“If we can keep our competitors focused on us while we stay focused on the customer, ultimately we’ll turn out all right.”
— Jeff Bezos
Black and White. Red and Blue. Yin and Yang. Yogi and Boo Boo. Tweety Bird and Roadrunner. Dodgers and Yankees. Raiders and Steelers. Are you noticing a pattern? The examples given tried to demonstrate opposite pairs. In statistics, if you take the two outlying extremes and average them, you usually are going to be close to the middle ground. It is of interest to anybody investing to pay particular attention to extremes because over a long period of time, often times the extreme condition cannot last. First, let me give you a few personal moments from the last week which might indicate different levels of the customer experience. Let’s start with the good one first.
Last week I attended the excellent LD Micro Conference, put on by the unforgettable Chris Lahiji. The LD Micro Event is by invite only, so you cannot just show up and expect to get in. I am fortunate to have that opportunity, and will be attending in the future. The conference had over 200 small companies presenting in nearly every industry you could think of. The setting was fabulous, the food was good, and things ran like clockwork. If a presentation was supposed to start at 8 am, guess what, it started at 8. I met quite a few interesting and nice people and really think there is plenty of opportunity in some of the enterprises that I learned about. It does not mean I will invest in any of them, or I won’t, either. What I did appreciate is the effort people made and thought it was a first class event. Chris is one of a kind, and anyone who has met him immediately recognizes he is a genuine person. Over the course of my life, I crave real people and genuine authenticity. If you walk it the way you talk it, I’m in. My worst experiences in life have been with people who don’t do what they say they will do. Conversely, the best situations have been being involved with entities that do exactly what they say they will do. I would note that is quite applicable when one invests capital, probably even more so. Capital wants dependability and predictability and hates disappointment. Watch a company’s stock when they pre-announce a shortfall or badly miss an earnings estimate, it is brutal. So, let’s now turn to the bad experience.
(cartoon provided by cartoonresource)
In what seems to be a recurring theme in my life, and millions of other people’s lives as well, the airport experience took way too many hours of my existence. I purposely scheduled a flight at a time that I thought would pose no problems. I get there a few hours in advance, go through the full cavity body search and hostile TSA questions as best as anyone can. Relieved, I struggle to the gate, pay unreasonable prices for a smidgen of nourishment, and try to settle in to get on the flight back home, a whopping 40 minute one. Fourty five minutes before takeoff, the power goes out at the terminal, and later we find out it was the entire LAX airport. We wait two hours, and every ten minutes get an announcement telling us that, sorry, there is no news about the power, but we will let you know when there is. Thanks. Finally, at 9 pm, they cancel all the flights that night. By the way, the airline I was on sent me a text saying the flight was cancelled, but if you want to reschedule, click here. I did, and the page did not work. I call the phone number they include in the text, and I get an hour wait. The next day, I get a message that my flight was rescheduled for 11 pm the following evening. Not being the most patient sort, I manage to get a rent a car and drive through the night back to Vegas, arriving at three in the morning. Lovely, just lovely. So there you go, two opposite examples of the customer experience. I am sure you have similar examples of both good and bad, and if you want to share them with me, please feel free to email.
In the markets this week, the Trump tariff tango continued as negotiations with Mexico eventually proved there is a middle ground after all with border security. The May jobs report came in quite soft at 75K jobs created versus an estimate of 180 thousand. Along with a retreating ten year bond yield barely hovering above a whopping two percent, investors see the weak report as a lock that the Federal Reserve is now going to cut interest rates, and at the very worst keep them where they currently are. What does that mean? Quite simple, hit the click the buy button, program the buy algo my dear chap, and that is what they did, with the market having quite a week on the positive side. On the earnings front, Beyond Meat showed it was no hamburger by beating estimates, while Zoom did exactly that by blowing away estimates. Those companies help their credibility immensely with good numbers, and the stock responded. Clearly, the customer experience they provide is working, and is genuine, at least now. Regardless, keep it real, and I hope summer is treating you well.
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Yale Bock, Y H & C Investments, its clients, and the family of Yale Bock have positions in the securities mentioned in the blog, Investing in securities involves risk and the potential loss of ones principal. Past performance is no guarantee of future results. All investment decisions should be considered with respect to ones risk tolerance, return objectives, liquidity needs, tax considerations, and one’s overall financial situation. The fact that Yale Bock has earned the right to use the Chartered Financial Analyst in no way means or guarantee performance better than market indexes.