Thursday, January 6, 2022

The Dirty Dozen fell 8% yesterday; Amazon's supply chain mastery; Artem Fokin on Hunting for Multibaggers; Funny tweet about value investors; Why More American Children Are Dying by Gunfire; Excerpt from The Art of Playing Defense on nutrition

By Whitney Tilson

1) On Tuesday, I named my 'Dirty Dozen': 12 stocks to avoid in 2022, and marked their prices as of the end of the day. The very next day (yesterday), every one of them fell, by an average of 8%! Why wasn't my timing this good when I was running a hedge fund?!

2) I'm proud to see one of my friends and former students doing so well...

Artem Fokin of Caro-Kann Capital was one of the original dozen students to whom I taught a weeklong seminar in December 2017 entitled: "Lessons from the Trenches: Value Investing, Entrepreneurship, and Life."

Artem has gone on to generate great returns and build a nice business, for which he kindly gives me more credit than I deserve. He's also a Lifetime Partner of Empire Financial Research.

I enjoyed the interview he did recently with the Hunting for Multibaggers podcast, which you can watch on YouTube or listen to on iTunes or Spotify.

3) NYU marketing professor Scott Galloway has some interesting statistics about Amazon's (AMZN) astonishing mastery of the supply chain – one of many reasons why it remains a core holding of both our Empire Stock Investor and Empire Investment Report newsletters:

45 minutes. That's how much time passes between the moment you click "Place your order" and the moment your package gets loaded on the truck. That includes processing, locating, packing, scanning, and labelling your package before it hits the road.

Amazon now receives 10 million orders per day (115 orders per second), and 1 out of every 153 American workers is an Amazon employee.

4) I gotta admit that this tweet is pretty funny – and a good contrarian indicator!

5) A quick follow-up to yesterday's e-mail, in which I wrote about the danger of suicide, especially if there are guns around (again, I'm not talking about any law-abiding person's right to own a gun... I'm talking about something we can all agree on: gun safety and, in particular, keeping guns out of the hands of children).

This sad story in the New York Times underscores another risk: accidents. Why More American Children Are Dying by Gunfire. Excerpt:

Two weeks before Elyjah was killed, his 5-year-old cousin, Khalis Eberhart, was fatally shot after a 3-year-old cousin found a gun under a sofa cushion.

"It's easy to get a gun. It's easy for our kids to get one," said Elyjah's mother, Ms. Munson, who believes that her son's death was not intentional. "When you're a kid frivolously playing with something you think is a toy, this is what happens."

The number of children and teenagers killed by gunfire has risen sharply during the coronavirus pandemic. Researchers describe the increase as a fatal consequence of rising nationwide homicide rates, untreated traumas of COVID-19 and a surge of pandemic gun-buying that is putting more children into close contact with guns – both as victims and those wielding guns.

The Centers for Disease Control and Prevention reported that the rate of gun deaths of children 14 and younger rose by roughly 50% from the end of 2019 to the end of 2020.

And it appears the toll grew worse last year. More than 1,500 children and teenagers younger than 18 were killed in homicides and accidental shootings last year, compared with about 1,380 in 2020, according to the Gun Violence Archive, a publicly sourced database that tracks gun deaths in real time ahead of official government counts.

Toddlers are discovering guns under piles of clothes and between couch cushions. Teenagers are obtaining untraceable ghost guns made from online kits. Middle school students are carrying handguns for protection.

6) Two of the most common new year's resolutions are to eat better and exercise more, so I'd like to pick up where I left off yesterday with another excerpt from my book, The Art of Playing Defense, where I address diet and nutrition (I'll include exercise in tomorrow's e-mail)...


Having Your Body Break Down

While, of course, not as serious as dying, having your body break down prematurely is a genuine calamity. Most people don't take care of their bodies – more than two-thirds of Americans are overweight, and 40% are obese. As a result, as they age, they often suffer years of pain and disability and die years before they should.

Warren Buffett gives a wonderful analogy: "If you were only given one car and you had to make it last for your entire life, imagine how you'd treat it: you'd drive it slowly and carefully, change the oil regularly, etc."

Yet most people do the opposite with their bodies: they stuff it full of sugar and fat, poison it with drugs, cigarettes, and excess amounts of alcohol, and do little to no exercise.

If you take nothing else from this book, vow to treat your body better. You don't have to be perfect – everyone has their vices (mine are Diet Coke, candy, and a little ice cream sundae every night) – but you can go far by taking a lot of small steps over time.

Nutrition

I don't follow any particular diet, nor am I a nutritionist. I just try to eat mostly healthy foods and avoid overeating.

Rather than trying to change everything at once, you might think about giving up (or at least cutting back on) something you know isn't good for you.

For 30 years, I ate a lot of candy every day – I had huge five-pound bags of gummy bears and Twizzlers in my cabinet, from which I would refill a little bag I kept with me at all times. I ate it very slowly, but the near-constant infusion of sugar added up.

Then I went on a trip to Europe a few summers ago and didn't take any candy with me. I found that I didn't miss it, so when I returned, I threw away all of my candy and never looked back. I quickly lost 10 pounds – and my teeth and stomach thank me every day! I didn't give up candy entirely – for example, I'll chew on some to help me concentrate on a long drive – but I'd estimate that I've reduced my consumption by more than 90%.

A healthy diet isn't just what you eat, but how much. Portion sizes today are so much larger than in the past that it encourages overeating. To combat this, when I eat out, I deliberately order something that's good reheated – pasta rather than a burger and fries, for example – and then I bring half of the meal home. It drives Susan crazy sometimes because our refrigerator can get filled with leftovers that we end up throwing out, but it's better than overeating!


Best regards,

Whitney

P.S. I welcome your feedback at [email protected].

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Empire Financial Research

Whitney Tilson

Empire Financial Research founder and CEO Whitney Tilson is the editor of the Empire Investment Report, a monthly investment advisory that focuses on cheap, high-quality stock ideas.

Whitney graduated with honors from Harvard University and Harvard Business School, where he earned an MBA and was named a Baker Scholar. Whitney spent nearly 20 years on Wall Street, during which time he founded and ran Kase Capital Management, growing assets under management from $1 million at inception to a peak of $200 million.

Once dubbed "The Prophet" by CNBC, Whitney predicted the dot-com crash, the housing bust, the 2009 stock bottom, and more. Now, he's sharing his secrets and strategies with followers of his latest endeavor, Empire Financial Research.

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