Consume Your Own Tech Investing

Most Investing Mistakes Are Not Analytical

Wed, 01 Apr 2026 11:29:38 GMT

Over time, I have come to realize that many of the biggest mistakes investors make—myself included—are not analytical. They are behavioral. They come from misalignment between who we are and how we invest.

Some people freeze, waiting for the “perfect” entry point.
Some overtrade, chasing momentum and narratives.
Some hold on too long, anchored to past decisions.

These are not failures of intelligence. They are patterns. And those patterns are often rooted in personality.

The Role of Self-Awareness

One useful way to think about this is through the lens of the Johari Window.

The framework divides self-awareness into four quadrants: what is known to self and others (“Arena”), what is hidden (“Mask”), what is blind (“Blind Spot”), and what is unknown (“Unconscious”). In investing, many costly mistakes sit in the Blind Spot quadrant—patterns that others may observe, but that we do not fully recognize in ourselves.

This is where self-awareness becomes practical, not abstract. The goal is not to eliminate bias entirely, but to surface it early enough to manage it.

Source: Positive Psychology.com

How My Own Approach Evolved

This idea of correlating self-awareness with personal investing did not come to me all at once.

My own investing journey started from a more traditional place. I was trained in finance, spent years in banking, and initially approached investing through the lens of valuation and discipline. Over time, that framework evolved. Not because it was wrong, but because it was incomplete.

What changed was not just what I invested in, but how I understood myself as an investor.

The shift from value to growth was not purely intellectual. It reflected a broader evolution in how I think about risk, conviction, and time horizon. And in hindsight, personality played a larger role in that evolution than I initially recognized.

A Different Way to Think About Portfolio Strategy

My personal journey became the foundation of my book, Suit Yourself: A Portfolio Strategy for Every Personality Type:

Published by Koehler Books

The premise is simple: There is no one-size-fits-all investing strategy.

A portfolio that works for one person may fail for another, not because the idea is flawed, but because it does not fit how that person actually thinks and behaves.

In the book, I explore this through the Enneagram framework, using storytelling and pop culture to make the concepts more accessible. The goal is not to prescribe what to buy, but to help readers understand how their own tendencies shape their decisions.

At its core, the book focuses on three things:

Why investors sabotage themselves
How personality shapes investment decisions
How to align portfolios with identity

Lowering the Barrier to Entry

One piece of feedback I received recently stood out. A reader told me that the ideas only fully clicked once they started reading the book.

That was useful to hear. It is suggested that the biggest barrier is not disagreement, but entry.

Read the Preview Chapters

So I decided to remove that barrier.

I have shared two chapters of the book on my website. These include the introduction and a chapter on my own investing journey, where I discuss how my philosophy evolved and how personality influenced that process.

If you are curious about how psychology intersects with investing, you can read the preview here.

The Real Risk in Investing

Whether or not you decide to read further, the core idea is worth considering: Investing is not just about finding the right opportunities. It is about understanding the person making the decisions.

And that person is you.

My book, Suit Yourself: A Portfolio Strategy for Every Personality Type, blends Enneagram psychology, pop culture, and behavioral finance to offer a personalized roadmap to investing. It examines how personality biases unconsciously influence investing behaviors. Learn more at my author page or order the book on Amazon. Follow me on X.com (formerly Twitter) @ConsumeOwnTech and Yahoo Finance.

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Trupanion: Mispriced Coverage

Mon, 02 Mar 2026 12:32:28 GMT

The pet insurance category is underpenetrated; Trupanion’s margins are normalizing. Yet, the current valuation reflects neither.

If you have read my book Suit Yourself, you will know that Enneagram Type Fives gravitate toward the complex and the niche. We like businesses that require spreadsheets, transcripts, and patience. We prefer the intellectual challenge of finding obscure stocks, and that is exactly our pitfall—overthinking rather than keeping it simple, like buying the S&P 500 or investing in a large-cap stock. And we are often attracted to underdogs that the market has quietly dismissed because we have an intellectual urge to prove the market wrong.

Trupanion fits that mold exactly, so this may be my psychological trap. I am aware that my personal biases may be at play here, unconsciously nudging me to look for evidence to support my preconceived thesis about this puppy. I am therefore writing up this analysis to lean more into objectivity and further away from the unconscious pull that may be driving my conviction. I am also capping my exposure by staying within the capital limits of my Traditional IRA and not extending it to my larger trading account.

Taking my own medicine here.

Trupanion: Capital Discipline Interrupted by Temporary Margin Collapse

Pet insurance is a niche sector, and insurance math is complicated. Trupanion management talks about targeting an internal rate of return of 30-40% on pet acquisitions, rather than adjusted EBITDA theatrics. That combination made Trupanion the kind of small, esoteric stock that rewarded deep work for a number of years at the height of its growth during COVID.

Strip away the noise in the last few years, and one can see that Trupanion’s business structure remains intact. Trupanion operates a cost-plus model: approximately 70% of subscription revenue is paid to veterinarians. The company targets a long-term, subscription-adjusted operating margin of about 15%. Excess capital is invested in pet acquisitions only if the projected internal rates of return are between 30% and 40%. This is not a traditional insurance approach; it aligns more with disciplined capital allocation within a subscription model. The margin drop in 2022–2023 was not a failure in strategy; it was due to pricing lag. Veterinary costs rose faster than premiums could be adjusted. Lifetime value temporarily declined. As a result, the market’s confidence faltered. However, pricing is now catching up. Margins are improving, and the financial guardrails remain in place.

Source: Trupanion’s Q4 2025 investor presentation

The key question is not whether Trupanion can return to hypergrowth. It is whether normalized subscription margins of 15% are durable while the subscription business compounds in the mid-teens.

I believe they are.

Growth Has Slowed, But That is Not the Same as Broken

Between 2020 and 2022, when COVID prompted many to own pets, Trupanion was compounding revenue at 30-40%. Subscription pet adds were accelerating. Internal rates of return were consistently above target. The narrative was pristine.

Today, growth is mid-teens. That slowdown reflects three realities:

The pandemic pet boom pulled demand forward
Competition increased in digital distribution
Management intentionally moderated pet acquisitions while restoring margins

The veterinary channel remains the company’s structural advantage. Trupanion Express still differentiates at the point of care. Retention remains among the highest in the industry.

This is no longer a hypergrowth story but a disciplined specialty insurer operating in an underpenetrated category. Pet insurance penetration in North America remains low, and veterinary costs continue to rise. Those forces still support category expansion over time.

Source: Trupanion Q4 2025 presentation

The key question is straightforward: can subscription revenue increase by 13% to 15% annually while preserving margin discipline and IRR targets? Keep in mind that Trupanion management is forecasting exactly that for FY 2026. If the answer to this question is yes, then the current valuation seems disconnected from its intrinsic value.

The Valuation Disconnect

At roughly $27 per share, Trupanion market capitalization is about $1.2b. Adjusting for cash and debt, its enterprise value is under $1b. That places the stock at less than 1x subscription revenue. For a business that has historically targeted 25% intrinsic value growth and deployed capital at 30% to 40% IRRs, that multiple implies structural impairment.

If subscription growth settles in the 8% to 10% range, the stock may simply be fairly valued. If growth stabilizes closer to 15% with normalized subscription margins of around 15%, the upside over a multi-year horizon becomes compelling.

This is not a bet on multiple expansion. It is a bet on durable underwriting discipline and mid-teens growth in a still underpenetrated category.

What Has Changed Since I First Bought It

I first bought Trupanion at $17 per share pre-COVID in my trading account. Back then, the appeal was explosive growth paired with strict capital guardrails. Today, the business is more mature. Growth is slower. Management replaced its CFO after a pricing misstep. Margin restoration took longer than expected. Yet the company is arguably more seasoned now. The balance sheet is solid. The playbook is clearer. Expectations are lower.

My Plan for Trupanion

My Traditional IRA position in Trupanion is currently small, under 2% of the account. I am fully allocated for Q1 under the deployment rules I set publicly. Barring a material deterioration in subscription growth or margin commentary in the upcoming earnings report, I intend to add in Q2 2026.

The bet is straightforward. I am underwriting normalized subscription margin durability and mid-teens growth. If that thesis holds, less than 1x EV/Sales for a disciplined, niche compounder looks attractive over a multi-year horizon.

This is not a comfort trade. It is a discipline trade. If margins hold and growth remains intact, intrinsic value should compound regardless of short-term sentiment. That is the bet I am willing to make.

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Project 350K: A Review of My 2025 Traditional IRA Performance

Mon, 02 Feb 2026 12:30:54 GMT

Project 350K: A mid-year review was posted in June 2025

At the beginning of 2025, I set a goal for my Traditional IRA: to grow it to $350,000 over a 10-year period, as outlined in parts 1, 2, and 3. Since I already have most of my net worth invested in lower-volatility assets such as real estate and large-cap stocks, this account allows me to adopt a more aggressive investment posture. Meanwhile, statutory contribution limits naturally restrict the amount of capital deployed—a useful constraint given my Type 5 tendency to gravitate toward niche, smaller-cap companies and to risk overconcentration.

Reaching $350,000 over ten years implies a roughly 14% annualized return. That target was intentionally aggressive, designed to test both my investing process and my discipline. With the benefit of hindsight, 2025 provides the first meaningful data point on how that process performs under real-world conditions.

Hard Facts: Performance and Key Drags

As of December 31, 2025, the account stood at approximately $43,500 after receiving the maximum annual contribution of $7,000. The portfolio declined 4.5% for the year. By comparison, the S&P 500 returned 18%, and the Nasdaq rose 21%.

Here is a breakdown of the portfolio at year-end 2025:

The primary contributors to underperformance were a lack of meaningful appreciation in Amazon , which rose just 5%, and a significant drawdown in Lululemon over the course of 2025. Neither position was actively traded during the year; performance reflected market movements.

The drag was partially offset by a roughly 50% gain in Shopify . However, that was more than offset by a poorly timed position in Globant , which resulted in a material loss during 2025.

Globant warrants specific attention. I initiated the position early in the year, added shortly thereafter, and ultimately exited the entire stake by August at a loss. While the capital at risk was contained, the sequence highlighted a recurring issue: adding to a position before sufficient evidence had accumulated to support the thesis, and holding on longer than warranted as fundamentals deteriorated.

The Central Lesson: Pacing Matters More Than Ideas

The most consequential takeaway from 2025 was not stock selection but capital deployment, as my mid-year review made clear. I allocated the majority of my annual contribution in the first quarter. When volatility increased and opportunities improved later in the year, flexibility was limited.

Front-loading capital reduced optionality and increased sensitivity to early-year misjudgments. In contrast, positions initiated later in the year—such as incremental additions to Life Time and Salesforce —benefited from better entry points and clearer operating signals.

Portfolio Structure Observations

The portfolio remains concentrated, with only a handful of positions carrying most of the weight. This remains a work in progress. Over time, I expect the account to hold roughly 12–15 positions, each with an allocation of approximately $5,000–$7,000, focused on businesses with operating leverage and durable brand or platform moats.

One structural adjustment I am introducing in 2026 is the selective use of opportunistic trades to enhance returns. With Amazon representing roughly half of the portfolio, achieving alpha is difficult unless it materially outperforms the market. To compensate, I will selectively deploy capital into shorter-duration opportunities in companies I know well from my trading account.

This thinking led to a position in Elastic in January 2026, funded by selling a legacy position in Floor & Decor . I have followed Elastic for years and previously held a position there profitably before exiting in 2024. Currently, Elastic trades near 4x EV/Sales, making it both a recovery candidate and a potential acquisition target. This position is sized accordingly and assessed on a different time horizon than my core holdings.

With additional purchases in Life Time and Salesforce completed in January, along with the Elastic position, capital deployment for Q1 2026 is complete.

Current Traditional IRA Portfolio (Jan 26, 2026, closing price)

Looking Ahead to 2026

Based on the 2025 experience, my focus for 2026 is as follows:

More deliberate pacing: Capital will be deployed more evenly across quarters.
Anchor stock: Amazon remains the portfolio anchor. While it may dampen upside in strong markets, it provides stability and scale.
Long-term conviction holdings: Life Time , Salesforce , Shopify , Lululemon , and Disney remain core positions, subject to further top-ups but capped at $5,000–$7,000 each.
Positions under evaluation:
- Square $XYZ remains a meaningful holding in my trading account, but it is a small position here, resulting from deploying excess cash before Project $350K took shape. Although it has underperformed, recent management guidance indicates accelerating gross profit growth. While I identified this company as a potential multi-bagger as early as 2022, the stock and its underlying financial performance struggled in recent years. I will revisit this position in the coming quarters, mainly to adjust risk appropriately for my trading account.
- Trupanion is another re-entry after a profitable prior investment. The pet insurance market continues to grow, though topline growth has slowed to the low-teens. This position will be reassessed following Q4 results and 2026 guidance.

The original $350,000 target remains intact, but it is best viewed as an outcome rather than a mandate. Achieving it will require favorable market conditions, disciplined execution, and time. More importantly, success depends on building a repeatable process that limits large errors and preserves upside when conditions improve.

2025 did not deliver outsized returns. It did, however, deliver clarity. In a multi-year project, that may be the more valuable currency.

My book, Suit Yourself: A Portfolio Strategy for Every Personality Type, blends Enneagram psychology, pop culture, and behavioral finance to offer a personalized roadmap to investing. Learn more at my author page or order the book on Amazon. Follow me on X.com (formerly Twitter) @ConsumeOwnTech and Yahoo Finance.

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The Trade Desk’s Existential Crossroads

Mon, 03 Nov 2025 13:36:50 GMT

The Trade Desk ( ) has long been the open internet’s counterweight to the walled gardens — an advertising platform built on transparency, neutrality, and scale. For years, that narrative justified a premium valuation. But in the wake of June’s earnings, which sent the stock tumbling from the $90 range to the low $50s, investors must now confront an uncomfortable question: Is TTD’s dominance still structural, or has it become merely executional?

I have held for years and pared down half my holdings last summer. I have been feeling stuck with those residual shares—not out of fading admiration for the company, but because the competitive dynamics have shifted, and the market’s re-rating may be more structural than sentimental.

The Catalyst Behind the Slide

The June 2025 quarter was meant to showcase the payoff from Kokai, $TTD’s new AI-driven platform. Instead, it underscored the gap between promise and proof. Revenue grew 19% year over year, and Q3 is expected to post a 14% increase, far below expectations. The result was a valuation compression that wiped out years of multiple expansion.

This is not a broken business—far from it. still generates strong free cash flow and remains the default DSP for most major agencies. But the premium multiple it once enjoyed was built on a narrative of sustained 25-30% growth. That story has now flattened to mid-to-high teens, and the market is adjusting accordingly.

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Kokai: A Step Forward, Not a Moat

Kokai, the company’s much-touted AI overhaul, is an impressive technological evolution. It brings AI-enhanced bidding, supply-path optimization via OpenPath and OpenSincera, and a new “Deal Desk” feature for pacing and forecasting. Roughly three-quarters of spend now runs through it, with internal data showing double-digit KPI improvements.

Yet despite these advancements, Kokai doesn’t create a new moat — it merely enhances ’s execution layer. The open internet remains fragmented, and while Kokai helps clean up the supply chain, it does not change the economics of ad demand. and (DV360) are embedding their own AI stacks into ad delivery, with privileged access to identity and inventory that cannot match. is pushing deeper into shoppable CTV, and even legacy players like Adobe () are modernizing their DSPs for enterprise clients.

The open internet narrative still matters — but advertisers increasingly value identity and efficiency over philosophical purity. In that environment, ’s “neutrality” advantage shrinks.

The Valuation Reality

At roughly 10x EV/Sales and over 40x EV/EBITDA—even after the sell-off—it needs to deliver at least 20% growth consistently to sustain its multiple, and much more to rerate it back to its prior stock prices. Management deserves credit for prudence and capital discipline, but at today’s scale, even strong execution cannot offset macro softness, ad-budget caution, and rising competition from vertically integrated ecosystems.

I view this re-rating as not merely cyclical but evolutionary. The company’s next growth leg must come from deeper retail-data integration, global CTV penetration, and proven AI monetization. Those are multi-year endeavors.

My Take

remains a best-in-class DSP with brilliant leadership, robust cash generation, and a differentiated culture. It is still the platform of choice for brands that value transparency. But the stock’s investment case has shifted: from a hypergrowth disruptor to a high-quality operator priced like one.

I will be looking to liquidate my remaining shares. This is not a bearish call on ’s business — it is an acknowledgment that the risk-reward profile no longer fits the narrative that once propelled it. The company will likely continue to lead in its category, but the category itself is maturing.

Sometimes the hardest sell is not the broken story, but the still-great one that has already told its best chapter.

There will not be a Substack post in December. January 2026 will be a year-end review of my Project 350k (see Part 1, Part 2, and Part 3) performance in 2025.

Follow me on X.com (formerly Twitter) @ConsumeOwnTech and Yahoo Finance. My book, Suit Yourself: A Portfolio Strategy for Every Personality Type, blends Enneagram psychology, pop culture, and behavioral finance to offer a personalized roadmap to investing. Learn more at my author page or order the book on Amazon.

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REPOST: What is Quality?

Wed, 01 Oct 2025 11:31:47 GMT

In the whirlwind of life lately—parenting, graduate school, startup building, and book launch—I haven't had time to write a fresh October piece. But perhaps that is a good excuse to revisit two earlier posts I remain proud of.

These two pieces, written back to back in August 2023, were born from a period of deeper questioning: What does “quality” mean in investing? How do we stay grounded when we feel stuck with an underperforming stock? The catalyst was Robert Pirsig’s Zen and the Art of Motorcycle Maintenance, a book that taught me that “quality” is not a static trait — it is an event, an interaction, a moment of harmony between subject and object. That is a surprisingly resonant lens through which to view both investments and investor behavior.

In “What Is Quality?”—reposted below—I pushed back against the overuse of that term in the financial world. Everyone claims to seek it, but few can define it. In the follow-up, “Stuck With an Investment?”, I unpacked the emotional complexity of holding a position that no longer sparks conviction but still resists being sold.

Both posts speak to a central theme: investing is as much about identity and adaptability as it is about metrics. If you are wrestling with decisions around holding, trimming, or doubling down, these essays may offer a useful frame.

Next month, I plan to share reflections on The Trade Desk ()—one of my earliest tech holdings that feels stuck given recent performance—once I have more breathing room.

*********

(August 2023)

The book Zen and the Art of Motorcycle Maintenance: An Inquiry Into Values is a narration of a summer motorcycle trip undertaken by a father and his son. It is not just a novel but a penetrating examination of numerous philosophical questions.

“Zen and the Art of Motorcycle Maintenance sold millions of copies and made Pirsig a reluctant hero to generations of intellectual wanderers…Zen was an instant classic — a work of literature that captured the spirit of its time and retained its appeal long after the hippie movement had faded.” — Washington Post

Halfway through this book, I am intrigued by the contentious concept of "Quality.” Specifically, two lines have stuck in my head:

“How are we supposed to know what quality is?”

“…even though Quality cannot be defined, you know what Quality is.”

While the “Quality” discussion in the book is not related to investing or business, I cannot help but wonder about its applications in stock picking.

Quality Investments: Only in Hindsight?

To make this post more focused, I shall stick to consumer-related companies.

Within that space, we can agree that some of the most successful companies include Nike, Apple, Amazon, Costco, Tesla, and Netflix. They have all grown by orders of magnitude in terms of earnings, scale, cultural impact, fandom, and of course, share price.

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Warren Buffett famously invested in Apple in 2016 - he had deemed it a Quality company. Apple is now Berkshire’s most prominent position. (Picture source: The Hustle)

However, before arriving at their vaulted positions, they all went through growing pains. Apple struggled with topline concerns when Buffet took a stake in the company. Tesla was in “production hell” when it tried to ramp up Model 3 at Fremont and almost went bankrupt. Netflix had multiple near-death episodes throughout its corporate history, as chronicled in the book, That Will Never Work, authored by its co-founder, Marc Randolph.

In the eye of the storm, few would have been able to discern “Quality” amidst missed earnings, social media chatters, negative headlines, production delays, and intense cash burn.

Unpacking Quality

Seasoned investors, whether retail or institutional, have probably reviewed enough companies to know (at least on some subconscious level) what a quality stock should be. Borrowing from the list of exemplary companies above, one may infer the following to be some of the critical characteristics of “Quality”:

Products and services enjoying customer loyalty and renewal thereof with each generation of consumers
Strong cost controls and capital discipline
Growing total addressable market through continual additions to product and service line-up, plus international expansion

Some investors like to use quantifiable traits like minimum revenue growth or profitability to qualify for “Quality.” While the approach is sound, that logic may break when a company undergoes financial turbulence, as did giants Amazon and Meta in recent quarters for different reasons.

Conversely, we probably know what low-quality means, primarily by studying cautionary tales. Peloton crashed and burned after mismanagement of hypergrowth discombobulated its operations to the point where the new CEO Barry McCarthy had to completely reverse its vertically integrated strategy and raise rescue financing.

Another example of a low-quality but hyped stock is Allbirds BIRD 0.00%↑. The company has been in the news for its lackluster financial results, burning through cash and struggling with waning demand. For a brand so early on its expansion track, Allbird has (so far) failed to live up to its promise.

Allbirds' ad featuring Lindsay Lohan (2022)

Quality is Earned Over Time?

“You never know who's swimming naked until the tide goes out.”
Warren Buffett

To be a “Quality” company, it must first endure. It is useless to have all the trappings of a successful corporate in the making if it cannot survive recessionary pressures or a hostile capital market.

For example, in the face of growing competition and a weakening economy, Tesla slashed prices to boost demand and keep its Giga factories running at full speed. But thanks to its established branding, customer goodwill, and balance sheet strength, it still generated near-record cashflows and sustained considerable investments into additional Giga factories and the production ramp of Cybertruck and Semi.

A Tesla Semi prototype on display outside Petersen Automotive Museum in Los Angeles

In contrast, the chances of Lucid enduring as a standalone enterprise look bleak, with its suboptimal production scale, rapid cash burn, and weak balance sheet. Along with EV peers at early (and costly) stages of expansion, these newbies cannot be considered “Quality” companies until they survive multiple storms.

Conclusion: Quality and Proven Resilience may be Inseparable

I may therefore deduce that the longer a company has been thriving (and exhibiting hallmarks of a well-run enterprise) over multiple economic cycles, the higher its “Quality.”

Quarterly numbers may display choppiness, but proven resilience over many years (or decades) is perhaps the closest indicator of “Quality” when reviewing investment opportunities.

I think we all know it.

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Suit Yourself Is Now Out!

Tue, 09 Sep 2025 10:56:28 GMT

After years of reflection and writing, my debut book, Suit Yourself: A Portfolio Strategy for Every Personality Type, is finally out, published through Koehler Books. This side passion project brings together my professional and personal journey across psychology, personal finance, and the many ways our identities shape how we invest.

For those who have already started reading, thank you—and if you found the book useful or thought-provoking, I would be grateful if you left a review on Amazon. Every review helps the book reach more readers who might benefit from its message.

It is now available through:

Check out my recent interview with ThinkAdvisor: Perfectionist? Achiever? Investigator? How Clients' Personality Type Informs Their Investment Style by Jane Wollman Rusoff.

More interviews and features are in the pipeline—stay tuned.

People who have read the book have been giving me encouraging feedback, which still surprises me. I have had my moments of self-doubt about writing this book—even now. But maybe that is just part of being human and doing something for the first time. Writing and publishing a book is not a linear path, and I am learning to sit with that.

Thank you to everyone who has supported the journey.

To find out more about your typology, try the free quiz on my website.

Follow me on X.com (formerly Twitter) @ConsumeOwnTech

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Life Time: A Small-Cap Bet on Stickiness, Scale, and Pricing Power

Mon, 11 Aug 2025 12:05:08 GMT

An abridged version of this write-up first appeared on Yahoo Finance as a featured community analysis.

Local Life Time club in Atlanta, Georgia

Peter Lynch’s core advice is simple: invest in what you truly understand. I have been a Life Time member since November 2024—using not just the gym, but also the spa, daycare, and café—and that proximity prompted deeper due diligence into the company as an investment opportunity. At the same time, I recognize the risks and potential for biases: remains a small-cap company, with a market value under $10 billion, and my favorable experience as a member may color my investor perspective. Nevertheless, I believe can more than double its current share price of approximately $27 within the next 2-3 years, and I have taken a small position to create alpha in my Traditional IRA.

Hard Moat and Meaningful White Space

operates 184 centers across ~30 US states and one Canadian province. The company has explicitly guided for 10 to 12 new openings per year—a measured pace that aligns with its premium positioning and capital discipline. Management has not set a long-term unit count target; however, investor materials suggest that meaningful whitespace remains in both urban and affluent suburban markets, particularly through mall integrations and residential developments. With an average club size of approximately 100,000 square feet, is building a national wellness infrastructure that cannot be easily replicated.

Inclusive Demographics, Pricing Power

While many gyms target specific groups or provide generic experiences, differentiates itself. It is more than simply a fitness facility; it serves as a lifestyle community that welcomes families with young children, working professionals, retirees, and individuals of all ages, genders, and sexual orientations. The diversity of its members becomes clear during my visits to the local club.

This inclusive appeal supports two of Life Time’s most durable advantages: member stickiness and pricing power. On the Q2 2025 earnings call, management noted that visits and retention were at all-time highs, prompting a deliberate focus on raising prices and ancillary revenues rather than expanding membership. That level of strategic restraint is rare in fitness retail and underscores the strength of Life Time’s value proposition.

Optimization and Greater Return on Investment

Financially, is entering a more disciplined phase. Revenue for Q2 2025 increased to $762 million, up 14% year over year. Net income rose by 37%, and free cash flow turned positive for the fifth straight quarter. These improvements are deliberate. The company is intentionally shifting its focus from rapid expansion to margin growth, cash generation, and debt reduction.

In contrast, , which relies heavily on a franchise model, reported $341 million in revenue for the second quarter of 2025, representing a 13% increase. Life Time's adjusted EBITDA was $211 million, surpassing Planet Fitness's $148 million. Membership numbers were 849,643 for Life Time and 21 million for Planet Fitness.

That gap reflects two very different business models: focuses on unit growth and franchise royalties, while emphasizes a more personalized, asset-intensive platform with greater monetization opportunities. In June 2025, Life Time signed a $150 million sale-leaseback deal, converting real estate into capital without losing control. Another $100 million in sale-leaseback transactions are expected in the second half of the year. This is a company trading scale for sustainability, doing so on its own terms.

What Could Go Wrong and Valuation

is dependent on retaining affluent members across economic cycles, and its business model carries significant operating leverage. Any revenue slowdown or cost mismatch could disproportionately compress margins. Growth initiatives in digital and branded products are still relatively unproven. Momentum is real, but execution must remain tight.

Still, at the current valuation, the risks might be justified by the potential upside. Management expects 2025 revenue to grow by around 14%, reaching $3.0 billion. Adjusted EBITDA is forecasted to increase by 20%, and net income by over 86%—showing that margin expansion is now a key focus. has also reduced its net debt leverage from 3.0x to 1.8x over the past year, indicating disciplined cash flow management. Based on the company's 2025 adjusted EBITDA guidance, its enterprise valuation (with a $27 per share price) is about 12 times. In comparison, trades at roughly 20 times (at $105 per share).

If continues to grow revenues in double digits while further expanding margins, more than doubling its share price is plausible.

Final Thought

is not trying to be everything to everyone. It is building a high-end, high-engagement wellness platform with a long runway for monetization and margin improvement. While the stock remains overlooked relative to its scale, pricing power, and member retention, the underlying business is gaining operating leverage with each passing quarter. For investors seeking exposure to health, fitness, and real estate in one disciplined vehicle, offers asymmetric upside.

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Early Praise for Suit Yourself and a Moment of Gratitude

Tue, 01 Jul 2025 11:30:52 GMT

Front and back covers of my upcoming book, to be published on August 18, 2025. See below for pre-order details.

I started writing Suit Yourself: A Portfolio Strategy for Every Personality Type to bridge two worlds that rarely meet: the inner world of personality and the outer world of personal finance. I wanted to explore why investing feels so different for each of us—and why that difference deserves to be honored, not erased through a one-size-fits-all approach.

What began as a personal curiosity has evolved into a book that others are now starting to see themselves in. That has been the most rewarding surprise.

As we get closer to launch on August 18, I wanted to share a few words from early readers that have meant the world to me:

“One of the biggest challenges investors face is between the ears. Learning how to manage our emotions and understanding why we do what we do goes a long way towards market success. Benjamin has written a book helping outline those challenges and how to overcome them by understanding our personality types.”

— Dave Ahern, Co-host of the popular investing podcast, Investing for Beginners

“The highest ROI activity you can do isn't analysis of a company or a sector, it's understanding yourself… Suit Yourself helps you understand how you can leverage your own disposition to maximize your strengths, and avoid your pitfalls.”

— Nathan Worden, Community Manager, Yahoo Finance

“Suit Yourself is more than an investment guide—it goes beyond sound investment strategies and provides clarity into the emotional rollercoaster of life itself… Concise, yet powerful… Definitely a book to have on any bookshelf, to read, and to reflect upon repeatedly over time.”

— Felicia Teng, CPA and Founder of Get Counting

“Benjamin Tan's Suit Yourself provides an insightful exploration of investment strategies through the lens of the Enneagram personality framework. Through his entertaining use of pop culture references and personal stories, Tan turns complicated financial ideas into understandable concepts while providing customized investment strategies for people to match their portfolio choices with their personal characteristics.”

— Dr. Patrick Behar-Courtois, Author of Maximizing Organizational Performance

Writing this book stretched me in all the right ways. Publishing it has stretched me even more. I am grateful to everyone who believed in the core message: that the best investment plan is the one that suits you.

If you would like to be one of the first to read it, Suit Yourself is now available for pre-order:

Thank you for walking this journey with me. More soon.

To find out more about your typology, try the free quiz on my website.

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Mid-Year Lessons from Project 350k

Thu, 05 Jun 2025 11:46:08 GMT

When I began Project 350k (see Part 1, Part 2, and Part 3) earlier this year, the idea was simple: grow a modest Traditional IRA portfolio into something far more substantial, eventually hitting a $350,000 target. The implied target return is around 15%—ambitious but not unachievable. Statutory limits on the amount of capital contributions would also cap the amount of risk I take relative to my net worth, which comprises a mix of home equity, REITs, fixed income, large caps, and mid-sized companies poised for S&P inclusions.

Now that we’re halfway through the year, I thought I’d pause and reflect on a few things I’ve already learned.

Time for a mid-year stock take and make some pivots to investing style

1. Timing of Deployments Matters:

With a contribution cap of $7,000 per year, I should have been more strategic with the timing and sizing of my buys. Not used to making deployments of this size, I was still operating the Traditional IRA account without being fully cognizant of limitations.

Between January and February alone, I made all four of my current investments:

Disney ( ) : Purchased $2,782 @ $107/share (Jan 16)
Globant ( ) : Purchased $2,000 @ $200/share (Jan 27)
Life Time Group ( ) : Purchased $1,153 @ $32.95/share (Feb 18)
Trupanion ( ) : Purchased $1,050 @ $35/share (Feb 20)

Looking back, I essentially used up the annual limit within the first six weeks of the year! That decision left me with no capital to act on better opportunities. When markets wobbled in April and May, I had to sell my stake in Warner Music Group ( ) to free up capital. While that position was always earmarked for disposal due to its tepid growth profile, I still should have been more conservative with the deployments of this small portfolio.

There’s a discipline to pacing.

2. Sizing Should be Consistent

My allocations were uneven. Disney ( ) and Globant ( ) got significantly larger portions than Life Time ( ) or Trupanion ( ). If I had stuck to $1k per name, I could have left room for later conviction adds—or scaled out more gracefully as earnings reports came in during Q1.

3. Risk is About Me

Reentering Globant ( ), a name I had previously owned and profited from, felt safe. But it is a small cap. And historically, I have had a blind spot for these.

This particular investment turned into my Achilles' heel. Q1 results disappointed, and revenue guidance for 2025 is well below my minimal 10% threshold for Project $350K. I am now looking for an exit from this name. Meanwhile, larger-cap names I already hold in my trading account—like The Trade Desk ( ) and Zscalar ( )—have fared much better.

Ironically, I ignored them to “diversify.” Geez.

4. My personality Showed Up

Looking back, I can see how much my personality shaped the early moves in this portfolio—perhaps more than I realized at the time. In my upcoming book, Suit Yourself, I explore how each of the nine Enneagram types tends to approach investing, with their own psychological biases and behavioral tics. As a Type 5 who can lean into a Type 7—optimistic and, at times, impulsive—I now recognize how those traits showed up in my decision-making.

A preview of the front and back covers of my upcoming book, Suit Yourself

The rush to deploy capital was not just about market timing. It was about chasing momentum, fearing I would miss out on ideal entry points. It felt like decisiveness, but in hindsight, it was impulsivity disguised as confidence. I told myself I was making bold, reasoned moves. But really, I was skipping the part where I pause, zoom out, and ask: “Is this the best use of limited capital right now?”

There’s a core lesson here: investors are not spreadsheets. We are human. And when left unchecked, our patterns—risk-averse or risk-seeking—can lead us astray, even when we know better. I have spent years studying valuation, business fundamentals, and capital cycles. Yet in this small account, the psychological impulse to act quickly overrode what should have been a more methodical deployment plan.

Self-awareness does not guarantee success but gives you a fighting chance to interrupt your worst habits. That’s what Suit Yourself—and this project—is really about.

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Part 3 of 3: A 10-Year Project for My Traditional IRA account

Mon, 05 May 2025 11:30:25 GMT

This article is a continuation from Part 1 and Part 2.

Statutory limits on annual contributions to the Traditional IRA basket provide a hard stop on the amount of capital at risk.

Other portfolio rules for Project $350K include:

Disposal Rules: Holdings will be evaluated for the long term, and disposals will be considered only if the fundamental growth story breaks or execution falters. Every quarter, I will assess their financial results, focusing on areas where management falls short. Often, I have noticed that consecutive gaps between Wall Street consensus numbers and actual results are a harbinger of deeper troubles. Think Unity ( ), ZoomInfo ( ), Peloton ( ), and Oatly ( ). While there are always mitigating circumstances to consider, red flags can be cloaked in management explanations that sound like broken records.
S&P 500 Names versus Others in Portfolio Balancing: I want to strike an intentional balance between S&P 500 constituent stocks—which arguably have already been uncovered by the markets—and non-constituent stocks. Currently, 75% of my traditional IRA account (in terms of market value) comprises S&P 500 constituent stocks, and Amazon ($AMZN) dominates it. It was not by design, and the allocation was random as mentioned above. Going forward, I will aim for a 50-50 split between S&P 500 names and non-constituent stocks, with an immediate focus on adding names that appear poised for index inclusion. They offer the highest potential for re-rating post-index inclusion and are suitable candidates for the lofty target returns of Project $350K.
Multiple Growth Engines: Each stock must have a proven track record of being able to keep adding new businesses and product categories. Amazon ($AMZN) is a prime example of a company that has been able to expand horizontally over multiple decades from a bookseller to the conglomerate that it is today, with more growth engines continually added (streaming, advertising, Buy With Prime). A single-product company just won’t cut it (think Oatly $OTYL and Peloton $PTON), even if they tout geographical expansion.
Caution with Mega Mergers: I will also be wary of companies that grow horizontally by entering large M&A deals relative to their existing sizes. I just don’t think it is a good sign, and I will stay away. While bolt-on acquisitions make sense since building new businesses from scratch can be riskier, when two peers try to swallow each other, it tends not to do well and can even result in more risk than a home-grown strategy. History is littered with more failures than successful mergers. Think of Time Warner and AOL as the quintessential cautionary tale.

The Road to $350K

Combining the tax-deferred growth benefits of a Traditional IRA account with a focused investing approach, I aim to create a narrative that can resonate with others in this community. I want to prove that the 14% IRR required to reach this $350K goal by 2035 is achievable with a focused strategy and a commitment to learning from successes and mistakes.

Since I am already financially independent and have substantial resources reserved in safe asset classes, I will take more risk with my Traditional IRA account. At the same time, the statutory limits on annual contributions provide a hard stop on the amount of capital at risk.

Conclusion: Join This Journey of Community Learning

Project $350K serves a few purposes. Firstly, the mission is informed by the lessons I learned from years of investing in a combination of multi-baggers (including Tesla , CrowdStrike , Cloudflare , and Datadog ) and certified losers (Peloton , Oatly , and Fastly ). Secondly, I want to create a disciplined, transparent challenge. Knowing my tendency for insular thinking, I want to make Project $350K into a Substack community project open to feedback, comments, and iteration. Plus, it adds an element of fun to the discipline of investing when there is lively engagement. Thirdly, using my Traditional IRA, I am testing the boundaries of higher-risk investing within a defined framework. This account allows me to explore the intellectual challenge of finding high-growth companies while limiting the overall impact on my broader financial picture.

Accordingly, this project is more than just hitting my desired investment returns. Project $350K reflects my past learnings and continuing journey to align investing strategies with a deeper understanding of discipline, focus, and long-term growth. Money heightens emotions like no other life variable. By executing Project $350K on this forum, I want to put my investment theses to the test of open feedback and become a better investor. This project also invites readers to share insights, learn from each other, and contribute to a community of thoughtful investors.

I hope Project $350K motivates readers to think more intentionally about their Traditional IRA accounts, which tend to take a backseat to regular trading accounts. Retirement accounts are not merely passive vehicles but can also be structured challenges for self-awareness and growth.

Update as of April 29, 2025: I have added to the following positions in my Traditional IRA account since Part 2 publication:

at $28.63 per share
at $132.50 per share
The above was funded by disposing of my original stake, a position that did not align with my new mandate due to its tepid growth profile.

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The Book is Coming (and Why I Wrote it)

Tue, 01 Apr 2025 11:42:04 GMT

Visit my author’s website for more information.

When I first began writing Suit Yourself: A Portfolio Strategy for Every Personality Type, I had no idea how deeply personal this project would become. What started as a concept to blend two of my passions—investing and personality psychology—quickly evolved into something more introspective and meaningful. It became a lens through which I could reexamine my own financial habits, biases, and identity. And now, after years of development, research, interviews, writing, and countless rounds of editing, I'm thrilled (and relieved) to say that the manuscript is complete and heading into layout with Koehler Books.

Even before the manuscript was sent to the editor, I had revised it countless times and probably killed a few trees in the process!

Message Recap: Don’t be a Copycat Investor

Suit Yourself is a book about making investing personal using the Enneagram. I have written about this topic on Substack through a series of articles covering all nine personality types, but Suit Yourself takes it to another level of detail and scope. The book is not in a self-help-y, just-follow-the-author kind of way, but in a practical, structured, and psychology-informed manner. The core idea is simple: the best and most sustainable investment strategy reflects who you are.

Using the Enneagram to Frame the Book

The Enneagram as a framework for Suit Yourself: A Portfolio Strategy for Every Personality Type

The Enneagram—a model of nine personality types—is the framework I use to map out Suit Yourself. Through each chapter, readers will discover how their personalities influence risk tolerance, decision-making, reactions to market stress, and overall investing mindset. From Type One perfectionists to Type Nine peacemakers, I unpack how each type behaves with money. Suit Yourself is a book about self-awareness, behavioral finance, and taking ownership of your financial journey. It is for anyone who has ever wondered why they sell too early, hesitate to invest, chase small-cap stocks, or avoid looking at their financial roadmap altogether.

My diverse experience in investing, finance, accounting, technology, and clinical mental health helped shape this project. So did the incredible conversations I have had with friends, quiz-takers, readers, and fellow investors over the past few years. Thank you to all of you who took my personality quiz, offered feedback, or just cheered me on from afar.

Timeline for Suit Yourself

The book is going through its due process with the publisher, and we are estimating a late 2025 release. I will be sharing more in the coming months—cover reveal, pre-order details, giveaways, maybe even some bonus content. Until then, I just wanted to say thank you for being here. This Substack has been a quiet but steady companion throughout this journey, and I am excited to share more with you soon.

Meanwhile, below are the posts I have written about Enneagram types and their stock-picking habits:

Enneagram x Stock Picking (Part I): Type One Perfectionists
Enneagram x Stock Picking (Part II): Type Twos Investing in AMC to Save Movie Theaters?
Enneagram x Stock Picking (Part III): Type Three Investors, Successes, and Delaying Gratification
Enneagram x Stock Picking (Part IV): Type Four Investors and their Emotions
Enneagram x Stock Picking (Part V): Type Five Investors inside their heads
Enneagram x Stock Picking (Part VI): Type Six Skeptics
Enneagram x Stock Picking (Part VII): Type Seven Enthusiasts
Enneagram x Stock Picking (Part VIII): Type Eights
Enneagram x Stock Picking (Part IX): Type Nines

To find out more about your typology, try the free quiz on my website.

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Part 2 of 3: A 10-Year Project for My Traditional IRA account

Mon, 03 Mar 2025 12:31:01 GMT

Hurdle Rates: Size, Growth, Leverage, and More

This article is a continuation from Part 1.

In assembling my Traditional IRA portfolio, I will apply the following quantitative criteria to mitigate risks and ensure their long-term potential to thrive:

1. Revenue and Market Capitalization

Companies must have a minimum revenue and market capitalization of $1 billion each, ensuring a focus on companies that have crossed the chasm (in the words of Geoffrey A. Moore). Smaller players that are still subscale—think the likes of Oatly ( ) and Peloton ( ) when they became popular—can quickly run into execution issues that derail operations and impair financial health. I should know since I invested in them years ago and took losses. These guardrails are essential to limit speculative risks. There is no upper limit since the big can get bigger.

2. Topline Growth

Each investee company must be expected to grow its top line consistently by at least 10%. Given the project's targeted IRR, this is an appropriate hurdle rate to impose.

3. Profitability

While looking for companies that have crossed the chasm, I am not necessarily imposing profitability measures in selecting my stocks for Project $350K. Growth requires heavy investments, many of which cannot be capitalized on the balance sheet. Accordingly, expenses like R&D and marketing will impact the income statement and often result in reported GAAP losses, regardless of the company's efficiency. Names like Datadog ( ) and Zscaler ( ) would meet the criteria. That said, companies must have clear targets to show profitability (think Block $XYZ and their path towards Rule of 40) and establish meaningful inflections in their financial statements.

4. Debt and Cashflows

This is the part where I will impose stricter guideposts. Companies with net debt/EBITDA of more than ~2.5x will be avoided. A combination of negative operating cashflows and a high debt load is a recipe for trouble and a prelude for heightened price volatility when markets turn bearish, no matter how strong topline growth may be. When a company desperately depends on external fundraising—whether from banks, markets, debt, or equity—for survival, it entails too much risk with skeletal safety margins. Accordingly, names like Rivian ( ) and Lucid ( ) are not for Project $350K.

5. Valuation

Having invested in technology names that do not even have positive book values (thus failing the cardinal Benjamin Graham rule) or report operating income, I am nevertheless of the belief that valuation guardrails are essential. Overpaying for a stock, even for the best-of-breed companies, can make a difference between market-beating returns and underperformance. “Price is what you pay, but value is what you get” is a mantra I live by, and it has proven useful when investing in value and growth names. In addition, especially when buying smaller companies that may become acquisition targets, paying multiples that exceed what private equity firms would pay might result in permanent loss, should acquisitions transpire. I have learned this the hard way with Avalara and Coupa Software. For profitable plays, my focus metrics are EV/EBITDA, and for growth stories, EV/Sales is key. Both will be evaluated as expensive or reasonable in the context of individual topline and bottom-line growth.

My natural tendency towards intellectual exploration can lead me to overanalyze and gravitate toward niche, smaller-cap companies while losing the plot. Hence, the above criteria provide structure, limit risks, and impose the often-hard lessons I have learned as an investor in clear terms.

Part 3 to come - stay tuned!

Update as of Feb 28, 2025: I have initiated Trapanion at $35 and Life Time at $33 in my Traditional IRA account.

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Part 1 of 3: A 10-Year Project for My Traditional IRA account

Mon, 03 Feb 2025 12:29:41 GMT

Project $350K: Growing My Traditional IRA by 2035

Since 2021, when I moved to the United States from London, I have had to juggle the challenges of a transatlantic relocation, graduate school, a tech startup, writing a book, and preparing for parenthood. Amidst these demands, I found some time to open a Traditional IRA because my husband had touted all the tax advantages of doing so. So, once I obtained my green card, I began contributing, albeit with little thought or strategy, as I had limited bandwidth. I did not have a cohesive plan for deploying the funds I contributed. Consequently, I put them into names I had already invested in my separate trading account.

Despite a hasty start, my Traditional IRA account has grown by more than 50% over the last three years – see the breakdown of my results below. While I am satisfied with the performance—no doubt aided by a strong market performance lifting all boats—the lack of an intentional strategy left me feeling wanting.

Recently, I came across an article Project $1M: End Of A Journey With Mission Accomplished on Seeking Alpha. That mission resonated, and I felt inspired to do something similar. Hence, I am setting a goal: Project $350K, a mission to grow my Traditional IRA to $350,000 by 2035. It has an implied 15% internal rate of return (IRR) over the next decade. By sharing Project $350K on Substack, I hope to make this a community-driven project, taking onboard ideas and feedback from readers while providing an inspirational blueprint for investors wishing to embark on a more purposeful journey with their Traditional IRA accounts.

My Story and Where I Have Invested

While living in Singapore, I worked in the investment banking and buy-side sectors for over 13 years at firms like Credit Suisse, UBS, and Oaktree Capital. I earned my financial independence mainly through employment income and property investments. What did not work well for me were the obscure stocks I had been drawn to since my nascent days as a stock picker. I was also overly focused on assets trading at low price-to-net-tangible-asset ratios, mistaking cheap valuations for genuine value. The kind of insular thinking and scarcity mindset common among my breed of highly intellectualized personalities—see below article on Type Fives, in Enneagram speak—resulted in missed opportunities to invest in quality companies trading at fair prices.

In recent years, however, spurred by moves to London and Atlanta, I started investing more in growth names. It was not a sudden pivot but a slow one that began with companies that embodied growth and profitability, such as Match Group ( ), Starbucks ( ), and a streaming-focused Disney ( ). Then, I doubled down on rapid growth stories—all lacking in GAAP profits—deep within the technology space, with mixed results. Over a decade, the lessons I learned from investing in winners and losers have informed my portfolio philosophy, which I wish to apply in earnest to Project $350K.

Current Holdings and Allocation

Overall, my current assets are anchored by home equity, and my liquid investments are evenly spread across S&P 500 constituent stocks, real estate investment trusts (REITs), cash, fixed income, and companies poised for index inclusion. My existing equity holdings—primarily in a separate trading account—comprise REITs and stocks in the technology and consumer sectors.

Below are the current holdings in my Traditional IRA account (as of December 31, 2024):

Current Holdings in My Traditional IRA Account
(market prices as of Dec 31, 2024):

Amazon (90 shares)
- Closing Price: $219
- Average Cost: $107
- Market Value: $19,745
- Gain: +104%
Lululemon (17 shares)
- Closing Price: $382
- Average Cost: $250
- Market Value: $6,501
- Gain: +53%
Shopify (45 shares)
- Closing Price: $106
- Average Cost: $58
- Market Value: $4,785
- Gain: +84%
Floor & Décor (25 shares)
- Closing Price: $100
- Average Cost: $119
- Market Value: $2,493
- Loss: (16%)
Disney (24 shares)
- Closing Price: $111
- Average Cost: $131
- Market Value: $2,672
- Loss: (15%)
Warner Music (75 shares)
- Closing Price: $31
- Average Cost: $39
- Market Value: $2,325
- Loss: (21%)
Square (1 share)
- Closing Price: $85
- Average Cost: $73
- Market Value: $85
- Gain: +17%
Total Portfolio Performance
- Capital Cost: $25,635
- Market Value: $38,606
- Total Gain: +51%

Mandate: Growing with Consumer and Technology Companies

I will make the maximum annual contributions to my Traditional IRA account for the next ten years. In 2025, year 1 of this project, it is $7,000. To calculate my target IRR, I assume it will remain the same for 2026-2035. As described above, I am starting with my seed investments, so to reach $350,000 by the end of 2035, the implied returns needed will be approximately 15%.

1. Sector Focus

Given Project $350K's high target returns, I will focus solely on technology and consumer names for this portfolio, not REITs. Having invested in these sectors for many years, I feel most comfortable with them.

Without stating the obvious, we are at the cusp of an AI revolution. Technology transforms every industry. I am working at a startup that harnesses AI to transform the mental health industry, so I see it firsthand. Having meaningful exposure to this sector and stakes in technology companies instrumental to this revolution is key to any portfolio’s relevance.

When investing in consumer stocks, my personal experiences come into play, and I find that to be most fulfilling when trends spotted early translate into portfolio performance. Spotify ( ), Lululemon ( ), and Tesla ( ) have been some of my best consumer stock investments, and they are all inspired by what I see myself or others consuming.

In combination, technology and consumer companies represent the highest potential for portfolio appreciation and align with my experience and professional background.

2. Research Universe

To find relevant names to add to my Traditional IRA account, I shall rely on the following sources:

- Current Holdings. My trading account currently comprises about 20 relevant names, including Tesla ( ), Zscaler ( ), Cloudflare ( ), and Adyen. These have been high-conviction, long-term holdings, and I know them sufficiently well. If prices dip to certain levels, I will add them using funds in my Traditional IRA account.

- Past Investments: I recently sold several names to fund a more significant home purchase for family planning purposes. Some names that I wish I had kept—including Trupanion ( ) and Globant ( )—are prime candidates for my Traditional IRA account.

- Sector Focus Lists via Research: I have access to multiple broker research databases, so I will examine related subsectors within the technology and consumer space. I will be monitoring cloud-native software makers, cybersecurity providers, fintech companies, and discretionary consumer-based companies.

Parts 2 and 3 are to come - stay tuned!

Update as of Jan 31, 2025: I have added more at $107 and initiated at $200 in my Traditional IRA account.

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The Rise and Fall of the Great Powers: Revisiting S&P 500 Performance

Tue, 03 Dec 2024 12:31:08 GMT

Over the past 25 years, the US stock market, particularly the S&P 500 index, has been among the top performers globally. This strong performance is largely attributed to the dominance of American companies, especially in the technology sector. Think of the likes of Apple (), Salesforce (), Netflix (), and Tesla () to visualize just how dominant the country has been at the cutting edge. Enormous wealth has been created through innovative offerings that simultaneously advanced mankind and made the S&P 500 index one of the best-returning indices in the world.

The S&P 500 has been the gold standard for equity investing for decades. It is often touted as a cornerstone of a diversified portfolio, and for good reason. Spanning the 500 largest publicly traded companies in the US, the index reflects the American economy's resilience, innovation, and dynamism. But what makes it such a consistent winner? As I recently revisited Paul Kennedy's The Rise and Fall of the Great Powers: Economic Change and Military Conflict from 1500 to 2000, it became clear that America’s enduring advantages—economic, geopolitical, and cultural—continue to endure.

Warren Buffet has always favored low-cost index funds for investors. Back in 2008, he even placed a million-dollar bet against a hedge fund manager that the S&P 500 would outperform a portfolio of hedge funds over 10 years. Buffet won that bet by a landslide in 2018.

America’s Enduring Advantages

Paul Kennedy’s book offers a sweeping analysis of why some nations thrive while others falter. Written decades ago, Kennedy highlights several advantages intrinsic to America's rise: its geographical isolation, abundant natural resources, and ability to attract talent worldwide. These factors have fostered economic stability and an unparalleled environment for innovation and entrepreneurship.

As I read Kennedy’s observations, I was struck by their relevance. The US still enjoys a robust demographic profile, technological leadership, and deep capital markets that few other countries can rival. Despite global economic shifts and rising competition from different nations, the US remains the birthplace of industry-leading companies, from tech giants like Google and Microsoft to emerging players in artificial intelligence. This relentless ability to innovate and dominate global markets feeds directly into the S&P 500’s performance, making it a uniquely compelling investment vehicle.

The Genius of Index Investing

In an article I wrote some time ago, I argued that index investing offers an elegant solution for managing the ever-changing tides of market relevance. The S&P 500, in particular, excels at this. By design, the index automatically renews itself, adding rising stars while shedding companies that can no longer compete. This natural selection mechanism ensures that investors are continuously exposed to the strongest players in the market without needing to manage their portfolios actively.

Consider this: companies like Kodak and Sears once dominated the American economy, but their eventual decline did not weigh down the S&P 500. The index replaced them with new giants like Amazon () and Palantir (). This adaptability makes the S&P 500 not just a reflection of the American economy but its engine, constantly evolving to capture the opportunities of tomorrow.

Comparing to Other Countries

Until six years ago, I invested almost exclusively in Asian stocks. While I did well and had the homegrown advantage of familiarity, I could have done much better if I had broadened my universe to include American companies. While many countries and indices may appear promising, they often lack the structural advantages that underpin the S&P 500’s long-term success. Over the last few decades, most groundbreaking companies have emerged from the US. Whether it is OpenAI revolutionizing natural language processing or Tesla redefining the automobile, America has proven to be the global epicenter of innovation.

Since moving to the United States in 2021, I have found myself deeply influenced by its environment of creation, learning, and innovation. There is an infectious energy here—a collective belief that the next big idea is always within reach. This atmosphere inspired me to co-found Psyntel, a software company that leverages AI to support mental health professionals and to begin writing my first book, Suit Yourself. These ventures, alongside a vastly different investment focus, represent a significant shift from my life while living in Asia, underscoring how uniquely fertile the US is for innovation and ambition.

Conclusion

Investing in the S&P 500 is not just about betting on the U.S. economy; it is about investing in a system that has consistently adapted, innovated, and thrived. As Paul Kennedy’s historical insights remind us, America’s enduring advantages provide a strong foundation for its economic dominance and, by extension, the strength of the S&P 500. Combine this with the index’s built-in adaptability, and you have an investment vehicle that has stood the test of time without any sign of slowing down.

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Reflections on a Year of Change: Family, Startup, Portfolio Changes, and a New Book

Tue, 05 Nov 2024 12:35:52 GMT

It has been quite some time since my last post on October 24, 2023, when I reiterated my confidence in Spotify () following their Q3 results. Back then, Spotify’s share price was under $160, and now it is on the brink of breaking $400—a gratifying development.

In the summer of 2022, I shared three picks that I believed could become the next Amazon and Spotify () was one of them. The other two were Palantir (picked by my friend John Nardi, who made an excellent call) and Block (), which is still grappling with slower growth in its merchant segment.

Looking back, I wish I had followed John’s lead on Palantir !

Portfolio: Then and Now—A Shift Toward Stability

As a Type Five, I know I can be wrapped up in my head and get swayed by insular thinking. My worst investment mistakes have been in the small to mid-cap sector, representing the greatest allure to my intellectual side, which wants to beat the market. There, I get excited by the idea of uncovering the next big thing and frequently ignoring (or underestimating) the immense execution risks that come with trying to crossing the chasm. Maturing into an established business—think Starbucks () and ServiceNow ()—is a gravity-defying act that only a few can manage. Many do not make it.

When my husband and I decided to purchase a larger home late last year, it became a forcing function to reassess my portfolio. Sky-high mortgage rates made it clear that we would need to reduce borrowing, which meant selling some stocks to fund the purchase. That decision led me to re-balance my portfolio toward a more concentrated, large-cap approach.

So, walking the talk, I let go of several small-cap names to release funds and concentrated my portfolio on larger companies.

Small-cap positions sold in late 2023 and early 2024 include:

Elastic ()
Sprout Social ()
Trupanion ()
Endava ()

In hindsight, selling some of these small-cap names felt like dodging a few bullets, especially with stocks like Endava () and Sprout Social (), which I exited near their highs. On the other hand, selling Trupanion (), a position I had held well before the pandemic and has since doubled my disposal price, felt painful.

Ultimately, shifting my focus to a smaller group of larger-cap, proven names—and balancing this with increased homeownership—was compelled by a mix of lifestyle choices and a growing recognition of my biases as a Type Five investor. I still hold some smaller companies outside of the S&P 500, but with a more cautious approach to avoid the intellectual allure these stocks can have for my personality.

I will continue to share insights on managing portfolio changes, specifically how to recognize and mitigate biases, blind spots, and mental traps associated with personality-driven investing.

Startup, Family, New Home, Non-Profit, and…

Since mid-last year, life has introduced me to exciting new roles and responsibilities. I co-founded Psyntel, a mental health software company, with my good friend Sam Fargo, whom I got to know through my writing endeavors. At Psyntel, we are working to bring AI-driven insights to the mental health field, and we are thrilled to be approaching our commercial launch in the coming weeks.

On another front, I joined P.E.A.C.E, a non-profit that offers pro bono therapy to Asian Americans and Pacific Islanders in Georgia. Initially, I started as a volunteer advisor and recently joined the board. Our work in the AAPI community is incredibly fulfilling, providing meaningful ways to support those in need.

And perhaps the biggest change: On February 4, 2024, I became a father through gestational surrogacy. It has been a transformative journey, and I am immensely grateful for this experience.

…an Upcoming Book!

In the early days of 2021, I first considered writing a book—and I am thrilled to share that this vision is coming to life. My debut book, Suit Yourself, is set to be published by Köehler Book in the fall of 2025. The book will explore personalized investing strategies through the Enneagram, blending finance, psychology, and practical insights to help readers find an approach that reflects their true selves. This is a passion project and I am excited to bring this closer to fruition.

Stay tuned for more updates!

Conclusion

As I step back into sharing my thoughts here, I am excited to bring a renewed focus and share how my perspectives—and portfolio—have evolved. Whether it is refining my Type Five approach to investing, managing new roles in family and business, or preparing for the release of Suit Yourself, each step has been a learning experience. I hope to bring you along on this journey, sharing insights that combine personal finance, psychology, and tech investing.

I look forward to reconnecting with you all here and in future posts, which will be monthly and at the start of each month. Be sure to subscribe and follow along as I share portfolio updates, reflections on my investing mindset, and, of course, previews of my upcoming book!

Follow me on X.com (formerly Twitter) @ConsumeOwnTech

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REPOST (Spotify): Emerging Public Companies: Next Amazons (Part Four of Four)

Tue, 24 Oct 2023 12:10:39 GMT

Below is a repost of my first Spotify () article I wrote in 2022. With the release of Q3 2023 results, this streaming giant is heading toward sustained profitability and a year-end subscriber base of 600 million.

Could Spotify be finally due for rerating? Read on below—I believe my original thesis has been reinforced by the latest quarter.

**************

(August 2022)

Spotify has been a difficult investment for many, simply because current share price is even lower than its direct listing reference price of $132 back in 2018. It is especially confounding, since as a business, Spotify is expected to more than double its 2018 revenue by 2022.

Investor Day 2022: More than Just Music Distribution

Amidst bearish market sentiment, Spotify hosted an investor day on June 8, 2022. Daniel Ek, co-founder and CEO, outlined how far its business has evolved since it became a public company. From its origins as a passive music distributor subject to the whims of major record labels, Spotify is now the world’s largest demand service platform and single most important revenue contributor to the recording industry. Not only that, with over 430 million users generating a plethora of first party data, Spotify offers valuable tools for labels to drive engagement for their artists. This has enhanced Spotify’s bargaining position vis-à-vis record labels as well as the profitability of its music business, similar to how Sponsored Products boosted Amazon’s e-commerce clout and margins.

Additional monetization channels have also been initiated to not only benefit artists, but also Spotify’s bottom-line:

“Beyond music, touring and merchandise are significant pieces of the equation. So we’re building solutions for both artists and fans, all while growing new lines of profit for artists and Spotify. We’ve integrated listings from top ticketing platforms to sell concert tickets at scale within Spotify. We’ve also enabled artists to sell merch, vinyl, and other offerings directly to fans via their Spotify artist pages through a custom integration with Shopify. And we’ve continued to make great progress with our Fans First program, which uses Spotify data to identify and reward the most passionate fans with exclusive offers, like advance access to concert tickets, exclusive merchandise, or invite-only events. To date, the program has generated more than $300 million in revenue for the music industry”

Podcasting – Second Core Business

Spotify has become the number one podcast platform – surpassing Apple – since starting the business from scratch back in 2019. Today, there are more than 4 million podcasts available on Spotify, up from just 500,000 in 2019. Podcast revenue grew tenfold over the same period.

Podcast is expected to be a gamechanger in the coming years. While the most relevant music content – especially back catalogue – is owned by major record labels, key podcast content is either exclusive to Spotify or user-generated by disparate content creators. Spotify wants to reach a lot more independent voices in the coming years, aiming to become the YouTube of audio content to aggregate both supply and demand. With celebrity-driven podcast deals making headlines, more creators have joined the Spotify platform to reach its vast audience, much like how third-party sellers continue flocking to Amazon to reach its insatiable customers. Advertisers have followed suit – total advertising dollars are likely to hit almost $2 billion in 2022, thanks in part to the hypergrowth in podcast revenue:

“In 2021, we generated close to €200 million in podcast revenue. We expect this to increase materially in 2022, and going forward, we believe podcasting in itself will be a multibillion-euro business for Spotify”

Daniel Ek – The Man who beat Apple, Google, and Amazon in the Race for Audio Dominance

Behind all these pivots is Daniel Ek, a patient and strategic thinker who has outmaneuvered all attempts by Apple to crush the service. To understand Ek, I would recommend reading The Spotify Play.

Similar to Jeff Bezos, Ek is willing to play the long game – invariably at the expense of short-term profits – in establishing new business lines and doubling down on winning initiatives. To accelerate its podcasting business, Spotify has spent considerable sums acquiring Gimlet Media, The Ringer, Megaphone, and most famously, a rumored $100 million for the exclusive rights to stream The Joe Rogan Experience. Impressively, they have been carefully funded by internal cashflows from the music business, without raising equity or debt, aside from an opportunistic $1.5 billion convertible bond issuance in early 2021:

“We have generated positive operating cash flow in each year, including more than €1 billion in cumulative free cash flow—even while investing into new areas like podcasting. This has enabled us to finance more than €900 million in mergers and acquisitions while returning more than €600 million in capital to date over the past four years”

So far, the strategy appears to be working, judging by the engagement levels of podcast listening on its platform, as well as the flywheel spinning content creation, audience attraction and advertiser interests.

During the investor presentation in June 2022, Ek declared Spotify’s 2030 revenue target to be $100 billion, nearly 10 times more than what 2022 is expected to reach. Not only that, Ek aims to expand profitability alongside, demonstrating his confidence in Spotify’s powerful operating leverage as it scales:

“From everything I see, I believe that over the next decade, we will be a company that generates $100 billion in revenue annually and achieves a 40% gross margin and a 20% operating margin”

Spotify has come a long way, and judging by the Amazonian moves made in expanding its audience and reach, it should be on the playlist of growth investors seeking the next big thing.

Drop a comment if you have any other names on your mind.

(Author is long $SPOT)

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Tesla: Key Broker Takes on Q3 Production and Deliveries

Tue, 03 Oct 2023 15:12:42 GMT

Tesla produced over 430,000 vehicles and delivered over 435,000 cars in Q3 2023. Numbers came in lower than expected, despite advanced notice from management on the planned factory downtimes, mainly due to the Model 3 refresh during Q3.

Year-on-year growth rates amounted to 18% and 27%, respectively. Under current economic conditions, these numbers are impressive, albeit below their 50% CAGR long-term guidance and Q2 levels.

FY 2023 production is still targeted at 1.8mn. I wonder if Elon will repeat his aspiration for 2mn on Oct 18, when Tesla hosts its Q3 earnings call. The descriptor “around 1.8 million” in yesterday’s announcement is causing some concern that Tesla may fall short of the baseline volume guided.

More importantly, what will FY 2024 look like? On the one hand, Cybertruck will be a meaningful addition, with pre-orders already exceeding 2mn; conversely, much will also depend on the demand environment next year.

See Tesla’s quarterly delivery trends since Q1 2018:

Q3 delivery was a rare sequential decline, partly due to the Model 3 refresh—customers holding back from ordering the prior model—and the lower volume of the much more expensive Model S/X

Margins, Margins, Margins: Now What?

With lower production volume this quarter, Tesla would have had to extract greater cost discipline in Q3 to maintain their 18% automotive gross margins (excluding regulatory credits) from Q2.

This appears unlikely, especially given more price cuts in recent months.

Nevertheless, Tesla remains fundamentally well-positioned in the electric vehicle race—see below a past article I wrote about its enduring competitive advantages:

Further Color from Goldman, Deutsche Bank, and Morgan Stanley Research

I have compiled some snippets from the above research houses to provide additional color on Q3 production and delivery numbers and what they may imply:

From Goldman Sachs (Oct 2): “3Q23 deliveries first take”

While we reduced our 3Q23 volume estimate in our 9/17 note to 460K to better reflect what we believed was lower S/X demand and the impact of the changeover for the Model 3 Highland, 3Q23 deliveries were lower than we had expected…We believe key debates will now shift to:
1) What is the margin impact in 2H23 from the reduced production levels (recall that last quarter Tesla's non-GAAP automotive gross margin ex. credits was 18.1%, and the lower production/deliveries and price cuts imply 3Q will be down sequentially).
2) To what extent new models (Model 3 Highland, Cybertruck) can help drive stronger volumes in 4Q23 and 2024. Consensus per Visible Alpha Consensus Data is at 499K in 4Q and 2.358 mn in 2024. We model a pick-up to 494K in 4Q and 2.275 mn in 2024, in line to modestly below the Street.
3) Price-cost in 2023 and 2024. We expect Tesla to benefit from lower costs in 4Q23/2024, although we believe that it may further lower prices to drive volume next year and mitigate margin improvement.
4) Tesla's opportunity and timelines with technology and new products, including FSD. We see Tesla as a leader in autonomy technology, although we think it will take time for Tesla to be able to offer an eyes-off and hands-off (L3/4) capable vehicle.

From Deutsche Bank (Oct 2): 3Q Deliveries a slight miss, expect large risk to 2024

To us, we think the more meaningful downside risk is to 2024 consensus due to limited volume growth next year and minimal Cybertruck contribution…we continue to see larger risk to downside to expectations for 2024 on both growth and earnings, as Tesla indicated recently at our DB IAA investor meetings that it is no longer planning to expand output at Austin and Berlin factories to 10k per week, providing only incremental volume from these two factories next year as well as minimal contribution from the Cybertruck with slower and more complex ramp-up of the vehicle. Our base case is for Tesla to guide to ~2.1m deliveries next year, vs. current Consensus of 2.3m units.

From Morgan Stanley (Oct 2): 3Q Delivery Miss + A Warning On ‘Too Fast’ EV Adoption

While the company cited disruption related to planned downtime for factory upgrades (Model 3 refresh) we believe investors will remain cautious on the near-term progression of price (downward) as supply of EVs exceeds demand in key pockets. Our current forecasted US GAAP OP margin (SBC burdened) progression for Tesla in 3Q and 4Q is 9.6% and 9.8% respectively. This compares to 10.5% in 1H23 and 16.8% in FY23. Looking ahead to FY24, we forecast approx. 33% growth in deliveries to 2.48mm units. On our calculations, removing 100k units from this figure at a 30% decremental margin would be worth between 9 and 10% of total company GAAP OP.

(Author is long )

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Disney: In the Midst of Reorganization

Tue, 19 Sep 2023 13:30:06 GMT

Recent rumors of Disney () selling a chunk of its linear assets have generated a flurry of new headlines as the 100-year-old company continues reorganizing its cost structure, DTC strategy, and leadership.

From Reuters (September 15, 2023):

Media entrepreneur Byron Allen has made a $10 billion bid to buy Walt Disney's ABC television network and assets including the FX and National Geographic cable channels, a spokesperson for Allen said on Friday.

The Walt Disney Company may soon bid ABC goodbye after owning and extracting plenty of profits from the network since 1995

Since Bob Iger returned as CEO in November 2022, many speculate his next moves. What will he do differently in his second swing at the job? Some journalists even wonder if he will sell Disney to Apple!

Selling Linear to Free up Balance Sheet?

The monetization move is almost inevitable, given Disney’s plan to buy out Hulu this year. Based on the put-call agreement (signed in May 2019) between Disney and NBC Universal, Hulu is valued at a floor of $27.5bn. This implies a potential upfront cash payment of $9bn (minimum) by Disney for the remaining 33% stake unless NBC Universal takes non-cash consideration or accepts some form of deferred payment.

From Reuters (September 6, 2023):

Comcast has moved up the date for the sale or purchase of its remaining stake in Hulu to Disney to Sept. 30 this year, CEO Brian Roberts said on Wednesday…the companies will go through an appraisal process to determine the value of Hulu, and that process appraises “a lot more than Hulu”

Between the potential selling price of ABC and the buyout quantum for Hulu, Disney will not be improving its balance sheet unless it can shift some of its existing $47bn debt along with the ABC assets.

Nevertheless, this asset swap will remove the uncertainty surrounding how Disney will fund the Hulu purchase, when its balance sheet is already laden with acquisition debt from the 21st Century Fox and COVID-19-related borrowings. In addition, Disney promises to resume paying dividends by this year after suspending them since May 2020. The amount will be small relative to its cashflows, but it will welcome dividend-yielding only funds back to its institutional shareholder manifest.

Disney Stock: Been a Wild Ride

Since co-writing “Disney 2.0: Iger to Reclaim the Magic?” on this blog in December 2022, the stock has not moved at all, which frustrates any shareholder. After the initial excitement surrounding Iger’s return faded, markets have focused more on the faults of its DTC pivot—cash burn, subscriber loss, dilution, competition, Hulu overhang—than the strength of its Parks, franchise value, consumer business, and its still-powerful ESPN network.

I believe the sum-of-the-parts valuation in “Disney 2.0: Iger to Reclaim the Magic?” has not aged. Current share price does not appear to ascribe any value to its DTC business, which should pivot to profitability sooner than later.

Disney has been a wild ride for shareholders who have been holding the stock since pre-pandemic days. Share price peaked at almost $200 before making its ways down to the lows last seen during the height of COVID-19.

We shall see how the ABC-Hulu moves pan out in the coming months, as this will be the first real strategic pivot since Iger took back control—more so than the changes to management and cost structures in the last year.

(Author is long )

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Salesforce: A Story of Profit Inflection

Tue, 05 Sep 2023 14:22:06 GMT

When Q2 2024 results were released on August 30, there were no surprises on topline growth or guidance. Revenue for the quarter grew by 11%, and for FY 2024, Salesforce () barely raised its outlook—it still expects full-year growth to land at around 11%, consistent with Q2 trends and cRPO trajectory:

Q2 revenue: $8.60bn, up 11%
Current remaining performance obligation (cRPO): $24.1bn, up 12%
Q3 revenue guidance: $8.70—8.72bn, up 11%
Raises FY2024 revenue guidance to $34.7—34.8bn, up ~11%

Again, management did not reiterate its original FY 2026 $50bn revenue target, which remains uncommitted.

Absent major acquisitions and a budget flush that fueled the broader SaaS sector growth in 2020-2022, Salesforce today resembles a mature technology company, more so than the 20%-a-year grower it was during the aforementioned boom years.

To keep the spotlight on Salesforce, vanity projects, moonshots, and acquisitions have taken a backseat to cost-cutting. The stock has recovered well since profitability began to inflect this year.

Margins: A Different Story

While revenue has been within expectations, Salesforce is shaping a different narrative for its profitability story. Gone are the aggressive hiring, over-generous perks, and lax cost controls: Amid a weaker demand environment, management’s primary focus is to drive down costs as hard as possible to surprise on margins.

Just look at the latest cashflow and profitability trends:

Q2 diluted EPS (GAAP) grew by 1,729%
Q2 operating cash flow increased by 142%
Q2 free cashflow rose 379%

A Case of Catch-Up?

At its current scale ($35bn annually), it is somewhat surprising that Salesforce had only just surpassed 30% non-GAAP operating margin. In comparison, ServiceNow ()—another SaaS company at less than a quarter of Salesforce’s revenue—has been achieving roughly 20-30% margins since 2019.

Latest ServiceNow results (Q2 2023)

That said, on the Q2 earnings call, Salesforce CFO Amy Weaver assures investors and Wall Street that healthy margins have only just begun. Salesforce operating margins may very well reach the heights of Microsoft and Adobe (40-50%) sooner than later:

And as I said last time, I really believe 30% annually is a floor, not a ceiling.

The markets overlooked years of ambitious acquisitions and unchecked spending when growth was the key selling point for software companies. Now, sentiment has shifted, and profitability—or at least the ability to prove substantial operating leverage—has become the main stock price driver.

However, with rapidly expanding margins, valuation for Salesforce may deserve another look:

Salesforce forecast by Goldman Research, as of September 9, 2023

This CRM giant stands a decent chance of reaccelerating revenue growth, if and when IT budgets recover in tandem with the broader economy. The runway for cloud-based software growth remains long—especially globally—and Salesforce has been a proven quality software platform since its founding in 1999.

For companies that have endured multiple economic cycles and are still dominant in their respective (growing) categories, investors should be willing to pay a premium, let alone a “wonderful company at a fair price,” to borrow a quote from Warren Buffett.

(Author is long $CRM)

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'When There's Blood in the Streets, Buy Property?'

Tue, 22 Aug 2023 14:00:52 GMT

I was in San Francisco recently for an Enneagram conference in late July. My prior visit was in 2019, and I was curious to experience the city in a post-Covid world.

San Francisco is the global headquarters for many technology companies, and the industry has minted countless entrepreneurs and investors. Salesforce () is among the largest software companies based there, and its gigantic Salesforce Tower—completed in 2018—represents a crowning achievement for its founder, Marc Benioff.

Salesforce Tower stood tall on a Friday morning in late July 2023.

He writes about the corporate headquarters in his book Trailblazer:

“In January 2018, in the early stages of writing this book, Salesforce Tower officially opened for business in San Francisco. At sixty-one stories, it’s the city’s highest structure and one of the tallest skyscrapers west of the Mississippi. I won’t lie—I was thrilled. I had spent years on this project: finding the right location on Mission Street and then tinkering with design details, from the multicolored furniture in the lobby to the artistic tiles on the walls. I knew its completion marked a significant milestone in the company’s history. I couldn’t have been prouder.”

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When I walked up to the building with a cup of Starbucks coffee in my hands, I felt a sense of awe. At 1,070 feet with a grid of metal fins running from the base of the building to the roof, Salesforce Tower was an architectural marvel. At the same time, I could not help but wonder how much of the office space would be utilized that day in the world of remote and hybrid work. The surrounding area felt a tad quiet, albeit it was an early Friday morning. It did not have the buzz that one would expect from that prime end of Mission Street.

Remote Work and E-Commerce: Paradigm Shift

Since Covid-19, San Francisco has been cited as a city in decline. Tourism is a fraction of its former glory, office occupancy continues to drop, hotels are barely breaking even, and retail space struggles with declining foot traffic.

Below are some of the recent headlines shaping the city’s image:

Jun 5, 2023: More trouble for downtown SF as owner of Hilton, Parc 55 cease payments on hotel properties

Park Hotels () materially reduced its portfolio exposure to the city when it ceased making payments toward the $725 million non-recourse CMBS loan secured by its two San Francisco hotels—the 1,921-room Hilton San Francisco Union Square and the 1,024-room Parc 55 San Francisco. I stayed
,

Jun 29, 2023: The Grim State of Downtown San Francisco, by the Numbers

For the second quarter of 2023, real estate company CBRE ( ) estimates the office vacancy rate to be 31.8%. CBRE’s data shows net absorption at negative 1.9 million square feet, implying that the vacancy rate can go higher

Jun 12, 2023: Walking away: San Francisco mall owner hands property back to bank as exodus continues

Retailer owner Westfield and partner Brookfield Properties stopped making payments on the $558 million loan secured by their property, the San Francisco Centre, a 9-story mall featuring over 170 shops & restaurants.
In a statement, Westfield says: "For more than 20 years, Westfield has proudly and successfully operated San Francisco Centre, investing significantly over that time in the vitality of the property. Given the challenging operating conditions in downtown San Francisco, which have led to declines in sales, occupancy, and foot traffic, we have made the difficult decision to begin the process to transfer management of the shopping center to our lender to allow them to appoint a receiver to operate the property going forward."

Real Estate Market: Disrupted

With technology enabling working from home, the office property market is undergoing seismic changes. Even in a gateway city like San Francisco, prime office space struggles to find tenants. Companies—large and small—are rethinking how much office space is really needed with a hybrid (or fully remote) model. Many technology companies, including still-thriving giants like Meta () and Google (), have announced massive reductions to their office footprints.

San Francisco Centre: The mall was well-maintained and offered multiple lunch options when I was there in July 2023, but the retail shops were ostensibly quiet

The proliferation of online shopping and rapid improvement in delivery capabilities—as exemplified by Amazon ()—is also causing a slow demise of lower-tier shopping centers, which continue to see thinning crowds. Even San Francisco Centre did not stand a chance, although the city’s woes probably added disproportionately to its diminishing prospects.

Conclusion: Stark Delineation Dividing Various Classes of Properties

Real estate is often regarded as one of the safest asset classes in the world. Apartment blocks, houses, shopping centers, office towers, hotels, warehouses—they are everywhere. We see, touch, smell, shop, and live in real estate. When an asset class is tangible, the human psyche is more assured, akin to how possessing physical gold still appeals to many.

That said, property value stems from actual and anticipated usage in the present and future, not the past. If demand for an office or retail space diminishes over time, it will command less lifetime rental, and valuation will drop. In contrast, a well-appointed single-family home in a good location, for example, will retain or enhance its value, as long as it remains desirable.

Baron Rothschild would not have been a happy man if he had indiscriminately bought any office space or physical retail shop in recent years. All words of wisdom require some qualifications, and when it comes to real estate, Covid-19 has upended multiple sub-sectors of the property market for good. Our relationship with conventional office and retail spaces may never be the same again.

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