I Bought Nike at the Worst Time (Still Holding)

00:00 - Opening

Welcome to Slow Builds.
So this one again is another rambling that I'm gonna go through.

And this one's more of an investment one.

And when you make investments, sometimes they don't work out the way you felt they should've...
or you got in at the wrong time.

But you always have to look at your investments - in my mind - as full-on long term.

And you just gotta go with the ups and downs.

So...

00:32 - Buying Nike at the worst time

I bought Nike pretty much at the worst time possible, in my mind.

I bought it right at the peak - not the peak, I guess - but one of the largest peaks they'd had for a long time.

It was well over $100 a share.

It was right before COVID.

They had just brought in a new CEO.

Things were looking great.

And then... yeah... COVID hit.

00:55 - Nike felt untouchable

The stock was doing great for a while because - like I said - anywhere you looked...

Every team, every sporting event, at the mall, every show...

No matter what you looked at or where you went, you saw a swoosh.

It seemed like everyone had it.

They sponsored everything.

Great stories were being told.

Great support.

Everything felt really good.

But then... like I said... COVID hit.

01:29 - COVID made the CEO's idea "work"

They had that new CEO who happened to come in on a high.

And he came from a background that didn't really fit that type of market... and that kind of product.

But because of COVID...
and the whole situation surrounding that...

his ideas worked.

Which... did it hit a lot?
Yeah.

01:55 - The biggest mistake: go direct, cut stores

His biggest mistake was he saw the sales going through the roof - shoes flying off the shelves - and he's thinking:

"Let's cut out the middleman."

"Let's go direct to customer."

"And let's get rid of the stores."

And you know what? Perfect timing - stores are shut down.

Nobody can go in and buy anything or try anything on.

So everyone's online buying.

It's the perfect situation for someone who doesn't really understand the product...

...but yet his idea manages to work.

02:29 - It worked... for that moment

And it did okay in that time frame because it gave customers a way to still get the product they wanted.

They were able to go run.

Like you couldn't buy a treadmill.

I live in Canada and my treadmill was broken and I couldn't get one.

So I'm running outside - and where we are it's pretty cold.

I'm talking... no wind... minus 20 Celsius.

Because I had to run... and I had to have my Nikes... because that's what I wear when I run.

Actually... I do wear Nike... but they stopped making the one I love... so now I'm a second runner.

But regardless.

03:13 - When COVID ends, people want stores again

So he managed that.

But then what happens is...

When COVID's over, people want to get out.

They want to go to the stores.

They want to talk to people.

They want to be in that environment.

And what happened in my mind is...

during that period, these stores still gotta put something on the shelves.

They still need product.

And if Nike doesn't want to be there...

other brands fill the hole.

03:57 - Shelf space shift: On + Hoka get their chance

And that gave an opportunity for the up-and-comers - the brand-new ones - like On and Hoka.

They got to fill space that normally they wouldn't even get a shot at.

New Balance has always been around - they got more shelf space.

Saucony - I've always worn it - it's always been there.

But again, they fill a void.

04:15 - Shoe retail background: reps + training mattered

And shoppers want to touch and feel.

And the other thing is...

I worked in shoe retail for quite some time - in my university and high school years.

Nike and Reebok - and all these brands - would send reps with the shoes.

They'd go store to store...
or set up nearby...

And they'd teach you about the products.

What the product's for.

What's new about it.

What changed.

Who it's not for.

And that makes a huge difference.

Because your salespeople are knowledgeable...

and they can help people make the right decisions.

And when you help someone make the right decision...

and that decision happens to be a Nike shoe...

they're gonna buy a Nike again.

05:14 - Runners are loyal

We used to get runners come in and they'd ask me about shoes I didn't even know were coming out yet.

And if it wasn't there... they'd just leave.

I didn't understand that at the time because I didn't run.

Now I get it.

I know exactly what size, which shoe, which make.

Unless there's a new model.

That's the only time I tinker.

06:00 - Customers try the new brands... and Nike loses share

So... shelf space gets taken over.

You've got On and Hoka and other brands filling that space.

The customer gets a chance to try them.

And sure - these are great shoes.

No issues.

And true runners are loyal.

Once they find something... they don't like to change.

Blisters. Ankle problems. Shin splints.

You gotta be careful when you run a lot of miles.

So Nike lost that market share right there.

And that's hard to get back.

06:59 - Second mistake: killing story + innovation

And on that front...

he took away the storyline.

He took away the athlete.

He took the heart and soul out of Nike, in my mind.

He tried to make it like a machine - just pumping stuff out.

You can't just knock out the same thing over and over again and hope people buy it just because it's iconic.

Dunks. Dunk lows. Skateboarding. Jordan.

You can't just regurgitate.

08:28 - Combined impact: off shelves, no story, no innovation -> stock drops

So all this together...

taking it off shelves...

losing market share...

taking away the story...

no innovation...

So what happens?

Stock goes down.

They're losing revenue.

Share price drops.

And again - I bought it at the worst time thinking Nike's everywhere.

09:31 - What I do: I double down (average down)

But again... what do I do?

I double down.

When I buy a stock and believe in it and I see the price drop...

to me that's a chance to average out.

I always believe it's gonna go back to where it is.

With Nike, I believe there's a new beginning.

10:42 - Nike reset: board + consumers spoke

Nike realized it.

The board realized it.

Shareholders spoke.

Consumers spoke.

People moved on.

But no matter how much the others grow...

their revenues combined still don't meet what Nike does.

And the one thing Nike has the ability to do - even when they look like they're suffering - is they can push back.

11:59 - New CEO brings back wholesale + innovation

With the new CEO back in - he was there before - I can't remember his name...

he brought back innovation.

He said: Nike is an innovation company.

This is what we do.

They brought back wholesale.

Foot Locker. Dick's. All those stores.

Now they're carrying it again.

Back on shelves where it needs to be.

12:42 - Nike can fund innovation others can't

And Nike is slowly gaining it back a little bit in running.

I always go to running because that's the biggest thing I do.

Hoka and On mainly do running and walking.

They don't have the budget to spend hundreds of millions... or a billion...

to chase the next evolution.

Whereas Nike can go try to make the fastest marathon shoe.

They can push track and field.

They can test crazy ideas.

Some might end up in the garbage.

But Nike can afford that.

15:35 - Stories are coming back too

And he's bringing back the stories.

He's bringing back what makes Nike, Nike.

That feeling...

when you wear it... and you believe.

And outside of running, they have so many other avenues.

I just don't see Nike failing.

Which is why... again... I double down.

17:15 - Slow builds / long-term framing

So I guess what I'm saying as part of this channel is...

I bought something knowing I was gonna hold it a long time.

I knew it was high.

But I thought it would at least stay there... maybe move up slowly.

I wasn't looking for a rocket ship stock.

This is something that chugs along.

Pays dividends.

18:46 - Dividend + DRIP + compounding

And here's the other thing...

they didn't drop their dividend.

They even increased it.

So even though the price is down...

I'm able to get a little more.

And the amount of money Nike makes is still massive compared to almost all of them.

So they're working from a place where they can learn.

And turn it around.

19:52 - Why I wanted to release this now

This is why I wanted to get this video out.

Because everywhere I look now they're talking about the innovations.

They're talking about the mistakes.

They're talking about reversing it.

And I'm like... man... I've been talking about this forever.

Even friends have said: "What price do I need to buy some now?"

And I'm like... I hope it does go back.

Because I've been buying at the low.

20:30 - Investing fear: "what if the market goes down?"

And I have a lot of people in my life who are scared of investing.

Their biggest thing is:

"What if the market goes down?"

"What if I lose all my money?"

And I always say... if you lose all your money...

those companies don't exist anymore.

And if banks, energy, telecom, pharma... all disappear...

we have way bigger problems than our portfolios.

21:36 - Price drops are a feature (for long-term dividends)

And then I always say:

Dividends reinvest.

Price drops are awesome.

Because the dividend buys more shares.

If the price goes up, I get less.

So over time... I actually want those downs.

So with Nike... I'm glad it's down.

It's a chance to get more cheaper.

22:09 - Closing

Again... this is the long game.

This is a slow build.

I'm taking my time.

I believe in Nike.

I've always loved Nike.

There are certain brands I stand behind.

And I really believe they're gonna turn this around and make it a great thing.

Alright. Thanks.