Greedy When Fearful

Qwikster is gone. The classic is back!

SNL attacks Netflix. Netflix falls 54% in one day because they lost 800,000 subscribers last quarter.  Time to panic? No, time to celebrate! I’m now dancing in my Netflix red colored pajamas this morning as this is exactly the jolt needed after a long 22 hour shift yesterday. Just got greedy and doubled down on Netflix AGAIN. If it halves again, down to 2 billion, I’ll double-down AGAIN. Here’s my investing thesis: Qwikster is gone and the classic is back.  Everyone is going to need to charge more for higher content costs, this is not unique to Netflix as prices are set by the movie studios. Customers just aren’t aware of this yet. Netflix customers will be back, eventually. Where are they going? Redbox? Blockbuster (I have seen a record amount of commercials lately)? Pundits are wrong that say yes on those two. Long term I’m worried about Google/Apple/Amazon but I don’t know anyone that has switched from Netflix to one of their services. If that changes, I’ll re-evaluate. But for now, in 2014, I’m betting Netflix will be worth 15 billion. That will be a 7 fold stock increase from today’s prices. Increased position from 4.5% of  portfolio to 9.1%. “Be fearful when others are greedy. Be greedy when others are fearful.” – Warren Buffett

Monty