It's coulda, shoulda, woulda Wednesday: EBAY

I was just listening to the Bob Lefsetz Podcast episode in which Bob interviews Linda Perry. She's talking about her dad and how should be so rich today because back in the 1970s he was RIGHT SMACK IN THE MIDDLE of the computer revolution.

Reminded me of me! Because back in the 90s I was RIGHT SMACK IN THE MIDDLE of the dot com boom. I have a LOT of coulda/shoulda/woulda stock market moments from that decade but I'm going to kick off this coulda/shoulda/woulda series with EBAY.

Here's the moment of truth that I remember: I was at a get together in a park in Menlo Park, CA, and talking to a friend about where to invest. I was preaching Onsale.com, while she was all about EBAY.

My logic was that Onsale's business model of buying up clearance items and reselling them was way better than EBAY's auctions for the simple reason that with Onsale, customers were buying from a business while EBAY customers were buying from whothehellknows. For awhile, I felt smug in my rightness as Onsale rocketed from around $15 (my buy price) to around $100. Did I sell? Hell no. Stupid, greedy, dumbass me.

Honestly, Onsale STILL makes sense to me but they are long out of business, while EBAY has risen from an adjusted price of about $.80 in 1998 to about $35.

Ouch.

Coulda: had money

Shoulda: 35x gain vs. bonfire of vanity as I held on to Onsale to sustain a total loss.

Woulda: Except I just did not believe that EBAY's business model would succeed, never occurred to me that a system so dependent on decentralized trust could ever succeed, still seems amazing!

Lesson learned: When you buy stock and it goes up nearly 10x in a few months, SELL.

What is the one thing that every investor and should do more of but is murderously difficult (and ridiculously easy)?

If you've investigated investing in stocks at all, you're probably feeling overwhelmed by all the possible strategies, but to my mind, there are really only two: passive and active.

Passive generally means you buy an index fund (you could also create your own list of stocks) pressing the buy button and then doing NOTHING. Active means you are a badass, so smart you can beat the market, almost always picking winners, holding them for the right amount of time and then, with cold rationality, selling and buying something else. Hedge funds are active, betting both on things going up and going down. Which is the best? You can find good arguments for both but Warren Buffett recommends passive so that's where I would bet my money.

And I do.

Mostly.

If a passive strategy is so great -- remember, passive has Buffet's imprimatur -- why am I not all in on passive investing and using my precious free time for, say, playing my guitar, instead of researching stocks? Because doing nothing is hard. Really hard, especially for a chronic market watcher like me. Every day, I check the market at least 10 times, scrolling though my list of holdings, reading market news, mulling, pondering, fretting, getting excited. And what about my index funds? I never look at them. Ever.

So which strategy is winning for me? Hard to believe, but in the short term (last 10 years) my active strategy is trouncing my passive holdings. And that's a problem because as we enter May, even though my active holdings are up nearly 3x my passive, they are well off their year highs, prompting me to wonder, should I "sell in May and walk away", as the old adage counsels. Fueling my jitters is global news, always bad but now a bit over the top with North Korea testing short range missiles, Trump threatening higher tariffs against China, Pompeo on a midnight flight to Iraq because of concerns about Iran, Iran announcing it was no longer adhering to the nuclear deal signed in Obama's last year, Trump's AG being held in contempt of Congress over the Mueller report, Russia fiddling with elections all over the world and on and on and on.

But here's the deal: worst case scenario, we get into a nuclear war and the market goes all to hell, in which case I think gold bars held in my own vault would be best; next worse case, war, in which case, who knows, but probably not good in the near term; three, Trump is impeached and convicted or not, a short term blip. So, given that I am not going to buy a bunch of gold and put it in a pricey vault and every other scenarios are likely temporary blips, I'm going roll up my sleeves, grit my teeth and... do nothing. Seriously, how hard can it be?

Okay, I'm already wavering...

Watering weeds. Not. (SWIR, ZYNG)

Peter Lynch once said, “Selling your winners and holding your losers is like pulling out the flowers and watering the weeds.”  

This adage should be pretty easy to follow, right? Not for me. Because fighting with it is the oldest investment adage of all, namely "Buy low, sell high." My weeds are low, my flowers are high, why not sell some flowers to buy more weeds? 

So which adage trumps the other?

It all comes down to prospects. Do your weeds have good ones or not? Are they cheap because they deserve it or because the market is missing something? Odds are it's the former because -- especially  for amateurs like me -- betting against the wisdom of the entire market and Wall Street traders is almost always a bad idea.

So, when Motley Fool Stock Advisor recently recommended Zynga (ZYNG) -- once a unicorn-like high flyer because of its game FarmVille, but now slopping around in the muck of pigdom -- on the theory that ZYNG's original strategy of free-to-play games that attract millions of users, and are monetized through advertising or in-game purchases (Motley Fool), I whipped out my wallet. As Motley Fool rightfully points out, ZYNG not only has decent financials (for a pig), it also has licensing deals to distribute/develop games based on three HUGE brands: Game of Thrones, Star Wars and Harry Potter. Adding to the likliehood of future glory is the fact the Fortnite, also a free-to-play game, brought in almost as much revenue as EA and Activision combined.

To raise cash for ZYNG, I pulled the weed that is Sierra Wireless (SWIR). I bought SWIR because Ifigured as a maker of chips for the rapidly growing Internet of Things (IoT) market, SWIR's future was all but certain. I actually still think I'm right, but IoT is taking longer gain real traction than just about anyone guessed and, as a result, SWIR is struggling a bit. 

Bottom line: ZYNG and SWIR both look good but ZYNG wins for me because its market is a better one than IoT for the next few years. Luckily, I about broke even on SWIR, a rarity for my weeds, which are usually massive losers!

My prediction for ZYNG: $15 by 2021.

















existing games are doing better than the market seems to think and that new games could fatten up revenues and earnings quite nicely. I agree with this theory.



-- at first glance only, because the company is profitable and growing and has games coming that should fatten up numbers nicely, namely Game of Thrones, Star Wars and Harry Potter. My prediction: a triple in 3 years.

To buy ZYNG, I pulled a weed by the name of Sierra Wireless (SWIR). I originally bought SWIR several years ago on the hype-fueled theory that IoT (Internet of Things) chips would start selling by the container-ship full, as IoT took hold, every "thing" on the planet got connected. Sadly, this is not happening nearly as quickly ad I'd hoped and though I hung on long enough to lose all my gains, plus a few pennies, the damage wasn't that bad.











Soon I was back down to my principle, minus a few bucks, and having had enough (this all took place over several years) I bailed. But… I kept an on SWIR and waiting for some sort of action and suddenly SWIR plummeted. I thought the plummet was way overdone and bought back in with the simple premise that as the Internet of Things (IoT) continues to gain, slow or faster, so would Sierra Wireless. I still believe this but after the Motley Fool Stock Advisor recommended Zynga, I’ve been watching it and with yesterday’s earnings report in the rearview mirror, I decided it was more of a sure thing than SWIR. Games are big and getting bigger and the free-to-play model that Zynga entranced the world with back in Farmville’s glory daze (Zynga published Farmville) seems to be where games are headed given Fortnite’s staggering success. Now, I’m not saying all games are going to be free-to-play in the future, but a lot of them will be and Zynga has paid in blood and toil to gain expertise in this market. Add with the rise of subscription services, as well as Zynga’s deals with Star Wars and Game of Thrones, not to mention Zynga’s stable financial condition, I see some pretty entertaining years ahead, at least a double in 5 years, maybe quite a bit better.

Buying Zoom (ZM) because Zoom is awesome.

In the corporate world everybody HATES Skype for conference calls and LOVES Zoom (ZM). In fact, ZM is so good that at Dell Technologies, where I work, we have recently done the unthinkable: a mostly Microsoft shop (MSFT owns Skype), we have switched to ZM. And that fact right there, that's why, despite ZM's nosebleed price, I bought shares.

When ZM's price falls materially in the coming year, as I imagine it will, I will double down, and then I will just sit tight for at least 5 years. Why not wait for the price to fall if I'm so sure it will? Because by owning shares now I will be watching ZM more closely and better able to spot the dips when they occur.

Conference calls are the lifeblood of corporate America, and demand will only increase with population and an ever more mobile workforce and ZM will rule the roost. Either it goes up 5X from here in 10 years, or it doubles as the result of being acquired. That's my bet.

What would Steve do? (APPL)

Apple (APPL) is mind-bendingly frustrating these days. I used to LOVE the company's wares and vibe, but now I am indifferent, at best. What the hell is going on? Here are the missteps, as I see them:

- iTunes remains a mess. No drag and drop to add songs? An interface circa 1998? Why? What could possibly be standing in APPL's way of cleaning up iTunes? I. Do. Not. Get. It.

- iCloud storage prices are laughably high and for what? Seriously, it's WORSE than Google Photos and Photos is free. Sure, this is minor for APPL's revenue/profits on the surface. But deep down it pisses people off, makes them feel taken advantage of, kisses of death for loyalty.

- Nuking the Mag-Safe. What was that meeting like? Someone says, "Hey, I know, let's take the one thing we truly OWN in laptops, the one thing no one else has, and KILL IT."

- The Mac Pro, the FLAGSHIP Mac has not been refreshed since 2013, despite a design that does no one any good, especially professionals. Now, I have one and I love it, but I got mine for a great price and can live with its total lack of upgradability/expandability, as I'm only a hobbyist. If I were a pro and got saddled with this thing, I'd be pissed (which is why the cheese grater Mac Pro lives on in countless agencies and recording studios).

- A dog's breakfast of a product line/nomenclature. Quick, how many iPhone models are there? What are the differences? iPad Air vs iPad? Why is the iMac Pro so expensive? Etc.

There's more, but you get the point, APPL, in my opinion has lost its way. So, the trillion dollar question is, if Steve came back, what would he do?

- Kill 50% of the current product and name what remains in a way that makes sense. My product ideas are iPhone + # + Pro if super killer, create iPhone for the masses/developing world; Mac Pro, iMac + # + Pro if truly killer, iPad, iPad Mini, iPad Pro; services should be iCloud (if it works), Tunes (kill Music, keep paid tier, rewrite code), change TV to Video, add Netflix and Amazon, revenue be damned); Health (for all health related services. This little list is not the end all be all but I think it's better than what exists, a lot better.

- Add Mag-Safe to all laptops, but as a combo USB-C/Mag connector

- Dump Intel for own ARM-based chips, leave Intel be an option for Pro machines, if needed in near term, or better offer AMD's 7nm chips.

- Stay true to data privacy.

- Go all in on health and make the Mac integral to the strategy.

- Be willing to take a short term hit on the stock for long term growth. APPL could double from here and be the first $2 trillion corporation, but it's got to take some chances. Real chances, which means a miss hurts but a hit feels better than anything else.

That's my list. What do you think Steve would do?

Is it time to sell Sierra Wireless (SWIR)?

Back in my first decade of investing -- 1995 to 2005 -- I would have sold SWIR awhile ago.

And lost money.

Nowadays, I'm much better about making short-sighted decisions to sell; instead, when times are tough for a given stock, as they are right now for SWIR, I take a hard look at the business and ask myself if my original thesis is still intact.

In the case of SWIR, it is but barely.

I bought this stock because I believe in the Internet of Things (IoT), and I am confident that sooner or later the world will need a lot more teensy chips that connect things into networks, exactly the kind of chips SWIR makes. However -- and it's a doozy of a however -- I bought SWIR when hype around IoT was frothy. Dumb. Now in 1019, the hype has subsided quite a bit and so companies like SWIR are not given a pass when earnings reports suck, which SWIR's have of late. But I still believe in IoT and I am bullish on the likelihood that as more things get connected, especially cars, a huge play for SWIR, demand for "connector" chips will go up, up and away.

And so, let the hand wringing cease. I'm staying the course. Next stop, 2025!

Blackberry (BB) delivers a juicy quarter!

When I bought BB, I was convinced I was getting the deal of the century, seriously. I mean, here's a company with unrivaled chops in securing mobile endpoints (phones, cars, etc.) in a world where mobile endpoints are mushrooming.

BB fell.

When BB bought Cylance, a fast-growing AI cybersecurity company, I was certain, certain, I tell you, BB would soar.

BB fell.

Finally, BB announced a truly plump quarter and the stock jumped about 13%. Here are the specifics:

BlackBerry reported earnings of 11 cents per share, 5 cents ahead of analysts' expectations. Revenue of $257 million topped estimates by more than $14 million (a beat by 5.75%) and grew 7.5% year over year.

Whew. And then...

BB fell.

No idea what's going on here, but I'm not about to squish my BB shares. In fact, within 5 years, I predict -- based on nothing but gut -- BB will be trading in the $30's!