When In Doubt, Zoom Out
At any time since 2007, when $Netflix(NFLX)$ ’s streaming business launched, a market-crushing thesis could have been “streaming is the future.”
I started buying shares of $Axon Enterprise, Inc.(AXON)$ in 2014 on the simple idea that every police officer should have a body camera and all of that data will likely end up in the cloud (Axon’s cloud). There were bumps along the way, but that simple high-level thesis led to incredible returns.
“I like my $Apple(AAPL)$ iPhone” was a pretty good investment thesis going back as far as 2007.
I remember sitting in my apartment in 2007 listening to a friend rave about $Lululemon Athletica(LULU)$ ’s pants. The company had just gone public and has returned 2,750% since the IPO. Pro tip: Pay attention to what women are excited about buying!
This one blew my mind. Since 1989, The $TJX Companies(TJX)$ — TJ Maxx, Homegoods, and Marshall’s — has generated a 22,320% return and outperformed $Wal-Mart(WMT)$ $Costco(COST)$ $Nike(NKE)$. Seems obvious in hindsight for as many times as I’ve heard, “I’m going to Homegoods.”
When in doubt, zoom out.
What is your 10-year view on an industry or business?
Ask simple questions.
Do people seem to like shopping there? (TJX)
Does “everyone” have it? (Netflix)
Does the market trend seem obvious? (AXON)
Are there lines when a new product is released? (AAPL)
We make investing too complicated by focusing on quarterly numbers and economic reports. The simple answers are often more accurate than the more complicated ones.
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