What About Nike Stock? | 8 Questions For Equity Empire

So maybe you should be a little more aggressive. Buy some shares, put it into account. The stock market is going to be there. And so I'm grateful I sold these stocks for a profit. Welcome to the Equity Empire Q&A session. And on today's video, we've got a ton of questions. That's because I threw up a post on my Instagram feed. And a couple of things are for sure. If you're not following me on Instagram, make sure you find that link down below. Now, also, there is going to be a part two of this video because that is because the Instagram crew showed up with over 50 questions and we can't possibly get to them all on today's video. So, we'll start things off with the very first question. And there was honestly numerous questions related to this stock and that is Nike. What are my thoughts on Nike and has my view on the company changed? So, take this actually in a couple of parts. Number one, technically Nike was broken right around the $70 level. It broke through a multi-deade trend and once those multi-deade trends get broken, it often times leads to a nasty slide. In fact, Nike shares have probably gone down another 45 50% since then. So technically the stock has been a no touch for me. Haven't even touched it. Now obviously this is lining up with the company fundamentally as well. Couple of things happened. First of all the previous CEO wasn't very good. He cut relationships over at the major retailers. That impacted the company. Also I think you did have certainly have a pull forward of demand and interest in the product during COVID. And now I I think simply just fashion trends and fashion needs have shifted a little bit and Nike quite frankly hasn't gotten out in front of those trends fast enough and that is always the risk in the business. What we do know about fashion trends though is they always come back into style. Whether it's baggy jeans, whether it's holy jeans, whether it's high-waist jeans, low-waist jeans, sneakers, high tops, low tops, things come in and out of style. And right now, Nike stuff is frankly out of style. Now, here's what I will say, though. Do I think Nike's brand will be around in 25 years? Absolutely. I think the brand is still going to be relevant in 25 years. And so that means at some point there might be a time to buy. I think you just wait for the stock to turn. Technically there's always the risk as well just fundamentally that the dividend gets cut. The company's revenue has been stagnant and maybe more importantly the earnings have declined as well and that is putting pressure on a dividend that is extremely extremely generous. So there could become a time where they have to cut the dividend or they have to eliminate it. Not saying that that that is going to happen, but I think some of that is being priced into the stock to a certain degree. Part of it is the company can't just magically create demand. They have to create good products. They have to create good advertising and the consumer has to respond to both of those things. It's a tough tough thing to do and obviously there's a fair amount of competition out there as well. So my view on the company longer term actually hasn't changed but fundamentally the stock is not a buy yet and technically it is not showing it either. Once the technicals show that the stock is a buy then I'll come in there and I'll buy more. Now moving to question number two are you shifting your portfolio if one of the major hyperscalers says they are slowing capex. Now let's take this in pieces. Hyperscalers are data centers. This is Google, Microsoft, Amazon. You could throw Meta and Oracle among many others into that group. And the capex is what they're spending on the physical shelves of the data center. But obviously maybe even well certainly more expensive are the chips, the Nvidia GPUs and AMD GPUs that go inside of those data centers. Now, couple of things that are for sure. Number one, 2027 is locked in stone. We we've actually heard that already from the companies. Amazon is going to spend aggressively next year. You've already seen kind of the movement around that. The company lining up financing for next year. Company also has the cash flow to spend the money next year and the leeway with shareholders. Google is going to do the same thing. They're announcing a ton of different chip deals over the last really over the last two or three weeks. that's to line up semiconductors into next year that they're going to need inside of their data centers and and what they're going to sell to customers. So, capex is not going to slow down really at all in 2027. In fact, if the money is available, it will uh accelerate to a certain degree. Maybe not as much yearover-year as it has in the past, but it is going to continue to accelerate. Here's what I will say, though. If if you're an investor out there and you're a little worried about a potential slowdown in capex, what I will say is the hyperscalers are probably not the best indicator of the potential of a slowdown. It will actually occur much sooner than that. That is because the hyperscalers look out for data centers a year, two years in advance and whatever is already in progress over the next year is going to get built. You're pretty much going to continue to go full speed ahead probably with the stuff that you have lined up for the next two years. What will get cut is the stuff that is 2, 3, 4 years out. So, some of the things that you might see is Amazon, Microsoft Google lease commitments that they've made out into the future because in order to secure these sites, you actually have to do it years in advance. So, if they modify those agreements or simply walk away from that could be a maybe a little bit of a sign that the capex is starting to peak out or potentially decline. The maybe [clears throat] even the bigger thing that you'll see even before that are price concessions. So before a company walks away from a deal, well they'll offer lower and lower prices. So whether that's a memory component manufacturer, whether that's all the way to the semiconductor side, anything in the supply chain, if they have to start lowering their price, if they come on an earnings call and say, "Our margins came under pressure, not because our end cost went up." And that's honestly what we're seeing right now. In some cases, we're seeing semiconductor companies report margins that are a little bit lower, but that's only because memory cost went up or other supply chain cost went up. If they c get on the conference call and say, "No, our cost didn't go up. We actually had to lower our prices." That is a terrible, terrible sign. And that is showing you that demand is for sure, for sure going to start to dry up. No sign of it right now, but that is where it's going to show up. Also, the tool makers, the ASMLs, the applied materials, these types of companies need to plan a year out, two years out into the future. If they start pulling guidance or they seem a little shaky on guidance going forward, well then, you know, capex spending is probably starting to get pulled back. Also, you can go all the way down to the chip manufacturing level. That's the Taiwan semiconductor. The minute they start reporting weak numbers, then it absolutely means capex is about to slow. It won't show up in the capex number on paper. In fact, by the time the company announces they're pulling back on capex, all these other things will have happened. My advice to all of you, and I'm assuming most of you have some exposure or a lot of exposure to these AI stocks, just pick some levels on the chart that you're just going to automatically sell the stock for. If it hits that level, you're you're just going to sell the stock and and hopefully it's for a profit. And no one's ever had a bad day selling a stock for a profit. And just take it from me, I've sold my portfolio 100%, hit the sell button on the entire thing. I've done it at least three different times and none of the three times I've regretted it. Have the stocks that I sold gone up? Yeah. But the good news is is Monday through Friday from 6:30 a.m. to 100 p.m. Pacific time. If I want to go back and buy that stuff again, I can log into my computer and buy that stock again. Could I have bought the house and the second house that I have bought selling their portfolios again for the same price? Absolutely not. And so I'm grateful I sold these stocks for a profit and then converted it into something else. For you, it might be a home. It might be a vacation. It might just be the security of having cash in the bank account. Not only that, we've got cash sitting in accounts earning four, five, 6% at the current time. And so don't be scared to sell stocks. Don't be scared to sell stocks for a profit. Yeah, maybe they keep going up, but you bought them to sell them for a higher price. So, don't ever hesitate to do that. Now, next question. Thoughts on QXO and do I own the stock? So, QXO is a building material company that I covered on my channel maybe about 2 years ago before they even really kind of formulated the business. Essentially what they are doing is they've started a shell company if you will and they are raising money to go by building material companies. These are roofers. These are drywall companies. These are you know fixture companies that you put into new residential typically buildings but also maybe on the commercial side as well. So do I own QX QXO stock? Absolutely. I own quite a bit. Kind of a mid I would say a mid five figure amount. last time I checked. Now, QXO just reported earnings. Over on the Equity Empire premium side, I still cover the company from a earnings perspective. And so, if somebody comments QXO down in the comments, the video is unlisted and it's private here on YouTube, but if somebody comments QXO, we'll paste a link to that and you can watch my summary of the company's latest earnings. But more broadly, here are my thoughts on QXO. QXO is trying to buy companies in a down housing market. And so, this is the perfect time to execute their strategy. They're actually buying companies that are in some ways in some distress from a sales perspective. the housing market is not good considering where interest rates are and where home prices have climbed to. So, this is the perfect time for the company to roll up a bunch of roofing material companies and other building material companies. So, when you get the next cyclical wave higher in housing, interest rates come down or wages come up and affordability, you know, somehow materializes. Well, then all of a sudden you've got one of the biggest building material companies. And then lastly on QXO is you buy companies like this and then you forget that you own them. In fact, if I wasn't asked questions about QXO, if I didn't have paid subscribers asking for the earnings video, I wouldn't even I I wouldn't even know and I wouldn't even follow the company. My view is three to four, probably even closer to five years out on QXO. And right around that time is when I'll start evaluating whether or not it's a good investment. And I think that's great advice for any stock that you have. If you have a 10-year view on Apple, it doesn't matter what Apple does today, tomorrow, or next year. So, if you have a long-term view on your company, particularly these smaller companies that are very undercovered, my advice is buy some shares, put it into account, forget that you own it, and just remember to check in on it maybe once or twice a year. And honestly, that's what I would be doing if I didn't have people asking me about it. Now, the next question comes in and it says, "For a 30-year-old investor, what allocation percentage should be in index funds?" So, this is a good question and I I think the obvious way to answer this is well, it depends. It depends on your job, depends on your future income potential. You know, if you're somebody that might make, you know, just above minimum wage. I'm not saying that's the case here, but let's just assume, you know, this is one of my buddies from Stockton, California, where they're going to work, you know, in labor for the next 25, 30 years, and they're going to make anywhere from 20 to $25 per hour, maybe like 10% 15% over minimum wage. Well, maybe they should be a little more aggressive because they have nothing to really lose because if you're going to be if you can only make 20 to $25 per hour, retirement is going to be a struggle. it's going to be a struggle either way unless you have a pension or you know you know you inherit some money or something like that. So maybe you should be a little more aggressive. You should be allocating a bigger percentage of your money maybe in index funds like small cap or heavy growth because you need that compounding over a long period of time because your wages are not going to be there. Now, let's assume you're one of my buddies over in the East Bay or San Francisco and you got one of these great jobs at one of these tech companies and you're making a quart million dollars a year and you know you're not blowing a bunch of your salary on crazy stuff and going out and partying. Well, maybe you be a little more conservative because your forward earnings potential is huge. You're going to work at one of these tech companies. You might do a startup. You you might get head-hunted and poached out into into somewhere else. you might get huge equity chunks into one of these companies and that's maybe how you retire or your parents were relatively well off too and you're going to inherit some money and so you can be a little more conservative in that sense and you put some money into index funds. I think that's the obvious way to answer a question like this but I I will rewind back to when I was a 30 year old investor and rewinding back to the decisions that I made. I certainly was saving money into the stock market, but I think the two best investments that I made when I was in my 30s had nothing to do with the stock market. The most from an investment perspective, the most valuable thing that I did in my 30s was lock in my fixed cost of living for the rest of my life. I bought the house that I am sitting in here today. I think it was maybe $200 a square feet or $225 a square feet was roughly what the house cost. a house right across the street, very similar house, just sold for over $350 per square feet. I invested in solar, so my electricity costs are relatively stable here as well. And so I have a fixed cost of living for the rest of my life. It has allowed me to take risk. It has allowed me to take time off of work. More importantly, once I had children, it allowed both me and my wife to actually stay home. There was at a point when both of my kids were little, both me and my wife didn't have a quote unquote job. That was all all because we made a solid financial decision and locked in our housing cost when at the time people thought we were crazy for buying the house at the price it is. But obviously looking back it was a great decision. So in your 30s I would lock in your fixed cost, your fixed cost of living. There's energy costs as well. Also during my 30s I increased my skills whether it's doing presentations here on YouTube, researching more about stocks, setting up different types of businesses, learning all different types of things. I would be more focused as a 30-year-old on all of that stuff. the stock market is going to be there 24 hours a day, seven days a week. And you know, it's a good investment. It is a very highly taxed investment as well. And and I will just say that the stock market and there was actually a question related to this later. The stock market has been a good investment for me, but I would say it it's probably not even in the top five investments that I have made both personally for my family and going forward. Not every investment has to be related to money either. And I know this question was about allocating percentage of money to index funds. And I think I answered that in the best way I possibly can. If you're a 30-year-old with high ambition, high skill, maybe in one of these areas of the country or the world where you can have high earnings potential, well, I I'd be a little more conservative. I would certainly be a little more conservative because you have high potential to just compound your money over the next 15 to 25 years. If you were somebody that might not be able to make as much money over the next 25 years, I'd be certainly way more aggressive. you have nothing to lose at all. Retirement is going to be a struggle no matter what if you're making$25 $30 an hour. And so you might as well take a little bit of a risk to make it uh less of a struggle. But I would focus way more on the other things. locking in your fixed cost when it comes to housing, improving your skills rapidly, leveling up yourself when it comes to your professional life and even your personal life, getting married in my 30s, having kids in my 30s. When I look back on my life, those will be the highest crowning achievements that I have ever had and it will pale in comparison to the percentage that I have in index funds or not. Hopefully that answers the question. Now, next question. This will be a fun one. Is my bearish conviction on Uber still high? Some investors or super investors seem to be taking positions in it. And and look, I think some super investors are probably looking at this on paper. On paper, Uber seems like it's a decent investment. You look at the price to free cash flow, price to earnings, all these types of things. And in some ways, super investors, it's not their money. Also, super investors have already made it, right? And so, I would be a little cautious out there looking at somebody that has already made it. It's very similar to business advice as well. You got to be a little careful taking business advice from somebody that has already made it. where I like to find business advice, particularly if it's like a startup. I'm I'm, you know, maybe I'm starting up a company or just starting my career. What I like to do is take advice from people that are in the midst of that or people that have just come out of that where they just sold their startup or they spent the last five years on it and they're now finding success. That person is going to give you great advice. the person that has already made it on the yacht with the billions of dollars and same with the money managers that have already gotten the clients and got the assets under management. Like they're just trying to maintain these customers wealth. So in some ways Uber is kind of a safe bet because is the downside somewhat limited in Uber? Probably. Uber is probably one of these brands that'll be around in a while. But is the upside that high in Uber? Considering you have competition from Google, you have competition from Tesla, you have competition from Amazon, three trillion dollar companies or more coming after a similar business. Also, what we're seeing with Uber is every incremental step that they have to take, they have to partner with somebody. They have to partner with an autonomous vehicle company. They have to partner with a zipline company that can deliver food via drones. They're not developing any of this technology in house. So, is the upside that Uber becomes eBay? Is the upside that Uber becomes Etsy or is the upside that Uber becomes all integrated? And I think the higher upside is it becomes integrated and that's not the step they are taking. They are playing it safe. And super investors, believe it or not, prefer to play it safe because if they blow up their fund, they blow up their lifestyle and they blow up their reputation. They can't take that risk. And so Uber, I don't think, is a great investment. I think it has low upside and somewhat low downside. And if you stretch the chart out on Uber, it paints that story. Next question. How would you balance building a long-term portfolio with shorter term trades? You absolutely need multiple accounts. So, you should have a long-term portfolio. If you are employed, they might give that to you through Fidelity or Schwab or one of these places. Or maybe you're doing it directed as well. You have an IRA or a Roth IRA or one of these things that you kind of contribute to on your [snorts] own for tax purposes, but for retirement purposes, that should be a separate account. And and the one thing that I always say is forget the password to that account. Don't barely log in. You know what I mean? Like I have a retirement account. I have a like two. I don't log into these things. I don't look at them. I can't tell you how much is in them. It it doesn't matter. If I was 60 or if I was 55, 59 years old, now these things start to matter to me. So, as I start to approach the age where there's like required distributions or I'm going to liquidate it or I'm going to sell chunks of it or I need to rotate, maybe I'm in aggressive growth and I want to rotate into safer stuff or whatever, I will start to look at it at that age. Thankfully, I'm not there yet. One day I will be, but I'm not there yet. So, I don't need to log into these accounts. I don't care if the stocks are performing great or not. I I know what I'm invested in, and that's the most important thing. Shorter term trades should be in a separate account and so you can monitor kind of your performance in some ways but also it will help you learn. Also just keep in mind in your shorter term portfolio do not judge yourself against the S&P 500 or the QQQ. These are realized gains. If you can take a chunk of money and earn three, five, seven, 8% compounded year after year on that and we're talking about realized profits, not these screenshot that these kids show on their social media accounts. We're talking realized profits even if it's one to two to 3% a year. That is real money and that is valuable. And so it also will allow you to adjust your strategies. Also, if you want to, it'll allow you to put margin on top of that account. I will say margin does help, but I almost never use it. R I mean, maybe once or twice a year I might dip into it for a day or maybe it stretches out a week or two, but I almost never use the margin that is is given to me. So, uh, you know, it's nice to have the margin if you're trading options. If you're trading maybe even short selling or doing kind of longdated options, it's nice to have the margin in there. In some cases, it's almost required to put those trades on, but uh, you know, certainly you want to risk manage yourself on margin. You certainly don't want to use a lot of it and you can actually make a lot of money just having it there as a security blanket and not using it. Next question. At what age did I start investing and how much did I start with and what stock? I started investing when I was 17 years old. I got a job. I think I I remember seeing it in the newspaper. They needed basketball referees and I think the salary was 565 an hour or something like that which was the minimum wage at the time. This would have been in 1992 or so or it was a little later than that. Maybe 1997 or so. So I get a job like in 1997 repping basketball and uh you know my parents are teachers so we're not balling but we're we're certainly not struggling that's for sure. And so my dad was like you should save all of your salary and put it in the stock market. At the time the stock market was doing quite well. you had the early innings of the internet kind of boom and under Bill Clinton who was president at the time the stock market did tremendously well and he was uh you know very instrumental I think in helping the economy grow during that phase and so my dad was like yeah put some money in the stock market so I was like cool now at the time there was no commission free trading there was no online brokerages this was before the internet you did all this stuff over the phone you mailed in checks it was all done through the mail and over the phone. And so you needed a minimum. So I remember I needed a minimum of thous $1,000. So I saved up my checks, saved up my checks until I got to $1,000. And then I was getting the newspaper every day and they had this big section in the newspaper with all the stock quotes. And you would go through it and you would look at the the prices. And I remember looking at uh you know AOL stock or Microsoft stock or there was a stock that I bought that was right around I think it was right around $7. I bought $1,000 worth of a $7 stock at the time and that was Nike. Now it's unfortunate that I didn't buy $1,000 worth of Apple or Microsoft or uh maybe Amazon. I don't know if it was public by then. Probably have a couple of more dollars in my pocket at today's rate. But uh look, that $1,000 has compounded quite a bit because I continue to get dividend payments. I continue to reinvest the dividends. In fact, uh my dividend payments on that investment exceed $1,000 per year. So, I actually make more in dividend payments from that investment than the original principal. So, it just shows you that over 25 years of a dividend paying company, uh you can compound that. I think at one time when Nike was at its peak, it was worth like over $100,000 at that stake. Uh now it's considerable less, but I keep it as a reminder of where I started and uh honestly it reminds me of my dad and you know him getting into in him getting me into these things and uh so I'll probably never never sell those shares. Uh, last question. What's your definition of a great investment and has it changed over the years? This is a good question and I think it has. Uh, you know, when I was young, certainly, you know, you invest in these sneaker companies. As I came out of college and into the, you know, great recession, I really started, uh, you know, I went to college, didn't have any money like most kids in college. Didn't really work that much. um went to a cheap school so it wasn't like I had to make a lot of money and I had you know financial aid and stuff helping me out. So it wasn't until about 2006 2007208 was when I really started to get into the stock market and then you had that major stock decline in 2008 and 2009 and that's when I really started to get heavy into stocks. Now, initially I was kind of alerted like most people into smaller cap stocks and and these smaller companies. And one company that I did buy was XPO, which has a connection to QXO. It's the reason why I'm invested in that company. And QXO blew or excuse me, XPO blew up. I bought it for, you know, pennies and it it blew up and I ended up selling those shares. And most of those shares actually went into the house that I'm sitting in today. And so very very grateful for that. Since then, yeah, my definition of a great investment has changed tremendously. I almost never buy speculative companies. I may have two or three in my entire portfolio. That's it. I invest almost exclusively in companies that generate high amounts of revenue, high amounts of cash flow when they're not reinvesting it into the business. typically have some kind of share buyback or dividend or probably more importantly I see them existing in 10 15 to 20 years and this is kind of goes back to my point you know do you take advice from a super investor if you are trying to go from where I was in 2008 relatively broke but with enthusiasm and earnings potential and you wanted to go from 2008 and then I think I bought this house in 201 maybe it was 15 or 16. So if you want to go like a six-year period of time where you go from basically zero to buying a house, should you be buying blue chip stocks? I mean, maybe you catch them, right? You might be able to scale it up, but no, you probably should actually go to some of the more speculative stuff. So that's why I I would if you're watching this and you're trying to take advice from me, you do always have to apply these things to where you are at your own life. And and I would say my style of investing and what I consider a great investment are probably more tilted towards people that have some earnings power, have some investments already saved up, don't necessarily need to be doubling and tripling their money and taking a bunch of risk. that that is less my style these days. Now the good thing is is at Equity Empire we have on the team we have John McHugh who specializes in these stocks that go up you know 70 80 100% and multiple of them over the past year and a half have have done that. Now you're taking risk to the downside. So you do have to have risk management and in my opinion you do need somebody helping you through that. I wish I had somebody back in 2007208 telling me not to buy some of the speculative penny stocks and biotech stocks that I ended up buying. Uh but yeah, my definition of a great investment uh these days and and I'll I'll rank them. The best investment that I've ever made is for sure without a doubt my two children. And so once you once you have children, your your perception on money and things and and stuff changes quite a bit. Uh the the entire world could collapse around me. My stock portfolio could go to zero. My businesses and reputation could go to zero. But as long as I have them and and they're doing okay, it wouldn't m it doesn't matter. And so in a lot of ways it changes your perspective and maybe in some cases frees you up a little bit because I I feel like I'm not as addicted to my stocks having to go up and and my success is tied to them. And I think actually in some ways it can be liberating. So my definition of a great investment for sure has changed over the years. I think a great investment is if you think you're going to live in a certain region or a certain town for a long period of time, you should lock in your fixed cost. You should buy a house and just lock your fixed cost for the next 25 years living there. Whether you have a mortgage or you just simply pay it off and then you don't have that expense going forward. On top of that, if you want to and you have the desire to, you should have children sooner rather than later. I was one of these guys that thought, I need to get my finances in order. I need to get a nice car first. I need to have, you know, a nice house. I need to have all my, you know, my together before I have kids. What I will say is, man, that stuff just magically comes together. It's amazing how it just magically comes together once you have kids. And I and I will say once you do have kids, your motivation level and your ability to earn money and make great investments in yourself, in the stock market, in business, anywhere, it actually is amplified. I have actually found that I I make money easier and faster than ever before, particularly because I have kids. I have a limited amount of time to record these videos, time away from my children. They take time away from you and so that actually makes the time that you spend on your work in your business even more valuable and it creates an urgency. And so a great investment for anybody watching this, particularly if you're in your 20s and 30s, is buy a house, have some children, start a family. That's going to set you up is honestly that is going to set you up and it will make all your investing and your career I think easier not harder and I know that's not necessarily the popular opinion or that's not the prevailing opinion but from my experience that is exactly that is exactly what has happened. Folks, that was part one. This has probably gone on long enough. We will come back for a part two. Make sure you follow me on Instagram every once in a while. I will post a Q&A and we'll do more of these. Thanks for tuning in. I'll see you again later this week. Good luck with your investments.