James Maskell

Buying a few stocks

29 September 2015

I bought a few stocks recently. After years of sitting on the sidelines, constantly saying “I wish I hadn’t wimped out on buying that stock”, I took the plunge. None of my bets are huge, but I want to have some skin in the game. With each stock I had a few simple rules:

  • Buy for the long term — no short term trades or “flips”
  • No panic selling — stocks are volatile and I need to ride that out to make a profit
  • Know something about the company — use their products/services, or know enough about them; no buying based on analyst opinions
  • Don’t invest more than I can afford to lose

Here’s what I bought:

1. $AAPL

Apple is undoubtedly the iPhone company, and much of the current value is tied to that one product. The iPhone currently seems unstoppable — I’m seeing many people switch from Android to iOS, growth in China seems to be continuing, and the second hand market remains strong. I’m also betting on Apple successfully entering other industries (e.g. with a car) at some point in the next few years.

2. $AMZN

I primarily bought Amazon stock on the success and strength of AWS. It’s not just the default for many startups, either. I’ve seen first hand how a number of enterprises are increasingly using it to host their services — and how rapidly that scales. Second, Amazon’s e-commerce offering keeps getting stronger, particularly if you have Prime membership. My behaviour is to go to Amazon first, before other retailers. I’m rarely looking for the best price, and will often pay a little bit more on Amazon for the convenience. I’m curious to see whether the focus on additional services for Prime members (e.g. video and the acquisition of Jeremy Clarkson et al) draws others in — and whether those people buy more products from Amazon.

3. $DIS

This was a fairly simple decision based on the films that Disney is releasing this year — including the latest Avengers and the new Star Wars film — and my expectation that Disney will fully milk the Lucasfilm cash cow (as we’re seeing from the announcement about Star Wars theme parks). There’s also the possibility of further acquisitions, such as remaining Marvel characters from Fox (X-Men) and Sony (Spider Man) or maybe even DC from Warner. One concern about Disney is the dependence on income from cable TV — which is obviously a declining market. However, given that they own such great content (a lot of which is sport), I’m positive about the prospects for online distribution (either going it alone or in partnership with other companies like Netflix).

4. $FB

A few years ago, I considered buying Facebook stock when it slumped down to $20 a share. I regret this now and ended up getting in at $90! I’m still bullish on Facebook and am continually impressed by their growth in mobile (and acquisition of companies — Instagram, WhatsApp) that threaten their core offerings. Instagram and WhatsApp are both huge (and still growing), and monetisation is just beginning. We’re also seeing the beginnings of businesses offering customer support on both WhatsApp and Messenger — both potential goldmines. In addition to this, Facebook is overtaking Google in it’s ability to drive traffic to other websites, and stands well placed to capture the value from brand advertising as it shifts from TV to the web.

5. $TWTR

This is probably the biggest bet I’ve made. Twitter has utterly failed to execute over the past couple of years, and has completely missed the opportunities and low hanging fruit offered by such a large and engaged user base. I bought a small amount of the stock because I think that could turn around if the board appoints a strong product focused CEO (cough Jack Dorsey cough) who can see the wood from the trees. There are also a few other specks of opportunity — Vine has been growing quietly, and Periscope has had a great launch.

I’m also considering:

1. $MSFT

Microsoft seem to be making great moves under Satya Nadella. Killing unsuccessful products/businesses (e.g. Nokia), and focusing on the future. I think they stand to gain from the move to the cloud, and have made some great acquisitions in mobile (Outlook is currently the best iOS mail client, and sits with Wunderlist on my home screen). Office 365 is starting to give Google Apps a run for its money.

2. $NFLX

Broadcast TV is dying — people (particularly kids) are watching less and less live TV and switching to on demand viewing. I think Netflix stands to benefit from this — particularly with it’s investment in original content (of which I’m watching more of). It’s also much easier for the company to build a global network than it was for any traditional broadcaster. My one concern is that Netflix could lose a lot of its back catalogue if studios start to see it more as a threat than an additional source of revenue, and what impact that may have on subscriptions.

3. $TSLA

I love Tesla cars, and it’s obvious (particularly following the VW scandal) that electric is the future, but I’m not sure what the car market looks like in that future. We seem to be moving to a world where people lease rather than own assets, and the higher utilisation will mean fewer units sold. The car market is ripe for disruption — but I don’t know whether that disruption will come from an existing player or someone new (like it did with phones). Tesla would be more of a bet than other companies on this list (I feel like I understand it less), but it would be fun to get on board for the ride…