Eclectic Thoughts From an Eclectic Mind

G'day (or G'evening if you are reading this at night),

Firstly, let me apologise about the gap between these articles. I know reading my thoughts is the highlight of your week.

The main reasons for the delay simply are that I've been busy and most of the writing I've been doing is for the book (and I expect you all to buy a copy ;) )

This one is going to be an eclectic mix of various thoughts and no real theme but hopefully it isn't too all over the shop.

Thought One - Consumer Staples Have Changed

The typical thoughts around consumer staples is that these are necessary items that mostly have fairly fixed demand. I.e. food and most of the things you will buy at a supermarket but as we saw during Covid at times there can be supernatural demand for certain items like toilet paper.

However, recently I have come to the belief that some items that were once considered to be luxury or discretionary have moved into the staples space. The perfect example of this comes from the electronics space being computer technology and mobile phones. Just imagine the device you are reading this on becomes cactus, for most people this would be a problem that needs to be fixed immediately. I.e. if my phone died, I need an urgent replacement because without it I can't communicate to the world, same with my desktop, laptop and even tablets.

While goods like TV's, couches etc will still remain discretionary purchases I believe that there is a real shift in consumer needs regarding the "staple" or essential nature of many electronic devices. If I am correct (and obviously I believe that I am) this means that the earnings of many of the retailers of these devices are going to be more economically resilient and less recessionary affected that the current P/E's and prices of these companies reflect. It's a question that I am giving extensive thought to and yet have not reached a definitive conclusion as to whether it is a prudent decision to add exposure to this sector.

Thought 2 - There's Nothing Wrong About Being Wrong

I know that this sounds like an oxymoron, of course if you are wrong something has gone wrong. Failures and mistakes are what enables us to learn, grow and evolve. It is an essential part of our journey through life.

The key however is to put measure in place to ensure that the downside risk is mitigated and be self aware enough to realise that you have made a mistake. There is nothing like making the decision to burn good money by chasing and doubling down on "bad money".

Thought 3 - Mental Health and The Importance of Talking

For those of you that know me, I'm not the most emotional person on the planet. I jokingly tell people that I have the emotional range of a teaspoon. Maybe this helps when I invest as it means that I don't get too excited if an investment makes money and I don't get too disappointed if it goes against me??

However, recently I've had a few friends and clients reach out to say that they are struggling a bit. I'm immensely glad that they did. If anyone reading this is ever struggling, my door/phone is always open but the best thing to do is to reach out to someone.

Rather than talk about their issues, I'm going to share something that very few people know about. I've had times where I've been down. In fact, about 4 or 5 years ago over a couple of beers I broke down and cried like a toddler that's lost their candy.

I wasn't too long into business and I was terrified/alarmed/worried/concerned that I had made a major mistake. Business wasn't going the way I thought it would, I (stupidly) expected that as soon as I announced I was open people would be knocking my door down.

Needless to say, for 99% of businesses this doesn't happen.

Over the course of enough tears to fill a small lake, a beer and a real conversation I was feeling immensely better. It's an inherent human desire to help those we love or care for, so don't be afraid to show "weakness".

Thought 4 - Twitter and Elon

I love using twitter, although almost all of you would hate my feed, it's all just finance related. But that is why I love it, I have been able to build my own personal feed where the vast majority of the content is directly related to content that I am interested in. Awesome. I recommend not following me on there though, I don't really post anything interesting.

As you know, Elon has bought Twitter and has found a way to slash and burn his way through an insane percentage of the workforce already. This is either going to destroy the back end of Twitter and the company is going to have immense issues or alternatively Elon is correct and the majority of the staff fired were just milking the corporate teat for as much as they could.

I am in two minds on this one. Firstly, as much as I believe Elon has changed the world I almost believe that he is a compulsive liar (fake solar tiles, promising autopilot annually for a decade and charging for it), a reckless gambler with others funds (allegedly used what were meant to be segregated client deposits when Tesla was close to bankruptcy) and his companies have benefitted more from Government subsidies/policy than any other in history. Needless to say, I am not a fan. Yet the man has put a rocket into space and made electric cars cool. I have to respect that.

Secondly, I believe that most government departments and big companies are dramatically overstaffed for the work that they do. If Elon is able to successfully run Twitter with a skeleton crew, this would just help further validate my opinion.

I'm going to be watching this unfold with enormous levels of curiosity.

Until next time,

Tyso

*oh and as always, don't trade on anything I write in these articles. This isn't advice and if you were to get advice from me you would have paid me for it and it would be personalised.*