Greedy When Fearful

I have a problem with nostalgia. I adore video games from the 80s/90s along with all the wonderful pop culture that surrounded the era. Movies, food, and toys from decades ago? Excellent! Accepting modern day realities has been a challenge, and it’s even affected my investing.  In Utah, I was raised in the arcades, music and video stores in the Layton Hills, Crossroads, Trolley Square, and Cottonwood malls. All these stores are gone now. Live by the technological sword, die by the sword. Bogus! But, my super shopper sister bought clothing. Quicksilver, Aeropostale, DC, Roxy, Delias, Pacsun.  People won’t ever stop going to malls to buy clothing, right? Wrong! 3 years ago I bought a “mall basket” of the great companies of yesteryear. I thought diversification in the clothing business would save me from quickly moving fashion trends and at least one would survive. But no, father time killed them. All of them. They *all* went bankrupt! Fast forward to today and JC Penny, Macy’s, Payless ShoeSource, Sears, K-Mart, Walmart, Office Depot, Ralph Lauren, HHGregg, Gordmans, Sports Authority, Gander Mountain, Bebe, Rue21, etc. are all drastically downsizing or going out of business. No retailer is safe from Amazon’s wrath! But, people are still buying clothing. How about sport clothing?

“You ought to think about the future.”
“Retail’s got no future Jack!”
“Better be sure.” (Batman, 1989)

Each month we save $100 for each of our children in a Coverdell ESA. About every four months, we buy stock for them. Since the investment horizon is 18 years, we rarely sell, and the stocks are primarily focused on their generation. The performance has been incredible. Netflix? 11 bagger. Tesla? 10 bagger. Electronic Arts? 6 bagger. Disney? 3 bagger. Now, I grew up with EA and Disney. But, they are not just nostalgia plays, they are also defining my children’s generation. It’s been stunningly clear that our family’s biggest winners, haven’t been turnarounds, but companies defining the present and the future. I’m going to take of my rose colored glasses, and don some Doc Brown silver future glasses.

Under Armour (UAA)

When I was growing up, if you played sports you wore Nike. It was impossible to walk onto the playing field without seeing the Nike logo everywhere. Nike, Nike, Nike! Now, when I go to my kids’ basketball, soccer, or baseball games, it’s all Under Amour. Under Amour (UAA) is currently trading at half the price to where it was a year ago, and a whopping *six* times less than it was in 2014. A 60 billion dollar company is now a 10 billion dollar company just three years later. Now, this is because of recent sluggish sales, and a massive investment in wearable tech that has added a whopping 1.6 billion of debt to their balance sheet. However, I think these investments are going to pay off over the decades and their brand is stronger than ever. Nike is currently a 90 billion dollar company. UAA is absolutely an easy double from today’s prices.

Take Two (TTWO)

Mafia, BioShock, Grand Theft Auto, Max Payne, L.A. Noire, Bully, Red Dead. Get off my lawn with your violent trash!!

Go Diego, Go! Dora The Explorer, Civilization, Carnival Games, Wonder Pets, Bubble Guppies, NBA2K, NHL2K, NFL2K, ahhh, that’s better!

Take Two has made all of these games. Though I don’t usually play games that aren’t at least drinking age, I have heard of all of these. Everywhere. Take Two is only a 6 billion dollar company and it looks and sounds a lot like the Activision (40 billion) and EA (30 billion) I grew up with. Can TTWO double and hit 12 billion? Absolutely. Their games are selling like hotcakes along with an incredibly strong performance in mobile games, with sales growing 30% over the past three with massive hits like Dragon City and Monster Legends. This is definitely a video game company that’s going back to the future!

Monty

P.S.

Also added Amazon proof Dunkin’ Donuts to our 18 year experiment. Not only is it our kids’ favorite treat, it’s time to put that 2.34% dividend to work for our daughter. I’m front loading her portfolio with dividend payers so they can do the heavy lifting for me over the decades.