It’s a busy week with a number of major retailers reporting earnings including Target and Kohls. Both delivered good numbers but what do they mean for the future. In addition, another retailer, Nordstrom’s, has entered into a partnership with fitness brand Tonal. Can this type of deal help make the company relevant to a new audience? In addition, Johnson & Johnson has an unlikely new partner helping it ramp up vaccine production.

Transcript

Samantha Bailey 0:07

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  0:17

Good afternoon seven investors and welcome to the Wednesday edition of 7investing. Now my name, of course, is Daniel Brooks Kline, I’m the host of the show. And today, Steve Symington, I am also the director of the show, as Sam Bailey is attending to personal business. So if things go wrong, and they will go wrong, it is almost certainly my fault, Steve, how are things in Montana, it is a glorious 84 degrees, I went to the pool on Saturday, the pool is actually really cold, because it has a kind of cold here.

Steve Symington  0:48

It’s great, I’m happy, I can pass off the blame for any wrong things that happened today to you. And it’s gonna be 52 here today. So we’re nice and toasty warm.

Dan Kline  0:57

So Steve, you know, and we’re going to do a news roundup, there’s so many stories in the news. That’s what we’re going to talk about, we’re going to go through a whole bunch of them. And then the second half of the show, we’re going to talk a little bit about areas where people waste money, and why sort of perceived value is important. Of course, along the way, we would love your questions and your comments. I don’t know that I know how to share them, but we will certainly share them verbally. So if you want to say hello to us, please do. If you have questions for us along the way. We’re going to talk about a lot of things. So we’ll probably go a little bit out of order when it comes to the questions and the comments. But Steve, have you ever bought a car I say new car but actually bought a used car? Have you ever bought a car?

Steve Symington  1:35

Yeah, yeah. I, I’ve probably spent too much on a new vehicle. Some of it was sort of in the name of Alright, I want something I don’t have to won’t have to worry about. You know, get it I got a new vehicle, we have an expedition that carries a boatload of people and has the turning radius school bus. But it’s a it’s a great vehicle that I don’t really have to worry about. So that was sort of one of those those rare exceptions to the general financial wisdom that you should follow is don’t buy that new car. But

Dan Kline  2:06

so I’ve driven a Nissan Versa for the past four years. And when I take a long trip or go someplace with narrow roads like driving the Key West, it’s a very light car and it blows around quite a bit. So I decided a few months ago that my son is going to drive soon. He’s He’s in Driver’s Ed. And then I wanted a slightly safer car. So I looked up really safe cars and I came up with that I wanted a Used Toyota Prius, I bought the Consumer Reports, I had sort of everything down and ready to go. And I did what I did for our previous two cars team, I went to Carvana.

Now this is an endorsement of carvanha the product not carvanha the stock, I think it’s too easy a model to duplicate. We’re seeing it with room that there’s basically a copycat company that’s taking some of the business but I’ve never had a better experience you log on. You basically tell it what you want. You can play with your your payment terms you can play with, you know, geez, do I want one that’s going to cost money to be delivered? Do I want to wait till they have the same car that’s right near me. It’s basically a seamless experience. I put my trading VIN number answered a few questions A few days later, they show up with a car. They let you sit in the car, take the car out, you assign a few things electronically, and then they are gone. And then you have seven days and 400 miles to decide if you’d like the car. I do like the car. And they called me today to say hey, just reminder. You have one day left? Do you like the car? Don’t Don’t forget to trade it in. If you don’t like it, Steve, that’s not like the dealer experience. And I love this type of business.

Steve Symington  3:37

that’s a that’s a fantastic thing. Yeah, I actually just went through the same thing traded in a vehicle for another used vehicle, actually, our secondary vehicle picked up a Jeep I was I was excited about that. But it was not that easy. It was it was with a dealer. And yeah, I’m a little envious of the process.

Dan Kline  3:54

But, it’s not an investable company, in my opinion, because it’s just too easy a model to to duplicate. We’ve seen a lot of copycats, we could also see car dealers decide to stop treating people terribly and have a different business model. We’ve seen that a little bit with the airlines. But enough for the personal stories. Let’s get to our top story for today.

Remember, please share your questions and comments. We would love to. We would love to hear from you. And I think we can make that work. But Steve, the top story here is Google. That’s the parent company alphabet. They just announced a blog post this morning. stop selling ads that rely on your individual browsing history. So if if I as a joke, as I did yesterday, spend some time on nuts.com a site my wife finds unbelievable that it exists and I was looking at what they actually sell. And now of course I’m seeing nothing but ads for like cashews and other things they sell there. That’s not going to happen anymore. What does that mean? What does that look like?

Steve Symington  4:54

Well, um, so it was David Tampines, Google’s Director of Product Management Information. Esther’s keeping track Remember, the parent company of Google, the holding company is a\Alphabet. And basically, they just announced in a blog post this morning that they’re planning to stop selling ads that rely on your individual browsing history, this is a huge deal. We might remember that Google already said last year that they were phasing out third party cookies. And this this goes further, though this is essentially Google saying that they plan to stop investing and using any tracking technology that identifies individually users browsing history.

And this really comes as the industry, the broader industry is facing rising expectations from consumers for more privacy centric internet. And to be clear, Google would be much more hesitant to do so if this meant if they were moving forward without any sort of alternative in development or in advanced development. And really sure enough, there is some technology that they’ve been developing in partnership with some other companies in the industry.

And it’s they’re going to use this so called privacy sandbox, basically, that’s arranges people into cohorts, they’re big groups of users with sort of similar interests, they can do this in a very privacy centric way, if that makes sense to where they’re targeting ads to aggregated groups instead of individual people. So there will be I think, some people are like, Well, does this mean I’m going to get just crap ads like this? You

Daniel Kline  6:33

You already get crap ads, like, right?

I brought up that nuts.com thing. One, that’s a joke between me and my wife, we weren’t actually going to buy anything. And realistically, if I google walnuts, does that really mean all I want to see is walnut ads. I’ve talked about in the past, that my wife had a nonprofit project where she had to help a local shelter, buy baby diapers, so I was searching forever on a whole bunch of sites, what the best prices for different sized diapers, I can pretty sure tell you I didn’t have a baby at the time. And I didn’t want diaper ads for the next three months.

So Steve, I think this is Google doing something that won’t hurt them from a business point of view. You know, serving me ads, because I’m a New York Rangers fan. You know, who also likes movies, it’s probably going to make more sense than serving me ads based on like, what I just searched, especially with what we do for a living where our search can take us far away. Do you see will this have some positive business blowback from a privacy point of view?

Steve Symington  7:30

I think it will have some positive positive blowback. That’s it a fun little dichotomy there. Yeah, I think it will. Yeah, I think part of the reason a big reason that they’re doing this is that Google realizes that they can do this from a position of industry leadership. And they can say, Well, you know, they don’t want to be caught, kind of behind the curve, because they see the writing on the wall, they understand that the industry is going this way. And that users are sort of demanding, more privacy centric internet. And I think we will see some positive positive user blowback. This also could also really help them from a you know, when you’re looking at privacy and antitrust concerns and a lot of scrutiny facing big tech companies in it saying, should you really have access to all this information? And I think it’s sort of a it’s it’s a user friendly move, that should kind of help their sway when they’re making these arguments to regulators in particular, that that may be there. They want to they want to play nice, and they want to have this this open, more private internet. And I think that the public at large will should welcome that.

Dan Kline  8:43

Yeah. And Steve, let’s, let’s pull up a comment here from I’m not even going to try to pronounce your name, I apologize. Well, this impacts snapper, Facebook news. And he relates it to the issue between Google ads and Apple’s new ad. And what I’d say here, and Steve, you could jump in, is that privacy is going to be something that companies have to think about more, I don’t think there’s any other way to put it that people are not going to want this sort of rampant data use that Facebook has been guilty of. And companies are going to have to be aggressive and dealing with it, whether or not they’re forced to do it. Once you have Google doing this, this becomes the new norm. I’d be shocked if everybody else doesn’t follow with using cohorts for ad serving.

Steve Symington  9:26

Right. And Google also mentioned in their blog post this morning, and you should search for it. It says Google charts, of course for more private internet. And they do mention, they sort of admit that not everybody’s going to do this right away. Right. So they’re looking at kind of phasing in some of this technology in the second quarter of 2021. And I think we can realistically expect them to be using maybe this on a more broad basis next year. So it’s not going to happen right away.

But when it does happen, there are going to be companies that still attempt to track individual users behavior, and Google admits that hey, we may not not be able to serve quite as as tailored data, even though it’s maybe not necessarily the greatest data, you know, you were mentioning earlier. It’s like if you’re checking out with online grocery delivery or something you had creamer, and they say you might also want to add creamer, it’s like, well, thanks for the creamer for my creamer like, I don’t need this, but so they’re not great in that sense, they might actually be better when they’re targeting the groups because they might not be so bizarrely specific and and sort of lacking context with what you purchased. Because maybe there’s an argument to be made that these very, very specific tailored ad experiences are, are two good. And and it might, you know, they might see some some positive byproducts of actually targeting to a cohort rather than individuals.

Dan Kline  10:48

You’re watching seven investing. Now, our top story today is all the stories we are talking all sorts of news, we see your questions and comments. We’re going to take them after this segment. Some of them I’ll throw out to Steve Just so you know, the specific companies they’re asking about, we might not talk about those companies. But we will talk about the market point that some of those questions raises, because there’s a lot of why is this stock doing that kind of questions.

And I think as long term investors, I literally just wrote a piece that said, Well, why is this stock doing this? Who cares? Nothing has changed about my underlying investing thesis, there was no news today that mattered. So for the most part, that’s usually what we think. But let’s uh, let’s move into the political realm without being too political President Joe Biden says that life will be back to normal by this time next year. He also said that there will be vaccine available for any American who wants it, which Dear God should be most Americans. By May. Steve, I see kind of a dichotomy there. If everyone can have a vaccine By May, why is life not back to mostly normal in June? Like, I’m not sure why we have these like strange goals. And I asked this investing point of view of normal means there’ll be crowds at Disneyworld. There’ll be hotels open, there’ll be, you know, I’ll be able to play blackjack without, you know, plastic dividers between me and somebody else. Yeah, I know, you’re not the medical person here. But why do you think there’s these weird two different goalposts,

Steve Symington  12:16

part of it is, you know, there’s certainly an aspect of sort of vaccine hesitancy people. There, there’s a pretty large group of people who are concerned that these vaccines were rushed, and that they’re not as effective etc. I mean, to be clear, and after talking with our colleagues in biotech about this, who are by all means that vaccine experts, these vaccines, they weren’t rushed, they were prioritized. And there’s a big difference. And that’s something that we really need to keep in mind is that these weren’t vaccines that were sort of rushed into development. And, and, you know, that, that you’re getting some sort of discount version of a vaccine that that isn’t, you know, it’s gonna make it grow an arm out of your neck or something. It’s not, that’s not the way it works. They were prioritized. And, you know, so I would make the argument that people shouldn’t be worried about that. However, there are a significant group of people who won’t get vaccinated right away. And we’re gonna have to worry about that. There’s also, you know, the arguments that some of these variants may be less, you know, that there may be new variants that we’re dealing with, we just sort of need to phase this kind of back in and, you know, there’s there’s a couple months sort of period where you need to, it’s not, it’s not just flipping a switch, you know, it’s not. And

Dan Kline  13:35

That’s why I asked this question, because I think we’ve seen volatility in the stock market, where people are bidding up like hotel stocks and other things based on a recovery. And this isn’t going to be like there’s one day where someone comes on TV and says, We’re recovered, like, everything’s, everything’s great. Like, this is going to be gradual, I’ve been vaccinated, I’m fully vaccinated, as of tomorrow will be two weeks.

So I’m going to do some things like go see other relatives who’ve been vaccinated, I am more willing to get on a plane because it’s less of a danger to my family, I was always going to be careful. But I am going to do the things that that you know, the CDC has said, it’s okay to do. But me deciding I’m going to go on a gambling trip doesn’t necessarily mean the economy is open, or everything is normal. So it is going to be a slow rollout.

But Steve, let’s stay in the political realm here. Well, while we’re dancing with fire, why not? There’s a $1.9 trillion stimulus plan that’s moving forward. And this includes 14 $100 payments, and why is this important? From an investing point of view? A lot of people are spending this money, but yes, it’s gonna look like

Steve Symington  14:43

Well, I think it’ll look like everyone takes their 14 $100 payments and yellows it into GameStop options. Just kidding, please, don’t the So, the yards it’s through the house, the $1.9 trillion stimulus plan and this year You’d kind of aid and sort of supercharge economic growth. And now it’s going to go to the Senate, we’re gonna see some back and forth attempts to kind of lower the size of that $1.9 trillion price tag, I think they’ll have limited success, anyone who’s trying to reduce the size of that, but there, there are some things that will probably be written out, they’ve already sort of abandoned the $15 minimum wage aspect of it. The 14 $100 payments are not expected to be a point of contention. Now, to be very clear, that will be on its way. That’s sort of a very bipartisan, everybody wants this, it’s going to happen. 14 $100 per adult up to 150,000. I think it phases out by Yeah, phases up by 150.

Dan Kline  15:46

Yeah, and see, let me let me jump in. I’m all in favor of jumpstarting the economy, right? I am not in favor of sending me money. And I think that’s a problem. Anybody who’s worked through the pandemic, maybe should be eligible for tax credits based on added expense. If I could say, hey, look, I had to set up a studio at home. And that was an added expense. Maybe some of that should be tax deductible. But I do think there’s this like in the beginning, I get it just get checks out to people. But if you get that check, if I get that check, is it better for the economy, that we’re much more likely to spend it than we are to save it? Because we’ve been in pretty good financial condition throughout the pandemic? Yeah.

Steve Symington  16:25

There’s, there’s arguments made both ways, really. And, you know, there was, you know, that that was a point of contention earlier. But now, I think everybody’s just sort of accepted, this is what we’re going to do, you’re going to get that money, whether you like it or not. And, and it’s, it’s one of those things that, that I think, you know, when you look at the follow on effects, the the upside of giving money to people who may not need it sort of outweighed the, the downside of potentially giving people money, who didn’t need it, because they wanted to make sure everybody who got it needed it. And that will definitely happen. And they did sort of accelerate the phase out of the full payments, to sort of make it slightly more targeted. But most people who got stimulus checks last time should get, you know, more this time around. So it’ll, it’ll be really interesting to watch kind of the the follow on effects, because the last $600 payments that we got did result in some pretty quick spurs for sort of economic reopening businesses. And, you know, we had the CEO of Walmart saying, you know, what, this is people are spending this on necessities, especially with those lower income tax filers. And, and, and that was really important, because these are people who, you know, they were sort of choosing between paying rent and feeding themselves. And, and that’s a situation that nobody should be in. And I think this was sort of like, let’s let’s overshoot this instead of undershoot this and they didn’t want to walk that line. So that’s kind of the way it’s happening and should, you know, hopefully, get it approved. Everything that in the stimulus package, they’re hoping by the middle of March, which means you know, possibly by the end of March or early April, we’ll start to see those checks arrive.

Dan Kline  18:05

You’re watching 7Investing ow we see your questions and comments, feel free to get more in, we’re gonna do them in between segments. Steve, let’s stick with Walmart here. So Walmart has dropped now they do two hour delivery in certain markets on a limited selection of items, but they dropped the $35 minimum. Is this a direct sort of swing it? Like if Amazon does it? We could do it better? Is this like escalating? We’re pretty soon I’m gonna be able to order like a 15 cent item, and it’s gonna show up in five minutes, and they’re gonna lose like $8 doing it like, it seems to me like a fairly unnecessary move to be made.

Steve Symington  18:37

Yeah, I think. Yeah, it’s definitely a shot at Amazon. You know, they’re looking for that two hour delivery. And they’re trying to it’s it’s sort of one of those those weird flexes. And so it’s like, Did you really need that to flex that? Did you have to do that. But I think they they decided that the benefits again, in this case of dropping the 35 minimum dollar purchase for two hour delivery outweighs the possibility that someone might want to alternatively get something like that from Amazon. So Walmart and Amazon are in this battle. I think people actually generally underestimate Walmart’s capabilities relative to what Amazon can offer because they think well, Amazon is this powerhouse in delivering and Walmart’s they’re so big, but

Dan Kline  19:20

yeah, well, Walmart’s not there yet. They’ve done a great job on the fly building this out. But the reality is Walmart’s still using 170,000 human people to fill these orders. That is not cost effective. What this is good for is it’s really good for consumers, as investors, there is going to be an expense drag on both of these companies and to a lesser extent, target based on this sort of, well, if you do this, we do that and that’s going to be good for their infrastructure that’s never going to end but at some point, well we can’t have instant delivery. So you know until you have Star Trek being able to beam things to people to our delivery might become one hour delivery, but that’s probably Probably the end of it. Let’s stay in retail.

This is what I really liked Steve Nordstrom, that is not a company we talk about much No, Nordstrom was a struggling high end retailer that caters to older people I think it’s probably fair to say, but, you know, you know, that’s a shop like my mom would talk about. Not really, that’s a terrible example. But like it’s more of a high end store than you and I might go into to buy a pair of jeans or sneakers or whatever it is, but they’re bringing in a store within a store concept for tonal tonal is a sort of a cross between Mirror and a Bowflex. It has it’s like a big screen mounted on your wall that also has the the exercise equipment built in it. And it can track your workout. It’s you know, so it’s part eloton it’s part it’s part directed workout. I think it’s a really cool product. And I wasn’t going to spend 20 $500 on one I’m not going to spend 20 $500 one because I live 30 yards from a gym. But if I didn’t, I might but I wouldn’t do it without seeing it. I think this is actually a pretty brilliant deal for Nordstrom to bring in some new clientele

Steve Symington  21:02

Sure.

I don’t live 30 yards from the gym and I’m not buying a tunnel, but hey, maybe they can I’m also not going to a Nordstrom anytime soon. So, you know, maybe maybe it’ll sell I’m kind of missed on this whole thing. Like I I honestly think a year from now we’re not going to be saying you know, Nordstrom in total maybe won’t be saying this is a transformative deal. You know, so they can they can maybe it’s bringing people but definitely

Dan Kline  21:33

definitely not a transformative deal. But you got to look at this in steps when BestBuy began its transformation and they first said, well let’s have a Microsoft Store. I don’t know what store was first and Best Buy. And then eventually a massive part of the Best Buy business became the store within a stores. If this becomes Okay, a month from now, Nordstrom announces Warby Parker is going into their stores or untuckit or whatever it is, yeah, a sudden they could use digital brands to transform Nordstrom and there is an opportunity for this because a lot of these online only retailers who are looking at brick and mortar are a little bit wary about their investment there.

So taking 50 square feet and a Nordstrom that you probably have a relatively short term deal is a much smaller bet than putting a peloton store in a mall and having to sign a lease though lease terms have been more flexible. Steve, let’s stay retail. So have you ever done an Amazon return at Kohl’s because Kohl’s says it’s driven 2 million customers to them. And it’s really the first good news we’ve heard out of Kohl’s in a very long time. Yeah,

Steve Symington  22:37

I have several actually. I like, you know, whenever I need to return something, it’s a lot easier just to go there. And, you know, throw my box back at me and be like, I don’t want this like so they’ll think of the packaging. And it’s kind of handy though. And I can confidently say I probably wouldn’t set foot otherwise. And I have browsed around a little bit so good for them. You know?

Dan Kline  23:00

Has it led to a purchase because we’re down at Kohl’s despite them being in a better financial position.

Steve Symington  23:06

I think actually once it did because I walked by there you know they make you walk all the way through the store to get you know sort of like back into the left and and Oh yeah, the Amazon You know, I’m like I know what you’re doing guys you making me walk by all your your little end cap everything and I was like oh yeah, that’s pretty good shoe selection. We’ve got kids and and yeah, we’ve picked up some shoes from them. So so absolutely has so good move for them. And you know whether it’s a giant headache for the person who has to sit there and accept Amazon deliveries all day, I don’t know. But I do think it was a actually sort of a low key brilliant move to bring people in and it sort of accomplished what they’re hoping it would I still

Dan Kline  23:43

question it but it’s the first time Cole’s has seemed hopeful. And I will move them from a I slightly don’t think they’re gonna make it to I slightly think they might make it

Steve Symington  23:54

you’ve gone from a frown emoji to a grimace emoji I think like

Dan Kline  23:57

I I think and you know, personally, I’m trying to go to a, you know that this guy emoji from being grimace? That’s, that is the transformation. We are going for target earnings. They were blockbuster sales were up 21%. But that’s not the interesting part. Steve. Yeah, this CEO of Brian Cornell said that this isn’t a one time thing. This isn’t a pandemic change. That seems to me very bold. Do you see that target has somehow become this much more popular with customers or a lot of it was that we’re going to places that are convenient and easy during a pandemic? Well,

Steve Symington  24:35

I honestly think they they did when they they want a lot of clout from customers who sort of relied on them for a lot of things during the pandemic. They did a really good job at it still bringing in traffic during it and now we’re seeing sort of a follow on effect from people who really enjoy their retail experience and I mean, I can probably Yeah, I can confidently say our family is probably a full percentage point of their sales growth. It was, I was like, I’m going to target I’m like,

Okay, I’m gonna go talk to the loan guy like this. She it’s it’s a fantastic concept. And you know that people spend a lot of time in these stores. And it’s, they’ve done a fantastic job, really honing the experience and bringing people back in for more. And you know, their their red card options and the Starbucks kind of built in and, you know, the you can kind of get most of what you want and avoid trips to other stores in the process at Target and a lot of their store specific brands, no target exclusives,

Dan Kline 25:42

owned and operated brands is the way to put

Steve Symington  25:44

it. Yeah, there you go. And then it’s actually a high quality merchandise that people like to go back for and can’t find anywhere else. And I think they’ve done an admirable job. And I don’t think it’s as bold as people think, to say that their strength will be sustainable. Even after the pandemic ends. It was pretty impressive business here.

Dan Kline  26:02

I think they’re overstating it a little bit. I do think they’ve gained some customers, their business is better. But a lot of target shopping right now not a lot. But some of target shopping right now is because it’s easier to go into target than a smaller store. Target has always been entertainment in my household, we have always on a do nothing Saturday, God, hey, you want to go walk around target, and we’ll buy a few things I live, as we’ve talked about on the show many times I know I know live four tenths of a mile from a target. As soon as this show is over, I’m going to change shirts and walk to target and go. So so it’s it’s, you know, it’s definitely a company I believe in. But I do think as investors be a little bit wary next year, that you’re gonna see some same store sales declines, you’re gonna see some stores, and you really need to look at two years ago, you know, Domino’s is a really solid company. And a lot of people for financial and convenience reasons have been ordering pizza, that might be more pizza than they normally order. I know that the Chinese place we normally order from is selectively closed a lot, maybe like two thirds of the time. They’re they’re picking and choosing when they operate. So we’re ordering other things, that pattern will change if the Chinese plays reopens. And that was probably a twice a month for us, as opposed to now being an Oh, good. They’re open, we’ll get it. So I do think be a little bit wary of targets. Optimism here, Steve, we got two more we’re gonna do. And I’m gonna let you

Steve Symington  27:24

like to hear question from if you could bring that up from Kevin acmarket. Absolutely. He said that the demo demographic changes is what is referring to a target which will be interesting filled with teenagers, young families like them all. I agree with that as well. That’s been really interesting. Sakhalin there, there’s a lot of young people,

Dan Kline  27:41

and I think that’s a change. I feel like that’s always been the target audience.

Steve Symington  27:45

You know, yeah, I feel like there, it’s more so than usual. Every time I go in there, you have kids, you know, groups of kids walking around. And and I noticed that the last couple times I was in was that it wasn’t so much, you know, kids being dragged to the toy section, or kids dragging their parents to the toy section. It was actually, you know, kids kind of browsing around teenagers who can rather themselves. So it will be really interesting to watch whether this is overstated. So,

Dan Kline  28:15

I’ve seen I’ve seen no shortage of the normal teenagers at my mall. So we know we still go to the mall somewhat regularly. And I do feel like it is still a Hangout I we talk a lot about mall traffic, and it’s one of my pet peeve things. I’ve brought it up many times.

Steve Symington  28:31

There is no you’re just getting older Steve. Right.

Dan Kline  28:37

Can I show that one as well? Oop, did I not? I made it disappear? It’s Yeah, we are getting older. And I think I think I’m more aware of how many people are in the mall with no intention of purchasing anything beyond maybe like a pretzel or something at the food court later. I think that is something and I our very own Maxx Chatsko chairs. I don’t know, I could see Steve dragging his kids to the toy section. Yes. I’m probably way more into Star Wars toys than my son is though. He can always be diverted to the nerf section. But see, we’re running out of time here. So let’s talk Roku. Roku has been making major moves in the advertising space. This is an ad driven company as much as we think of it as a hardware driven company. And they just bought an ad unit from Nielsen. Why don’t you tell the seven investing audience sort of what this means. So

Steve Symington  29:29

They bought Nielsen’s advanced video advertising unit. And what this is really going to do for them is give them the capability to handle dynamic ad insertion. So da II then amicably inserted ads, where they kind of know the the content that’s flowing through their pipeline, and they can give advertisers the option of serving up a more relevant ad that might have better ability to actually convert to something and you know, and something that advertisers would be willing to pay a little bit extra

For So, you know, their their automatic content recognition tools will come under ROIC, whose roof they’ll be able to really give them some really compelling options for advertisers. So this this should be, I mean, it’s a great move by Roku and and how it actually whether it represents a threat to some of the other companies in the space like The Trade Desk and Meg Knight and, you know, specifically kind of remains to be seen, we’ve already seen some competition with between Roku and the trade desk specifically, because they acquired a company called “Data zoo,” and turned it into Roku one view. So you have these sort of sell side platforms for getting advertisers the best bang for their buck, programmatic ads, Roku kind of wants to do everything itself, you were talking about that a little before the call, I’d love to hear kind of what you think of this specific deal. Yeah,

Dan Kline  30:56

I think this is Roku following the Facebook model. I think Roku wants to be able to sell you the ad, have it all be self serve, and target the ad as best as possible. We all know this is not a great experience, like I have a TiVo. And when you play something in your TiVo archive, it gives you a 30 second commercial, you can skip it if you want, but it gives you a 32nd commercial. And it’s in theory targeted, it is never in practicality, this has been my experience.

So Roku is going to get better and better at this. And it’s going to make them more of a Facebook competitor where they can go and say, Hey, small business, like I can give you pizza place people who live within two miles of your restaurant that are interested in pizza. And that’s going to be a very, very long road to get there, that’s going to take a few years. At first, it’s going to be Hey, you watched a minimal rerun on the Roku channel. You might also like the A t like, you know, it’s not going to be that specific.

But the more of this, they control sort of the bigger piece of it. And this is going to be good for consumers, it’s also going to be good for advertisers. Because if you don’t have a middleman in there, the advertiser will pay less, the consumer will get something that makes more sense for them. So again, I like the direction I think the reality of this is going to take a while. But Steve, one last story before we we take some questions, then we’re going to talk a little bit about seven investing. And then we’re going to talk about one of my favorite personal finance stories where people are wasting money, but a Square has launched a bank, I didn’t know square wasn’t a bank, what does it mean that now that square is a bank.

Dan Kline  32:31

So it’s,

Steve Symington  32:34

it is it’s gonna be headquartered in Utah, it’s gonna offer business loan and deposit products. So, you know, I visited square headquarters a couple of years ago, and they were talking about how they wanted to kind of be this this leader in these small loans that they wanted to offer people This will make it easier. You know, they’ll kind of originate loans for squares, capital, or square capitals, existing lending products. So this will help facilitate this. You know, it’s, it’s a good move. And, you know, it’ll, it’ll continue to sell loans to third party investors and limit balance sheet exposure, doesn’t expect to really have a material impact to its balance sheet, or revenue. Gross profit, adjusted EBITDA in 2021. But really, it’s just a signal for squares, broader ambitions to be sort of a one stop shop, in the financial space and in payments. And, you know, that’s it’s a fantastic move for the long term, even though it may not have really any big impact on its financials in the near term.

Dan Kline  33:37

Yeah, they’ve said, it’s not going to have a material impact. I just think it gives them optionality, they’re still going to use outside banks, they’re not going to take the balance sheet risk of everything being alone, they do. This is just another tool in their arsenal. And I think it’s a smart play. It’s not easy to become a bank. I know, Steve, if you want to become a bank, that’s gonna take years, not not weeks, not months, there’s a lot of regulatory concern. Yeah. That being said, we have gone through a ton of stories here. We’re going to take a few of your questions, if you want to get questions and comments, and we will do some questions. Now. We will also do some questions at the end of the show.

But Steve, before we do that, it’s a couple of days after the first of the month, you you had a busy, busy weekend. Why don’t you tell the audience that’s watching sort of what happens at seven investing on the first of the month? I

Steve Symington  34:25

t’s, yeah, it’s, always a little crazy, toward the end of the month and right afterward, because we offer our top seven stock ideas to subscribers every month, for $49 a month or $399 a year that basically it’s a couple months free if you go with the annual option. But we that’s what we do. We pick stocks for people and we transparently track them with real money positions in a recommendations table that people can click on your reports.

See the performance of the stocks in real time. And every month we offer seven new recommendations up to subscribers, and you got to 7investing.com forward slash subscribe to take a look at what we have to offer. And you also get access to us. We love talking with subscribers and answering your specific questions about our recommendations. So that’s part of the fun. We’re a small team. And, you know, even though it tends to be very busy for us, and you might get emails from us at 10pm, or something, when I’m digging through something, if you sent me, it’s, it’s a blast, and we really can’t express our support or our appreciation enough for the support of people syncing them to Europe.

Dan Kline  35:35

It’s an amazing value. We’re going to talk more about our anniversary with Simon Erickson on Friday’s show, I think Matt Cochrane is going to join us for that as well. But I can say the value is incredible. I use our picks, like I am a professional stock picker, and I use the seven investing service for a decent part of my portfolio for of the new money I’m investing, because it’s such a diverse team just just so much going on. But that being said, Steve, we’re gonna move from stocks into personal finance. And I had a tweet go viral that this has been seen by about 90,000 people at this point, which is pretty exciting. And I, I basically asked on Twitter, what’s the dumbest thing people spend a lot of money on.

My suggestion was, and this is not about my personal situation, because I had a lovely wedding that that my mother my father through and it was it worked out. We’ve been married for 20 years. But I think for most people a wedding is really a bad idea. Because it comes at a time of life. Now we already owned a home, we were already a little bit established. For a lot of people, it comes at a time when you’d be better off putting a down payment on the house, you’d be better off paying down student debt. And really, I kind of feel like we should celebrate like our 10 year anniversary, not are getting married, zz staying married is is the challenging thing. But Steve, let me ask you, is there any area in your life where you know, you’re consistently wasting money, and you do it anyway?

Steve Symington  36:58

Um, you know, not so much probably eating out is one of those areas that we probably spent too much money on every month, and maybe we don’t look at our budget as closely as we should. But that’s one of those areas that I’m not particularly concerned about. There, there are a lot of places that you can, that you can sort of waste money. And like to the wedding idea, I honestly think that’s kind of one of those hard cells because people like I’m doing this once and only once. And

Dan Kline  37:31

statistics would say No, you’re not. Oh,

Steve Symington  37:35

that’s that’s kind of the the tricky part about those those big one time expenses, you know, you could put college up there with that as well, where you know, might be smarter for people to go go to a couple years of community college, and then finish their degree at, you know, wherever they want their diploma to say. But, again, that’s kind of a hard sell. And in retrospect, people say I would have done this differently. But

Dan Kline  38:00

that’s how I’d look at it two ways. I think it’s kind of a value proposition. And there’s people most commonly answered Starbucks or fancy coffee. And here’s the reality, we’re going to talk about this in the finisher, as well. And I forgot to get to your question. So we will get to your questions at the end of the show. So please keep getting your questions and comments in things you’d like us to talk about. They don’t have to be related.

But I will say that for me, when the world is normal, and you can sit in a Starbucks, the ritual of walking or driving to get my cup of coffee, maybe something to eat with it, getting my laptop out doing some work. There’s a lot of joy in that for me, even after the show, to walk over to target, get my iced coffee and walk right back home with it. I’m going to enjoy that very much. So now if it’s just a ritual, and you don’t enjoy it, or just a rote thing you do and you’d be just as happy with the coffee in your your house or your office place, then it is a waste of money.

But you know, if you’re doing something like I have Disney passes, which are most people would consider, that’s a waste of money. Like why, you know, you’re gonna spend between my son and I was like going to 1213 $100 a year on on annual passes to Disney as well. We went 2530 times last year. And there’s a lot of fun to it. There’s a lot of stress removed, when you don’t have to say I’m only going a certain amount of times per year. So I think that’s the reality of all of these personal finance areas.

But Steve, let’s share some ideas where people you know, could maybe still get what they want, but cut some corners, I’ll throw one out buying a car. We talked about this in the early part of the show. I have never purchased a new car. I always buy a used car. In fact, this time, I traded in a 2016 Nissan for a 2014 Toyota and I did all my homework on that but one carvanha does an excellent job. The car looks like nearly new, but I got a car I really wanted with all the features I wanted, and I got it for under $11,000 like whereas a new one would have cost me I don’t somewhere close to 30 What are other areas like that where people can maybe still get what they want and save a little bit of money?

Steve Symington  40:09

phones, you know, new new tech, like a I’ve never been sort of the the guy who wants to have the latest and greatest everything like do you know?

Dan Kline 40:17

You mean like me?

Steve Symington  40:18

Yes. Again in some people take a lot of pleasure in that. And I think there is something to be said for sort of the intangible joy that you get from some of those items on a limited basis. But I don’t mind waiting, you know, a year kind of like, you know, if you waited even a year or two to buy, to let somebody put the first 20,000 miles on a car or something, you know, save yourself 10 or $15,000 in the process, like even if you’re getting an almost new vehicle, you know, and I’ve kind of done the same thing. With vehicles. We traded in my wife’s first car just a couple of years, actually, we donated it to a church. It was a 98 Cavalier or something like that it was so you know, I don’t I don’t mind hanging on to things for a while if it means I don’t have the latest and greatest. But I do. I think there is some some sort of intangible joy that people do need to consider when it comes to little expenses like that. So

Dan Kline  41:14

I think it’s important to go to sort of relative value. So I’ll go back to weddings again. We had a lovely wedding, we got married at the Peabody Essex Museum, it was it was an amazing affair. But if I had been paying it for it myself, Well, a wedding cake is hundreds of dollars should a really nice cake from a bakery isn’t. So isn’t that important to you that your cake be a wedding cake.

If you buy a save the date, through a wedding planner, that’s going to cost you a lot more than going to a stationery store and picking out something you can use or printing your own. There’s a lot of ways you can, I don’t want to say cut corners, but you can do something very, very nice. That sort of outside the system. I know that I just booked travel for the summer. And I did it on Priceline. And for me, I always start at Priceline, like one your deals get better, the more you shop there. And it was frustrating because where I wanted to go in Key West.

As soon as I tried to book something it was gone, like the area is that there’s been a run on travel. So it took me a while but I paid about a third the price I would have paid had I gone to another travel site or to where I booked website directly. So I do think no matter how much money you have, you really need to focus on what your purchases are. I know during the pandemic we’ve been ordering you know, gold belly and butcher box and, and things that are really, really convenient and go belly admittedly, there was a really good deal from American Express. So I got a basically 50% off. I’m not gonna do that post pandemic, when I could go to the little grocery stores and butcher shops and places that I like. So I don’t think any spending is inherently wasteful. If it brings you that amount of joy. If If your wedding or your dream vacation or your cup of coffee, is that important to you? You need to rank it. But you also need to give up like I’m getting my cup of coffee, but I’m not driving a 2021 car. Steve, I’ll give you the last word on this one.

Steve Symington  43:09

Yeah, actually, our friend max Lucas brings up an excellent point, if you wouldn’t mind bringing up his comment. He says after reviewing a ton of people’s financials at a bank, I can tell you the biggest mistakes people make are living above their means the amount of credit card debt I see is extraordinary. That is a fantastic point one of the people waste a lot of money is credit card interest. You don’t realize you know when you’re even if you have a really you know, card with attractive terms and attractive when I say that, I mean something like 14% 15% interest or something might be a good rate on a credit

Dan Kline  43:45

That’s not even an attractive term from a guy who will break your legs.

Steve Symington  43:49

The trouble is, you know, when you have a ton of credit card debt that’s accruing interest at extraordinary rates higher than you might reasonably able to be able to expect each year even in the stock market. That’s something that you should a pay down and be avoid running back up again. living well within your means not spending money that you don’t have, I think is something that you know, on a on a broader basis is a fantastic way to avoid wasting money and accruing interest on on credit card purchases because that purchase you know whether you needed it right away or not, or whether you waited maybe a month or two to kind of save up for it ends up being a whole lot more expensive than you think when it’s accruing interest in a cart. So, definitely a fantastic point for Maxx.

Dan Kline  44:34

It’s also really important when you talk about living within your means to make big purchases really thoughtfully so we talked about cars, but the biggest purchase most people make is a home and I know that I’ve always been pretty cautious when it came to homes and buying towards the end of what we could spend. Now the problem is that’s great. If what you’re buying is going to be just enough for a long time. I can think of one home we purchased that we only stayed in for A few years because yes, it was inexpensive, but it wasn’t really enough home for us. And we kind of needed to move on relatively quickly. And we did so during the housing crash. And it wasn’t pretty and it was sort of difficult to sell the home. But that being said, you know, since then we’ve moved very thoughtfully. When we moved to West Palm Beach, we thought a lot about how much room Do we need, and can the outside be part of our living area, but I don’t mean our deck, I mean, the the city and pre pandemic that worked really well, once the pandemic hit three of us at a 1300 square foot home didn’t make that much sense. So we made some changes when it comes to credit cards, your credit cards are for emergencies, your refrigerator breaks, and you can’t afford a new one. Well, that is something you should charge because you need a refrigerator. And even if you have to pay that off, now look to see if there are better terms, maybe Best Buy, I’ll give you 0% financing. Credit cards are also for purchases with rewards cards that you can pay off before you pay the interest. So I know I use my credit cards for absolutely everything. And then I pay that bill, if not on a daily basis, at least on a monthly basis. Many of my credit cards, just let me go in and immediately just pay the bill. And I do that because I want those travel points. I want those rewards dollars, every purchase I make on Amazon goes on an Amazon credit card, and it’s a 5% bonus, but I pay that credit card off, I don’t pay interest charges. So that’s an area where if you can be disciplined, you can do really, really well with credit cards. And that also really helps your credit. The more you pay off your cards, the more credit card companies will increase your limits.

When your limit goes up your utilization rate. If you’re you are using some of your credit, that will go down. I know at points we’ve had a balance because we had a 0%. Like when we redid our floors, we had a 0% 18 month financing, and I just set it to auto pay in 17 months. So you know paid some every month why not take a free loan, but that does up my utilization. So the more credit you have, the better. But Steve, I see a lot of questions here. And they’re all on a very similar theme. And I’m going to share just a couple of them. So this one is hi all is Palantir bottoming I tend to think so. And then Tucker 4151. And I can’t see the names, they block out on my screen while I control the

Dan Kline 47:19

session. And he says can you explain lemonade after earnings? And Steve? I don’t want to explain any of these companies. What is Palantir bottoming out?

Steve Symington  47:27

Oh, yeah, that’s uh, so I mean, I can I can speak to those a little bit. And, but Palantir, I

Dan Kline  47:36

just didn’t like you to speak to sort of the philosophy of long term investing more saying,

Steve Symington  47:42

the thing that we need to talk about is, is the fact that we don’t try and time market entries, you know, we do provide our recommendations on a monthly basis when we think the stock is trading at a relatively attractive valuation, relative to its long term prospects. So that’s something we really need to think about. Don’t try and time so much the bottom or top of stocks in that sense. And, you know, there’s an argument argument to be made that, you know, companies like Palantir have been hit hard. And, and potentially the stock could be attractive for long term investors. You know, especially given really, really sharp pullbacks, but it’s really hard to tell how far they’re going to go. And I think the the better idea is to buy companies like this on, you know, if you’re interested in buying a particular stock, don’t be afraid to dollar cost average your way in, don’t, you know, say, all right, I’ve got $1,000, I’m gonna put it all in at this time, because I think it’s a good deal, I think I’m going to time the bottom. And then you know, it falls 13% more or something. And you know, people panic, because they see the value of their investment declining, you should think of this as owning a piece of a business. And I think that’s key is, is say, if you were to buy a piece of this business, would you be comfortable owning part of that, and holding on to it for years at a time? And if the answer is yes, and you think that this business is going to be a much larger business years from now, then we’ll consider opening it up. And maybe don’t put all your money to work at once you don’t buy it in thirds or quarters or something. But that’s kind of how we need to think about this. We’re long term oriented investors, we don’t try to time tops and bottoms or trade around earnings, we say, you know, we like this company, now. We’re buying it, we’re holding it, and we think that its value will go up in time.

Dan Kline  49:27

So let me talk a little bit about lemonade. You know, my wife and I both got a 10 year insurance policies through lemonade within the last week or so. But they’re trying to disrupt an industry that’s been around for hundreds of years, when the earnings report, he’s not that relevant. Now. If you go to the earnings call, and they tell you hey, we thought consumers were going to like this and they don’t. Well, that would be different. They did not say that. But really the story for lemonade isn’t going to be about quarter to quarter. It’s going to be about whether the market accepts this as a way of buying insurance that’s important, and to whether the risk portfolio of selling insurance without a medical exam proves to be a good one, you’re not going to know that answer for at least you know, five or six years until you start seeing, oh, was there AI wrong, and they were selling these too low and more people are dying, or maybe their AI was great. And they can actually start lowering prices in selective places.

So this is not a company. And there are other companies being asked about, there’s probably 10 questions on the list here about specific companies. And for the most part, you know, it’s really encouraging when say, a target comes out and says, are a cold, which both did we fundamentally think we have more customers? And here are the reasons because that gives you a baseline to track? Is that true? Do they have more customers? Will that play out a year from now I think that’s really interesting. But I don’t really put a lot of stock in in any of the short term news. And if you’re a member, I wrote a piece this morning talking about one of my picks, but mostly talking about how it was 20% up and 20% down in the same day more than once in the past few months.

And that doesn’t matter because it doesn’t change the long term thesis. Steve, this has been fun. We are nearing the end here. We’re gonna hit our finisher. I think I know how to bring this up. This was related to what we’ve been talking about for the last little while. What area Do you think people waste the most money on? 34 and a half percent said fancy coffee 27.3 said new phones 31.3% close and 7% said travel? Steve, is there one there where you think people are wasting money more often than not? Um,

Steve Symington  51:45

that I guess I would have said new phones on that one. I don’t mind my fancy coffee and clothes are necessary, but they can be wasteful depending on which ones you buy. But you know, maybe there’s an argument for higher quality clothes like shoes, for example, like I love decent shoes that lasts me 567 years instead of buying a pair every you know, two pairs every year. But travel maybe not so much right now.

Dan Kline  52:11

No, not not not so much right now. I think people are largely wasteful on clothes. Because if you plan ahead with clothes, like you know, you and I own two suits, maybe three, you probably own a similar amount. Yep. If you buy a suit, because the suit is well priced. Knowing you will need a suit for various things in the future. That makes a lot more sense than a credit. I got that wedding coming up in a month I’m gonna go buy a suit. I tend to plan clothes, and I only wear like three things. So I’m not a great example.

Same thing with sneakers. You mentioned having good shoes, I really hard on shoes, I walk a ton. I until recently live downtown. So I go through maybe two or three pairs of fairly expensive, I tend to wear New Balance shoes. So every time I’m at the outlet mall, I’ll take a look at the ones I like. And if they happen to be 149 instead of, you know, 189 it is very possible. I might go with that. I also think I also think travel is an area where people aren’t selective enough. In the days of travel agents, you had advocates who were sort of, you know, working for you and going out there trying to get you the best deal possible.

Think right now you need to do a lot of that yourself. I see a question that Chris Morley says this reminds me of the vines. Boot theory, Chris. I don’t know that theory. So Chris is a longtime friend. So if you want to share, we’re on for another minute or two. If you want to share what that is, we are more than happy to talk about it. But I actually think with all spending, you need to really think about like, is this a smart choice for me? Now, I got to a point where a cup of coffee no matter how often I have one is not going to impact my finances.

I don’t care if you say well, you’re spending $7 a day, you could have put an extra $50 in the market, I could put an extra $50 in the market if I want to. I’m lucky I’ve gotten to a point where things are reasonably stable. There were points where my wife and I wouldn’t necessarily buy lunch without discussing with each other. We know what we were you know what we were doing,

Chris, I appreciate you getting that that to me, but I don’t actually think that helps. Steve. Steve, if you know the answer, feel free to raise your hand and jump in but message me privately and we will talk about this on a future show. I think with any spending, you should be looking for the best deal possible. You should also be thinking does this matter? So I mentioned booking The Key West. in Key West the number one thing that matters is location. So as long as you have a safe hotel room, I knew on this trip I wanted location and I wanted a pool because our mutual friend who is visiting with his family is renting an Airbnb and won’t have a pool and I’ll have his kids at some points. So I’d like to have a pool. So I found the cheapest combination of those things. I think that is a great personal finance lesson to keep but with that we are just about out of time. Steve, if people want to send us an email, where can they do that? And what should they email us about?

Steve Symington  55:05

Sure. info@seveninvesting.com generally need, it’s going to be answering that email at all wild hours. So, you know, you can ask us questions. You know, our subscribers, we answer questions about investing in general and a lot of the specific companies that we see, you know, there’s a lot of questions that are coming in about very specific companies, several of them may or may not be formal, seven investing recommendations. And, you know, a lot of times you go to the our research portal, on the site, look at our company updates, you will find company updates that we have written for our recommendations on any material news.

So look there if you’re a 7investing subscriber, but we also talked about, you know, specific companies or any questions about our service, or if you have any, any thoughts that you’d like to share feedback about our site? Send them info@seven investing.com we’re happy to answer that. And then

Dan Kline  55:57

Steven a broader sense people can get, they can interact with us on Twitter, I was really excited that that that whole last segment was literally based on a Twitter post that hundreds of people liked and commented on. And it’s always exciting for me when that happens, but if they want to talk to any of us at seven investing, they can reach us at seven investing, we make that very simple. That’s the number seven and investing. And Steve, before we go, we do actually have an explanation from my friend Chris.

Steve Symington  56:24

I did read it up to

Dan Kline  56:26

what why don’t you read it out loud and and we can explain it to people

Steve Symington  56:29

basically says rich people stay rich by buying things that lasts while poor people are forced to buy cheaper things causing rebuys often poor people end up spending more money over time. And yeah, that that goes for like good work boots, or like I was mentioning good shoes. That’s exactly it. So yeah, good, good. analogy there. And really, it’s it’s one of those things where you buy something that’s higher quality. And you know, I buy a pair of shoes that lasts me 5678 years, rather than buying two pairs of shoes every year, because they wear out or they’re you know, uncomfortable or whatever. You know, so yeah, that’s, that’s kind of a troublesome thing I guess you run into is if you’re able to rich, rich folks is the idea for work boots, or whatever it is that lasts. So

Dan Kline  57:15

you see it sort of personified if you visit $1. General, right, Dollar General sells like half rolls of toilet paper. So if you’re really tight, and you need a half roll of toilet paper, well, you probably want to buy toilet paper, but I guarantee that half roll compared to buying a 20 packet at Publix or your Sam’s Club or Costco or Target or wherever is a bad value. Well take that and multiply it across everything you buy. And you can see why not being able to make the good choice. Now of course, it could also lead to you know, buying in better quantities can also lead to waste and other problems. But yeah, me being able to buy $200 sneakers that are going to last me for six months, as opposed to going to target and buying $30 sneakers that are going to wear out, you know in a month, that might be a better value. We’re going to take one last comment and Steve is this one principle before I put it up there it is it’s fun. From our very own Maxx Chatsko. And because they don’t make shoes and Steve sighs every year see

Steve Symington  58:17

actually makes a for being a large person. He says Look how small the door looks when I get up. But yes, I’m not a small person.

Dan Kline  58:24

Yes, Steve is actually his size is actually Chewbacca that’s the there’s just a big picture of chewy on the side of the sneakers. Or Or he actually has to buy us sneakers. It’s just a Slack channel with Steve and Shaq like just the two of them back and forth. We are being silly here. We appreciate so many of you watching. I think I know how to end the show. If I do not that we’re just going to turn it off and slink away but uh, Steve, this has been fun and we did this with our producer Sam Bailey, but so many of you watch today. We will be back on Friday.