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Big Tech Earnings; And Building A Sensible Portfolio

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Whitney Tilson’s email to investors discussing that Amazon, Facebook, and Alphabet  earnings; building the foundation of a sensible portfolio; Q&A with readers on stock declines, vaccines, and Operation Warp Speed; Hard Money’s Million Dollar Podcast episode on China.

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Amazon, Facebook, and Alphabet All Report Big Earnings

1) The first largest tech giants, Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL), and Facebook (NASDAQ:FB) all reported big earnings numbers this week (although Amazon disappointed on revenue and guidance expectations).

I don't claim to have any proprietary, piercing insights on any of them – rather, I can simply recognize the obvious facts that: a) these are five of the greatest businesses of all time... b) they have enormous short- and long-term tailwinds... and c) their stocks aren't wildly overvalued and are therefore likely to outperform over time.

That's why the latter three were among the first stocks we recommended when we launched our first two newsletters, Empire Investment Report on April 17, 2019, and Empire Stock Investor on December 4, 2019. On average, Amazon, Alphabet, and Facebook have doubled since both of these launches versus 52% and 41%, respectively, for the S&P 500 Index.

In my mind, little has changed. If anything, in the aftermath of the COVID-19 pandemic, these companies are even more dominant – and their future prospects are even brighter – than before... which is why they remain open recommendations in both newsletters.

I think there are two important lessons here...

First, sound investing doesn't have to be hard. As Berkshire Hathaway (NYSE:BRK.B) CEO Warren Buffett once said, "I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over."

Second, it's important to build a strong foundation for your portfolio with stocks like these – solid, long-term compounders that are unlikely to blow up in your face. Then, as we've done with both Empire Investment Report and Empire Stock Investor, you can take on more risk in search of even greater returns elsewhere.

For example, in Empire Investment Report, we more than tripled our money with four stocks – Virgin Galactic (NYSE:SPCE), Smith & Wesson (NASDAQ:SWBI), Penn National Gaming (NASDAQ:PENN), and Citi Trends (NASDAQ:CTRN)... And in Empire Stock Investor, we nearly doubled our money on three – Twitter (NYSE:TWTR), Wells Fargo (NYSE:WFC), and ethereum.

If you aren't already a subscriber, you can learn more about Empire Stock Investor – including how to pay just $49 for the first year – right here. And for Empire Investment Report, we have a special deal to get 40% off the regular price for the first year of a subscription... Click here for all the details.

Building The Foundation Of A Sensible Portfolio

2) I'm delighted with the comments and questions I've been getting since I set up [email protected] a week ago to make it easy for my 138,000 readers to communicate with me. I should have done this long ago!

As you can imagine, there aren't enough hours in the day for me to reply to everyone, but I want to publicly address a few of the things I'm hearing most often...

I get a lot of questions about particular stocks we've recommended in our newsletters. Unfortunately, for legal and fairness reasons, I can't give individualized investment advice. But I can say two things:

  • First, we listen to which stocks our subscribers are asking about and typically discuss them in the "Portfolio Update" section in the monthly issue of each newsletter.
  • Second, in response to the common question, "You recommended Stock X at Price Y, and now it's down. What should I do?" In most cases, the answer is: sit tight. We don't claim to have any particular skill in nailing a stock's exact bottom. In fact, it's almost certain that a stock will, at some point after we recommend it, trade below our initial buy price. That's just the nature of investing. If we think you should buy more or sell (the only other two options), we'll say so in either a special update or in a regular monthly issue.

Readers' Comments On Vaccination

3) My two e-mails last week calling on folks to get vaccinated and slamming the people and organizations who are spreading misinformation led to a ton of comments, nearly all at the extremes.

At one end were folks expressing appreciation. Kerry S. wrote:

I have put off taking the vaccine. I'm 71 and can mostly stay at home. But you've convinced me. Considering delta, which one is the best one to get?

I replied:

Hi Kerry,

I'm so glad to hear that!

I'm not sure you'll have a choice – different cities and states seem to favor one or the other – but both the Pfizer and Moderna mRNA vaccines appear to be the best.

Best,

Whitney

Here are other kind comments:

  • "Thank you for your daily report and your COVID letter. You were a large part of why I got both jabs." – Neil S.
  • "Thanks for your clear and reasoned interpretation of the COVID data. It's a real public service." – Skip R.
  • "Thanks for speaking up and using your platform Whitney. Appreciate the use of appropriate words and not dancing around the truth." – Winston H.
  • "What I appreciate most about Empire Financial and you personally, Whitney, is that you actually care about more than my financial future, you care about the lives of people everywhere." – Valissa W.

Alas, many readers had the opposite point of view – and let me know in no uncertain terms:

  • "Need to spend research time on something other than COVID and chastising anti-vaxxers. 99.7% recovery rate. Like the flu. Getting a little long in the tooth. Boring read." – Dave W.
  • "You've made it clear where you stand on vaccinations, now drop it and get back to financial and investing posts. Enough already." – Dale B.
  • "Funny, I thought I had subscribed to a 'financial' newsletter. Again, today's (7/22/21) newsletter content continues to be filled with pandemic statistics from the NYT. Most of this information is all over the media, so 'we get it' one way or another. I don't need a 'financial' newsletter to be filled with pandemic content we get on a continual basis from all other media. I'm looking for 'financial' content." – Tony H.
  • "I don't appreciate being lectured about this or any other information unrelated to your financial knowledge. Keep it out of your newsletters. I don't plan on re-subscribing to your newsletter." – Clint C.
  • "I am deleting my subscription – you are a sham!" – Renate M.
  • "Your support of the vaccines makes you complicit in crimes against humanity." – Cliff H.

My reply: I have a separate e-mail list for those interested in more content about the pandemic (to subscribe to it, simply send a blank e-mail to: [email protected]... Here's a link to the in-depth e-mail I sent around yesterday). But I will continue to share highlights every week or two in this, my daily investing e-mail. Folks who aren't interested can simply delete those particular e-mails – and there's always a permanent unsubscribe link at the bottom of every one of my e-mails...

Operation Warp Speed

4) I wanted to respond to one particular e-mail, since I try to be apolitical in my investing e-mails. Gary H. writes:

Why? Because we had a President, Donald Trump who knew what he was doing to cut the red tape using Project Warp Speed and saved millions of lives!

I replied:

Gary,

You are absolutely right – I've repeatedly given the Trump administration credit for the lightning-fast development of multiple, miraculous vaccines.

That's why it boggles my mind that much of the GOP and right-leaning media, at least until very recently, has, at best, been highly skeptical of the vaccines – a major reason why a recent survey showed that 86% of Democrats yet only 52% of Republicans have been vaccinated.

I would have expected the opposite, with Republicans lining up to get the "Trump Vaccine" to defeat the "China virus."

Best,

Whitney

Hard Money's Million Dollar Podcast Episode On China

5) To follow up on yesterday's e-mail discussing Chinese stocks, I also recommend listening to a recent episode of Hard Money's Million Dollar Podcast by my colleagues Enrique Abeyta and Gabe Marshank here, in which they discuss the perils of investing in China.

Best regards,

Whitney

P.S. I welcome your feedback at [email protected].