Stock Stories

Welcome to Stock Stories!  This is a very special episode for me because it is the first interview that I have ever done for this podcast.  Not only that, but I got to talk with my friend and mentor Teri Ijeoma, who is a professional trader.

Teri and I first met at FinCon in 2018, and we got together again in September 2019 at the same conference to do this interview.  I hope you enjoy our conversation!

To find out more about Teri's courses, including the one I took, check out her courses below.  In the interest of full disclosure, these are affiliate links and I may earn a commission if you enroll in the class:

Trade and Travel Program - best for learning how to read charts and trading fundamentals
VIP Investor Program - includes Trade and Travel content with additional advanced topics such as shorting, options, and more

You can also find her on Instagram: @imaninvestor

Email: [email protected]

You can't mention computers or software in the world today without mentioning Microsoft.  The now trillion dollar company has changed the way that people interact with the digital world, and they're still making waves today.  With cloud computing, artificial intelligence and new operating systems, Microsoft is working hard to stay on the edge of technology.  This week's show is the first of two episodes where we go into Microsoft's history, as well as its business model to try to understand it from the investor's perspective.

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Centene is the leader in providing Medicaid and Medicare health plans in the United States.  Their massive growth over the last few decades has been precipitated by a changing health care climate as well as rapid consolidation of smaller competitors.  Though this is a complex business that is highly regulated, the fact that the federal government funds the majority of premiums indicates stability of future revenue.

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I took a little vacation this week with the family and have some more research to do on the next company I plan on bringing to you.  In the meantime, here's an episode of a company I enjoyed studying some time ago - retailer Ross Stores.  They have continued their expansion, and even though there is a lot of doubt out their regarding the future success of retail businesses, Ross still has a lot going for it.

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When we put effort into something, we expect to get the same amount of output, right?  This can often be the case, but sometimes the rewards we get are not proportional to the risks that we take.  For example, in portfolio construction, diversification only makes sense to a certain point before it "waters down" our overall returns.  The Law of Diminishing Returns reminds us that we should be mindful of the inflection points in our investments and in our lives as well.

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Tiffany and Co. is known worldwide for their high quality jewelry, particularly for their classic Tiffany diamond rings.  They also sell accessories, watches, and fragrances, but the bulk of their sales come from jewelry.  They have over 320 stores in over 20 countries, and have a storied history, having been in business since the 1830s.  This is not a business that is highly susceptible to technology disruption, and sells classic goods where prices can be raised without much customer objection (a benefit of companies in the luxury goods sector).

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Dunkin's Brands owns the iconic Dunkin' Donuts and Baskin Robbins franchises, and has over 20,000 locations across the globe.  They primarily sell coffee, donuts, and ice cream.  Sounds delicious!  Because of their franchise model, they are able to expand rapidly with very little investment.  Although not a high growth business, Dunkin' is interesting because of their overall economics (stability of earnings), and because management has historically been diligent with returning cash to shareholders.

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As one of the larger American fashion houses, Ralph Lauren produces branded clothes, shoes, and accessories.  They cater toward an "Ivy League" or modern look with a lot of their clothing, and sponsor the PGA championships and on-court officials at Wimbledon and the U.S. Open.  Although it is a slower-growing business, management seems to do a decent job at returning cash to shareholders, but can they reinvest effectively for growth?

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Have you ever thought about the habits and beliefs that you have?  Many of these beliefs were likely formed before you even had the consciousness to make many decisions to yourself.  This concept applies to life more broadly, but also applies specifically to investing decisions.  What brands do you purchase simply because your parents purchased it growing up?  What products or services are part of your life that stem from a core belief that was passed down to you as a child?  

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Coach, Kate Spade, and Stuart Weitzman are the three brands under the Tapestry umbrella, although Coach dominates in terms of sales and profits.  This fashion house has been making handbags for decades, but may have lost some of their cachet in recent years.  Will their diversification with the purchases of Kate Spade and Stuart Weitzman revitalize their bottom line?

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