Most weeks I link up with two smart analysts (@rorycarron and @TMFWillSommers) on Skype for 30 minutes or so to talk shop. Rory is covering stocks for our friends over at Rubicoin and Brendan is getting stuff done for us here at The Motley Fool. These are not service specific talks, just a chance for the three of us to link up and chat. I figured it's easy enough to just keep our notes here for posterity and for anyone else who may be interested. Enjoy!  

Zillow

• Pull back in the stock price is a bit more valuation related, not as concerned with the actual business but still big questions as to the overall market opportunity. How are these guys not profitable yet?
• Redfin is now a competitor in the public market and while the business model is a bit different (advertising versus online brokerage) it will likely be a worthy challenger to Zillow and could be worth a look as a recommendation at some point.

Walt Disney, Netflix

• Streaming product is a smart idea in that they already have all of the content people want. But can they execute a compelling platform?
• Shows how important and valuable Netflix’s early investments in the space were.
• BBC coming up with its own streaming offering as well.
• Cost argument is becoming less and less relevant over time in the move to streaming. The collection of a la carte apps you may subscribe to for your content may start costing as much as it would be to just subscribe to a cable package.
• Netflix and Amazon are both making big investments in their own children’s content and it’s paying off; the content is good and kids are watching.
• ESPN is becoming a bigger question mark. People valuing time differently, are sports as attractive an entertainment option for younger generations? Are sporting leagues running into a situation where they won’t be able to command as much pricing when contract renegotiations come back around?

Chipotle

• Long road ahead for these guys. Any negative press is crippling regardless of veracity. Perception is reality like it or not.
• Good move on Ells’ part hiring a chief restaurant officer as well as chief communications officer. Both have extensive experience in dealing with restaurants that offer fast food, an area where Ells needs some serious help.
• Chipotle peak earnings was $15 per share in 2015. Perhaps they hit $7.50 in 2017. How long to get back to $15? Can they ever? And if so what’s the multiple on the stock? It likely never gains the premium multiple back, perhaps it’s 30 in better times?
• With this in mind the stock even today as it looks to dip below $300 doesn’t look like a steal.

Under Armour, Nike, Dick’s, Foot Locker, Kohl’s

• Bit of contention between Dick’s and Under Armour as Under Armour continues to develop its relationship with Kohl’s. This relationship is resulting in Kohl’s being able to offer Under Armour gear at lower prices due to the nature of its business.
• Tough road ahead for Dick’s Sporting Goods and Foot Locker, probably not as severe for companies like Nike and Under Armour over the longer haul as they have the brands and the products that people want in the first place.
• Still some questions on Under Armour’s connected fitness acquisitions and potential return on investment.
• CEOs like Plank and Ells tend to paint targets on their backs with their bold statements and outlooks. This can work when things are going well, but when the worm turns it can work against them just as much.
• All in all, the future for Under Armour looks encouraging as long as Plank can learn from mistakes and just focus on growing the business by getting great product out there as opposed to hitting unnecessary benchmarks.

I’ve been investing for many years thanks to my father. He sparked the interest when I was a kid and it never left. Making my money work for me has always been an attractive notion and to do it as an owner of some of my favorite companies was just icing on the cake.

Luckily my path eventually led me here to The Fool where I’ve been able to make a living out of something I love to do. One of the great things about investing is that it’s a never-ending pursuit and you can do it for as long as your body/mind will allow. And with that never-ending pursuit comes never-ending lessons learned. I’m sure I could put a small book together today talking about lessons learned (maybe I will one day), but for me there’s one that stands out among all others:

Keep an open mind.

It’s very easy to get caught in a rut of one-track thinking as an investor. After all, you’re putting your money where your mouth is so you better be right! But I have found that keeping an open mind keeps me open to more possibilities, whether I’m wrong or right. It keeps me humble. It makes me smarter.
​
So rather than draw a line in the sand, consider how you might be wrong in your thinking. Think about what could cause an investment idea to fail. Or succeed. Think about why someone is selling while you’re buying. And seek out opinions contrary to your own. Investing is not about being right all the time. It’s about being right some of the time and getting smarter along the way. And for my money keeping an open mind has proven to be a most valuable tool in investing and in life.

​Back when Zillow was just beginning to change the face of how we view real estate the Zestimate was a very clever brand builder, but those days are over. Today Zillow is facing a class-action lawsuit based on the shortcomings of the Zestimate. And in a stroke of perfect timing, they are also holding a contest where they’ll pay $1 million to the person or team who can make the Zestimate better. I’ll never fault a company for wanting to get better and that’s what Zillow’s doing I think. However I think the Zestimate is more trouble than it’s worth.
 
Management’s go-to is that “the Zestimate is a starting point to determine the home’s value, and isn’t an official appraisal." And therein lies the biggest problem really: it is utterly meaningless. No lender is going to give you a loan based on the Zestimate; it’s not an appraisal, plain and simple. As someone who just went through the process of selling two homes and buying one I can tell you that the Zestimate never played any role whatsoever in determining anything. I never even looked at it. And I looked through Zillow a lot. It’s not because it’s inherently good or bad. It’s because it doesn’t matter. As a buyer I want to know what the list price is and then I want to know what the appraisal is. That’s what matters.
 
This is less about financials for Zillow and more about the brand equity that it’s earned to date. The company has done a phenomenal job becoming the name in the space. But to my eye today the Zestimate seems like something that poses more downside than upside. The only way that changes is if the Zestimate becomes part of the official transaction and I’m not saying there’s a world where that can’t happen. But given the regulatory considerations in place today in real estate that is going to be a tremendous hurdle to clear if that’s management’s endgame and I don’t think it is. The juice just ain’t worth the squeeze and it’s not in their wheelhouse.
 
Zillow would be better off just retiring the Zestimate completely and directing those resources elsewhere. Go back to the drawing board and come up with something that solves a problem.  I’m sure a $1 million contest is far, far less than what they would spend if they just tried to build upon it in house. But again, the question comes back to what problem the Zestimate actually solves and as far as I can see it seems they’ve still got some work to do. On the bright side for investors at least it seems like they know it.

I went into Twitter’s earnings release this quarter thinking there was absolutely no way anything good could come of it. I guess statistically speaking they were due for a change. Revenue fell. But hey users grew and that’s what matters, right? Wrong. Still, that daily user growth is outpacing monthly is a sign that users are more engaged and I appreciate the way Jack framed his thinking in a recent interview:

“We’re not here to provide something that people use once a month; we are here to provide something that provides daily utility, people checking multiple times a day to figure out what’s going on. So we re-cast how we measure ourselves internally, around providing daily utility to people. And as a daily utility to [not only] people on the service but also this massive audience [who see tweets outside the product]—we have one of the biggest audiences in the world through the syndication audience. If we serve those people better, that audience naturally grows.”

Revenue fell because they are basically blowing up the current product landscape as it is based on old thinking. Twitter’s ultimate goal is to air live content on the platform 24/7/365. Is this the right move? I have no clue. But consider one of its biggest weaknesses from a monetization standpoint: its fast and free flowing nature is not ideal for advertisers. Shit just happens too fast for it to have a meaningful impact. Changing things up a bit and diving head first into video is about as sensible a thing as I can imagine given the fact that what they’ve been doing to date hasn’t seemed to work. And with the secular move to mobile video and alternatives to traditional cable bundles, hey it’s worth a shot.

Video is a way for Twitter to gain more eyeballs for more sustained periods of time which is what advertisers want. This enables Twitter to at least go back to the table to their ad partners and demonstrate a potentially better ROI picture than before. Assuming they can prove this out (and they seem to think they’ve hit upon something) then this makes Twitter a more attractive ad platform. Again, this is all theoretical. Until it actually happens it hasn’t happened. I’m just telling you what my pea-sized brain is thinking based on what I’ve read.

The burden of proof is squarely on Twitter. They need to be able to say to their ad partners, “Hey we’ve got all this great video content playing on our platform and our users love it. And you can tell they love it because we have a pretty decent size user base that is coming back for more on a daily basis.” Show your partners you have engaged and sustained eyeballs and those partners will start to dip their toes in the water. This is why revenue necessarily must lag user growth and engagement. All year long. There is no other way. And I give management credit for setting appropriate expectations this time around. Wall Street won’t be expecting much in the way of revenue growth this year at all because they’ve been told not to.

Twitter has been an extremely emotional stock for many since its IPO. It would be very easy to just cut ties with this one and move on based on principle alone. But it’s a strong network and there’s value in there somewhere. If they don’t realize it then eventually someone will; it’s not a network in decline. At least not yet. Maybe cutting ties now is the right move. We won’t know until hindsight tells us so. But I’ll hang onto my shares. I don’t need the money now anyway and I told myself when I started the position this was a ten year (if not more) holding. Sometimes in investing patience does pay off.

I continue to be intrigued by Jack Dorsey. I know a lot of people think he needs to go (I’m not one of them), but I must say if there’s one CEO I’d like to meet he’s right up there at the top of the list. He’s clearly a very bright and driven individual and he strikes me as a really good person.

I hear/read him say somewhat frequently that the team there at Twitter is “focused on what matters.” It’s abundantly clear now (to me at least) that in his eyes Twitter is becoming the platform and the utility that he believes it needs to be. I agree with him, the world indeed needs Twitter; there is nothing else like it. And he doesn’t give one f*** about catering to Wall Street’s quarterly demands. I gotta say I admire that about him. This is going to be a very fascinating story to look back on years from now, one way or another.

​JMo

One of the most valuable skills I’ve come to enjoy and appreciate as an investor is being able to minimize the role emotions play in my investing. And while taking the emotions out of investing is easier said than done (hey it’s your money after all) there are things you can do to develop this skill.

1. Contribute to your employer’s retirement plan: You’re simply paying yourself first and because it happens automatically, well out of sight out of mind. You may think you can’t afford to do it based on what you make, but give it a try. You’ll likely surprise yourself.
2. Index: I think anyone who invests should index at least some of their money. It’s automatic diversity and the long-term prospects are undeniable.
3. Diversify: When it comes to individual stocks this is a bit more subjective but the more diversity the less exposed you are to any one particular asset which really helps you sleep at night.
4. Keep doing it: Like anything else, the longer you invest the better you get at it. You become more confident in your ability, what you are doing and why you are doing it.
5. Go long: The longer your timeline the better off you are. Investing knowing that you don’t need any of that money for at least the next five years allows you to make better decisions without subjecting yourself to the vagaries of the stock market. It really is a marathon and not a sprint.
6. Know your why: Investing is about achieving a goal. Understanding why you are doing it and what your time frame is will help you keep things in perspective.
7. Have a support system: Whether it’s one friend, a network of friends, a social media outlet, an investing community or something else have a support system that you can rely on when you need it.

Remember...

On this week's episode of the Motley Fool Money radio show we tackled a listener email asking for some good sources of investing knowledge. We went around the table and of course one of my go-tos is Twitter. In fact if you're an investor I'm not sure how you get by not using Twitter. Sure it's a poor investment, but it's a damn good tool with a treasure trove of real time information.

I've received a number of requests over the weekend (thanks for listening!) asking about specific accounts worth following. What follows is my initial stab. I'll also include the caveat that this is my first attempt at compiling a list like this and I fully expect to have missed some obvious suspects out there so it should only get better with time. Please note these are in no particular order:

@MotleyFoolMoney - How can I not recommend this?
@MarketFoolery - See above.
@AnswersPodcast - Alison and Bro do a great job answering all sorts of real-life money questions.
@MFIndustryFocus - Podcast covering a different sector of the market each day.
@RBIPodcast - A look into David Gardner's style of investing.
@themotleyfool - Our main feed.
@morganhousel - Great big-picture perspective, excellent writer.
@ReformedBroker - Funny and insightful, he's been around Wall St. for a while.
@ritholtz - See above.
@rubicoin - Long-term investing perspective, check out their apps.
@EddyElfenbein - Witty and smart long-term investor.
@MArgersinger - Smart tweets about investing with some Boston sports on the side.
@rationalwalk - Value investing perspective that carries over into greater investing lessons.
@Adweek - Good information in the ad industry which is a massive market opportunity.
@business - Bloomberg feed, good business news source.
@Recode - Good general view of the tech space by some pretty knowledgeable folks.
@magyer - Excellent investor, I always value his perspective.
@FoolFunds - Access to some great missives on what's going on in the world of Foolish investing.
@elonmusk - Good follow on many levels.
@HedgeyeRetail - Good insight into the retail industry, good investing humor as well.
@SEC_Investor_Ed - General investing perspective and education from the SEC.
@AwardsDarwin - Comic relief, good reminder there are some real idiots out there.
@consumerist - Good consumer-related news source.
@comScore - Love data and they tend to have a good bit of it.
@wsj - Totes obvs.
@stratechery - Smart observations and thinking in the tech space, good blog.

I'll add that it's worth following any company whose stock you either own or are interested in. They aren't all going to be great and you'll find over time whether you want to continue following them or not. But some are super and can give good insight into the business, how leadership behaves, etc. Same goes for actual leadership; some are good follows, some not so much. You'll notice I didn't include names like Jeff Bezos or Warren Buffett on this list. It's not because I don't like 'em; hell I own shares in their companies. But these guys just don't tweet much so it's hard to call them compelling follows. I hope you find this list helpful. As always, keep calm and Hit 'Em With The Hein.

JMo

Obviously not an impressive quarter (wasn't disastrous either) but I don’t know that I’d make the leap to state that it’s time for Jack to leave. To be clear if I had my druthers he’d be working as a full-time CEO there, but it sounds like he’s happy with his choices and believes he can continue doing what he’s doing. I think part of what the company is struggling with is unwinding years of poor leadership before Jack came back full-time. The fact of the matter is that there was no clear vision as to what they wanted to be and further the business was simply run poorly with no real focus on shareholders or profitability. That’s all perfectly fine if you’re private, but if you’re public it matters a lot and I think this was a big opportunity squandered early on after its IPO.

I think Jack hit the nail on the head today when he said: “The whole world is watching Twitter. While we may not be currently meeting everyone’s growth expectations, there is one thing that continues to grow and outpace our peers: Twitter’s influence and impact.” There’s no denying the importance of the platform. But they are obviously not meeting certain sets of expectations. Somewhere they need to figure out how to close that gap if that's even possible at this point.

I think the market has more or less told us at this point that this is what it thinks Twitter is worth in the face of continued lackluster results. For investors it’s basically a coin flip, but I’d say that coin flip offers more upside than downside assuming that management continues to work on the initiatives they’ve laid out for us in things like engagement, safety, speeding up the pace of innovation and development, bring stock-based compensation in line with peers and hitting GAAP profitability in 2017. They seem to have sensible goals that could ultimately help the cause so I imagine as long as they feel they are on that path Twitter will remain independent. But this is looking more and more like a “important product, bad investment” kind of situation.

For shareholders today? I don't see any harm in hanging onto your shares; I'll hang onto mine. It's a pretty easy ticket to the potential that this thing may still have and it's probably best if you just tuck 'em away and check back in a year. Again, it's an important network and it's not something that can just disappear with no consequence. By the same token I totally get it if you've just had enough and can't deal with even seeing the ticker in your portfolio anymore. It's been a dud of an investment to say the least. But that's why we preach patience and diversity; we just ain't gonna get 'em all right. Don't own shares but are thinking about buying? I guess I could think of worse things to do, but I can also think of way better ideas out there for your money today. Like I said, this one's pretty much a coin flip now. As long as you're diversified and can sleep at night, it's all good either way.

Keep calm and Hit 'Em With the Hein

Anecdotally, for my trip down to Georgia to close on the sale of our house last week I found my hotel on TripAdvisor and booked it on TripAdvisor as well. This was a big win in both cases as I depended on the reviews to find an affordable (and acceptable) place in an otherwise pretty expensive part of town. They really came through and the booking process was seamless.

This is the third time I've actually booked a hotel on TripAdvisor and I've no doubt it was the right move for them building the Instant Booking platform. Now whether it gains meaningful traction is another story altogether, but from this one customer's perspective (yep, me) I will use it every time it lets me going forward. From an investing perspective (and I do own shares of TripAdvisor personally) I think there are reasons to be cautiously optimistic but we'll learn more next week when they announce. I'll be looking specifically for signs of growth in revenue per hotel user as well as growth in hotel users.

Keep calm and Hit 'Em With The Hein

Some will disagree, but I like the house money concept as one way to deal with either a stock that has run ahead of itself or even as a way to rebalance if you feel like a position has gotten larger than you're comfortable with in your portfolio.

The concept is simple: sell what you need of the holding in question in order to recoup your initial capital and then you can keep the remaining shares for free (assuming you still believe in the story). And you can hang on to those free shares for as long as you want.

Of course make sure you understand any potential tax implications of selling (if it's in an IRA then that's even better) but at the end of the day we invest to make money and there's nothing wrong with that. While I consider myself an investor who takes the long view, I also consider myself an investor who's always paying attention to the options that may exist. The longer you invest the greater the chances you'll run into a situation like this and the bottom line is that it's always OK to sell as long as you understand why you're doing it. House money can allow you to hold onto that position (regardless the size) for as long as you want and if it's one thing most multi-baggers require it's time. This is one way you can have your cake and eat it too.

​Here’s an idea for a high school project that could be implemented anywhere in the country with this as a simple blueprint. This may already be something teachers and schools are implementing in some places; if that’s the case then more power to them. If not, then maybe this could serve as a starting point. Students could pair up or this could be an individual project.
 
Choose a publicly traded company. Perhaps the teacher compiles a list of some of the most obvious suspects to make it easy. Perhaps I could even provide the teacher with such a list. Using that company’s investor relations page as well as EDGAR for SEC filings (as well as any other Google research the student may like to incorporate), have the student produce a bull or bear case for that company’s stock based on their research. The student must at least use the company’s investor relations page and EDGAR and source information from both. The presentation should consist of no more than 8 slides and focus on the following:

• What does this company do?
• How does this company make money?
• Who is leading this company?
• What kind of market opportunity does this company have?
• What kind of competitive advantage (if any) does this company have?
• Are there switching costs?
• Are there barriers to entry?
• Is there pricing power?
• Run this business through the Porter’s Five Forces model.
• Is this company in good financial shape? Why or why not?
• Do you think this would be a good or bad investment? Why or why not?

 
For this exercise we will assume the company is fairly valued by the market today. There is no need to go into the weeds on valuation work as it is nuanced and subjective and not the ultimate point of the exercise. There are lessons from this exercise that extend well beyond investing including:

• Learning about business;
• Learning basic financial concepts and measures;
• Evaluating leadership;
• Learning about competitive forces within a given market;
• Public speaking skills;
• Assembling a concise and clear presentation;
• Building research skills.

 
After all is said and done all of the decisions can be tracked based on the call for whatever period of time makes sense. Perhaps a full year or even more based on what year the students are when they do the project. The bottom line is this is real life stuff that could serve as a way to teach students a multitude of real-life concepts that they will more than likely encounter as they grow older. And of course, maybe it results in a few more investors along the way.
 
Keep calm, Fool on and hit ‘em with the Hein.