Castanza

Didn't Netflix just miss on user growth by a few million? You're absolutely right when you say it's all about content. This "r&d" cost will likely skyrocket as competition increases and the need to push out better content quicker to compete grows. However, I do think Netflix has some pricing leverage on the table that they aren't currently utilizing. How do you feel about FB Libra. The company in general seems to constantly put themselves in the crosshairs of big government. But who knows? I mean Nancy Pelosi does have a bunch of LEAPS. Also have been looking at MSFT. Took a small position when it was in the 90's earlier this year and will certainly add if another opportunity presents itself. Can't really say enough good about Google. They are the gold standard in so many sectors.

+ Berry Had this on my watch for a bit. Finally a good entry point.

Adding to $MO

I get that you think Einhorn is an idiot, a point that has been repeated ad infinitum on this board in recent years. Do you have any actual thoughts on the point he's trying to make here? I thought the Pets.com-Chewy parallel was an interesting one. Of course Einhorn leaves out alot, like that Pets.com was nearly pre-revenue when it IPO'd. Chewy is an actual business. Pets.com was never much more than an idea. More broadly, I think the profitability of selling dog food on the internet is still an open question. Zooplus in Europe looks like it operates around break even. Even more broadly, I agree with Einhorn that many US companies seem priced for something close to perfection. For what it's worth, when I was at UPS I remember whenever the Chewy's contract came up for bid UPS pursued it hard. Dog food deliveries were (for UPS) high margin. Dense heavy product packed in a box as small as possible that was pretty much a recurring monthly shipment. Pet food deliveries were always increasing yoy. Again, from Chewy's perspective can it be profitable? I don't know. All I can say is, the demand seems to be there for the product and delivery service. Customers had nothing but good things to say about it. Women loved not having to pick up 50lb bags at the grocery store. Cat litter is also another big one. That's really interesting, thanks. From Chewy's website FAQ: "Orders over $49 ship free! All other orders ship for a flat rate of $4.95." I wonder how much their average cost to ship a 50lb bag of dog food is? IDK but Amazon will ship a bag costing $26.74 for free. https://www.amazon.com/Purina-Chow-Complete-Food-Bonus/dp/B00PFXFH6O Well if you do a quick shipping quote on UPS website for a 40lb bag (retail $27) 26x16x6 Standard Ground service in state = $28 shipping cost. I used a local Amazon warehouse to my houses address. Things this doesn't address: - Manufacturer -> Amazon cost - 2 Day shipping - Labor fee for packaging, handling in warehouse I don't see how Amazon or any company can pay for the shipping costs on this. Dog food (according to the internet :P) is a low margin product from the manufacturer. - The original manufacturer certainly isn't taking a loss on this - UPS certainly isn't taking a loss (although they are only making pennies) - Amazon almost certainly IS taking a loss and subsidizing the costs.

Whats the reason for the switch? You see more upside with PayPal? Long term yes. Short term also capitulating to any bearish ideas. The original idea was to invest in some recession-resistant dividend paying companies with at least some pricing power. But growth has totally outperformed this idea. Mostly I think I need to move towards a more passive (indexing) option, at least for the near term (3-5 yrs I'd guess). Over the last year I haven't really had the time/energy/pleasure to actually do any investment research, and the results reflect it. Even worse, I haven't really cared... The reality is given my situation (age, net worth) my ROI is higher concentrating on my career than on my portfolio (ROI both in terms of amount and volatility of cash inflows). Something about whole-assing one thing vs. half-assing two things ;D ;D Thanks for the response, always love a good Ron Swanson reference.

Whats the reason for the switch? You see more upside with PayPal?

Kicking myself one month later...who would have thought this was going to keep running?!

With how ridiculous IPO's have been it's becoming tempting to try and make some short term plays with a little bit of cash. Buy a few shares, ride the wave up and dump. Find value where it's at right? :P. I know as soon as I try this I'll get burnt. Looks like more Brk.B it is!

Is it a first mover? We've been ordering cat food and cat litter from Amazon for ages... Amazon has some 1st-party availability issues, but for the things it carries the prices are a bit cheaper than Chewy and shipping is free with Prime (vs $49 spend to get free shipping with Chewy). Chewy has only seen 9% net sales per active customer growth. Not sure if that can be called a great number but it does show some margin of customer "loyalty". The competition basically offers the same deal 30% off for subscribing, exclusive deals and of course free shipping. I'd imagine margin on pet food if low. And it certainly can't be cheap for these companies to front the shipping costs. Does the average consumer even know the difference between Petco, PetSmart and Chewy? Who owns who etc? I doubt it. As far as allegiance goes I bet customers stick with whoever they buy from first. Buying pet supplies is more like a utility payment than anything else. Out of sight out of mind. I don't think it's necessarily first mover that's important. More so first to acquire. Why else would these companies all be offering ridiculous discounts where they are probably losing money? It's all about getting people to sign up.

I get that you think Einhorn is an idiot, a point that has been repeated ad infinitum on this board in recent years. Do you have any actual thoughts on the point he's trying to make here? I thought the Pets.com-Chewy parallel was an interesting one. Of course Einhorn leaves out alot, like that Pets.com was nearly pre-revenue when it IPO'd. Chewy is an actual business. Pets.com was never much more than an idea. More broadly, I think the profitability of selling dog food on the internet is still an open question. Zooplus in Europe looks like it operates around break even. Even more broadly, I agree with Einhorn that many US companies seem priced for something close to perfection. For what it's worth, when I was at UPS I remember whenever the Chewy's contract came up for bid UPS pursued it hard. Dog food deliveries were (for UPS) high margin. Dense heavy product packed in a box as small as possible that was pretty much a recurring monthly shipment. Pet food deliveries were always increasing yoy. Again, from Chewy's perspective can it be profitable? I don't know. All I can say is, the demand seems to be there for the product and delivery service. Customers had nothing but good things to say about it. Women loved not having to pick up 50lb bags at the grocery store. Cat litter is also another big one.

My impression is that wide moat companies like MSFT, as well as Big Tobacco have actually done very well after being subject to intense regulatory scrutiny. Ditto for the Ma Bell breakup. I was wondering if anyone could think of any counterexamples.... Also, it has come to my attention that I neglected to finish giving this thread a title. Oops. I think this is exactly why FB is embracing and basically begging for govt regulation. It's easier to drive when you know the road ahead.

LOL...laughed way too hard at this. But I concur.

$MO - added a bit

Interesting article https://www.cnbc.com/2019/07/17/foreign-purchases-of-american-homes-plunge-36percent-as-chinese-buyers-flee.html

It's also a historical index of your life events. It has symbolically replaced scrapbooks and baby albums (to an extent) The longer it has been established the harder it will be for people to leave all that behind. I think there is a sense of effort from the user perspective. The idea that you're building something to be able to look back on has value in and of itself. But let's not forget 2.5B active users....that number alone is insane.

I think the odds of Goggle, FB or Amazon getting broken up is slim to none. There are plenty of search alternatives out there (DuckDuckGo if you value privacy). When Zuck called out the government and openly asked them to regulate them it came across to me as an impossible challenge. I like Mark Cubans response. https://www.cnbc.com/video/2019/07/12/billionaire-mark-cuban-on-breaking-up-big-tech-facebook-and-more.html

I think you're underestimating Facebook and its importance to society. Smoking cigarettes is also unappealing to most smokers. Yet they are addicted and can't quit. The figure always changes, but it's something like 65ish% want to quit but don't. Not a perfect comparison as traditional cigarettes are declining. But Vaping is increasing. But I'm trying to highlight the addictive nature of FB and social media.

This would do wonders to help people grow up. Personal sacrifice has taken the back seat to "me too" - to the detriment of the country. How do you strive for a tougher society when institutions are continually removing the toughness factor from everything. Gym class, Boy/Girl Scouts, everyone gets a trophy, lower military standards, the anti-traditional male propaganda, rapid decrease in person to person interaction, safe spaces, coaches getting fired for yelling at players, continual glorification of obesity, etc etc.

Much if the US power grid is 2nd world standard at best. Wooden poles leaning over until they fall down, transformers that look they are from the 60’s and high voltage lines strung and cobbled together are the norm. I list power last winter in an apartment I rented for a week. However on the plus side, electricity is fairly cheap compared to Europe when you get it. Most larger industrial facilities have multiple power connections for redundancy. Which just goes to show how massive infrastructure projects could easily increase productivity. Would be such an amazing positive economic investment. What is the US currently missing? The one thing I can think of is mobile network and wifi capability. But this is already really good. Especially when you think about how big the US is geographically. And in the high population areas access to these services is already good. Practically everything needs upgrading. A few examples in this thread. Another one: http://t4america.org/maps-tools/bridges/overview/ "68,842 bridges – representing more than 11 percent of total highway bridges in the U.S. – are classified as “structurally deficient,” according to the Federal Highway Administration (FHWA). Structurally deficient bridges require significant maintenance, rehabilitation or replacement. A number of bridges also exceed their expected lifespan of 50 years. The average age of an American bridge is 42 years." I get that, but the majority of those highways and bridges are still being used regardless. It's more about safety than efficiency. Now if we're talking about adding new routes and lanes sure I get the efficiency/productivity argument. It's like companies who are still running Windows 8. Yeah there is a better product available; but can you justify the cost with the marginal (arguably zero) productivity increase?

Much if the US power grid is 2nd world standard at best. Wooden poles leaning over until they fall down, transformers that look they are from the 60’s and high voltage lines strung and cobbled together are the norm. I list power last winter in an apartment I rented for a week. However on the plus side, electricity is fairly cheap compared to Europe when you get it. Most larger industrial facilities have multiple power connections for redundancy. Which just goes to show how massive infrastructure projects could easily increase productivity. Would be such an amazing positive economic investment. What is the US currently missing? The one thing I can think of is mobile network and wifi capability. But this is already really good. Especially when you think about how big the US is geographically. And in the high population areas access to these services is already good.

I share your long-term enthusiasm given the evolutionary (and cooperative) nature of humanity, despite the negativity and divisiveness that often oozes from online exchanges. The other day, I was discussing with my daughter (studies software engineering) and she was explaining how it was becoming possible to detect when an exchange was about to become abusive (previous behaviors, nature of the exchange, words used). This is quite similar to discussions around the dinner table but online exchanges lack non-verbal and other cues. Some people have tried to use bots during Twitter exchanges that would introduce empathic comments at opportune times and it seems to work quite well :) Also, in-group discipline and posts leading by example seem to be helpful. Back on topic, what is perhaps surprising is the relative low frequency of power outages given that the City That Never Sleeps sits on the oldest and largest underground network of electrical wiring and connections in the world with some of equipment (5 to 10%) dating from the 1880's, at a time when Edison himself was 'playing' with electricity and contributing to the debate about the direct and alternate current. Maybe the timing is good with ultra-low interest rates for major infrastructure upgrades but progress is being made as, a few years ago, Con Edison moved from reactive maintenance to preemptive or preventative maintenance using modern statistical tools and even machine learning in order to, for instance, predict where and when the next manhole fire or explosion will occur. But more work needs to be done. An interesting feature about the redundancy principle is the fact that the City of New York is presently negotiating a long-term electricity supply contract coming from hydro power in my jurisdiction. Of course, the political message is centered on the 'clean' energy aspect but diversification of inputs may also be helpful for secondary prevention of power outages and help the grid be great again. How does the frequency of outages NYC compare to other large cities? I guess it depends on how you look at the situation. If you're a civil engineer you're probably thinking "These people have no idea how messed up this system is and difficult it is to keep this city running." but the citizen is thinking. "Why can't the power company just do their job!"

I did spell it that way on purpose on case anyone was wondering :P But you are probably right. Media definitely exaggerates real life. But there certainly are differences. However some of those differences are for the better (racism). I think humanity and our ability to communicate in personal ways is going downhill. It seems like most people don't even know their neighbors. cAstanza

One of my favorite episodes of twilight zone is The Monsters Are Due on Maple Street and it hits on this theme. I have a home in the mountains so Im kinda use to prepping for things like this for longer times than normal as its not uncommon to have roads be block for extended amounts of time. The thing that scares me most about society today is the general lack of kindness or willingness to help. People during the depression for the most part tried to be respectable and held each other accountable. People back then seemed to work more for the collective. Sure, selfishness has always been a general theme of humanity, but today people are me me me me me. And we get small glimpses of this during natural disasters.

Yup the older cities in the US certainly have more issues. Especially as population grows. Philly is also a mess.

Not to derail the topic, but I was talking with my Grandfather about this blackout (Who was a kid/teen during the depression). He raised the question of what would it look like in these cities or heavily developed areas if we truly hit another depression. People are so reliant on modern day tech, systems, and processes. How many people still grow gardens or have any type of fallback for things like this? I love visiting cities as much as the next person. But I'm certainly glad my wife and I recently purchased 10 acres to build a house on. I'll get off my soap box now :P NYC does need to get their infrastructure in check. And this is coming from a Pennsylvanian :P