly indicator set is interesting – look at 10yr, SP and inflation expectation
- https://seekingalpha.com/article/4177534-bristol-myers-squibb-one-stock-ignore – Here is an example of why i cannot confidently invest in Pharma companies (even though i have small positions in JNJ and PFE)
- This is NOT to knock this author. This is to suggest that i just do not understand the Pharma business well enough to form strong opionions (that can drive investment decisions). I have also yet to find a Pharma author that simplifies this sufficiently.
- While BMY may be a great investment, i just cannot bridge my ignorance to make that call w/ conviction.
- https://seekingalpha.com/article/4177567-place-like-cone – Brad Thomas on CONE – while the data center REITs fit within my IOT narrative and i was once interested in them as growth vehicle (ala Brad), i find that risk to that assumed growth is greater than i want to take on w/ REIT investment.
- Debt / Bonds
- Automation and Robotics
The Plans for Next Week
- Specific Analysis
- Water component makers is next deep dive for possible new (revisit) narrative – XYL, PNR, ITRI, BMI and MWA are the current list
- Actions Set Up
- Weed Trades – CRON (holds support @ $5.90), ACBFF (holds support @ $6.20), CGC (unclear on patterns after NYSE listing)
- Tech Trades – CLDR, FEYE, IOTS and CY
- Investments – TU, RCI (value entry points not fully discerned – patterns still being understood)
I am extending my work time on this week’s update thru Monday … i am refining tactics and tools some and taking the holiday downtime to refresh, test and possibly share
Credit, Rates and Bonds
S&P and other equity
Jeff Miller’s WTWA https://seekingalpha.com/article/4175654-weighing-week-ahead-will-higher-interest-rates-lead-lower-stock-prices
- From Doug Short – the weekly S&P view; look at the volume patterns at the bottom. The greatest yield by far (from visual) is in the closing hour – does that closing hour direction set the ‘morrow, too?
- Rail Traffic is usually interesting and this table is great … the key for me was the ‘accelerating’ labels
- Port traffic as well – quote: Port traffic improves on both imports and exports. Steven Hansen’s (GEI) analysis suggests that the implications are stronger for global economic growth than for the U.S.
- Weekly indicators … seems quiet and stable other than the 10yr
- And the big indicators … the green trends are holding
- Jeff points to this article as a ‘should read’ https://seekingalpha.com/article/4171190-want-see-bears-go-zoo
- Stay calm, stay focused
- I add – always understand the business (profit) motivations of the people sending you information – few are doing anything for your benefit alone
Actions and Analysis
Lance has a way of articulating heavy data sets to render understandable; the counter to his perspective is that it is very close to mine