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The pandemic changed a lot about how many white-collar workers work. Many people who used to go to an office every day stopped doing that. Going forward, not everyone will be heading back to a traditional five-day-a-week in-office work schedule. That’s going to have ramifications across the economy. Steve Symington joins Dan Kline on “7investing Now” live at noon to discuss what this means for investors.
June 21, 2021
The pandemic changed a lot about how many white collar workers work. Many people who used to go to an office every day stopped doing that. Going forward, not everyone will be heading back to a traditional five-day-a-week in-office work schedule. That’s going to have ramifications across the economy. Steve Symington joins Dan Kline on “7investing Now” live at noon to discuss what this means for investors.
Best Buy (NYSE: $BBY)
Alphabet (NASDAQ: $GOOG/L)
Microsoft (NASDAQ: $MSFT)
Zoom (NASDAQ: $ZM)
Slack (NYSE: $WORK)
Salesforce (NYSE: $CRM)
Apple (NASDAQ: $AAPL)
Ping Identity (NYSE: $PING)
CrowdStrike (NASDAQ: $CRWD)
Okta (NASDAQ: $OKTA)
Cloudflare (NYSE: $NET)
Zscaler (NASDAQ: $ZS)
Docusign (NASDAQ: $DOCU)
Upwork (NASDAQ: $UPWK)
Etsy (NASDAQ: $ETSY)
Fiverr (NYSE: $FVRR)
Sam Bailey 0:10
Welcome to 7investing Now, a show that teaches you how to take a long term view on investing by better understanding what’s happening in the market now.
Dan Kline 0:20
Good afternoon 7investors and welcome to the Monday edition of 7investing Now. My name of course, is Daniel Brooks Kline. I’m joining you from beautiful and sunny West Palm Beach, Florida. While Steve Symington is joining me – I’m going to assume from the third circle of hell, Steve, you shared with me a weather graphic yesterday. You’re helping your mother in law move in, I want to say Arizona, and it was 115 degrees. Is it safe to be outside at 115 degrees?
Probably not. But we were unloading a U-HAUL in that weather. So it was a good time. It was I wouldn’t say that circles of Hell, I would say maybe surface of the sun that would be more appropriate. But yeah, that’s what it feels like from a guy from Montana.
Yeah, if my mother in law’s watching and given that she doesn’t have an internet connection, that’s very unlikely. I’m not helping you move in 115 degree weather. My mom could be watching. You know maybe I’d help mom. But I’m gonna draw the line on that. Steve, you took your family to the Grand Canyon. I’m going to one up you in a couple weeks going to the little known Venti Canyon. But did the kids like the Grand Canyon?
Yes? I mean, they I think appreciated it. It’s good that they saw it. But there was there’s more complaining that I think we would have liked. But they’d also just been on 20 plus hours of driving leading up to that. So they did good. And we went on a couple great hikes and had cooling towels and water and all that stuff and, and ice cream. So that helps.
Yeah, and the Wi Fi at the Grand Canyon is terrible. The theme park rides aren’t that great. It is not an attraction for the current generation. That being said, why don’t you share with us in the questions and comments where you’re going this summer where you’re where you’d like to go. And as many of you know, I am hopefully headed out on a cruise July 2, which would be the first time that has happened from the US in a very long time. First time for me since a year ago, February. So two Super Bowls ago was the last time I did that. But if you’re watching, you want to share where you’re going, we would love to have that.
But that’s not our topic today. Our topic today is how to invest in the changing nature of work. Steve, as you know, the pandemic sent a lot of people home, a lot of offices closed, a lot of people haven’t figured out what normal looks like. My wife and I moved. So we could have the space to both be worki ng at home. And I wouldn’t have to go to an office. There were a lot of challenges here. But before we get into the investing part of this, I want to set the table a little bit, I thought we might want to talk about the work world and what it will look like over the next year. So I’m going to throw some things out I believe are true. And you can give me your thoughts. First one is most companies will allow more work from home and flexibility.
Steve Symington 3:12
Yeah, I think that’s true. And I think part of the reason that’s true is that that the power dynamic has kind of shifted toward the workforce. And the actual laborers, at least for some knowledge based, you know, stuff that you can do remotely anyway. And I think that’s something that is tricky, because you do have several chief executives who are saying, I think we had the Morgan Stanley CEO and bank of america CEO, both saying they expect workers to return, who are currently doing remote work kind of once they’re vaccinated. And that’s, I think, maybe a tough dynamic given the workplace and how it’s evolving in favor of people who hope to work from home. So yeah, I think there’s going to be a bit of a struggle.
I think it’s fair to say that even those companies are going to be more open to ‘Hey, I have the sniffles. I’m going to work from home today.’ ‘I have a doctor’s appointment, it’s dumb to commute into the city and then leave early,’ or however it works. So I do think that aspect is going to change. We’re going to talk about the investable part of that in a minute. But let me share my thought number two here, some offices, some companies will not require people to come back, but they will maintain their offices. So I would argue that a company that does that and a lot of employers are saying hey, we still have an office, you can come in you don’t have to. I actually think that people that choose to not be a presence in the office are going to hurt their careers. Your thoughts on that Steve?
Yeah, that’s kind of the worry right? And actually, I’ve seen several articles in recent days including one from the Wall Street Journal like how to answer the How do you feel about working from home question during an interview, right and that sort of becoming a very real thing for a lot of people because a lot of people do want to have, again, the power dynamic is shifting toward employees who kind of have the power to negotiate terms that will kind of work well for both parties. And people are kind of thinking about how to answer that. And I think there is a very real possibility, that’s the big worry is that if someone says, I’d love to work from home, instead of coming to the office, they say, well, we’ll go with this person who doesn’t want to, and you’re gonna see some some strange power plays by people who maybe used that as a strength, it’s like, you want to work from home? Nope. All office, you’re hired kind of thing. But we’ll see.
Yeah, I’m a big believer in face time. At our former employer, I made myself a presence in the office. And it got me noticed, it got me appearances on podcasts I might not have have scored otherwise, it got me face time with the CEO and, and sort of asked onto projects or invited into meetings. I was in the office during a snowstorm, and got to appear on a really big show otherwise, did a good job with it, and then became a regular. So I’m not saying it’s impossible in the new world where, you know, maybe days I’d be in the office well nobody else would be there. So it wouldn’t matter as much. But I think a lot of companies that especially big tech, where Yeah, a lot of people can do jobs, from home from remote, but you might be stalling out your ability.
Dan Kline 6:27
And sometimes that ability is just dumb luck, where someone more important than you is struggling at the end of the day, and you jump in and help and you’ve made a good impression. Not impossible to do that from home. But not easy, I’m gonna throw one more out. Larger companies will add physical space in more locations. So I used to work for Microsoft. And at the time, I had to download the latest windows eight, through the employees server. And what I used to do living in Connecticut is I didn’t actually have access to the office there, it was a sales office. But I would park outside the office close enough so I could get on the server. And I would download what I needed to download. I think more companies are going to just create sort of gathering spots for employees sort of like company specific co working does that does that sound insane to you?
Steve Symington 7:12
No that doesn’t sound insane, especially given the advent of higher powered internet connections and hyper converged infrastructure plays where you have a lot more cloud capabilities, the ability to effectively serve employees at remote locations. And I think, sooner or later, you’re going to be able to say Gone are the days of massive campuses, where you work and some people will still favor that. And there’s some there are perks to that. But you know, I remember interviewing at Microsoft out of college, I was a computer science guy, and I was kind of overwhelmed by the size of their campus in Seattle. And it was crazy. It’s its own little city. I think as many people work in areas, I had my entire town. But yeah, I think it makes a lot more sense to have smaller office spaces.
There’s a lot of benefit to the campus structure. So I was an out of office worker on a team that at times was all in the office. And at times they vacillated to having us not all in the office. So I think it can work both ways. It absolutely helped create bonds with my team that I spent time physically in the office and look having dinners. And I do think you have to as a big company balance that we’re going to get to the investing part of this in a second. But But let me throw one last corollary here. I don’t think you’re going to see big companies abandon New York, San Francisco, Los Angeles. But I do think you’re going to see companies like that have a big presence in let’s call it Austin, Texas, Miami, maybe even here in West Palm Beach, where we’re building world class facilities. Because if you’ve lived in New York, Miami seems cheap, even though it’s not cheap compared to most places. I think you’re gonna see a lot of geographic diversity. Steve, you agree on this one?
Yeah, I agree with that. And, again, that kind of speaks to I think you can move to cities that are less expensive, but still, you know, considerably more expensive than little rural towns and such but yeah, I think there’s the economic driver. Not only that, but just geographic expansion as well.
We’re gonna get to the investing angle here. We’d love your questions and comments. It has been a quiet summer for people watching 7Investing Now, though a ton of you contributed to the second part of this program. We’re going to talk about investing advice we’ve shared with our kids, we had a couple thousand people interact with that post on Twitter, and lots of good advice was shared, but Steve, I’m gonna throw out some things and you can sort of explain why the trends have benefited them and I’ll jump in as necessary because some of these are more companies in my space than yours.
Dan Kline 9:52
The first one is, the changes have been really good for electronics retailers. The obvious one is Best Buy (NYSE: $BBY) because here’s what happened, I’ll give my house and then Steve, you could explain the greater trend. The pandemic started, my wife broke her work laptop, I had to quickly set up another computer for her, my son dropped his school laptop, I had to buy a laptop for him, we needed backups. So I had to go out and buy some inexpensive desktops just so we can have some options. I started needing to be able to work in all sorts of places. So I went out and in addition to my two MacBooks, bought an iMac, we bought two desks, multiple other things that we probably wouldn’t have needed before the pandemic, this has been really good for Best Buy, among others.
Steve Symington 10:36
Yeah, and part of that is, I think it’s it’s, you may see a bit of a dip from the initial sort of work from surge that we had during the pandemic. But I think, because of the fact that a lot of this is going to be sustained, at least to some degree, you’re going to have more work from home people going forward. I think this is definitely good for retailers like Best Buy, you know, not only from the products that they sell, but the services that they offer as well, you know, they’ve got the whole Geek Squad thing and actually drove the Geek Squad bunker for years in college. That’s how I paid my bills. So I was that guy who’d come into your house and, you know, fix your your computer, remove viruses, and all that stuff. But as more people are working from home, you’re gonna have more demand for people and some of that supplemented by the companies themselves as well.
Yeah, I actually think the Geek Squad is going to become the IT department for a lot of companies. When I used to work for Microsoft, and my laptop broke, I had to drive into New York from Connecticut, go to the office in Manhattan, and get it repaired. And if it had to be dropped off, and there wasn’t a loaner available, that was a real nightmare, I think you’re gonna see some big companies contract with Best Buy. Now Best Buy is very high priced for those services. So I think they are going to have to offer institutional rates. But that’s a company that was doing very well, that the trends were leaning into because of the pandemic benefit their future growth, Best Buy’s also benefited by the ageing of the population and some of the things investments they’ve made in the health. So this seems like a mature company, I’d argue from an investment standpoint, there’s a lot of room for this to run. Two others, I’m gonna throw out Steve are Microsoft (NASDAQ: $MSFT) and Alphabet (NASDAQ: $GOOG/L), these are both companies that offer a suite of products. So you could use the Office family of products within your company, you could use the inferior but much cheaper Google family of products, as we do. And it’s one of those things where more and more people are going to be in this simply because it’s easy.
Yeah. And Microsoft and Alphabet benefit not only from their, their team’s software availability, but also the rise of cloud computing and enterprise computing. And they have massive computing infrastructure supporting their cloud businesses. So I think that’s a very big thing for them.
Yeah, and this is something few other companies can scale up. So you know, why we saw say, the Salesforce (NYSE: $CRM) purchase of Slack (NYSE: $WORK). Slack makes a lot more sense as a tool in the Salesforce arsenal than it does on its own. I’d argue the same might be true of Zoom (NASDAQ: $ZM). I’m not a fan of Microsoft Teams. I liked its predecessor link, because Zoom didn’t exist. But the only time I ever had meetings in Microsoft Teams were when they were meetings with Microsoft. And I don’t think it works as well. That being said, I’m not sure the average institutional customer cares that much. And yes, you’re gonna have plenty of companies use Office or use Google that opt to use Zoom instead of Google meet or Teams or whatever it is. But I do think there’s a massive advantage in scale. And it’s obviously something that Apple (NASDAQ: $AAPL) on a certain level can do as well. So I think those companies are going to be big investment winners. Steve, you covered the the Internet Security space, do you think there’s gonna be any big winners there?
There’ll be a bunch of big winners there. And, and not necessarily from your pure play security standpoint. I mean, obviously, you have your Crowdstrikes (NASDAQ: $CRWD) out there and Zscaler (NASDAQ: $ZS) and CloudFlare (NYSE: $NET) and those kinds of businesses, but also companies, like when we’re talking about Okta (NASDAQ: $OKTA) or Ping Identity (NYSE: $PING), are both sort of like Single Sign On and multifactor authentication companies, but also companies like DocuSign (NASDAQ: $DOCU), for example, who, you know, basically you need someone be able to sign contracts and make agreements through this agreement process, and you need to be legally binding and you need to have a secure process in place for that as well. So, I think all of those things are gonna win big, and they won’t, by any means be the only one. So I think you’re gonna have scores of really, really big cybersecurity plays because cybersecurity is it’s it’s been important for the last decade, obviously, but it’s only reaching a fever pitch, and I think it will get even more important than anyone could really anticipate,
Look for quality here, look for strong management look for strong infrastructure, there’s going to be a lot of companies that have a good quarter or two, because there is an increasing focus on this coming out of the pandemic. But you really do want to avoid owning the third best player in the space. For a lot of these, this isn’t going to quite be winner take all, but there’s not going to be 50 winners, like we’re gonna see some level of I don’t know what the word is same-ification when it comes to security solutions.
Dan Kline 15:33
Let’s throw out one that I don’t think people are thinking about here. And feel free to jump in with your questions and comments. Steve, do you think the post pandemic work from home world will be bad for car manufacturers? I’ll share a personal example. My son will get his license at some point next year. And for a long time, we’d assume that meant getting a third car because we want him to drive to school because he has to take a very, very early bus in the morning. He live we live about 18 minutes from his school, it’s a relatively easy ride on the highway. And we’d always assumed we’d get another car. But the reality is my wife’s only returning to the office two days a week. I travel a lot. But I don’t have any need for a car on a day. I’m not traveling, I can walk to Starbucks, I can I can walk to target, I could walk to a few other places, if I want to obviously, there’s food delivery and grocery delivery and hey, alcohol delivery if you’re having a bad day. So I don’t think we will get a third car. Do you think some families will even opt for just going down to one?
Steve Symington 16:32
Some will, I don’t think that will be necessarily the rule. I mean, for example, my wife and I have both worked from home for several years. And you know, we still require a second vehicle we’ll get one for for each of our kids as they can I’ve got a 13 year old and a 10 year old, it’s not gonna be long. But I think more than work from home being bad for car manufacturers, I think that innovative car manufacturers will be bad for legacy car manufacturers. Maybe I put it that way. You know, so we have companies like Tesla that are you know, working on sort of Robo taxi fleets in the distant future, obviously, but, you know, I think that’s going to be something where the dynamics of the industry just change and you have more car sharing. And, and the right manufacturers who are kind of set up for that will be the ones who kind of benefit. So it’ll be interesting to watch the dynamics of transportation change in the coming years, but I don’t think work from home would be necessarily bad for it.
I actually sort of do but but I think it’s sort of leaning into those trends that you’re talking about. Right now, it’s hard to look at the car industry because we have a shortage of cars due to chips, cars are selling very expensive. I know that at our vacation place, people planning visits from Canada and England are seeing rental cars for a week at what they used to spend for a month and it’s literally causing the resort to think about should we have shuttle transportation or, or figure something out, you know, even ideas like Should we just buy a few cars and insure them and let people lease them. And obviously, that’s not, you know, an easy decision for an HOA to do at this day and age.
Dan Kline 18:08
But I do think some things that maybe would have taken four or five years to develop, like car sharing, and people being more willing to take an Uber or Lyft I think we’re gonna see some accelerations. Now, my generation, your generation, we’re not that different in age where we’ve been pretty open, adopted to ride sharing, you know, someone like our parents generation, like my mother will get an Uber if I call it, but I doubt she has the Uber app on her phone. As people of those generation start to travel and renting a car becomes less viable. I think we’re gonna see some forced adoption, and that will accelerate and change some trends. It’s not a public company. But I think you might see like Turo, which is a company that lets you put your own car into kind of a rental pool, like, Hey, I’m gonna be away for a month, I’ll make some money with someone renting my car, that you might see some solutions like that, that make car ownership more affordable. That’s the last thing in the world I want to do. I’ve seen how people treat rental cars. I don’t want to see people treat my car that way. Steve, your final thoughts on this topic?
Steve Symington 19:08
Yeah. And to be clear, I’m not a big fan of the unit economics of Uber and Lyft. I don’t view them as investable companies personally. I could be proven wrong. And that would be fine by me, but I really don’t like their economics. And I’d much rather put my money to work elsewhere. But even if they do increase, that’s kind of a tough sell for me.
I am 100% convinced that one of those companies has to collapse for the other one to succeed. And I actually think it’s possible that they both get disrupted by whether it be Tesla or one of the automakers sort of having to go direct fleet mode. My mother chimes in you can share that one Sam and she says no, she actually does have the Uber app so so I have to admit I’m surprised but she does it. Thank you for watching mom.
Dan Kline 19:58
I’m gonna throw out one more thing that I Don’t think as an investable, but I think as an investor in some of these companies, you need to be wary of it, I think you’re going to see restaurant closures at a faster pace based on shifting population. So I’ll give a real life example. I used to work someplace that had an awful lot of people in the office, and so did many of the other companies in that building. And all in the tech space more or less. And I would imagine that most of those companies are not going to require people. I have no knowledge of what the rules are. But most of those companies are not gonna require everyone to be in the office.
So are there going to need to be a Panera Bread, a Starbucks, a Dunkin Donuts, a potbelly sandwich, all the places that are there may not be supported. Now, some of your advanced companies, you know, like Panera had done a lot of catering might have other ways to support themselves. But this isn’t a failing business. This is the normal thing that these chains do. You know, McDonald’s will shake up its inventory by a couple of dozen stores every few years, since simply because people moved away from population centers, you’re gonna see with this sort of shift to rural of Hey, that, you know, my town of Swampscott, Massachusetts where I grew up, which is three square miles has two Dunkin Donuts, I think technically they’re over the line in Salem, Mass, but there are two Dunkin Donuts across the street from each other. Because the big one, the parking lot would get full and people go to the little one, which is a parking lot that has staples and a lot of other stuff. I think you’re gonna see that type of shakeout. Steve, your thoughts? And then we’ll close out this topic.
Steve Symington 21:40
Yeah, I think this is sort of the the strong survive, kind of thing I think we’re gonna see, I think we’re gonna see a lot of underperforming restaurants, you know, those that are perfectly streamlined or that that don’t serve absolutely exceptional food in our international chain, right? Those are going to want to be the ones that have a difficult time surviving and you know, your Chipotle’s and your sort of extraordinarily popular concepts are going to be the ones that thrive on a national scale. And coupled with your really great popular local options that aren’t national chains, those will be the ones that survive, but you’re gonna have, you know, kind of as it always has been, the little guys getting smashed unfortunately.
Execution matters. And when I was growing up, there were a lot of local donut shops in New England. And Dunkin Donuts would essentially operate as close to them as possible. And my guess is they subsidize the franchisees and what happened near my family home in Peterborough, New Hampshire is there was a pretty good diner and donut shop in a plaza and a Dunkin Donuts opened. And I don’t think a single local went to the Dunkin Donuts, but the passing by traffic which was maybe 10-15% of the business all went to Dunkin Donuts and it slowly choked out the local place.
Dan Kline 23:00
So, you know, some of that is boy, I’d like to see plazas be as protective of local shops as they are of national chains. A national chain can come in and say you can’t locate another one of these near me, I know that the plaza closest to me that has a couple of national chains has gone out of its way to get permission when something similar is gonna go in and you know that there was a couple of coffee chains there. And Capital One Cafe came in. Capital One Cafe has a Pete’s coffee shop inside. And they weren’t allowed certain signage and other rules. Now they did a pretty smart thing is that they had free coffee for Capital One card holders three mornings a week. So that is a really good promotion. We’re going to take a comment here, the first one from Mike Fee. Sam, if if you want to grab that, Steve, if you wouldn’t mind reading this one
Steve Symington 23:50
He says “HyreCar is another company that allows owners to rent out their vehicles at a fixed day rate. It is growing quickly. But personally, I wouldn’t rent out my own vehicle.” and you touched on this a little bit. And that’s something I think owners of Tesla’s is they want to ramp their own Robo taxi fleet, for example, will have to grapple with is are we willing to lend out our own vehicle and risk them in that way? And what sort of recourse do you have if it’s ruined.
Obviously, there’s insurance. You know, I’ve learned a lot of this owning a rental property that I have to have insurance that covers certain things. I have a maintenance program that covers certain things like if they break if a guest breaks my coffeemaker, it’s a standard coffeemaker that the maintenance company just replaces and there’s no cost to me. If I opt to leave a caring there, which I did, because I own about 1800 coffee machines. And that breaks. Well, that’s on me, the person who’s renting it has to take out a small insurance policy. I also have to maintain so let’s say someone slips and falls and dies in my shower. Well, I have liability on that whereas the overall Association has coverage on the outside. I’ve learned more about insurance in the last few weeks.
Dan Kline 24:58
And I think I think we’re going to see that with cars, I think that’s an area that’s going to be really interesting with your, your Root’s of the world with your Lemonade’s of the world. If they get into those properties, it’s actually pretty difficult to get a quote, on my rental property, which is, in Davenport, Florida adjacent to Kissimmee and Orlando up the one place on Earth, you’d think there’d be, you know, that type of insurance coming out the roof, because there’stons of people, we’re gonna take a follow up from Mike, because I think it is a good one as well, and then we’ll move on here, “I feel like the business park is more or less dead, a few large projects around me were recently cancelled.” I think you might be right, I think we’re gonna see a lot more mixed use, it would not shock me to see.
The plaza I was just referring to, Rosemary square here in West Palm Beach, where there is a giant Class A office building that’s just gone up to support that we’re starting to see a number of new restaurants open up. And they’re actually building a residential tower, not that there are already residences there. But you’re, there’s also what used to be a cool bowling alley, though it was poorly run, is actually going to be a marketing company. So I think you’re gonna see this weird hybrid mix. And your business parks might also have like trampoline parks and other things in it or destination restaurants or dine in movie theaters and that type of thing. So yes, Mike, I think you’re right there.
But Steve, it is now the middle of June, something big happens at 7Investing on July 8. So I’m not great at math. But that’s roughly 18 days from now. Here’s what happens right now, if you’re a member of 7Investing, you are paying $49 a month, or $399 a year that is a tremendous, tremendous value. If you are a member already bought by the end of the day, on July seventh, you get to pay those prices forever. So if you’re not a member, you have less than three weeks to sign up to lock in the current pricing. Why is that important? That’s important because on July 8, our prices go up to $49 a month or $399 a year there is also a special membership, an $84 membership for students. So if you have .edu email address, or you’re actively in school, you can get that special membership. We want everyone to be involved. That being said, if you’re watching the show, if you’re already a member, share out your code. Steve, where do people find their referral code? where not only can their friends get a deal on the already low price membership, but that member gets a free month? Where can they find that code?
Steve Symington 27:35
Right? If you’re on 7investing.com and you’re logged in, there’s a little My Account interface that you can access just in the upper right hand corner, click my account and right there is your referral code, you can copy paste whoever signs up and creates a subscription using your code, will get 10 bucks off, you get a free month, there’s no limit to the free months as well. One member I think has like 42 or 43 free months or something so he won’t have to pay us a dime for another four years almost.
So now is the time share your referral code or if you’re not a member, sign up and get a referral code lock in these prices. Sam Bailey if you want to share it is 7investing.com/subscribe. That is how you join that is how you become a member. If you don’t do it, you’re gonna feel awfully silly on July 8, when you realize wow, I still want to be a member I still want access to their picks, all their in depth analysis, all their members only content where Steve might even be wearing his members only jacket you never know. There is a ton of value there. We’re gonna move on though. And for the homestretch here, we’re going to talk about what kind of investing advice Will you pass on to your kids, I only have one kid. We would love your questions and comments, your investing advice as well. We’re going to start with one from me to give Steve time to think about what he says Sam, if you want to share the one that I shared on social media.
Dan Kline 28:56
The one I’m working on is figuring out what’s a want and what’s a need. That’s really hard to explain to a 17 year old. So Steve, you know, with kids, I have a 17 year old and he needs $220 sneakers. And I pointed out no you want $220 sneakers, you need serviceable, comfortable sneakers that won’t hurt your feet. And he’s argued well you buy $200 sneakers and I said yes, I need them because I’m buying extra cushiony old man New Balance sneakers, so my feet don’t hurt while I walk. Those are two very, very different things. And it’s a constant source of argument in my house. You know, we’ve been lucky that that we’re you know reasonably well off. And it’s difficult to say no because of that. But you want to set the standard of no like, you know, you get a few bonuses and luxury items. But no, you don’t need the new $60 video game when you have Xbox game pass, which gives you access to all sorts of games. Steve, what’s your piece of investing advice you’ve worked to pass on to your kids?
Steve Symington 29:56
I think first and foremost is not to be intimidated by it. It should be, and it is, is open as ever. It’s accessible to everybody. And, you know, investing should not be a scary thing. I’m trying to drive at home that my kids are part owners in a business, I’ll set up a custodial brokerage account for them and help them invest. But that’s the big thing is don’t be intimidated. And I think maybe that can carry over to a lot of adults who haven’t started investing yet either. But, you know, I want my kids who again, are 13, 10 and 6 to be investing from now on. And when they’re adults, I hope they can go through and they’ve had enough practice where they can read it a 10-K, or your quarterly filing or something and know what everything means, and it’s just standard business and financial education is just not to be intimidated. It’s not a scary thing.
Yeah. And that speaks to the next comment from our friend, David Strauss. Sam, if you want to share that one. “The fact that my kid aged seven will get investing advice now puts her on a different level than most. My first advice didn’t come until I was about 25. And at her age, My only advice so far is your age and time will make her wealthy beyond her current comprehension. Stay invested.” Yeah, I’ve talked about that a lot with my son, my brother has demonstrated it with my son, my son has an acorns account that my brother funded initially and puts a small but generous amount of money in every month, that will turn over to my son when he’s like 25. And the amount of money in it would be like a down payment on a house, maybe not if housing prices keep going in the direction they’re going. But but but certainly possibly.
Dan Kline 31:36
So it’s one of those things where you have to talk about it. And I grew up in a family that invested. But it wasn’t really something we talked about, at some point. They they introduced me to their broker, who later went to jail. And I didn’t really know that it was something you could direct yourself. And admittedly, the ability to direct your own investments got a lot easier over the last 15 years than it was when I was in my 20s. But it was still possible. And it’s something schools don’t teach. You know, people think of the stock market is risky, the stock market’s risky, if you don’t get good advice, and you don’t have a long term horizon. If you’re chasing FOMO stocks, absolutely. The stock market is risky. If you’re buying Hertz because you hear people talk about it when they’re in bankruptcy. Yes, absolutely risky. Let’s throw up one from Kelly Burgess. Steve, I’ll let you field this one.
Steve Symington 32:26
All right, Kelly, he says, “Start now. Be patient, Prioritize it. Have fun.” Yeah, actually wrote an advisor update I think about my thoughts on portfolio allocation. Start small, be patient, stay flexible enough but prioritize it Have fun. Those are four nice succinct rules, where you start now you make time on your side, your patient, you actually allow compounding to do its work, you prioritize it, that means actually saving money and putting more in your brokerage account. Have funun, again, that speaks to it not being intimidating. It’s actually my favorite thing to do. I love investing. And yeah, that’s that’s how I roll. So
Yeah, it’s something that comes up in my house, if my son is getting the new Xbox, which he owns the new Xbox, or I own the new Xbox. We’ve talked about how the hardware as a subscription model works and why it’s good for their bottom line. And why it essentially means instead of them getting one payment from us, they’re locking in a monthly payment. We haven’t talked about the fact that our new Roomba, who is affectionately named Room Bob is purchased that way we pay every month, and every three years, they’re gonna send me the latest robot, they send me replacement parts as needed. And it’s way better than the previous robot, I had. I mean, you you have one to Steve, it’s self cleans, I it’s like once a month, I have to actually change the bag, the rollers are better, so I don’t have to pick cat hair out of it.
Dan Kline 33:52
That being said, talk about it openly talk about it often. I know as a family, it can be difficult, especially if you’re struggling to talk about finances, but I’ve always felt it was important for my son to understand, okay, if we take a Disney World trip, this is before we lived in Florida, we can’t take these two other trips. And now we’ll talk about like, Okay, well, we could do this, but it means we’re not going to do that we could buy a vacation home, but it means we’re not going to do these 16 other things or, you know, maybe next year we’ll only pick passes one Disney or universal not both. That’s probably not true. We’ll probably keep passes to both because we actually go quite a bit.
That being said, we’re going to take the comment live from Martha Barry West, if you want to share that Sam it is a nice comment. “A 7Investing subscription would be an excellent gift for college or high school student. This will get them on a path of investing success.” Yeah, absolutely. We try to break it down and I don’t want to toot our own horn. But we try to make it not difficult and we don’t worry about a lot of technicals and not that we aren’t analyzing stocks and looking at some of the math and some of the numbers, but we’re not telling you to go breakout charts and sell at a certain point.
What I tell young people is look around your world, there’s a decent chance that the companies you interact with if they’re public are good companies you might want to own. Now that’s not always true. Like you when it used to be a public company, I was not a fan of Dunkin Donuts or Panera Bread for different reasons. And those are both companies I used a lot, but probably 8out of 10 things in my portfolio started that way. It was just like, Oh, wait, my computer, my phone and 16 other devices from my house are all from the same company. Like oh, yeah, that is a good investment. And I did my due diligence. I did the research. We are going to throw up the next comment from Brandon Tyler. Steve, you’re welcome to read that one.
Steve Symington 35:44
Right. So Brandon says find companies with great products people use. We’ve already spoken to that focus on long term charts only invest in uptrend.
Dan Kline 35:53
Steve, I want to push back on that one. I’m not sure I agree with that.
Steve Symington 36:03
Go ahead. Keep going.
Yeah, you can see a downtrend. That doesn’t mean anything. So So there are a lot of good companies. We’ve talked about this multiple times. Apple put out two stellar earnings reports in a row and was down the next day. And I know down the next day isn’t a trend. But there are two companies I picked for 7Investing. But I think they’re they’re up overall, but they’re not beating the s&p 500 that have put out unbelievable earnings reports. That’s why the long term part matters. And the trend part doesn’t matter as much. Sorry, Sam, if you want to put that back up. I stepped out a little bit there.
Yeah, I mean, I would I would definitely agree with I’d say focus on the long term. I don’t really pay attention to charts and I don’t pay attention to be honest to trends. I buy businesses and what I deem to be fairly attractive valuations I add to those positions over time. So I don’t mind that and but I don’t really pay attention to near term trends. I guess it really depends on maybe what your what your focus is, unless you’re thinking long term we’re thinking multiple years here at 7Investing. And the the last part of that if you bring that back up, is Brandon says finally you’re going to want to buy and I would say maybe rephrase you’re going to be tempted to buy cheap penny or low dollar stocks and downtrend city that used to be great or promise to do something you don’t understand don’t do it. Yes, avoid penny stocks at all cost.
And don’t think about share price. That’s that’s the other thing that’s kind of difficult, especially considering a lot of brokerages buy fractional shares now share price taken in isolation means absolutely nothing. And you know, just because a company traded $1,000 per share does not mean it is more expensive than a company that’s trading at $20 per share. That literally means absolutely nothing. It just depends. It’s a function of how many shares they decided to make available, think in terms of dollars invested not share price.
And I will say it’s not never on penny stocks, because I can think of two examples. The current Sirius XM, and the former Priceline, which is now booking that got into penny stock territory that both had, I don’t want to say definite, bright futures. But you could make a strong business case for how those companies could come back in the case of the former Sirious, it was merge with XM. And there were a lot of ways that wouldn’t happen. And both companies would declare bankruptcy and one would emerge. But there were roads back. So it’s not a never, I’m not gonna say I will never pick a you know, a penny stock is really a stock trading below $5. But there would need to be pretty heroic, pretty unique reasons for that.
Dan Kline 38:42
So we always we tend to talk in absolutes, and it’s actually something Simon Erickson, our CEO and I have talked a lot about that we want to be careful to carve out the occasional exception. But that exception isn’t some company with no assets and a great website that talks to you about their future thing. It’s, it’s probably not a biotech trading for fractions of a penny that’s gonna, you know, you know, cure all cancers. So be really, really wary, we’re going to take a few more of these. We’re going to throw up a few more of your questions and comments as well. If there are things you want to talk to us about that are not the topics, there is a little bit of time to do that. So feel free to jump in as well. Patrick Crocker says, invest in your best vision of the future. Don’t sell great ideas just because the stock went up quickly only sell if your thesis changes. Math is your friend $1,000 invested at 21 doubling every seven years would be $128,000 at 70. doubling every seven years might be an aggressive number. But even if you go up, you know, roughly 9% which is the average so if you just mediocre every year, you’re still doing incredibly well over time, Steve, you’re welcome to comment on any of that.
Steve Symington 39:56
Yeah, and actually that number Actually, I don’t think Is that aggressive at all? $1,000 invested at 21 doubling every seven years. That’s actually the average. If I’m not mistaken, that’s about a nine and a half percent annualized return, which is about the average annual returns of the s&p 500. You know, so I would say that’s appropriate. And but yes, math is your friend. That’s the power of compounding at work. And I agree again, best vision of the future, you touched on that earlier, don’t sell great ideas, because the stock went up quickly. That’s a big one. You see people like Cramer love him or hate him, who will come out in you know, say, Hey, you know, sell once your stock doubles, you’re playing with the houses money, like terrible advice, right.
Dan Kline 40:43
Steve Symington 40:47
Yeah if I would have done that, with my Tesla stake, you know, then buying it a split adjusted 40 bucks a share, I would have sold at 80, and missed out on huge gains. And, and I would have missed out on pretty much every big gain. Because what happens is, a lot of times these stocks will run up a lot further than you ever think is possible. But there are going to be cases where it pulls back. And you regret not selling at higher prices, avoid price anchoring like that, because it just, it’s an exercise in futility buy and hold and only sell if thesis changes. I agree wholeheartedly.
Yeah, there’s two scenarios where I would sell if my thesis changes, or if something I own and this has never happened. But if something I own got to be such a big part of my portfolio and still had a lot of risk, then maybe I would trim some, if it’s keeping you up at night, it’s not worth the gains, as long as you’re maintaining exposure to that stock. But this is only likely to happen in a fairly new portfolio where, you know, at the beginning of the pandemic, you bought one of these Tech High fliers, and they went up 8,000,000,000%. And all of a sudden, right 60% of your portfolio was one company that’s going to be very volatile, it might make sense to trim that to wherever you feel comfortable.
Dan Kline 42:04
But that’s not about the company, it’s about being able to sleep at night, I’d argue that if you’re very young, that’s not that relevant, because your timeline is so long that Who cares if it has big, lurching jumps, but you never want the stock market or your portfolio or your investments to make you uncomfortable. And that’s why I did one of those Twitter spaces with a couple of mutual friends over the weekend, run by our friend, Max Bosenko. Those are really fun. So if you see me promoting one of those Feel free to jump on. And this friend of ours talked about something being 2% of his portfolio, which was a big percentage for him. That’s not a big percentage for me, I’m probably never gonna own 140 stocks, which is I think the number he claimed, but I might because I keep buying things that you guys recommend that the rest of the 7Investing team recommends.
We are going to take one more comment from Daniel Delgado, that’s the one about the 40 year olds, Sam, because there’s a few from Daniel there. What you know what, 40 years, your kid knows that knowledge at nine years if you share it, I mean, there’s certainly a technical aptitude our kids are gonna grow up with like, Look, I couldn’t grow up and know how to trade online. Because when I grew up, there was no online when I was in college, the only emails I sent were basically you have email. Wow, I have email it was it was basically right after that, that email became a thing. And obviously apps and brokerages being online happened much later and no fee trading is relatively new. But yeah, growing up with people who openly talk about investments, the world has changed. Money was something you didn’t discuss at the dinner table when I was a kid. Now, I think there’s a lot more transparency, where people involve kids and discussions and do things like that. Steve, how open are you with your kids?
Steve Symington 44:02
Oh, yeah, I mean, I don’t share exactly how much money we have in our checking account at a given point. But I’m open with them and I tell them what certain things cost, this is what we’re spending on a vacation and you guys need to know and they can get their allowance or their accounts and see how much they have and realize, okay, I’ve got a ways to go before we’re there. But I think the more open the better. And you know, with the caveat that they shouldn’t be like this is how much money my dad has like in his brokerage accounts or something like that, but I think they do need to know to an extent.
Yeah, I don’t share actual numbers. But we certainly explained what we were doing when we sold our principal residence and moved to rental and then bought the investment property. We’ve explained to my son why we’re selling our first sort of modest Disney home and how that money is going to be used. Because some of that will be a, let’s call it post High School fund for whatever it is he decides to pursue. Yeah, absolutely. We’ll talk about choices of, okay, we can buy these things for the house that cost a few $1,000. Or we can make do with the old ones we have, and go on six more trips like so. Yeah, there’s absolutely some of that.
Dan Kline 45:24
David Strauss, we are going to field your comment at the end of the show, but I wanted to take one from ZL. And I’d be curious to know how Steve feels about this. But it’s, uh, I think Upwork (NASDAQ: $UPWK) should be mentioned today. So here’s what Upwork does. Upwork is a platform for freelancers. It’s a marketplace where a company can go in and say, Okay, I want to put an ad up for people to do graphic design, or freelance writing, or coding or whatever it is, find people. And in theory, it’s a pretty robust, thriving marketplace, I do not recommend them as an investment.
And I’m going to speak, I’m gonna try to be really careful because some of this is proprietary information, but they charge freelancers a fee, some companies opt to pay that fee. Some companies previously had a deal with them where if they brought the worker Upwork took a much different fee. Upwork has stopped doing that. So if I use their platform for paying people for managing my workforce there, there are fees for that. And now they want to take a very hefty fee for an employee, not an employee, a gig worker that I brought to their platform, I find as a freelancer, and I don’t do any freelance, I do a little I don’t do much freelance work anymore, I do a couple of select things, mostly for fun. They take 20% of the pie. That to me is a deal breaker. It means that any company that gets to scale on that platform is going to find a way to leave that platform, unless Upwork is readily sending them people. Steve, you’re welcome to jump in. You have some experience here as well.
Steve Symington 46:59
Yeah, Upwork wasn’t bad as a platform. I used it for the better part of a decade, because that’s what our old employer would use. And it was it was all right. I think it’s potentially ripe for disruption, especially with that fee structure. That doesn’t mean the business itself can continue to thrive as our economy pushes more toward kind of freelance careers. But yeah, I’m not as convinced what are we looking at its market cap, maybe six and a half billion dollar company. So I think the potential for market beating gains is there, but I haven’t delved too deep into the stock it elf just hasn’t quite cracked my top 10 every month when I kind of consider stocks to recommend at 7Investing but..
So let me compare it to Etsy (NASDAQ: $ETSY), Etsy has maintained a rigid focus that their customer is the creator. Upwork doesn’t feel that way, if you’re taking that type of percentage. And again, I’m going to be very vague, because I don’t want to give away any trade secrets here. But when I was working with them, I was actually the liaison to Upwork on a project. And when that thing came up with the fees, we said, well, we’re a big customer. In fact, we might be your biggest customer, we should negotiate this. So we don’t leave your platform. And they said our focus is on raising our bottom line this year. That is a really terrible way to talk to your customers.
Dan Kline 48:27
So look, not every company we invest in, are we going to have first hand knowledge. But if I’ve dealt with the company and actually worked with them and found their method of problem solving, and dealing with their constituents to be pretty bad. Look, if you find me a gig, I might be willing to pay you 10-15%. 20% seems like an awful lot. But if you don’t find me again, should I have to pay that or split it with my employer or get less work because because you’re taking your cut. It’s not a particularly high tech service. I think they’re leaving themselves open to disruption from, you know, I’m actually not sure why LinkedIn doesn’t move in or do more of this. There’s a lot of other ways to hire gig workers.
The other one people will ask us about is Fiverr (NYSE: $FVRR). And look, I use Fiverr. But I don’t think professionals generally operate on Fiverr Fiverr is the place you get your logo done as a placeholder before you hire a professional to do your logo. And I don’t want to disparage any professionals who are working on Fiverr. But when you build your business around $5, and I understand that everything doesn’t cost $5 there anymore, but low cost. You’re going to have people just churning stuff out and there’s a place for it. But I question the growth strategy, Steve, anything on Fiverr as I bury these two companies, which I apologize for the people who use these platforms?
Steve Symington 49:48
No, I don’t really have any informed thoughts on Fiverr right. It’s a stock I haven’t seriously considered personally I’ll admit.
Dan Kline 50:39
Doris and Renee, we will say hello back to you, we appreciate the audience chiming in with comments. It was awfully quiet at the beginning there. ZL says, I’m a grandfathered annual member. And it feels good. I locked in the annual rate. Thank you for doing that. And please, this is the time if you want to buy a subscription for someone who’s still in school, send an email to email@example.com and we will share that info with you. As soon as it becomes live right now, you can’t pre buy those due to some of the quirks. I don’t actually know why you can’t pre buy, buy those. But you can get on the list. And we will make sure we get those subscriptions. Active as soon as the changeover happens.
And this is now where we want you to be our advocates, take to Twitter, take to Facebook, take to your Instagram, your MySpace, your TikTok whatever it is, get those referral codes out there. I’m not sure what a 7Investing TikTok would look like. But I would love to see it. We appreciate so many of you playing along. Steve, we’re going to turn back to the world of work as we hit our finisher. For a Father’s Day weekend. This was a really busy poll, if you want to share it Sam Bailey. How do you feel about going back to an office? About 27% are miserable, about 16% said I can’t wait 41.7% said part time is great. And 15.2% said I quit.
So overwhelmingly, I think it’s fair to say people don’t want to go back full time, I will share that our friend and viewer and occasional guest, Max Lucas shared that as someone younger, he was really excited to get back to the office because of all the opportunities to learn. I’d actually make that argument too. I used to talk to young freelance writers and tell them I understand you think you want this, you won’t appreciate it until you’ve had a bad job and worked in an office, or even a good job that had the constraints of having to be in an office. So I’d actually argue that at least being part time in the office, having those lunches and meetings in person is important. But Steve, do you think we’re gonna see a wave of people quitting their job because they don’t want to go back?
Steve Symington 52:06
I wouldn’t say a wave, maybe a ripple, the people quitting their job, that they don’t want to come back. And, you know, it’s it’s hard for me to speak to this. Because I’ve sort of been spoiled, right, just working from home for a decade. And, you know, and had the option not to go back to the office. But I do miss the camaraderie of being able to see people in person on a regular basis and there is, you know, to some extent like this, that we have Zoom meetings, live streams and stuff to be able to talk to everybody.
We launched 7Investing in March of 2020. And I haven’t seen any of you in person since then, in part because of the pandemic, but it would be really nice to have an office space and there are underappreciated aspects of the job. But there are also you know, very Office series-esque moments that are derived from working in an office space. And I would say that the good far outweighs the bad of work in home.
Dan Kline 53:08
We’ve all managed to build close relationships, despite not seeing each other obviously, a lot of us knew each other beforehand. But aside from Matt Cochrane, you were all in my world, obviously, Dana Abramovitz is new to this. But you weren’t like my close friends who I sat with at events. We all definitely knew knew each other and spoke. But we’ve managed to build those bonds. That being said, it’s difficult to do, I’m going to a wedding in July, with a former colleague, and that former colleague started as someone I worked with did the occasional podcast with, I learned that he lived near the hotel I stayed at. So that became, hey, it’s easy for me to get in the building. If you pick me up on your way into work, which became let’s get a beer after after work, which became dinner, which now became, oh, my God, I’m going to his wedding, like this is my actual close friend. And I do think some of that is a lot easier when we have an office. Especially at bigger companies, especially when we don’t all see each other, you know, on a normal basis.
Sorry, I tripped over that trying to read the last comment we’re gonna take here from Roman M., who I assume I won’t say his real name. I’m really looking forward to getting back to an office and having a commute again, I understand that logic. But I also think everyone’s going to appreciate not having to always go to the office. See, I know as a parent, it can be very frustrating if for example your company’s requiring you to go to the office, even on a day where like your kid has a school play that afternoon that they’ll let you leave for. I think there’s gonna be a ton more flexibility there.
I want to share the comment from David Strauss earlier today. Dan, I’ll be in Orlando in October and I’d love to buy your beer if you’re not on a cruise. At that time. Steve, I’d make you the same offer but cut only knows when I’ll be in Montana. So, so yes, any members, let me know if you’re going to be in West Palm Beach if you’re going to be in the Orlando area. I’ll tell you right now, David, I am on a cruise. The week of my birthday, I’m on the Allure of the Seas for seven days because a close friend of mine is the guitarist on there. And we’re gonna hang out for my birthday week, which I am very, very excited about, but happy to come up to Orlando, especially if someone is offering to buy me a drink. Steve, anything else you’d like to share before we close out the show?
Steve Symington 55:31
No, I’m good. Thanks for having me. This is fun.
We appreciate the large pickup in comments on the show. We’re going to be back Wednesday. I’m not sure what we’ll be doing on Wednesday’s show. On Friday’s show I’m going to be joined at the top by Simon Erickson. We’re going to do some live news we’re going to do some some hot topics, whatever it is, and then we’re going to finish the show with Anirban Mahanti that I’m gonna tape Thursday night. So if there’s something you want to know about the world of international investing, hit us up @7Investing on Twitter, we are very easy to get ahold of. And of course, if you want to shoot us an email and that could be getting on the list to for the new subscription for for for anyone who’s currently enrolled in school. That could be for questions about the service questions about referral codes, whatever it is, that is firstname.lastname@example.org. Until Wednesday, thank you Steve, thank you Sam Bailey behind the glass. Thank you all for watching. Steve, will get back to his vacation. We will see you on Wednesday.
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