Long-Term Investing Ideas in a Volatile Market
Simon recently spoke with a $35 billion global asset manager about how they're navigating the market volatility. The key takeaways are to think long term, tune out the noise...
Stocktwits co-founder Howard Lindzon and Austin Lieberman discuss Howard’s approach to public market investing. Hard and Austin dive into Howard’s “Fashology” and “8 to 80” portfolios on Koyfin. Howard also shares his current portfolio as well as his top 10 positions. The conversation wraps up with Howard’s thoughts on the recent market volatility and how he’s thinking about the future.
October 6, 2020 – By Samantha Bailey
Stocktwits co-founder @ Howard Lindzon and Austin Lieberman discuss Howard’s approach to public market investing. Hard and Austin dive into Howard’s “Fashology” and “8 to 80” portfolios on Koyfin. Howard also shares his current portfolio as well as his top 10 positions. The conversation wraps up with Howard’s thoughts on the recent market volatility and how he’s thinking about the future.
03:00 Howard’s thumb burn and toothpaste treatment
03:50 Thoughts on Stitch-fix (SFIX) & how he thinks about finding long-term compounders
05:40 Howard’s “Fashology” companies
07:30 Howard’s “8 to 80” companies
08:40 How Howard uses Koyfin to track his “8 to 80” and “Fashology” portfolios and company data
11:30 Howard’s current portfolio & top 10 holdings
13:00 Thoughts on portfolio allocation and risk tolerance
15:00 How being an Angel investor has impacted Howard’s public market investing
17:00 Biggest takeaway’s from the guests on Howard’s “Panic with Friends” podcast
20:00 Howard’s thoughts on the recent market volatility and how he’s thinking about the future
26:00 Be nice to people on the internet
Austin Lieberman 0:00
Hey everyone, welcome to the 7investing.com podcast. Our mission at 7investing is to empower you to invest in your future. We do that by providing a ton of free educational content like this podcast, and by offering a monthly subscription where our team of advisors provide their seven best ideas in the stock market each month for just $17. Talked about the free educational content we like to provide, and one of the ways I like to do that is to talk to smart people that are investors, business owners, entrepreneurs. And so with that, I asked Howard Lindzon to come on the podcast, and you probably know who Howard is, but in case you don’t, just from his Twitter profile, he is a general partner at Social Leverage. He’s a cofounder of Stocktwits, he created Wallstrip, which was acquired by CBS. And he is a serial tweeter that makes me crack up all the time with his tweets. So Howard, thanks for being here.
Howard Lindzon 1:02
Good to be here. Listen, if I can be known for making people crack up. My life’s work. I was so inspired by people to crack me up. If I yeah. I mean, as a as a lonely weird kid, Dave Letterman, Johnny Carson. I guess when I got older Jerry Seinfeld,you know, Gary Shandling just cracked me up.
Austin Lieberman 1:30
That’s, that’s one of the things I’ve really appreciated about following you on Twitter, Howard. I mean, I’ve learned a lot from you just from kind of stuff you share. But it’s nice to to find people that can make you make you laugh, especially during times like what we’ve all been through for the last I don’t know, six, eight months or however however long it’s been.
Howard Lindzon 1:53
My only unique perspective and I put my foot in my mouth a lot is if my timings off because what do they say clock you know, it’s misery plus time or or plus time comedy. Sometimes it’s just not the right time to drop something. Some things you know, Hitler, there’s never funny, right? NASA is just it’s hard to it’s hard to just go there. And pretty much anything else in the world is fair game, it seems. And it’s dangerous. That’s the literal though the only dangerous thing I do.Yeah, it’s silly. It’s an appeal. It’s only dangerous to my reputation. Because I get crazies that are disagree with everything I say.But it’s it’s a guess it’s a form of giving back. I get such great feedback from from making people spit out their coffee or whatever, because they’re not expecting financial advice to come with a reverence and a bad attitude. Yeah, and sarcasm, which is not always I’m not a professional comedian so it falls flat 50% of the time, maybe less, but like, there’s always somebody offended.
Austin Lieberman 3:00
Yeah. And that’s, you know, finance and investing is super boring. But speaking of danger, you burnt your thumb yesterday. How is it doing?
Howard Lindzon 3:11
Good! I asked Twitter. And you know, I didn’t rush to ice because I don’t think ice helps. But from previous burns, but I put toothpaste on. Someone said put toothpaste on and it totally worked.
Austin Lieberman 3:22
I saw that I was gonna ask you about that if the tooth it looked like the toothpaste actually worked? Who would have known?
Howard Lindzon 3:28
Yeah, someone said to stick it somewhere else? And I didn’t do that.
Austin Lieberman 3:32
Yeah. (laughs) So this is kind of an investing related question. But you also have been doing I like watching your Q and A’s and your live streams and stuff. You’ve been doing Stitch Fix box openings. And they report earnings here pretty soon. And and I think there’s been some funds that have been buying Stitch Fix. I’ve never been super bullish on the company, just because I couldn’t get behind the like the business, the unit economics. But first of all, how do you like it, from what I’ve seen, you have not had the best experience necessarily with your choices.
Howard Lindzon 4:10
So I’m always trying to find things thathave a good story. Because in order to be a multi billion dollar company, you have to have a great founder who can tell a great story, they got to have a great business, which you just said, and I’m that suspect and that’s why the stock has lagged as an e-commerce company. Right? So you hate buying the last e-commerce stock, which a lot of people want to do because oh, you know, I’ll play catch up. So there’s a reason it’s a $2 billion company. Not, not to knock a $2 billion company, but I’d love to find, you know, $2-5 billion companies on their way to 50 or $10 billion companies on the way to 100. And that sounds crazy, but in the world that we live in and the inflated asset world that we live in, that’s, you know, that’s what brands can be worth, you know, the global brands So, you know, in a new paradigm. I hate that word. But in a market where rates are zero, and money printing exists in a customer basis global, and government is always a wild card and remains the wild card only. But that’s the only wild card right now. And you’ve had a pandemic to stress test so many companies, we’re going to see many more hundred to $500 billion companies period and end of story. That makes it hard for public companies under 10 billion that don’t have a growth model that are just asset based are yielding you know, lower ROI people want growth. And so Stitch Fix is interesting because it’s interesting right? I getting my clothes you know, I have this fashology index, and I’m looking for another company, so I have a fashology at index Restoration Hardware is in there. Nikes in there. I guess Adidas should be but isn’t Under Armour isn’t. But Nike, Peloton. And I’m always looking for that’s (exclaims) Lulu. And that’s really where I feel like. I wear clothes and 55 I’m shaped like a pair. I have clothes problems. We all work from home. You know, nobody wears suits, department stores are out. So there’s this whole new category that combines technology and fashion. It’s very American thing. They caught even Lulu calls himself athleisure. I prefer to call it fashology. So, so So I’m looking, you know, for a next company to add to that. Things I’m constantly trying to think, you know, which without stretching the Peloton. Is it really fashion? Not yet, but I think it will be. So it’s in my index. And it’s in my portfolio. So so I’ve been looking at, you know, (The) Real Real. I’ve been looking at Stitch Fix I’ve tried to own a few times I’ve been stopped out. And Farfetch, which is a stock that I’m on right now. FTCH, truth is, you know, an $8 billion, $8-10 billion dollar company., it seems to be the clearest of the three between Real Real, Stitch Fix, and Farfetch seems to be the one that makes the most sense. You know, Amazon’s trying to copy them, which is good. It’s not good short term, you know, because the Amazon overhang but Farfetch has got a platform that will allow high end kind of fashiony brands to use their platform to reach a larger customer base, kind of like Etsy for high fashion. So I think, I’m constantly looking for those kinds of things. And then I have my 8 to 80 list, which is companies would graduate, to which Lulu has graduated to and actually peloton at some point may graduate to, which is companies that have customers that are eight to eight years old. So you know, Google, Facebook, even bitcoins in that list because of the brand. Zillow, Zillow is not up and comers on that list or Zillow, Peloton, but on that list, Lulu, Nike, McDonald’s. So brands, you know, I want to find the next potential 8 to 80. And that’s more beta in that portfolio. It’s kind of what you guys do. And then I want to find 8 to 80 brands. And when the markets are good, I’m really focused on these companies that could become 8 to 80. When the markets really bad. I generally refocus on the 8 to 80 brands that have pulled back 20 to 30%. And those are the brands that everybody rushes to in a bear market. So it’s kind of, you know, that’s kind of, you know, where I, where I swing,
Austin Lieberman 8:31
I think I’m sharing my screen now, Howard, but you mentioned your a couple of your… And that’s one of the things I wanted to ask you about is
Howard Lindzon 8:39
That’s my 8 to 80 portfolio.
Austin Lieberman 8:41
Yeah, is just some of the different tools you use. And I know you’re a big fan of Koyfin, so while you were talking about
Howard Lindzon 8:46
Investor, so yeah, I’m a big fan. I think it’s one of the best. I’ve been doing this for 20 years as a institutional or retail investor call myself and I ran a hedge fund, including, and for a long time, it’s the best product I’ve ever seen for a beginner or an expert investor. Yeah, other than silver.
Austin Lieberman 9:04
So I get and I can share these out with everybody, you’ve shared these links out you’re 8 to 80 and then you’re the Howie portfolio as well. But it’s pretty cool function here. You can create portfolios, and then share them out with people. So for my, anybody that’s wondering, this is this is the 8 to 80 portfolio that Howard was talking about.
Howard Lindzon 9:23
The newest, the new, you can pull it back out so we can walk through it. So I have a free blog that people can go to where I talk about when I add a name to something as big as the 8 to 80 list, and think in April, I added Zoom at around 120 bucks. And that sounded crazy. And it’s silly. It’s up like 400% in the last three months but occasionally happens right? I added it holding my nose saying listen, Zoom is now a brand that eight year olds are living on an eighty year olds they’re living on. If you look at Shopify, it’s the same thing whether people know they’re using Shopify, they’re living on itand it’s growing Netflix, we all know, Spotify, I added recently as a pro cut from 160 that is a brand known around the world. So they have to be profitable, I would have loved to have added Tesla at a sooner price, I think the brand is going is a global brand. But you know, profitability is sketch. And you know, I am an old person, so and I don’t use Tesla. So, Tesla’s cost me the most money of all the stocks because if I just bought one, I’d probably be rich. Because I think, yeah, I mean, you know, I love McDonald’s that’s helped me own the stock. I love Apple. And, you know, you know, Spotify live on that’s helped me on a Tesla as a non user, that one really hurt me. But anything here from Bitcoin to Lulu, I live with these products. The only one that I don’t is medical device, I think everybody should have exposure to this sector. And because it’s so hard for me to pick individual stocks within the sector, because I don’t really understand medical but in a world, in a world that people have wealth and want to live longer, this is like a no brainer, less risk, these companies make money in the medical device sector so so again, I’d like to focus on this list when stocks are when the markets are down. 20% So these all these stocks were tremendous buys that I was writing about in March, they might have seemed overvalued. But if you look at the March returns, April returns, even May, if you had just bought this basket, and then my other list, you know, the stocks I own, I don’t know if you have it up there, but the actual stocks I own a portfolio here are the Howie portfolio to mix up 8 to 80 and stocks that I think are on their way to 8t to 80 mix with a few spec things that I want to keep an eye on. So a lot of very tiny positions mixed in here, but generally it’s 15 major positions. Yeah, just constantly fiddling with it, as everybody should, if they own individual stocks, but I’m constantly fiddling with it, but my top 10 positions, you know, are McDonald’s, you know, Apple dropped out of the top 10 recently, Amazon, Elastic just looking here Google, MasterCard, Shopify, think Snap is now in my top 10 . So it’s Apple’s like a you know, they kind of move in up at the top 10 kind of dominate what I have and then we’ll have like quarter point positions and stuff speculative stuff that I want to keep an eye on just to make sure
Austin Lieberman 12:31
Keep track of it.
Howard Lindzon 12:32
Yeah, and if they quadruple like a genetic the in the CRISPR space, I can’t tell you what that’s not going to be $400 or zero yet but anybody smart that I talked to is like got that in their portfolio on the genetic side. So it’s like a venture capital stock position.
Austin Lieberman 12:47
Howard Lindzon 12:48
No, sorry, Peloton is in my top 10, so so but generally my top 10 positions I just know the stories inside out and I’m a product user
Austin Lieberman 13:00
And do, do you for some of those top positions, do you kind of add the same amount or do you look to have kind of the same you know, say it’s you have X amount of money and you you you want to have those be even positions for your cost base and then you just kind of let them out outperform and that’s what decides Yeah, I try to let him perform within my risk. Something gets to 10% like Apple used to be just yeah, it’s cost me a fortune. So my own conservativeness has cost me a fortune. Yeah, when do you rebalance but staying true to your risk profile? So my thesis around stock market is I get my wealth is in the private markets. So you know, stock markets to me are not going to change my life. But owning a Robinhood or owning an E-12, you know, investing in those companies will. And Apple did because I owned it for so long, but I mean, I really would have been wealthy if I, instead of every time I sold Apple I bought, now what it would be 50-60% of my portfolio. And I guess I’m just not wired. I’m not wired to look at my portfolio and see it move that. You know, but in the end, I think the best investors are wired a little differently and the reason private work markets work for me better than public markets is I don’t have to look at the price every day. And I think if you get people, part of the problem with trading is you give people, most people, and they could see that they can get out on any single day and they’re going to do stupid stuff. So part of the part of the holy grail, this is same thing with your iPhone. The people that master their iPhone can turn it over all the time like mine’s turned over for the pod. You know what I mean? Mastering the market is being able to look at it and not trade. It’s just enjoy and that’s why I like Koyfin it’s like being able to talk to people and not have to pull the trigger is is is the ultimate zen of investing.
Austin Lieberman 14:49
Just enjoying the process. I wanted to ask you about how being an angel investor has has impacted the way you invest in public equities. And as you said, most of your wealth is tied up in private companies. But we’ve heard the famous line from Warren Buffett that he’s a better investor because he’s a business owner, and he’s a better business owner for an investor. So just curious on your take on angel investing, and how that has impacted your, how you think about public markets.
Howard Lindzon 15:22
Um, I mean, it’s been nothing but good. You know, I think I’ve talked more people out of being in hedge funds, and I can, I think I’ve done the world a good service, I do think it’s a not an honorable job. It makes people do dishonorable things. Meaning even if you’re honerable, just, it’ll bring you to the dark side, kind of like, going on TV. You know, before Jim Cramer went on TV, I thought it was, I thought it was like God’s gift to, to, you know, just being able to read that person and tap into their brain, right. So, you know, two things, destroy a hedge funds – media, you know, putting on makeup. So, you know, you’re constantly battling the idea of charging people, you know, for your ideas, where I’m at now is just give it away and build goodwill. And, you know, that helps my private investing, that helps build my network. But being an angel investor has really helped me connect the markets, right? Understanding, understanding where private valuations are, and where public market valuations are, you really start to see how not crazy things are. And when things become way too crazy. And sometimes it’s just way too crazy in the startup world, not just the public world. So having ability to like, focus on the two ends of the spectrum, the most liquid early stage technology businesses and then the most liquid, you know, public securities has really given me this. It’s hard to explain it to people every day. I write about it every day, but I feel like I have an edge in dissecting how the world is thinking about prices and technology.
Austin Lieberman 17:00
Yeah, and so talking a little bit about giving back. You’ve got your website, Howardlindzon.com. You do Momentum Mondays, which just put one out today. So I subscribe to your newsletter. I think everyone else should as well, just for really daily thoughts on the market. But I want to ask you about Panic with Friends. I think you turned Lindzanity, your previous podcast into Panic with Friends, kind of at the at the start of the whole Coronavirus thing. And I listened to have not listened to all of those episodes. But I listened to a lot of the early ones. One of the ones that stuck out to me was when you talked to Bill Bishop, and you you both you talked about that he really helped us learn about the dynamics of China and the US-China relationship. Just curious. You talked to Jeff Richards on there, you just mentioned in Twitter that you’ve got Patrick O’Shaughnessy, and I think Jamal coming up. So if you have just a couple takeaways from your experience, doing Panic with Friends, and how that has kind of helped you as an investor and just mentally get through these last, you know, six, eight months.
Howard Lindzon 18:10
Yeah, I mean, it’s one of the writing and I guess audio now to you have to include it’s different different muscle than writing. Writing is the greatest thing that I ever discovered. You know, I hated writing in school. I’m not a reader. The attention span of a dummy. We’re supposed to be dummies, right? Because I have a low attention span. But I wanted to have people on not that traded, but that had been through panics. And what in what are you supposed to do? And without a doubt what I’m most proud about if you look at when we started it was like from Jim O’Shaughnessy, it was like, okay, it’s too late to panic. My whole thinking was if you were going to panic, panic when the VIX is 10. Not when VIX is 90. Okay, now we’re somewhere in between a 30. And it’s very elevated. So I’d still think we have a bias higher, but like, you got a panic when the VIX is, is 10 not 90. And so it’s like too late to panic. Let’s talk about what to do next. And at least we gave out really level headed advice that, you know, stop selling, and buy something or move away from your money.
Austin Lieberman 19:17
Howard Lindzon 19:18
And so it helped me to, like really selfishly, that it all helped me because, you know, the itches. Ooh, Google’s at 1000 really, the temptation is you need to be buying, but it’s still overvalued. Like the panic is like this could go to 600, no doubt. But so at some level to be a stock investor, you if you don’t think that a big 70/90 is coming again, you’re crazy. So, you know, this will give people a frame of reference now in the next panic to go listen to the first few episodes and really remember what panic was like, and that the center did hold. Now the center doesn’t hold we’re all screwed. I don’t know what to tell people. You may not be wired to invest if you constantly think the center’s not gonna hold. And cash is an option.
Austin Lieberman 20:02
Yeah, and so we’re kind of getting close on time here. But just just curious on on your thoughts on this whole thing now. We’re starting to see the market act up a little bit, some volatility, I think it’s most likely a kind of a normal healthy pullback. But there’s a lot of panic out there right now. So just curious if you have any, any thoughts on that? And if you think you’ll be needing to do Panic with Friends for another another year, or if- are we almost done?
Austin Lieberman 20:29
I think we’re done. We’re doing VIX 90 again, you know, people think that’s coming back. And I’m all for people having that debate. If it is, we have bigger problems. So it’s not about does it come back? It’s what, how do we react if it does? And the way you would react is like, okay, start planning for that today, sell something today. You know, because the VIX is 30. At 90, we’re gonna see much lower prices. I still don’t think people understand the markets, just a new market structure we’re dealing with. And so the first thing I’m trying to think of is like, why would I ever, I never liked hotels, I never liked transportation stocks. Although transportations it’s a good index and logistics I there’s certain things I never liked. I didn’t like Midtown Manhattan for the last 20 years. Right? If you’re in the tech business, you didn’t go to Midtown. So it’s like, there’s these trends that were already in underway. San Francisco was a shithole to many a year ago, three years ago, you know, there were problems there. So it’s like, we’re just seeing an expansion of the problems. So that’s not going to get any better. Right? So this move to digital is happening. The the hard part to understand here is like who’s the sheep who’s the sucker is the sucker? Like Eastern Asia is a sucker of Africa is a sucker Mexico, because America is pretty good a distribution. And I think one of the last great rackets we have going is stock and brands and culture. If, if everybody in Mexico wants to own Tesla, it’s not my fault, right? The stock is going to get we have a supply demand imbalance of great American businesses. And most of those just happen to be digital. So if you light up Mexico with a robinhood, guess what people are going to buy there, they’re not going to buy Mexico cement company. They’re going to or Mexican grocer or the Mexican Walmart, they’re going to go buy Tesla, Walmart, they’re going to go by. They’re not gonna buy JP Morgan and Goldman Sachs, they’re gonna buy Twilio, and they’re gonna buy fucking Facebook, and they’re gonna buy Zoom, right? Because that’s, to them, a brand that’s not going to disappear. Right. And so, in a world where that’s happening, I don’t think people really have factored in, and I as a ground floor investor in Robin Hood and eToro and running Stocktwits. I am seeing other companies, you know, start their own robinhood’s, or get their first crypto or be able to earn interest on their cash and use an app and Venmo and Square cash. And they’ll be able to buy their first stock, they’re gonna buy an American company. So So how this fully plays out, I don’t know what we are saying is smart American venture capitalist starts back like, we’ll go buy a brand that we know the rest of the world will love because there’s a billion buyers of that stock. And that’s how the stock market works is distribution. Goes from the hands of a few to a hands of many. So I’m kind of bullish, because we’re at the early stages of that. Will there be scams galore? Yeah! Should buyers beware? Yeah! Uh-huh, never more than today. But does that mean there’s not the best opportunities of all time? Yes! So you have this incredible opportunity, incredible ways to get involved like left low friction ways Koyfin, Robinhood, Cash App, Venmo, Twitter, Telegram Stock, you know, Reddit, to communicate to everybody has inside information in this era. The question is how do you manage your money so in that world, Superbowl. In the world of like, how we, where we end up on prices have no fucking idea no one does. And so the question is, you know, how do you manage your money within that arena is the exciting part. And that’s just for everybody to do themselves. But there’s, you know, it we’re, we’re in a incredible bull market still. I think what March taught us was that this volatility is going to be back. This is like an earthquake. So I think we’re gonna have more earthquakes and they may come closer than together I can’t predict that we could have another 90 VIX, but I don’t think a 90 VIX necessarily means a bear market anymore. Right? A 90 VIX may just be you know, like going up, going up Everest. People do die. Yeah, but more people doing it even though they know they’re gonna die. That there was a lineup on Everest lineup to die. I’m licking my chops because I have a network of people around to kind of hone in and try and not lose my cool and try. And you know, I’m playing against everybody else. So I like – I’m super bullish on that. But I do think people need to be more careful than ever at least newbies, but at the same time, spend three, four years instead of 10 years now you can learn a lot. So yeah, that yeah. So hopefully that gives you like my overall look at it.
Austin Lieberman 25:24
Yeah. Thank you, Howard. I know we got to get going. So my, to kind of summarize my takeaways from this is we’re, you know, we’re probably in one of the best times ever to be an investor, because of the access, because the information. But the important thing at the community, the important thing is that we do our research, which I know you’re a big proponent of, and that we behave the right way in order to empower us to be a good investor. So that was my takeaways from this conversation. And everybody, Howard Lindzon, you can follow him on Twitter, @ HowardLindzon L I N D Z O N. And we’ll link to all your your podcasts and everything, your website in the show notes. Howard, thanks a lot for your time. I appreciate it.
Howard Lindzon 26:07
Yeah, yeah, just like one more thing that because it was a good wrap up there. It was like, you know, it’s easy to be disrespectful, right? It’s easy to yell at somebody online. It’s also easy to be respectful and build your network. So it’s like, we have these great tools, you know, do you use them for good or evil? I would really urge people to just, you know, it’s so easy to yell and to be anonymous, I would said listen, there’s just such opportunity to be nice. Like you do, like we do, and and give back and say hello to somebody or if they thanks for that idea. I would say take the high road on this stuff. It’s easy on Fintwit or whatever, just scream at somebody and demand demand demand. But hey, there’s enough of us out there sharing that you can find. And so I would say you know, pay it forward, be nice. And these these tools are great. And you know, they’re a privilege. So you know, hopefully, you know, people take advantage of them.
Austin Lieberman 27:00
Yeah, that’s a great note to end on. We should we should all make a little bit more effort to to be nice and be be good. Good to others.
Howard Lindzon 27:07
Austin Lieberman 27:08
Thanks a lot, Howard is great, great talking.
Howard Lindzon 27:10
Okay, talk to you.
Austin Lieberman 27:11
Have a good one. Bye.
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