Everywhere you look these days it's March Madness. First, there was the announcement that Warren Buffet is finally buying a purely tech company in Apple (Aapl). He drew a comparison between iTunes and the Gillette razor blade - each is the repeatable purchase for its respective company. Proctor & Gamble doesn't make its money from razors - it makes money from the blades. Same thing goes for Apple and iTunes, right?
Everyone got really excited that Warren Buffett has bought Apple, not only for Berkshire Hathaway, but for himself personally. Wall Street analysts even upgraded Apple by assigning higher price targets for the stock, because what's good for Warren must be good for all of us - right? I find myself wondering, who's left to buy Apple stock? I mean, when the biggest investor in the world just bought up as much as he could, who's left?
So, for our clients who are in the Envestnet models, we took the opportunity to sell Apple at an all-time high, with the plan to buy it back if it's trading at a better valuation in the future. This was a roughly 40 percent gain from when we purchased Apple in early 2016 (during the last market crisis. Does anyone even remember that?)
In other market madness, Snapchat (Snap) IPOd last week. Now, many people have compared Snapchat to an early version of Facebook for millennials and tweens, as this is the audience that primarily uses Snapchat. Thus, advertisers are trying figure out how to gain their attention and build product brands and end-users through this platform. Back to the IPO. Unless you bought the stock at the IPO price (and there were few shares available), you've most likely lost money. After initially moving higher, Snapchat stock has come back to Earth. While people are realizing that Snapchat is a pretty cool app, it's losing money at a fast rate - very much unlike Facebook, which makes billions off all of us each each month. (For those of you interested in the origins of Snapchat, click here
Speaking of snapping things, by the time you're reading this, I'll be in Nashville attending my very first SEC tournament, as a die-hard UK fan. For those of you who've been to Nashville, I'm sure you can picture Dave in boots with a ten-gallon hat running around snapping shots to put on Facebook. (Now there's a sight!)
And speaking of the SEC, now that we've talked about what's hot in stocks, and what's hot in Dave's closet (did I mention the dinner-plate-sized longhorn belt buckle? No?), let's talk about who's hot in this tournament. Everyone knows that the Kentucky Wildcats are the equivalent of Apple stock - they're the team people root for even if they're not from Kentucky, because everyone wants to be associated with a winner. To sports fans, Kentucky feels safe to cheer for, because if Kentucky loses, everyone loses. Just like the stock market, a decline in the overall indices typically hurts everyone.
For those of you out there who like to cheer for underdogs or startups, rumor has it that the Vanderbilt Commodores are playing their best basketball right now. Plus, for them, this is the closest they'll come to a home game in the SEC tournament, and they do play well in Nashville. They may not have the most fans there, but they'll have the smartest fans (remember that old cheer, "That's all right, that's okay, you're gonna work for us someday"?).
In addition, the Arkansas Razorbacks have definitely played well this season, and are a contender, and you can never forget about those pesky Florida Gators. Although I can't cheer for them due to family connections who have won too many wagers against me in football and basketball games of late, the Gators do tend to play well on big stages. I recently lost a $5 bet when Florida beat Kentucky, so I sent, via DHL overnight, 500 pennies to the winner's office at FedEx. Be careful when you wager against a Smyth!
But back to the topic at hand. It's anyone's guess what will happen in the SEC tournament or the stock market over the next few days, but in either realm, there are favorites, underdogs and Cinderella stories we can root for.
How do you determine who or what could be the next big winner or loser? That's what our team at Family Financial Partners is here for. We can help you with research, answer questions and help you find the path that's best for you. And some of our staff have even volunteered to give fashion guidance to those of you, like me, who are most likely to have the fashion police called on them! As a friend of mine said, "Dave, you're going to Nashville, not Texas." But I'm pretty sure no one would mistake me for a Texan either.