Defense, Defense, Defense

Jackson Zhu1 Comment

In an environment where almost no active investment managers can outperform U.S. stock indexes, “risk management” as a serious subject has morphed into something different. Being able to tell a risk management story well does not mean being able to invest well. Unfortunately, for managers who cannot outperform stock indexes (almost all managers!), shifting investors’ focus away from investment performance and focusing instead on telling a risk management story has become business critical — managers need something to say in investor meetings. However, sensible investors should understand that excellent investment performance naturally lends itself to excellent risk management, but telling an excellent risk management story means almost nothing as to an investor’s ability to invest.

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A Few Stocks.  A Few Days.  What Is Going On?

Jackson Zhu3 Comments

The U.S. stock market, as represented by key indexes, has produced solid returns for investors over the long run.  This fact has led many investors to conclude that 1) most stocks go up in the long run, and 2) buy-and-hold is a sure-fire strategy. 

I would like to argue that, while the initial observation of strong index performance is correct, those secondary conclusions are misleading and have serious implications for successful investing.

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My Thoughts on DoorDash’s 2023 Q1 Results

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[I own DoorDash stocks.  This is not investment advice.  Please do your own due diligence.]

Earlier this month, DoorDash announced its 2023 Q1 financial results, which are generally robust.  I would like to share several pertinent points arising from those latest results.

Profitable Total Addressable Market (TAM)

Not all TAMs are created equal.   Some TAMs are profitable.   Some TAMs are unprofitable.  The profitability of TAMs varies considerably and typically cannot be easily discerned — because in most times, companies’ presentations tend to paint a rosy picture.

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Rousseau and Insights For Modern Investors

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In recent weeks, I had the chance to study the philosophy of Jean-Jacques Rousseau through a course offered by the Yale Alumni College (YACOL), an Yale alumni-run organization with which I am actively involved.

As I studied Rousseau’s ideas, I began to recognize connections between his perspectives and my own thoughts on investing, ultimately inspiring me to share these insights in this post.

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My Reactions to DoorDash’s 2022 Q4 Earnings

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[I own DoorDash stocks.  This is not investment advice.  Please do your own due diligence.]

DoorDash impressed investors by its continued strength in consumer engagement.  It continues to demonstrate strong growth, gaining market shares in most of the markets it operates, both within and outside of the U.S.  But DoorDash’s growing losses have raised concerns among investors. 

“Under-earning” As A Strategy

In contrast to other delivery services that have recently driven up consumer fees to improve platform profitability, DoorDash consistently drives down consumer fees.  I track the consumer fees on DoorDash, using publicly available data and my own algorithm.  The resulting chart shows a clear trend:  as time passes, consumers pay less and less for each order they place on DoorDash. 

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Key Learnings from 2022

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The Importance of Mental Strength

Physical strength, intellectual strength, and mental strength are the dimensions that investors can be measured. Yet, among these three dimensions, mental strength is probably both the hardest to acquire and the most important to have.

In investing, long hours do NOT guarantee good results. Investment analysts are hardworking, yet most investing programs do not yield good results. So, while physical strength and endurance still matters, it does little in separating investors.

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Do Not Put Out The Fire

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Many people were given answers before they had questions. By the time they have questions, it is too late!

We study history, not for the purpose of bringing back the past but building a brighter future. Growth mentality, not siege mentality.

Do not follow the herd. Seek tranquility, so you may gain transcendence. Quality has something to it that quantity does not. Find your groove.

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My Reactions to DoorDash’s 2022 Q3 Earnings

Jackson Zhu2 Comments

[I own DoorDash stocks.  This is not investment advice.  Please do your own due diligence.]

DoorDash announced its 2022 Q3 earnings last week and the disclosed results confirmed my prior predictions: DoorDash is doing well.  

“Food Is The Most Resilient Category”

Many investors see DoorDash as the ultimate “consumer discretionary” stock that would see its demand collapse in a recessionary and/or inflationary environment.  On Aug 9, 2022, I wrote a piece titled “DoorDash Is A Resilient Business.”  I was making the counterargument that DoorDash is the exact opposite.  

For casual observers, their instincts tell them that during bad times, people would want to save money, so demand for food delivery would drop.  This argument sounds logical, but the fact is that it goes against the facts!  

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