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  • hello everybody and welcome to investing with IBD sponsored by Market Smith

  • today is February 19 2020 I'm your host Irusha Peiris and with me today is Andy

  • Swan he is the founder of LikeFolio thanks for being here Andy yeah thanks

  • for having me on on today's podcast we are going to talk

  • about the current markets how social data can help you in your stock analysis

  • and then we will end the episode with three current stocks so the current

  • market the market continues to be in an uptrend we have two distribution days on

  • the Nasdaq five on the S&P 500 but the market continues to climb that wall of

  • War II and more importantly leading stocks are acting well in hitting new

  • highs Andy what are your thoughts on the market yeah I think you nailed it it's

  • just very strong and continues to just defy expectations I think you know it's

  • almost like the more negativity is in the in the headlines of the world the

  • higher the market goes yeah I think there's pretty good reason for that I

  • think that the economy is strong there's a lot of wealth being created and you

  • know there's a lot of great companies doing some extremely innovative things

  • so I think that drives a lot of this and there's excitement around around all

  • that plus money's pretty cheap that's true and and also you know the US

  • markets are now like the safe haven right this seems like the money's coming

  • from everywhere else and let's Park in the US markets because of that

  • innovation and also where we're not having as many crises as a lot of other

  • parts of the world that's right yes exactly and and so you definitely want

  • to make sure you're keeping your watchlist fresh keep an eye on those

  • leaders because eventually there's going to be a time for a pullback and so

  • they're gonna set up and give everyone an opportunity to get buy more shares or

  • start initial positions so Andy let's get into how you got into investing

  • you've been doing this for a while now and so why don't you walk us down the

  • path that led you to starting LikeFolio yeah so we actually it's

  • you know my brother and I have been partners in this since the very

  • beginning we actually opened our first brokerage account together we were

  • college roommates oh wow and this was you know this was in

  • college it was 1998 1999 markets were popping like even at the

  • gym people were watching CNBC rather than anything else it was just the

  • dot-com boom and everything was moving and it was a great way to get involved

  • in it was really like very exciting and it made sense to me the markets did I

  • understood not necessarily you know valuations and things like that but I

  • understood supply and demand and how companies can participate in in growing

  • the economy and that sort of thing and so there was this new era that made

  • sense to me I was online a lot I understood the dot-com boom and in the

  • in the ways that I could yeah and so I got very interested in the stock market

  • started studying it started trading our money and you know really just kind of

  • learned by going and that I think a lot of times people miss that aspect of it

  • it's everything's kind of academic until you have real money on the line I think

  • for a lot of people and it doesn't have to be a lot we started with a couple

  • grand in a brokerage account and that was you know very real to us and very

  • fun and you know it's just super interesting from the very beginning in

  • 1998-1999 it sounds like a long time ago now but it doesn't feel like it no not

  • at all because that that was the time where I got exposed to the markets too

  • and it was remarkable how everyone was talking about the stock market at that

  • time let's you touched on an interesting concept here about you know putting real

  • money on the line and the emotions that people feel a lot of people it you know

  • especially more analytical people they want to do all the analysis first before

  • making that move and it's that paralysis by analysis but going to a little bit

  • more about you know just put some money on the line and learn to feel those

  • emotions that come out when you start doing well in the markets and then when

  • you start doing really poorly yeah I think I just think that it's really easy

  • to pretend that you're doing something and you know it's kind of like I you

  • know I like to make sports analogies all the time because I play basketball and

  • you know it's like you can't really read a book on how to shoot a free-throw and

  • eventually you got a step to the line with a crowd around you and with other

  • players on the line and the scores going to matter and that changes everything

  • and all that stuff that you read goes out the window and so I think it is

  • important because probably the most important part of investing I think is

  • you know understanding your own emotions and how they can throw you off track and

  • disrupt a strategy that you might have and so until you have those emotions

  • engaged you really don't know how to control them and unfortunately I haven't

  • found anything that really beats a couple of bad losers in terms of

  • teaching lessons in a really quick way and that's true though the market has a

  • great way of humbling all of us yeah so after you and your brother started your

  • brokerage account you started putting real money on the line what were the

  • next steps that got you more involved and really started you know enabling you

  • to become an entrepreneur yeah well we had we had really good success and you

  • know a lot of people a lot of people did at that time because it was the dot-com

  • boom and everything was going up but you know we had some unique advantages we

  • figured out we figured out like simple things like real time quotes and level 2

  • quotes and things like that that were kind of unique at the time so we were

  • always looking for that little edge and we were able to find someone exploit

  • them and eventually you know through the chat rooms and other message boards of

  • the time had actually built up a little bit of a name for ourselves through what

  • we were posting both in terms of picks but more importantly educationally

  • online and so about a little ways through law school about six weeks into

  • law school in fact I decided this this is not for me I don't necessarily want

  • to work with and surround myself with lawyers for the rest of my life

  • I really have something good going in the stock market and people are coming

  • to me constantly not for my picks but more for you know

  • how to get started in that educational component

  • so that's when land and my brother and I got together and decided let's start

  • something where people can actually pay us to help them get started investing we

  • did that we we eventually turned that into I think it was the world's first

  • live-streaming you know content and educational channel for that was that

  • was going across the internet throughout the market day and you know people

  • subscribe to that and we built that into a nice little business that eventually

  • we sold and and that got us kind of kicked off on the entrepreneurial path

  • that's very very cool and so now your latest venture and and is like folios

  • your brother involved in that one - yeah we're partners on that as well this is

  • our third fin tech company together and yeah we're having a lot of fun with this

  • the the reason that we started LikeFolio kind of goes back to those roots

  • and its pivoted since then but back at the beginning the idea behind LikeFolio

  • and the name was really we wanted to help people create portfolios based on

  • the companies and products that they actually liked in real life and so we

  • use social media to figure out what they and their friends were talking about

  • online and actually created a portfolio based on those products called a like

  • folio the the idea was to get people interested in investing it didn't take

  • long though for us to realize that there was a lot of value in the data itself

  • and in figuring out what brands and products people were talking about we

  • were able to see some really interesting correlations between that data that we

  • saw in social media and upcoming future earnings reports and savings store sales

  • numbers yeah and I I saw you speak in the traders Expo in Las Vegas back in

  • November and it was a really fascinating presentation because for us a lot of

  • times we're looking for stocks that aren't strong up trends you're looking

  • for the purchase intent in strong up trends but the stocks might be getting

  • hit and might be you know falling off a lot of people's radar so that's what I

  • liked about it it's like okay this is another way to get some of those stocks

  • that might have fallen off my radar back on my

  • yeah a great example of that would be you know last summer the our great call

  • on Crocs the maker of the ugly shoes and what we start you know that stock had

  • fallen off everybody's radar it was down around fifteen or sixteen bucks and

  • really kind of dead money but what we saw was a massive uptick and a really

  • pretty fast and accelerating uptick in the number of people talking about

  • buying Crocs and liking Crocs shoes and the new models that they had and there

  • was some influencer action behind that I think Ariana Grande and Justin Bieber

  • were caught in public wearing Crocs and not necessarily paid to do so and that

  • just started this this trend and Crocs were on a comeback and we were able to

  • see that through the mining of social media data you know well before the

  • stock made the move from I think 16 to you know forty dollars yeah and and in

  • the end you know the large concept that we're all looking for here is you know

  • that supply and demand whether you see it in the stock market or in the

  • products that can eventually lead to those Rises and in stocks yeah that's it

  • I mean I think what everybody's looking for is an edge right we don't claim to

  • have the golden goose that produces profits every single time no one should

  • ever claim that you know but what we can provide and what we do you know work

  • really hard to discover are those small little edges that can add up to a

  • distinct advantage for the investor over the rest of the market and once you get

  • that you start exploiting it over and over and you know those those what were

  • small gains can start to turn pretty large absolutely so the markets continue

  • to remain in a strong uptrend and we're almost done with earnings season let's

  • take a quick break but when we return we'll go more into this and we'll talk

  • more about the social data and how it can help you with your investing stay

  • tuned I am here with Scott st. Clair Scott's

  • one of our senior product coaches at MarketSmith now Scott there are a ton

  • of publicly traded stocks just on the US I think it's over five thousand stocks

  • who has the time to go through all these stocks and find the very best one yeah

  • most people don't right so what you need is a tool like MarketSmith we have

  • decades of research and what makes a great winning stock so we've done all

  • the research for you so we're gonna try to highlight those specific stocks with

  • those great data points so if you're looking for that next great potential

  • big winner orange stock ideas button you just click on it and you've got some of

  • the main reports that we use including the growth 250 yeah and the grow 350 is

  • the first list that I go through on the weekends yeah it's the most popular one

  • but there are others there's the breaking out today stocks near a pivot

  • and then the blue dot list right which is very popular it's going to show you

  • the stocks with the best relative strength so we've done a lot of the work

  • for you what you have to do is review these lists you're going to come up with

  • some of the best ideas in that current market environment perfect MarkSmith

  • saves you time and makes investment research that much easier for more

  • information go to investors comm slash podcast 2020

  • and II Swan is our guest on investing with IBD sponsored by MarketSmith okay

  • Andy let's go over how we can use social data to help us with our stock analysis

  • and I think maybe the best way to start off is with how Tesla came on your radar

  • because that was a pretty cool story that I heard back in Vegas when you gave

  • your presentation yeah back in November I was a little

  • nervous to give that because Tesla was going through a little bit of a rough

  • patch it started to move higher at that point but you know was was widely hated

  • I want to just I think it's a great opportunity to make clear that what

  • we're doing it LikeFolio has nothing to do with tracking investor chatter about

  • the stock itself we're not concerned with that at all in fact a lot of times

  • we found that that can be a contrarian indicator and rather what we're doing is

  • focused on what consumers are saying about the brands and products that the

  • company makes and all of that information is you know it's publicly

  • available on Twitter we have a great feed directly from Twitter we're

  • partners of theirs and so this is you can kind of think of it as a real-time

  • consumer poll that runs 24/7 you know and is looking at the the opinions and

  • experiences of people that don't necessarily know that they're being

  • watched so you can trust the data a little bit and so with Tesla what we saw

  • was a really nice spike and very sustained in purchase intent mentions

  • and so that's what we call it when people are talking about actually making

  • a purchase of the product they're leasing a Tesla they're buying one

  • they've pre-ordered that sort of thing and so we saw a really nice sustained

  • acceleration and purchase intent mentions especially around the Tesla

  • Model 3 which was what Elon Musk had essentially bet the company on right and

  • we so at that point we're able to see that consumer demand for this product is

  • extremely high and is growing rapidly at almost a you know kind of an insane pace

  • what we don't know is whether or not Elon Musk and the company is going to be

  • able to deliver what their production issues might be their debt structure all

  • those types of things still have to come into play but

  • we could say with certainty on that stage was that consumer demand for Tesla

  • vehicles and especially the model three was through the roof and for me that's a

  • great starting point when you're looking at a company especially one with the

  • short interest that Tesla has yes exactly

  • and and as we know I mean probably tussles around 350 at that point when

  • you were talking about it and who could have imagined that it would have gone on

  • the amazing run that's gone but when you are heavily as shorted as Tesla was you

  • know that the shorts have to learn a lesson too about not fighting the trend

  • yeah I think you know it's it's kind of one of those you know perfect storms in

  • a lot of ways because you know you had a huge short interest on the stock that

  • had to come off at some point and it just seemed like with the data that we

  • had on on consumer demand for the products that at some point the dam was

  • likely to break to the upside now did I see it going to $900 no but but I did

  • but we did think that it had room to run in a very meaningful way over the course

  • of a you know two or three years it just happened to happen much faster than that

  • and a lot of that was due to the you know the demand that had to come into

  • the stock once it started moving higher and those shorts started having to cover

  • right and and and that's where that's that little bit of an edge that that you

  • give and you get a few of these edges that's that can make all the difference

  • in the world because you take that edge and then you apply it to your own stock

  • strategy and your own setups and when you know whatever stock is actually now

  • buyable for according your strategy now you can put that plant in a place so

  • that's what I like about it is that okay here's a little bit more insight that I

  • did not have before yeah I think that I think that's the whole key and that's

  • why you know most of our clients and most of our revenue you know ninety

  • percent plus comes from institutions and institutional investors who are looking

  • to put this into their formulas and into their processes and the biggest

  • component here that we can offer is that we can say

  • I don't know about the debt structure I don't know about their ability to

  • produce but what I do know is that the demand has never been higher and is

  • growing in an exponential pace and that a lot of times is enough because if you

  • remember back in the summer of 2019 and even into the fall when I was speaking

  • on that stage there was a lot of chatter online that maybe people weren't going

  • to buy these cars that they weren't popular enough that they were sitting on

  • you know in the parking lots of the production facilities going unsold and

  • it was you know kind of that ability to tap into social media data that it led

  • us to say that's absolutely not true we know that with a high degree of