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Stock Squawk 🦜 - Interview with 7investing's Simon Erickson

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Stock Squawk 🦜 - Interview with 7investing's Simon Erickson
By Parrot 🦜 • Issue #26 • View online
Welcome to the Stock Squawk Newsletter! Subscribed to follow my investment journey, learn about investment strategies, and of course discover great stocks!
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Preview
This issue (#26) marks six months of writing this newsletter. In the past 6 months we’ve grown from 0 to over 1300 subscribers, have an average of 72% engagement, an email open rate that’s never fallen below 50%, and a “click” rate as high as 17%. What does all that mean? I have no idea 😂, I just know you all keep coming back every week to read about the things I find interesting; and I appreciate each and every one of you for it. 🙏
To celebrate, this week we’re doing something different on Stock Squawk. I’m hosting my first interview! Who better to start off with than Founder & CEO of 7investing, Simon Erickson!
Here we cover a wide range of topics, many crowdsourced from your questions on Twitter.
Topics include: building 7investing, semiconductors, Ad Tech, Crypto, Healthcare, Insurance, Quantum Computing, what the future holds, Ab Lincoln, and… High School Dating!?! 🤔 (you’ll have to read to find out)
Some tickers discussed include: $AAPL $TTD $SNAP $CLPT $DMTK $HOOD $NNOX $AMD $BFLY $TSLA $NVDA and more…
Don’t miss the SPECIAL OFFER at the end of this issue… Let’s get started!
*interview held 10/26/21; edited by Parrot for readability (any errors are mine)
Introduction
Parrot: Simon, welcome to Stock Squawk. I appreciate you taking the time to chat with me. We’ve talked a few times, but I’m excited to share your thoughts with the rest of my audience. So first, tell us about 7investing and what you guys do.
Simon: Well, thanks very much for having me. I’m excited to be here as well. Our company at 7investing is long term, buy and hold investors. We have what we’d like to call a diverse buffet of options that we present for individuals to choose from every single month. They represent our favorite stock ideas. But, we also think that investing is very personal; and so it might include a combination of high risk stocks or of low risk dividend paying stocks. We want to give a full buffet of options for investors to find the best stock market opportunities that are available. We pack them together, put them into a subscription product, and you get access to all seven of our advisors each and every month.
Parrot: It’s a big leap of faith, leaving a steady paycheck and building your own business. What gave you the confidence to go out and build something on your own?
Simon: Confidence, or craziness? I’m not sure which it is sometimes. [laughs] Some of us are perpetually just stuck in fifth gear. It drives our spouses crazy, to be go-go-go all the time. But, for me it’s just rewarding to get to unleash that. It’s a small business, you know, and a smaller team. It really is an opportunity to jump into the deep end and do a lot of things that I was always wanting to do with my professional career. And, I think that was kind of the driving force for starting 7investing: Go out and find some other really good investors and say, “Okay, what if we turn these amps up to 11? What could this possibly unlock for us?”
That was the whole idea. I mean, I think that as an entrepreneur, it’s been an incredibly eye-opening experience for me. Both as an investor – just seeing so many different viewpoints that I wasn’t considering before – but also other things like leadership and management. And to run a company that you build from scratch from zero revenue and try to put something together that’s truly world class and really valuable for people. But a lot of fun. A lot of work, too.
Parrot: Yeah, a lot of work. You’ve come a long way very fast. Congratulations, by the way. 
Simon: Thanks. 
Building the Team
Parrot: Feeding off of that, what’s your criteria when you’re looking for an advisor to join the 7investing team?
Simon: Well, a lot of the advisors on the team I’ve actually known for quite some time, some coming on a decade now. I was certainly looking for people that wanted to be very thorough in the research that they were doing. I didn’t want to find people that were just looking at earnings, or quarterly updates, or a lot of the other things that so much of Wall Street or institutional investors are looking at. I wanted people who were experts in their fields, that I could say, “Okay, what is really going on out there?” And, they would be a very trusted opinion that I would know that they knew what they were talking about.
So what I tried to do with 7investing was put together that type of team. One who was looking at a whole bunch of different sectors and thought about things differently; but would also gel together as a team of seven advisors.
So examples of this:
We’ve got Steve Symington that has been working in artificial intelligence since he came out of undergrad, he really knows why certain companies that are adopting AI are going to be successful and others are not.
Anirban Mahanti, who is our Sydney based Australia advisor, has a PhD in computer science. He did a lot of preliminary work in internet work packet exchange. This became the backbone of what Netflix’s business model eventually was built upon; this kind of stuff. He actually just got Starlink down there in Australia. He reconfigured it and then called Starlink and said “This is how you can reconfigure people in my neighborhood to get the latency better.” I mean, stuff like that.
Dana Abramovitz has a PhD in biochemistry. She worked for years in genetics and just understands the health care system of America inside and out.
I mean, those are the kinds of people I was always looking for. I was fortunate enough that I’ve known several of them and met several of them from my professional career.
And then, Parrot, what I basically did was I applied my high school dating approach to my professional hiring approach: I continued to ask them until they finally said yes. I wore them down. And man, we put together a rockstar team of advisors. I’m really excited to work with every one of them every day.
Parrot: You’ve put together a great team, I learn something new from each of them every month. Even in areas I may not be interested in investing in, just reading their thought process on companies I find helpful.
You mentioned that 7investing is built on finding long term buy & hold stocks. How do you balance new recommendations with those that you’ve already recommended – and still believe to be the best current opportunity?
Simon: For us, it doesn’t really make a difference if it was a recommendation before or if it’s a completely new idea. We always want to take the mindset of what is the best pick in the market right now. So if you’ve recommended it once, that’s great. If you’ve recommended it three times, that’s great. If you’ve never recommended it before, that’s also great. For us, it’s always a starting point is the same and forward-looking.
For me, I tend to think of it in terms of how markets are changing and which markets I’m most excited to be a part of right now. So it’s a top down investing approach. From there, I will typically say, “Okay, this is where I really want to be. What are three or four companies I’ll typically get to, in that space?” Then I start to really look and put the hammer down on every one of them and say, “Okay, what is the best investment idea that I have – based on this market that I really want to be a piece of?” And, each of our advisors is different. We have different approaches; we have different ways of looking at the market; but, for me personally, it typically comes down to I see something happening out there that’s a really big catalyst and a big opportunity. Then find the right company to benefit from that.
Red Flags
Parrot: When you’re narrowing it down from four or five companies in a space, can you give us an example of a company that you initially liked but found too many red flags to recommend? What are some of those red flags that are recommendation killers?
Simon: Yeah, I think the best example for this one is actually Robinhood, who kind of really got people excited about zero commissions. You know, no fee trading. It seemed in the beginning like it was a great opportunity, right? It was going to encourage the individual investor to not be paying fees. Of course, you get to put that money in your pocket if you’re not paying for commissions.
But a closer look at how they had organized their business showed that there truly was no free lunch. This wasn’t as fantastic as when they first were founded and the company was getting a lot of attention. There were certainly some skeletons hiding in the closet, in my opinion. One of them is around payment for order flow. For anyone unfamiliar with this, there is a middleman that sits between the exchanges and the brokerages that is actually fulfilling the trades themselves. This is also called dark pools of capital or dark pools of trading. There is a kickback that brokerages often get for fulfilling those orders, and they also give access to the trading information that goes into those.
Robinhood is very, very highly involved in payment for order flow. This is something that was outlawed entirely in the UK because it did not represent the best pricing for the people that were placing the trades themselves. And there’s some questions right now of whether it’s going to become illegal in the United States. At the time of Robinhood’s genesis as the company, half of their revenue was coming from payment for order flow. So that would be very substantial if something like that were to disappear. Then the other half of their revenue was coming from interest from margin people were taking out on money they didn’t have the funds to be buying stocks with right now. That’s always a financial weapon of mass destruction when you’re using margin. Especially if you have a platform that’s kind of encouraging or gamifying the trading experience and trying to get people to place as many trades as possible. Not only so they could capture payment from order flow from those high frequency traders, but also so they could capture it from margin.
Just a really broken business model, in my mind. It was a company that was portraying itself to be the people’s champion. But in reality, there were a lot of holes in the business model that I just wasn’t ever comfortable with.
Parrot: That’s a great example. We’re doing this interview on Tuesday Oct. 26th. and Robinhood just reported earnings and had a pretty big miss. So good timing on that example. Along those same lines, your model is buy and hold forever. But, could you see there being a case where you see too many red flags on a previous recommendation, and you’d make a sell recommendation?
Simon: Absolutely. And that’s actually a conversation we just had recently with our 7investing team. We each brought one company per advisor to discuss as a team as a potential sell. We identified some red flags, not necessarily thesis breakers or investment busters, but things that we just didn’t like that were manifesting for several of our previous recommendations. We brought them all together as a team, we took a real close look at all of them, and we said to ourselves, “should we issue a sell recommendation because we’ve completely lost faith in these companies?” And I put a bit of a disclaimer on that, because a lot of times we actually trick ourselves into selling at the wrong time as investors. A lot of the reasons we sell in practice is based upon valuation. We’ve seen a stock price go above what some institutional investor might have said was the price target for that company. We’ve thought that it’s run up too much and it’s gotten too expensive. A variety of other things we sell out of the right companies at the wrong time.
But the real reason we think that you should sell is if there’s just a permanent impairment of the business or of the company’s capital or revenue. If that’s the case, then we would really recommend that people would get out of those types of companies. We looked at seven companies, like I mentioned, and we concluded that we weren’t going to issue sell recommendations for any of them. We’re going to let all of them ride on the 7investing scorecard. It was something that we published as an update for our subscribers, I think it’s a good activity to go through. To look at your portfolio and just say, “okay, there are some things that aren’t looking great right now. Is this a short term headwind? Or is this a really big long term problem?” If it’s something that a company just can’t get itself out of, there’s really no reason to hold on to those in your portfolio. There are too many better options elsewhere.
Parrot: That’s a great response Simon.
Personal Investing
Parrot: Jumping to your personal investments a little bit, do you only invest in long term shares, or do you use options, leaps, or any short term strategies?
Simon: Well, the market is continually a salesman that appears on your doorstep. He’s either really excited about the stock because there’s a cheery consensus and it’s at a high valuation, or it’s really just the complete opposite, really depressed and just going to give you a bargain on this because nobody else is wanting to buy it. The stock market is a giant auction that’s taking place all the time. So if you find great companies that are on sale that you already own, I think those are always opportunities to add to them. I personally, every time, every single time that I ever buy a new stock, I have the intention of holding it for at least three years. Preferably five years. I still have stocks I’ve held for a decade or longer. But I do add to them over time. And to your question about options, I will at times write puts or establish a synthetic long if I want to add into a position at the right price. Typically, I rarely back the truck up into a full position right up front. It’s almost always, especially my biggest winners, I’ll add over time.
Parrot: Thinking about one of my faults, when I hear about a new company; or read a 7investing article and hear about a new business; I often get really excited. I get the urge to jump right in with both feet. You mentioned you like to average in over time, how do you manage your excitement and stay focused on your core positions and not get stretched too thin?
Simon: Well, I’ve got two great quotes for you to frame my answer for this one. The first one, I believe was attributed to Abraham Lincoln. I don’t know if he said that or not, but it’s attributed to him. He said, “The best way to predict the future is to create it.” The second quote is from William Gibson, the author, who wrote “The future is already here, it just isn’t evenly distributed yet.”
So when you think about the combination of those, it’s not like you’re throwing darts at how things just all of a sudden come out of nowhere. They’re the result of long term pain points that the market is experiencing, even IPOs. Even the process of companies coming public takes years, if not decades. From the founding and the way that they’re originally raising private capital to finally getting to the public markets. It takes a very long time. So I balance my enthusiasm.
To answer your question of how do you manage your excitement, stay focused. I look for those developing trends and try to stay as close to them as I can for years. When they do have options for publicly traded companies, I jump on them.
Some actual examples of what I’ve done in just recent years:
One is the recent “Buy now pay later” trend. This is getting a lot of headlines right now. But years ago, this was just being called transparency in finance. You know, this was shots across the bow of the credit card companies and how they weren’t disclosing either the interest rates that they’re going to charge you or the late fees that they’re going to charge you. Things like this have been a problem in the industry and discussed at industry conferences for years if not decades.
Privacy concerns on the internet. We’ve seen this for years, and it’s been regulated very differently in the United States and in Europe. Now we’ve got an entire ad tech ecosystem that’s figuring out people can opt in to view web sites. How is that going to impact, you know, programmatic advertising and targeted advertising? It’s all related to privacy and the experience of how people want to give their information to websites.
Drug delivery is another one. That’s a really hot topic right now. You know, we’re hearing a lot about CRISPR and gene editing. There’s also a huge challenge in the scientific community of how do you get drugs of any type or any therapeutic to the right part of the body that it needs to be in? It’s extremely challenging. It’s something that’s still being worked on. But there are also delivery mechanisms for the drug developers that are being looked at, and that’s a pretty exciting space right now that doesn’t have a whole lot of publicly traded options. It’s something we’re going to be talking about quite a bit in the next couple of years.
Parrot: That’s great. That’s one I’ll be watching closely. I’ve got a grandson with a genetic condition that’s actually going to require that kind of drug delivery to treat his condition. It’s an area I’ll be closely watching. 
Simon: Yeah, absolutely. Investing is personal. I mean, health care is the ultimate personal industry. Everybody is different. Every patient is different. We have to be respectful of that. The genome and genetics is really opening a lot of insights for how medicines are thought about.
Parrot: Absolutely.
Crypto
Parrot: So I understand you were very early to the crypto market. What did you see back then, and how do you feel about it going forward? Do you ever foresee 7investing recommending a cryptocurrency?
Simon: Yes, so to answer the first part of the question: there was a huge disconnect between the market’s expectations for crypto and the industry’s embrace of cryptocurrencies. So the first time I can remember talking about this was at South by Southwest. It’s a conference in Austin every year. It’s huge. It’s one of my favorite events of the year, every single year. It had just so happened that there was a breach of one of the cryptocurrency exchanges called Mount Gox. At the time, right before one of the conferences that I attended, everyone was scared of losing all of their Bitcoins and the security of digital wallets. Just a whole lot of pessimism that was plaguing this market. So the price, as you would expect when there’s excessive pessimism, plummeted.
And yet, I went to South by Southwest and sat in and saw these entire amphitheaters filled with people that wanted to learn more about this. Not just people in their basements that were buying or mining Bitcoin. Lawyers talking about what are the legal ramifications going to mean for this; business manager saying, how can we get this on our balance sheet; Techies, IT folks saying, okay, how are we going to connect the dots on integrating this with our current infrastructure that we had. There were thousands of people that were all really, really excited about this. At the same time, the market as a whole, which was really direct to consumers already at this point, was just saying they wanted nothing to do with Bitcoin. So seeing that disconnect of the excess of pessimism in the price of Bitcoin compared to really a lot of optimism by the people who were making business decisions about it, led me to say, “Okay, now’s the time to get into crypto.” And it certainly was the right time, because as you’ve seen with Bitcoin and crypto, it’s going nuts lately. A lot of the people who were laughing at me at that time, several of them are actually buying and embracing crypto themselves right now [laughs].
Parrot: Right, what about the second part? Do you ever foresee 7investing making a crypto recommendation?
Simon: It would have to be an equity. It would have to be a stock that has exposure to crypto. We actually do have some recommendations that the investing thesis was based upon cryptocurrencies adoption. Without revealing the name, I’m very excited about it. I think that it’s a front runner in that space. We also have a partnership with a company called CryptoEQ, who takes a much closer look at the cryptocurrency tokens themselves and can make assessments on whether they’re undervalued or overvalued at the time. But that’s a completely different ballgame from what we like to look at as equity analysts. So we offload a lot of that to them, and we recommend people check out their analysis as well.
Semiconductors
Parrot: All right, I’m going to shift gears a little bit and talk about the chip market. We just had AMD report today. A lot of people and businesses are talking about the chip shortage. So first off, what’s your take on the shortage? And how do we get out of it?
Simon: Well, it’s going to take several years. This is not something you just get to flip a switch and all of a sudden you bring a whole bunch of capacity online. The answer is it’s going to have to be a combination of capacity expansion and innovation from companies. So, what that means, is the capacity expansion part is there’s only a handful of fabs in the world – fabrication facilities – that are handling the vast majority of the chips that are being produced. Taiwan Semiconductor, Samsung, and Intel are the big three. Intel and Samsung are really using primarily their own capacity for their internal needs. So, it’s really Taiwan Semi that is the largest pure play foundry out there.
It’s going to be really expansion that’s needed. We want to make more chips. We want to leverage our existing IP to do that. I’ve seen that Taiwan Semi is expanding in Arizona. I’ve seen that Samsung is expanding into Austin. Intel has actually got a new independent foundry division that’s now accepting orders from tech companies in America. So you’re just going to be seeing a whole lot more capacity coming online. This is tens and hundreds of billions of dollars being put to work here over the next three to five years. So anyone who’s listening or watching this or reading the transcript of this, if you have expertise in semiconductor manufacturing, you’re going to be adding a few more zeros to the end of your paycheck in the next three to five years [laughs]. There is a huge demand, and we’re trying our best to contain this.
I also think, though, that a lot of this is going to be market dependent as well. So innovation, the innovation side of this, let’s take the auto industry as an example. We are seeing Tesla with a heavy foot on the accelerator right now in terms of expanding their production. You just saw that they got a huge order from Hertz, just yesterday that was announced. They’re ramping up their electric vehicle capacity. Electric vehicles actually use about 10 times more semiconductor chips than a traditional internal combustion engine vehicle would use. There’s just more systems, there’s more monitoring. Tesla’s are extremely tech progressive technology. Progressive vehicles, and at the same time that Tesla is increasing its production so significantly, you see companies like Toyota that are cutting their production forecast by 40% a month for two or three months in a row right now. They say “well, how can that possibly be?” And it in fact goes back to COVID. It all goes back to the legacy automakers had to cut back on their forecasts because they just didn’t see the demand from their customers because people weren’t buying cars when there was a pandemic outbreak. In the meantime, Tesla was doing the design, they were doing all the work that they wanted to go out and actually approach the semiconductor industry and say, “We’re ready, let’s put our foot on the accelerator put us into front of the line.” So if you’ve got a fab and you’ve got available capacity now, you hand that to the company that wants to set up the orders and place those orders with you. And now unfortunately, if you’re the companies like Toyota, you’re in the back of the line trying to catch up with them.
And so that’s innovation in markets. I mean, even though EVs are more technologically dense than traditional autos are, they’re going to be getting a lot more attention from the semiconductor manufacturers right now. And it’s going to be interesting to watch. To your point about AMD, that’s on the design side of it. That is upstream of the manufacturing. But that might be another conversation to have. You know, who’s doing the design for these chips versus who’s making them.
Parrot: Great. That’s a great point because my follow up question was going to be about AMD. There are a lot of headlines in the news about many companies designing & manufacturing their own chips. How does that affect the market overall; and, does that affect AMD or Nvidia?
Simon: The companies that are making their own chips are going to be using them for very specific applications that they want to optimize. So the quintessential example of this one is Amazon designing its own Inferentia chips for Alexa. That probably cost them $30 million to do all the design, to get it integrated into the hardware and to have something that’s available and ready to ship to millions of homes all across the world. There are a handful of companies that can do that. There are chips that can be very, very optimized for cryptocurrency mining, which could be an opportunity. Facebook is designing its own chips for image recognition. Tesla is designing its own chips for managing its vehicles and identifying things that they see on the road. Google is designing its own chips for managing its own infrastructure and its data centers. But, every company is not going to be doing that. They’ll probably be following what has more broad market appeal. If it’s not as application specific where you just want to design your own Alexa app and optimize that. There’s going to be plenty of opportunity for AMD and for Nvidia and for any other designer of semiconductor chips to capitalize on all the other companies that are not large enough to do their own in-house design. I think the market is big enough for both of these. You know, at the end of the day, it’s going to be a matter of efficiency; of who is performing the most computation for the least power cost possible; and what’s the application that you need to do that for.
Parrot: A great summary.
Med Tech
Parrot: Okay, let’s talk Med Tech. There’s been a lot of buzz, or there was a lot of buzz earlier in the year, in the med tech space. Between Clearpoint, Butterfly Network, Dermtech, Nanox. A lot of stuff going on there. How do you feel about that space in general? And do you have a particular next gen med tech player you like?
Simon: It’s a challenging space. And it’s one that I don’t follow quite as closely. I’d recommend following my colleagues Maxx Chatsko and Dana Abramovitz, who have a more informed opinion on this.
The only insight that I can offer is that this is very highly regulated. In the United States, the FDA demands three different classes of medical devices. They’re very, very hard to get those designations. And while they do offer protections, it’s something that’s a very high barrier to entry for competitors for a reason. And I think that a lot of the smaller cap companies, even with innovative ideas, are going to have to require some patience as they go through compliance and regulations, because it’s a lot of hoops you have to jump through. That’s going to push out a lot of timetables, a lot of deadlines, and a lot of expectations that might not be fully appreciated in the market caps of those smaller companies.
Parrot: I think that’s definitely the case with some of the ones I mentioned. They had a lot of excitement, but people didn’t realize how long it was really going to take to actually come to market. I think they’re realizing that now.
Simon: It’s really neat. You see the opportunity, you see the pain points, you see the innovation, and you see what you want to do. Then it’s kind of this compliance regulatory battle, that’s just brutal sometimes, to do exactly what you have to do. Takes a lot of patience.
Parrot: It’s one space, off topic a little bit, but it’s one space where COVID might actually help us. Cutting some regulatory red tape, and fast tracking through the regulatory process. 
Simon: Yeah. And some of them you mentioned, there’s certainly an opportunity for it too because it’s capital intensive, right? I mean, you mentioned Nanox. That’s a company that is trying to redefine imaging. These are super expensive machines that depreciate very quickly. If you could change the business model, where you’re just selling the scan itself, rather than the capital equipment to a hospital, they might embrace something like that. It’s just a completely different way of thinking about it. About purchasing capital equipment for health care institutions.
Ad Tech
Parrot: All right, let’s move to one of my favorite subjects. I think one you like also. Let’s talk about ad tech. 7investing has made a couple of recommendations in the space. As you know, it had an incredible run last winter. The whole space has kind of stalled out for the last six or eight months, and we saw this big dump after the SNAP earnings report last week. How do you see the short and midterm outlook for ad tech playing out?
Simon: There’s a revolution against the third party cookie which is the basis of all of this. We don’t want companies who are advertising to us to see our past web behavior, and then serve personalized ads on that. If you’re on a website itself, it’s okay for you to have a relationship and personalize the site itself for you. But, you might not want to have that go on to advertisers who are then using the open ad inventory to serve you personalized ads. So we’ve got different approaches that are completely changing the game on the free internet. We’ve gotten so accustomed to the cookie being deprecated and phased out by so many of these companies and it is changing the game.
There are different approaches that we don’t have kind of a universally agreed upon solution for just yet. One that’s been pushed by Apple is IDFA, which is identification for advertisers. It is basically opting in to see ads. You’re giving permission to see ads and have your web behavior tracked on any iOS or Apple device. There’s a lower pool of total candidates, if you have to opt in for things like that. But, the prices of those ads tend to be higher if somebody is opting in. You are agreeing to be served, so of course the ad rates are higher. That could be just an adjustment as the industry kind of realizes the new normal for these things. There’s other identity verification solutions that are also being looked at out there: The Trade Desk has Unified ID 2.0, which is emerging as one opportunity; Google is also looking at the federated learning of cohorts, “FLOCs” is the acronym for that one. But again, all of these are being pushed out. Even Google is pushing out its timetable for the cookie. There’s going to be a variety of different approaches that are going to identify who you are on a web page, give that information to advertisers, and then go through the entire process of how is an advertisement being placed for you. And again, this all goes back to our web is generally free today. Content and publishers generally operate free websites because they’re subsidized by advertising. That entire industry is changing because of concerns about privacy.
Parrot: How do you see supply chain issues affecting advertising? Outside of the iOS issues with Apple, we thought we were going to see a lot of advertising come back at the end of 2021. It seems like the market is hesitant to agree with that right now. We’re about to find out in another week or two. But, how do you feel about how that’s going to play out in the next few months?
Simon: Travel is almost certainly going to be one of the highest, in terms of percentage terms of who’s advertising more in the next quarter and two quarters. In fact, we’ve already seen that. I don’t know if I have a whole lot more insight on really what pockets of that is growing most rapidly. I know that for the most part, 2021 versus 2020 comparisons for all AdTech players and advertisers in general is almost an order of magnitude difference. It’s a huge jump from a very low bar last year. Because nobody was advertising a year ago.
What's next?
Parrot: All right, well you’ve been very outspoken about up and coming industries; those that we don’t fully understand yet, don’t really understand the scope of yet. Sort of trying to skate to where the puck is going, not where it’s at. So to wrap up, where should the average investor be looking for new opportunities?
Simon: This is probably one of my favorite topics of all time, and we could have a two beer conversation every single day about this. But just to give a couple ideas of where I think the puck is going.
The first is a more consumer facing health care approach. This isn’t just about going to the hospital and having a paper file in a manila folder that tracks your history any more. There’s a lot more availability of information about patients. There’s a lot more medical information about patients that is being provided to them. It’s turning them into true consumers rather than just patients. That’s going to impact the diagnostic market, that’s going to lead to a more proactive system of healthcare, and it’s also going to be leading to a much more personalized form of treatment. We still have to address privacy, we still have to respect it. I think that consumers are playing a much larger role in their own health. And, combining the diagnostics we have with artificial intelligence, with AI, there’s going to be a lot of optimism for the future of health care in the next couple of years.
The second space I’m really interested in is using AI for insurance. Insurance is highly complex, whether it’s home insurance, whether it’s life insurance, whether it’s car insurance, wherever it might be. There are just too many choices for us to keep track of, especially when those choices are changing on a weekly basis. If we could deploy AI to monitor this multi trillion-dollar industry and give us the best rates for the coverage that fits us best, I think there’s a huge opportunity for companies to benefit from that. Personal assistants as well. I hate managing insurance, I hate managing my life and my calendar. If I could just give the AI a way to do that for me, it’d be a huge win.
The third one that I’m also really excited about is quantum computing. This is something that’s going to happen a lot faster than most people think right now. It’s mostly just a science project. A lot of companies aren’t making any revenue off it. But once we get commercial grade quantum computers, everyone’s going to want to embrace them because no one’s going to want to fall behind their competitors. Even at a national level, no one’s going to want to fall behind their competitors in the form of other countries. So, we’re going to see the embrace of quantum happened very quickly. We’re starting to see some publicly traded options. And I think that several of those will be worth several times their current valuations in a few years.
Parrot: Awesome insight Simon! I really appreciate you taking the time to join us. 7investing has been a great place to learn about the market, new industries, and companies I would otherwise not have found. So it’s been a pleasure, and I hope to do it again soon.
Simon: Thanks very much. Thanks for having us. And, I believe we have a promo code of “Parrot”. Anyone who uses the promo code “parrot” will get $10 off their first month. So please take us up on that deal.
Parrot: Thank you Simon, it’s been a pleasure affiliating for 7investing, and we’ve got an even better deal for readers during the holidays!
💥Anyone opting for the annual subscription in Nov/Dec can use code “7Bird” and get $30 off! That’s 3 Times the discount for the annual option! 🔥
Summary
Wow! I’m really amazed at how much ground we’ve covered. This may just be my best work yet… Of course that could be do to Simon doing most of the heavy lifting!
7investings November recommendations are out TODAY! So if you want to get the latest scoop, and all their past research, make sure and use the affiliate link or code “Parrot” at the end of this newsletter for a $10 discount. Or better yet, use “7Bird” and get $30 off an annual subscription! Now would be a great time to gift an annual subscription for the holidays!
I hope you enjoyed this interview as much as I did. Let me know if you’d like to see more. 🙏
Weekly Portfolio Update
Weekly summary
Some wild swings this week, just to end up mostly flat. The 9-5 is getting busier, so I decided to try and cut back on a few open trades.
October treated me pretty good overall. Let’s hope we get that bull run into the end of year.
Trades
  • none
Additions
  • $PLNHF; added 25% to this position, just DCA'ing as opportunities present
  • $TWLO; big sell-off, so took the opportunity to start a position as I like the r/r at these levels. This is meant as a trade, but will evaluate for a possible longer hold.
  • $NNOX; has been in a nice consolidation around these levels with more partnership news coming out on Friday. Added 1/3 to position.
  • $NET puts; add 2 more NET puts for a total of 7 going into earnings next week. 😅
Sold
  • $PUBM call options; profit taking on swing +30%
  • $SNAP call options; closed for major loss after earnings miss
  • $MP shares; locking in profit after short report put outlook into question. Was a long term hold, but didn’t have time to devote to evaluating position, so got out.
  • $HOOD call options; closed for 30% loss after earnings miss
  • $TDOC shares; closed pre-market after earnings, big mistake as stock rebounded later in the day. Right thesis, not enough patience.
  • $ATY call options; sold near cost when price did not rebound after sell-off
  • $ARBK shares; sold near cost after languishing for some time. Price not reacting favorably to crypto run, not willing to hold through another down cycle at this time.
  • $FDX call options; sold for +10% as shares stalled out, adding to cash position
  • $CCJ shares; closed for small gain, adding to cash position and reducing noise
This Week
Busy week last week to trim some fat. More earnings coming up this week, and a little more capital to maneuver with. Will probably watch current swing trades to play out, and stay cautious with capital.
Next Up!
Whew! I’m not sure what’s going to top that interview, but Drowsy and I will dream up something for you next week… we always do!
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Thank You!
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