🧠 My Awful Investment


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Welcome to Long-Term Mindset, the Wednesday newsletter that helps you invest better.

Today's Issue Read Time: <3 minutes

  • Lesson: Lessons from a terrible investment
  • Timeless Content: Your last remaining edge on Wall Street
  • Thread: Stoffel's 5 "Cheapest" Stocks
  • Resource: ETFs 101
  • And more!

Together with Finchat*

I (Feroldi here) have used Finchat as my primary stock research tool for over a year.

Finchat makes it easy for me to chart hundreds of business metrics with just a few clicks. I track valuation metrics, financial metrics, and company-specific KPIs of my favorite businesses, such as unit volumes, same-store sales, or dollar-based net retention.

However, I recently discovered that I can use Finchat to track my portfolio statistics. The picture above shows the stats on my real-life portfolio. I was thrilled to see that my portfolio is packed with businesses that are growing fast, have great margins, and have strong returns on capital.

This is why I'm a happy paying customer of the premium version of Finchat. While the free version is great, being a premium user lets me access 10 years' worth of financial data, track analyst estimates, and get the portfolio statistics you see above.

If you want access Finchat's premium features, use this link to sign up and save 15% off the annual price.

Friends,

Three years ago, there were few stocks I (Stoffel, here) was as excited about as Unity Software. The company's platform was responsible for creating and monetizing 70% of the top mobile video games in the world.

And yet, few stocks have been as disappointing. Here's what the ride has looked like since then.

Looking back, I can now see that there were warning signs that I ignored.

I don't want that to happen to you. So, if you see any of these happening in the companies you own, be sure to spend extra time understanding them:

  1. Creative explanations for slowdowns: Every company runs into problems. What matters is that the explanations are honest and make sense. In late 2022, Unity said it had trouble monetizing games because of "bad data ingestion" from a large customer. It was an odd explanation then, and remains odd today.
  2. High-profile departures: We can never know what happens behind closed doors. But when key figures leave, it's worth noting. Unity co-founder Joachim Ante left in mid-2023 right before the company made an awful business model pivot. I wouldn't be surprised if the two were related.
  3. Sudden business model change: Speaking of that pivot, changing one's model needs to be carefully choreographed ahead of time. A sudden pivot should be alarming. Unity pulled the rug on game developers last year with additional charges. It's still digging itself out of a hole from that move.
  4. Massive acquisitions: Big acquisitions can be expensive signs of desperation. You don't want to own companies that have to pray for Hail Marys to be caught to survive. In late 2022, Unity spent billions acquiring IronSource -- a move that has yet to provide any benefit to shareholders.

It should go without saying that none of these moves require you to hit the SELL button right away. There's nuance and context to everything.

But we're all about the long-term here. And we'd wager that when you're at the end of your investing career -- reflecting back on your biggest failures -- a number of the issues highlighted above will have been present.

Let's eliminate them from our portfolios as early as possible.

- Brian Feroldi, Brian Stoffel, & Brian Withers

P.S. Have you consumed any great investing content recently? If so, hit reply to this email and share the link. If we think it's great, we may include it in a future issue (and give you a shoutout).


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One Piece of Timeless Content:

Morgan Housel explains the individual investor has a serious edge on Wall Street. If you know Morgan's work, you probably already know what it is.


One Thread:

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Brian Stoffel
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One Resource:

Want to gain the benefits of being in the market but don't want the hassle of picking individual stocks? ETFs might be for you. Learn about all the basics of ETF investing here, including 10 ETFs for beginners.


One Quote:


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Long-Term Mindset

I teach investors how to analyze businesses. Each Wednesday, I share six pieces of timeless content that can be read in less than 2 minutes. Read by 100,000+ investors from a16z, Amazon, Google, Microsoft, and more.

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