What We’ve Learned from the Pandemic Stock Market Crash One-Year Later - 7investing 7investing
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What We’ve Learned from the Pandemic Stock Market Crash One-Year Later

It’s hard to imagine that Tuesday marked one year since the stock market crashed as the impact of the coronavirus first became evident. It was a short-lived drop as markets recovered quickly and some stocks even soared to new heights. We’ll look back at the wild ride of the past year and peak into the future as vaccines make it seem possible that the pandemic will soon be something that’s an unpleasant memory, not something that shapes our world.

March 17, 2021

It’s hard to imagine that Tuesday marked one year since the stock market crashed as the impact of the coronavirus first became evident. It was a short-lived drop as markets recovered quickly and some stocks even soared to new heights. We’ll look back at the wild ride of the past year and peak into the future as vaccines make it seem possible that the pandemic will soon be something that’s an unpleasant memory, not something that shapes our world.


Samantha Bailey  0:00

Welcome to 7invesing Now, the program that teaches you how to take a long term view on investing by better understanding what’s happening in the market now.

Dan Kline  0:09

Good afternoon 7-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 I’m being joined today by Steve Symington, Steve.. Do you know what today is? Today is a special day.

Steve Symington  0:23

Do I know it today is is it the the anniversary of some horrible stock market crash

Dan Kline  0:30

is that and that will be our lead topic, but it is. It is a couple of things and it’s St. Patrick’s Day. It is Manisha Samy’s birthday, our very own Manisha Samy. It is her birthday. And Steve just disappeared. That’s not good. So it’s up. it steams back hopefully here. Hopefully, it is Manisha Samy, his birthday. It is St. Patrick’s Day. It is our friend and former colleague Gaby Lapera’s birthday. So it is a day we’ll be drinking green beer, we’ll be eating empanadas. Gabby’s mother is a fabulous cook.

So I’ll try to recreate something and her autumn will be drinking seltzer water for Manisha whatever it is, all of those things will be happening. But first, we’re going to talk about the sad anniversary of the pandemic. And let me let me give you some perspective on this on the pandemic, when things first shut down in mid March last year, I started stress booking travel. And at first it was like, well, it’s March, a book some things for like August. And so I booked a couple of cruises August, September, but then I booked one for my birthday in October.

And I’m like, well, there’s no way this won’t happen. And of course, it did not happen. How did you approach it? Steve, did you enlarge have the idea that it was going to go on for this long? And Steve is again disappearing? We there he is he’s back? We don’t know technically what is going on here. We’re going to see how did you approach the beginning of the pandemic? Did you ever think it would go on for a year?

Steve Symington  1:53

And no. To my wife’s credit, she she feared it would and I was like, yeah, it’d be fine this summer should be pretty much normal. And, and I’m a perennial optimist. So I think that’s kind of how it functioned. But you know, we ended up canceling a couple trips ourselves. And, and, yeah, it was sort of stunning. That, that it lasted as long as did from my perspective, but live and learn, right?

Dan Kline  2:20

So we’re starting to come out of the pandemic, this felt like a good time to look back on the topsy turvy stock market. Let’s give a little bit of perspective here. It’s one year ago, Tuesday, the stock market dropped 12% in a single day. Steve, that’s scary, but it is actually fairly typical. Right.

Steve Symington  2:38

Right. It’s, it’s one of those things that people don’t realize kind of how normal Well, I mean, that drop was was substantial. Right? It was

Dan Kline  2:49

I think the second biggest percentage loss since World War II.

Steve Symington  2:52

Yeah. So I mean, it felt terrifying at the time for a lot of people. But it was also one of those things where, where I was stepping out. And I was I remember actually looking at my phone because I was on a walk. And we were visiting some friends out of town. And I was like, Oh my goodness. And that was like a kid in a candy store. Looking You know, I’m pulling up my watch list trying to figure out what I wanted to buy at a discount and, and so I mean, it felt terrifying, but we need to recognize is patient long term investors that those are the times when really fortunes are made and your your substantial amount of returns are driven. So it’s just a fantastic time, most of the time to buy because they tend to end of being temporary.

Dan Kline  3:37

Steve, when this happened, and it was very temporary. We’ll talk about that in a second. It was also the biggest drop for the NASDAQ ever 12.3%. But what happened is and it’s pretty logical people went there’s a pandemic is this going to devastate restaurants and travel and all these other things. And it did it did devastate those things.

What it didn’t do is change the long term view for most companies, obviously, someone out of business, some change, but the reality is, there was a bounce back pretty quickly. The example I’ll give, Starbucks took a really big hit at the beginning of this, they had to close all their stores that were open for drive thru, they had to pivot to do pickup and delivery in some locations. But they had that infrastructure in place. So relatively quickly, they were back to about 70% of their sales and all things considered, that’s pretty strong. Some companies even recovered more fully, but the biggest thing we saw here, Steve, was an acceleration of the model for some of these tech companies. Can you explain a little bit about what happened there? And then we’ll talk a little bit of Amazon and teladoc because

Steve Symington  4:39

I know the the big thing that we saw was, you know I guess a lot of companies ended up sort of testing their mettle and and we got to see how they responded to big pullbacks like that. So it was one of those things where a lot of high growth kind of tech companies became higher growth tech companies as their stories were accelerating. By the pandemic.

So it was, it was interesting to watch because we we had a lot of businesses whose growth stories wouldn’t play out, eventually, they just played out or came to fruition rather a lot more quickly than we had anticipated happening in the first place. So we had a lot of things push forward and a lot of valuations really kind of stretched in the process. But, you know, there’s there’s an argument to be made that some of those were justified as their stories were accelerated. And, and that’s kind of what we did all of last year at seven investing was we’re searching for, and monitoring these kinds of companies.

Dan Kline  5:36

There’s also a lot of call it emotional based trading. People are are looking at a news story, and they’re buying and selling very quickly. Based on that news story. I’ll give an example because Tella doc is down quite a bit today. And the reason for that is Amazon, obviously you don’t want to compete with Amazon. they’ve expanded their Amazon Care Health Care Program, which is a tele small t medicine program that they’ve made available to some employees, they’re expanding that to all employees, and there is the theory that they will expand that to the general public at some point in the future.

Steve, I think there’s a ton of room to disrupt traditional health care I, I used a telemedicine appointment through our healthcare, my son had a horrible allergic reaction, being outside this weekend, needed some eyedrops, got it in about 20 minutes picked it up 30 minutes later, at a 24 hour pharmacy great experience, but I have no idea of teladoc powered it. Do you think Amazon entering the space is a potential disrupter to tell Doc, I actually think it is because I’m not sure you care if you’re on a teladoc platform. Or if you’re on an Amazon platform where you already probably are for so many things.

Steve Symington  6:41

Right? I don’t think I think it will be sort of a potential disrupter. But I also think there’s room for multiple winners in the space. It’s so big, the markets that they’re chasing, so I’m not sure you could say like, Oh my gosh, tell it x, you know, teladoc growth story has changed that its thesis has been disrupted if you’re already bullish. The and I think it is more than a theory. You know, if you’re looking at it, different enterprise customers, actually, the the manager of the Amazon care which it launched his pilot program a couple of years ago, she’s actually said, you know, Amazon benefits is the primary enterprise customer that we’re catering to, right. So they sort of think of themselves as different companies within this giant company, even though they’re all sort of under under the same publicly traded umbrella. And they do realize that a lot of big enterprise customers needs for telehealth are very much the same. And they could scale this. And it really disrupt a lot of companies in the process, particularly teladoc, which is why shares are trading lower. But I don’t think this is a thesis buster.

Dan Kline  7:48

I think it’s one to be wary of my concern about Teladoc, we’ve talked about this before, is I’m not sure the branding Matters, I’m not sure people are seeking out teladoc, we went through our health insurance now, it was a $55 appointment, it might have actually been cheaper to just go to Teladoc, but then they wouldn’t have had our insurance info. It’s very, very easy. So I do think you’ve got to watch Amazon. But I tend to agree that there are going to be multiple winners here. There’s going to be providers that simply don’t want to be on an Amazon platform. And I think that’s you know, there are privacy concerns our own Maxx Chatsko shared to us on Slack, there might be anti trust concerns. And I agree with that Amazon is facing both rational and irrational regulatory concerns, and I’m not so sure that the federal regulators are going to want them taking over another giant space or even getting a big piece of it. That being said, You’re watching seven investing now we’d love your questions on the pandemic, the stock market where things are, are going where they are, we’re going to talk in the next segment about inflation concerns and the Fed.

And then the third segment, we’re going to talk about Walmart and Dick’s Sporting Goods, making a move into I call it you know, high end clothing, you don’t really think high end clothing when it comes to Walmart. But that being said, Steve, so you have a company a Disney is a great example. Their Disney plus was basically supposed to get to 100 million subscribers by like 2023. And they got there in like a year. Very good are already there. Does that change anything for you about Disney plus, like I just say that accelerated my thesis. So you got some of the stock growth faster. But there’s obviously a long way to go. Is that largely true for these tech companies?

Steve Symington  9:28

I think so. You know, in Disney’s case, for example, when you look at a company, and I think what they were targeting was something like 90 million subscribers by 2024. And that was the point at which they determined that they would most likely be, you know, cashflow positive for the business. So they were planning sort of a relatively rapid scaling, but the pandemic was, I mean by happenstance that they launched Disney+, just a few months before the pandemic hit was maybe the best thing it possibly could have happened to a company like Disney.

And they’re very, you know, sort of pronounced case. But again, a lot of a lot of this has been reflected in in many of these companies share prices. But we also have to keep in mind that, you know, it also improves their financial position and oftentimes their their kind of balance sheet their ability to pull on operating leverage, to to really improve the business and reinvest in other areas of the business more rapidly, or Peniel. Potentially distribute capital to shareholders, no, Disney likes to return, I think at least 20% of cash degenerates to shareholders in the form of dividends and repurchases. So, you know, it does it not only accelerates kind of their their growth story, but massively improves their financial condition, on timetables that they really many of them hadn’t anticipated, when they when they initially had these plans in place, which were all in place before the pandemic happens. So those who were able to capitalize on it, and realize that growth faster than expected are the ones that will really benefit shareholders.

Dan Kline  11:07

I think we learned a lot about management, there are some companies that really struggle to make changes, just the immediate immediately. And this is true of Starbucks is a true McDonald’s Domino’s, a lot of really strong companies, zoom, this is true of zoom, zoom, took all its resources for 90 days early in the pandemic, and took them off development and put them into security because they were growing so quickly. I think what we saw with Disney is it’s not just the trend of streaming that grew, we saw I don’t want to call it the death of theaters, I’m going to say the change of theaters where we’re really only going to go see the biggest movies in theaters, there’s there’s a lot of films that simply don’t, you don’t need to spend $200 million to make the movie and then $200 million to market it.

I think the latest Wonder Woman, which was terrible, is an example of that, where if I paid for that movie, I think it would have died a pretty horrible death. Because I didn’t just another thing I get on on HBO that makes that subscription worth it. And I think that trend has changed. Steve, you’ve been to the movies a few times since since the pandemic, that is that something you’re going to continue to do simply because you have young kids isn’t that it’s an activity. Do you think your habits have changed at all?

Steve Symington  12:18

I mean, not really, I would have gone to more movies obviously had the theaters not been shut down. But it’s also kind of nice right now. We went through I think it was Raya, the Last Dragon when it came out. The the new Disney Studios animation film, and the theaters were at 40% capacity, and they kind of change the way you order. So there weren’t people walking in and out of the theater. And it was a nice experience. But as a parent with kids, I’m gonna bring them to certain movies when, when we’re able and when the movies worth it. And you know, as an adult who’s a fan of, you know, Marvel franchises and Star Wars and stuff, sure, I’ll go to those movies. But I really hasn’t changed the way I approached it short of maybe preventing me from going and seeing movies that would have come out that didn’t blackwidow, for example, and in other movies that I would have been in the theaters for

Dan Kline  13:09

I’m not sure I would have gone to the movies because I live in Florida. And there are no rules here. So while I do believe and see. And that, which is the local movie company is following procedures and guidelines, things do tend to be a bit lacks a lot of places here. So I would be wary of that. That said, Steve, I saw the Oscar nominations. And I was surprised that neither Scoob nor The Croods got a nomination for Best Picture, because I was pretty unclear that any of the movies that were nominated came out. And I do think that is going to be a problem going forward. When you have these films on Netflix or Disney plus or or wherever it is. I do think there’s a little bit of obscurity to them where you know, the people who have that service, watch it.

And we kind of have no sense what’s successful unless you get something like birdbox which like builds a huge word of mouth and becomes kind of a sensation. I do think we have a lot of good movies that maybe more people are seeing them and less people are talking about them. I don’t know if that matters economically, but it doesn’t feel great to me about the business. If we’re going to take a question here from our very own Maxx Lucas before we do that, well, Max is an affiliate of 7investing he is a friend of the family Maxx is going to be on seven investing now. A week from Friday we are going to talk about his new book. So as a prelude to that let’s grab his question here.

Sam Bailey, if if that works, I feel like Amazon going after teladoc will be like Facebook going after match or Pinterest or Google going going after zoom or what Amazon went after after shop or Etsy? I kind of disagree. I think healthcare is broken. I don’t think too many teladoc fans and again Steve, tell me if we think I’m wrong. I don’t think too many Teladic fans are specifically fans of teladoc I think they’re a fan of telemedicine and I don’t know that there’s any different enchanted branding there. So then it becomes a back end game who does Teladoc sign up to partner with because I’m pretty sure you’re just going to go with the most convenient. And hey, Amazon already knows where I live has my credit card information, they have a pharmacy, they have a lot of things they could do to tell me where I’m wrong, Steve.

Steve Symington  15:11

I think that’s relatively on base. You know, it’s not so much a matter of consumers, but partnerships in the back right now. And then, you know, Amazon’s got reach, but so does teladoc. And I’m not so concerned about it from a consumer facing side, because you’re right. They, they’re not gonna say, that’s the Amazon one. I don’t want to use that. I want to use the top one. And they’ll be like, well, tough. That’s not what we have. So it’s really a matter of how well they can kind of leverage their partnerships and, and actually roll out their solutions elsewhere.

Dan Kline  15:42

Yeah, again, I’m not saying this will work. But I think if you’re Amazon and you’re competing with Pinterest, a lot of people go but I love Pinterest. I’m really not sure a lot of people like I love Teladoc. Again, I’ve done a teladoc specific appointment. And it was great. It was easy. Going through my wife’s insurance company. It was a little bit harder. There are some repetitive and kind of dumb questions. But for the most part, it was really, really easy.

And I think from the point we decided to do it to the point I had a prescription in hand and the pharmacy was half an hour away because I needed a 24 hour pharmacy. It was less than an hour. We’re gonna take the question from z l next, if you want to pull that up. Sam Bailey back at the home office in Houston, we don’t have an office Sam’s in her house healing Tetro to regain leadership over reopening stocks as more people get inoculated, and life goes back to normal again. Hmm. Well, let you answer first. I have some really distinct thoughts here. But yeah,

Steve Symington  16:36

I don’t think all tech will regain leadership over reopening stocks. I think what we’ve kind of seen here is the I do think this is kind of a broader bull market. And I think what we’ve seen is the bull market kind of broadening really, people were sort of wrongfully ignoring a lot of these reopening stocks, and finally have some kind of flows in there. But I don’t think i think i don’t think tech broadly is as weak as some people, as maybe the pullback would would indicate. And I think we do see a kind of realization that a lot of these tech companies have more sustainable growth than the old this so called pivots to reopening plays might indicate in their share prices. So I do think we see some relative strength kind of as things settle down, but a it’s kind of a unique time right now. Because you know, you have vaccinations, more broadly available, and life kind of going back to sort of new normal. And I do think we see some some relative strength and tech going forward that, you know, once sort of this, this pivot finishes up.

Dan Kline  17:51

Yeah, I think this is a false narrative. I think we’ve created this idea that, you know, somehow Boeing is a good investment, because like, it’s gonna take a long time for demand to get high for planes. Now, there are a lot of really strong travel plays, that were strong through the pandemic. I’m not an investor in casinos. But a case could be made for some of the casino companies that they were in a really good cash position before the pandemic, there’s going to be demand.

A lot of people don’t you don’t spend months or years necessarily planning your Las Vegas trip. This show will be coming to you live from Las Vegas next week. Just me and I’m going to unvaccinated but my first trip in a very long time that involves a plane. That being said, I don’t think you know, some things like people are Disney, the theme parks are going to reopen Disneyland is going to open capacity is going to go up in Florida and yes, over years, that is going to play out well. But remember, there’s been a lot of economic damage due to the pandemic. And also it takes time to plan a Disney vacation. If all of a sudden in July they go back to 100% capacity, that’s going to be really good for locals and passholders.

Because they’re going to have to offer all sorts of deals. You might see a little flurry of late summer trips, but trips that cost four or $5,000 for you know family afford to go to Disney World for a week. That is not something people are necessarily going to be in a position to do quickly. So I think this idea that there’s going to be a giant reopening I’ll talk about cruise lines, Royal Caribbean is briefing. travel agents today and a lot of people believe they’re going to, you know, set a date for when they start some short sailings probably just to their private islands, some of which I will likely be on.

That being said, you can book cruises for next year for a third the price you can book them for now when they officially reopened might that push demand and price higher? It might but they’ve already sold a lot of rooms at depress prices. So when you look at reopening plays, consider them over a five to 10 year basis, not even the normal three to five, we might say as a minimum timeline, I would really look at the long term timelines. We’re going to take one more comment from je and then we’re gonna move on to We’re watching. I use teladoc, for the first time last summer, bought shares the next day, definitely more a fan of the concept of the company specifically, but I did have an amazing experience. Steve, have you? Have you used Teladoc?

Steve Symington  20:12

I haven’t. No. It’s compelling. But I’ve heard nothing but good things from people have had experiences like that.

Dan Kline  20:19

Yeah, it’s, it’s great. And technology is only going to make it better. At the beginning of the pandemic, when I was broadcasting four or five hours a day, I was worried about my voice, and I thought maybe I could have someone look at it. And I try to Teladoc appointment. And there’s not much they could do for you over teladoc, you know, they can’t really examine your vocal cords or figure out what it’s going to be. So it’s one of those scenarios where it is great, it does replace a lot of doctor visits, it doesn’t replace all of them with my son, I had to send them pictures, it was very obvious what his allergy issues were, you know, and it was very simple to get done. I think telemedicine has increased because of the pandemic.

We don’t want to go to the doctor more so than we normally don’t want to go to the doctor that said, Steve, are you ever super eager to take your kids to the doctor when you know what it is? And could just put them on camera and get it done quickly? I don’t think you are. With that being said we’re gonna move to what we’re watching. We’re going to talk the Federal Reserve and inflation fears but before we do that, first David Strauss says 7investing meetup in Vegas. Yes, please.

When the world is normal, when it’s okay to meet up when when back when vaccines are common. I promise you, I will make some some of my time available. I’ll let people know when I’m going to be in Vegas, and we’ll do a meet and greet at a coffee of it. I’ll let people know some of the short cruise trips I’m taking we’ll do some, you know, some investing talk and that kind of thing, unofficial sort of just more you know, Dan, and whoever feels like coming along, I’m gonna gonna drag Maxx Chatsko on one or two of those trips, because he’s a, he’s single and has the availability to do it.

So we promise when the world is more normal, we will do some things publicly whether that be officially or unofficially, because I miss people, I’m really eager to meet our members to shake hands with our members. But Steve, not only can you join seven investing right now, and still get it on our Friday, new member call 10 a.m., our existing member called 11 to 12:30. That’s going to be followed by it. Everyone can watch it special 7investing Now at 12:30. After that, we’re going to take our team call, which is a monthly podcast we all do together. And after that, we’re going to take our pitches where we pitch each other our stocks for the next month. So we’re going to be broadcasting live or taped for about seven hours on Wednesday. But Steve, if people want to join 7investing, there is a way they can do that where they can also get a discount, how would that work? And how would they do it?

Steve Symington  22:43

Right? If you go to seven investing, comm forward slash subscribe, and use the code now and o w and that will get you a $10 discount on your first order. And you can check out what we have for either seven bucks or 160 bucks if you use that code now seven investing.com forward slash subscribe, that’s all of our premium recommendations, get access to the subscriber only calls and access to our team. So

Dan Kline  23:11

pretty fun access to access to premium research. And really, you get to be more of an intimate part of the family, we interact with members, the members calls are a ton of fun. We’re publishing lots of texts that’s not published on the free side, I don’t think there’s a better value in the investing world than spending, you know, 10 bucks for a month of seven investing and we promise you’re gonna want to stick around so that your deal that is a great deal. And you also save $10 so you get it for $160. So that’s not only two months free, it’s basically like two months in like two and a half weeks free when you work out the discount.

But with that, Steve, you’ve been keeping your eye on the Federal Reserve and inflation fears. What do we know, this is? inflation is not something I worry about all that much. I think the market dramatically over plays like an eighth of a percentage move or whatever it is. But what are we watching today? inflation fears?

Steve Symington  24:05

Yeah, you know, I’vehit refresh on on some separate screens a couple times to see what’s coming out. But the Federal Reserve kicked off a two day meeting on Tuesday. broader markets pull back pretty hard yesterday again today. They were kind of mixed ahead of an expected policy statements from Chairman Jerome Powell. Really they’re going to be elaborating on their thoughts on how they’re handling interest rates, how they’ll essentially monitor inflation, we’ll see updated projections for economic growth and employment.,

Steve Symington  24:37

it’s kind of a tough one I’m watching because, you know, yes, on one hand, you have concerns for higher inflation and increasing bond yields that have caused sort of this, this so called rotation out of richly valued growth stocks and into value stocks and economic reopening plays. I do think a lot of those value stocks were sort of under appreciated. There’s a couple of them on my scorecard for seven investing picks that I’ve played. Some insurance companies and financial services companies that were sort of under appreciated.

But I’d be remiss if I didn’t point out that over the long term, most of these short term concerns shouldn’t really have any bearing on how patient long term investors approach buying and holding shares of great businesses. So while I’m watching the Fed statement, in the sense that, you know, I’m almost certainly going to get questions from our members, questions on social media, from people wondering why the market is swinging so wildly in both directions, I still don’t believe that the repercussions of what they say will have any real material bearing on the stocks that I’m looking at buying. And you know, short of maybe creating buying opportunities in the process, if they happen to pull back hard. This isn’t something that should be really, you know, I keep an eye on it. It’s good to understand, but maybe not the most important thing you should be thinking about. When it comes to analyzing businesses, and picking them up

Dan Kline  26:01

the media and I can’t I hate to I’m a lifelong journalist, I hate to talk about it. But you have a lot of people that are business reporters now that aren’t business reporters, and you’ll see a story like this cost X amount more than usual. And that’s inflation. And here’s the reality. At the beginning of the pandemic. Remember, when there were toilet paper shortages, there weren’t toilet paper shortages, because they couldn’t make enough toilet paper. There were toilet paper shortages, because something like 30% of the toilet paper sold was sold for offices. And that’s a different toilet paper than what you use at home, you can actually buy office toilet paper rolls, if you wanted to unfurl them yourself from office supply places during the because you don’t have a Toilet Paper Dispenser like the big ones they have in offices. So it really was about shifting production. Some shortages were about increased demand, you couldn’t buy hand sanitizer, because that wasn’t something we normally went through a lot of.

And now we had to and we saw go to Target now. And there’s no shortage of hand sanitizer. There’s a shortage of maybe exactly the paper towels that you want. But there’s no shortage of paper towels. Overall, I i’ve dubbed this the golden age of Brawny. Because I feel like the people that brought it, you’re just endlessly high fiving thinking they’re geniuses. Here’s the reality, they’re out of Bounty, nobody’s choosing Brawny, it’s just what’s left.

But that being said, people are conflate some of that gas prices going up. It’s been all these political reasons, all these gas prices always go up in the summer. And as the world is opening up, people are venturing out more. So I really do think you need to look underlying at a company out of business and say, well, what’s the reason for this or like, remember, when Chipotle a was running out of guacamole in some places, or last summer where there was a real fear that that because of the Chinese pig flu, we were going to not have enough pork? Well, those were short term concerns and they don’t change what you think about Chipotle, they might change their sales for a month or two or a quarter or a year, or whatever it is. But I think with inflation, we over inflate, which I know is is fun, Steve, that being said, What’s your final word on the Fed and inflation here,

Steve Symington  28:06

we’re going to get some comments this afternoon markets are probably going to swing in one way or the other, depending on what he says, you know, they’re expected to hold rates steady and continue sort of his strategic buying a bonds. Nobody expects any big surprises. But you know, the markets gonna do what it does. And, you know, as long as I think you just steadily continue looking for and buying shares of great businesses month after month, just steadily adding to your portfolio to your cash allows, everything’s going to be fine. If you’re a long term investor, don’t try to time the tops and time the bottoms, buy businesses at what you consider to be relatively attractive valuations relative to their potential over the long term, and, and the rest will take care of itself.

Dan Kline  28:53

And when you listen to people about stocks, Make sure you you’re listening to people that understand beyond the top line numbers, let me give a big example are Walmart and Target two of the strongest retailers in the world. There is every chance that Walmart and Target will have negative comps at some point next year. Because we’re gonna start going out more and we go out more, we might buy less groceries, we’ll go through less paper towels, we won’t need as many of whatever.

And maybe we’ll have to replenish our dress clothes and Walmart and Target aren’t generally the places we go for those. So will there be some shifted spending? Yes, but you could argue with Walmart and Target. They added new customers, they pleased existing customers. And while they might have some difficult comps, that’s not going to change the long term trajectory of either business, which is really, really strong. But Steve, we’re hitting the homestretch here and you’re watching seven investing now just a programming reminder.

We’re going to be live at 12:30 on Friday with the whole team. So we’re doing our members only call at 11 that goes about 90 minutes. We wanted to go right from that into seven investing now. So feel free to Hit us up on Twitter at seven investing or at worst ideas seven on Twitter if you have questions for the whole team for or for people who aren’t here, like maybe you want to ask some biotech questions, maybe you want to ask Matt Cochrane about, you know, payments and other issues, we would love to hear from you.

But that being said, Steve, this is a weird one. So I read yesterday, Walmart and Dick’s Sporting Goods. They’re launching fashion driven clothing lines. So Walmart has has hired acclaimed fashion designer Brandon Maxwell. I’ve never heard of him. But apparently, he’s on all sorts of shows. And he’s very acclaimed. There’s not a lot of acclaim when you only wear one shirt. He was on Project Runway, and he’s had a list celebrities, including Lady Gaga, Michelle Obama, and Oprah wears designs, you can tell him reading because I’ve literally never heard of this person. I’m guessing he hasn’t heard of me either. He’s gonna be in charge of creating affordable high end fashion at Walmart. Let’s get into Dick’s in a second here. But Steve, you’ve been to Walmart? Do you think the Walmart customer in a broad level is looking for this? This seems to be like, an attempt to expand? That doesn’t make that much sense.

Steve Symington  31:10

Yeah, I mean, it. I don’t know if it’s a if it’s an attempt to dress up some of their core clientele or to draw in new consumers or a combination of both. But you know, I’m not I don’t know. And maybe they’re looking at kind of what, what Target has done pretty well, with some of their Store Exclusive brands and clothing lines and stuff. So maybe a push there. But affordable high end fashion Walmart don’t quite seem to go and go together, I guess. And I’m not particularly compelled by the FDA. Let them try what they can. But it

Dan Kline  31:51

feels to me that target with its owned and operated brands and its partnerships with say chip and Joanna Gaines, they went up a level they went from like, acceptable gym, where to gym where you wouldn’t be embarrassed at like wearing out in public outside of the gym. Like, I’ve always thought like Target sells like one sport coat. And my thought was like, if I ever saw someone wearing that sport coat in my head, I’d go that’s the target sport coat. And you don’t really want people to think that I kind of feel like that’s what Walmart high end fashion, I would have loved to see Walmart come out and say we’re doing you know, nicer casual where we’re doing, you know, an affordable line jeans, or whatever it is that that’s better than what we saw before. But I actually like what Dick’s is doing. So Dick’s they’re launching v rst. I’m not sure how you say that. It’s a it’s a men’s athletics, apparel apparel brand. Their goal is to take on Lulu lemon. I like the idea that they’re doing a high end line at lower prices than Lulu. But Lulu lemon has a big hold over women, I don’t think it has a big hold over men. And when you go into a Dick’s they’re already selling Nike and Reebok alongside some of their own brands. So I don’t think it’s as big a leap. And I know as a man who owns a lot of gym clothes, you know, I work out quite a bit. I which I know you can’t tell, but you know, kind of strong here. I would buy a nice feeling piece of, you know, piece of clothing from Dick’s that felt like it was quality. And I wouldn’t care that it wasn’t Under Armour or Lulu lemon or Nike. Steve, would you do the same?

Steve Symington  33:26

Yeah, yeah, I guess. Yeah, I’m kind of with you. I think this is an all right idea. I think it’s actually important to note that, um, you know, the, I mean, the men’s business at Lululemon is growing relatively fast, I think, you know, they had double digit comps growth, the last couple of quarters, you know, so it’s sort of one of these sort of kind of growth areas that they can expand. But you know, I don’t think Dick’s new brand is going to be you know, some big threat. No, I

Dan Kline  33:58

don’t think they hurt. I don’t think they hurt Lulu at all. I think this is a smart because not a popular brand Under Armour has struggled. So I think this is really a scenario where if this is a high quality line, it’s has the customers and maybe you’re coming in to buy a canoe, maybe you’re coming in to buy a new pair of sneakers. And if I see a nice pair of shorts that I would wear to the gym, or you know, or an Under Armour style shirts, which I bought that style of shirt at Target for less money. I don’t see why I wouldn’t buy it. Because, again, I know there’s cachet when you’re a teenager wearing Nike or Under Armour or what the the hot brand is.

I’m pretty sure Steve at our age that people at the gym do not care what we’re wearing. In fact, I would argue that we’re in the prime invisible at the gym age. So what we’re wearing is not relevant, but we’re gonna keep an eye on this. We are going to, to focus on retail, we’re going to focus on all sorts of things on coming shows, but Steve, we’re nearing the end here. If you have any last minute questions or comments, feel free to get them in Jay. He says, he’s pretty sure that Mickey Mouse will take stimulus money. And yeah, I agree. I do think some people who are in a good position that the stimulus money is a bonus.

But remember, this stimulus check. phased out when individuals made over $80,000 I believe it’s 150. For a family, there are a lot of well off ish people. You know, if you’re making 160 grand a year, but you live in a, in a major city, you’re doing fine, but you’re not necessarily full of money to go on $6,000 vacations, there will absolutely be people that got extra money due to the pandemic. But they’re also people that were hurting, that haven’t worked, even some people with really good businesses that suffered.

So I think you’ll see a little bit of that in the bounce back effect. I do think Disney is a premier brand. But I think their big benefit is going to be next summer, when people can be assured things are going to be normal. You’re also going to see some major openings in the Florida theme parks, you know, that have been delayed construction slowed down on things like the Tron Light cCcle coaster at Magic Kingdom, or the Guardians of Galaxy roller coaster in Epcot, Ratatouille in France, in Epcot has been pushed back to October, I do think you are going to see some some hesitation.

All I was saying about the recovery is it’s not going to be linear. It’s not going to be let’s say the president comes on TV or whoever comes on TV and says pandemic over we’re good 80% vaccination, herd immunity, all the variants are in control, you can stop wearing a mask you can do whatever it is you want. That is going to be great for a lot of things, but it’s not going to happen all at one time. Like a lot of people aren’t gonna be able to go Oh, now it’s okay. I’m going to take a week off in August.

Maybe you had to request that six months before or whatever it is. So I’m bullish about the recovery. But I don’t know that it’s going to happen as quickly as people think it will, even as we are slowly putting a toehold into normal. But with that Sam Bailey, let’s pull up and hit our finisher.

So there’s a story behind this one. Before I came to seven investing, before I started broadcasting regularly in my previous job, I mean, I was doing podcasts but before I was doing three or four hours a day, and you can leave it up Sam if you want. I’m gonna use it for part of that. So I did a personal podcast one of the first things I did during the pandemic was I just launched a podcast with my friends and the first one I did with Nick seipel, our friend and former colleague and we did a March Madness style bracket on what candy we would want for a two month lockdown and we use two months because it was inconceivable to us that it will be longer than two months and I believe the way we did it. I think Skittles won which everyone absolutely hated us for that. I think we bracket it incorrectly it was an overall disaster. So I shared the top four here and Reese’s Peanut Butter Cup one overwhelmingly m&ms was second Skittles third Milky Way my personal favorite was fourth. Steve couple of things. What would be your pick from the candy from the candy bar here? Did I miss a completely? Is it something else? That would be your pandemic go to?

Steve Symington  38:05

Oh man, if I had candy for a two month lockdown, I go Reese’s Peanut Butter Cup because I could arguably call that a meal right? But if I was going candy for pure enjoyment, I’d go straight up Skittles.

Dan Kline  38:18

That will take one more comment from Max Lucas was going to be on this very program a week from Friday talking about his guide for new investors. He points out there are so many Lululemon competitors. You know he bought his fat ballistics balance Jim Barrett, I don’t even know some of these. He said if Dick’s wants to be successful. They need to pay a ton of money to get influencers on board. I don’t know that that’s true. I think Dick’s has the advantage. They have physical stores, their customers in those stores. They could display their wares. I’ve talked about this a lot with Amazon.

I think Amazon should either buy Kohl’s or partner with Kohl’s to put it’s owned and operated brands on display at Kohl’s which has some pretty tired brands itself. If you walk by a cool looking athletic shirt at a Dick’s and the price is good. There’s every chance you’re going to buy that I do understand if you want to be trendy if you want to have my son want to go to Dick’s to buy a shirt? Well you probably have to pay some rapper I’ve never heard of to wear it. But I don’t think that’s the Dick’s audience. I think Dick’s is going after a sporting audience that’s going to worry more about will it perform will it will it be comfortable while I’m playing basketball or swimming or working out at the gym or whatever it is?

Steve Symington  39:34

Lucy there Dan

Dan Kline  39:40

having some technical difficulties area Yeah, we’ve had a weird technical difficulty show I just disappeared I don’t know what the audience so with that we’re going to close today’s edition of seven investing now. If you want to get in touch with us it is very easy to do the email is info@7investing.com that is usually Steve answering Questions, he’ll throw them out to the team. That’s a lot of you know stuff. That’s good. You know, would you have questions about the service? Do you have questions for how the pics work, you know is something not working for you, whatever it is send that to info@7investing.com. And if you want to interact with us on the internet that is @7investing on Twitter, we are happy to do that we have a really active Twitter life all of us. So if you tweet at us, if you copy and send something, there’s a decent chance we’re going to respond and get involved. But I feel like we’re on borrowed time some of the technical issues we’ve had today. So with that we will be back at 12:30 on Friday with the seven investing team see Friday.

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