How to determine if you are Investing vs. Speculating, plus pricey Yeti Coolers

Investing vs. Speculating

Before buying any stock, you should ask yourself this question: Am I investing, or am I speculating (guessing)? Just be honest - are you hoping a stock goes up primarily on your hopes and dreams, or did you do some research and feel confident about your analysis? I find that asking myself this question helps me be realistic about the stock performance. When I speculate, I do so with just a little bit of money and fully expect the stock to go way up... or way down.

For more on this, here's a paraphrased quote from Ben Graham, who Warren Buffett learned a lot from:

an investor looks at a stock as part of a business and the stockholder as the owner of the business, while the speculator views him/herself as playing with expensive pieces of paper, with no intrinsic value. For the speculator, value is only determined by what someone will pay for the asset. There is intelligent speculating as well as intelligent investing; the key is to be sure you understand which you are good at.

Poppy's Thoughts & Updates

Poppy told me on Monday that perhaps we should all collaborate with Garrett if he is indeed some stock-picking genius. He has a fantastic return on YETI stock, up 70% since Garrett bought it in March. If you're unfamiliar with the company, Yeti took the $20 cooler idea and started selling $200-$500 coolers, and apparently, lots of people are buying them. In 2019, Yeti had about $900M in revenue. If you click that Yeti link above and scroll down on the right, you can see Yeti's annual revenue and earnings trends. We haven't asked Garrett whether he was investing vs. speculating on the trade.

Trades  

• Mikal bought as much Boeing (BA) as possible
• Kyla bought as much CostCo (COST) as possible. Note: That's 594 worth of Costco's $1.50 food court hotdogs!
• Antonio "Birthday Boy" bought as much PayPal (PYPL) as possible
• Caitlin bought about ~$200 worth of ESGV, a Vanguard ETF. Its biggest holding is Microsoft, then Apple, Amazon, Facebook, Google, and smaller holdings.
• Annika, Brenna, the Korzekwas, and Bryan are still sitting on the $1000 in cash. If only Chloe liked investing as much as she does animals! PS - congrats on graduation!

Please remember to update the google sheet detail tab when you buy/sell something. I look at the revision history each month so I can include your trade in this newsletter. The summary tab is at the bottom of this email as a picture and the live link to it is here.