Chris, Do you avoid investing in any companies in the San Francisco area? Just wondering. Do you live anywhere near San Francisco? I believe that there are also risks in the Seattle area (home to Amazon). You can’t avoid everything because of earthquake danger, but a big one would really be devastating, and probably with effects throughout the economy.
Saul
Do you avoid investing in any companies in the San Francisco area? Just wondering. Do you live anywhere near San Francisco? I believe that there are also risks in the Seattle area (home to Amazon). You can’t avoid everything because of earthquake danger, but a big one would really be devastating, and probably with effects throughout the economy.
I live on the 4th floor of a 4 story old building in San Francisco. I think it was built in the 1920s after the 1906 earthquake.
I don’t avoid investing in companies in San Francisco, in fact, I also have a heavy concentration of investments based in the SF area. I am aware of the risk and I thought I would post about it because I think most investors who don’t live in SF would not even consider this risk.
I agree that a Katrina-like disaster in the SF area would have an effect on the global markets. Some companies that are based in the area:
Google
Apple
Facebook
Uber
Twitter
Gilead
Arista
Nvidia
HP
Agilent
Genentech
Wells Fargo
Charles Schwab
Ebay
Paypal
Tesla
McKesson
Adobe
Salesforce.com
Oracle
Chevron
Clorox
Bio-Rad
Square
and many, many others including several thousand start-ups (BTW, a huge fraction of the world’s venture capital is based here; I heard recently that 50% of the global VC funding went to companies in the SF area)
The paralysis of a major earthquake due to infrastructure damage would certainly have global repercussions.
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OT: if you had to open a position / add to a position today, where would it be and why…
As always, the first companies I’d recommend to anyone are the companies I own. And even in the order to which I’ve allocated my own money to them.
So…have you considered Shopify?
Bear
Wow, that’s a lot…I forgot Gilead and Square were out there when I mentally reviewed my own portfolio’s geography. Visa’s HQ is in San Francisco too, I believe.
Matt
Long GILD, SQ
Thanks Bear, assumed as much, shopify is now firmly on my radar!
have you considered Shopify?
I also like SHOP – I bought it a couple of months ago, mostly for the dividend.
OTT
I also like SHOP – I bought it a couple of months ago, mostly for the dividend.
As far as I know, SHOP does not pay a dividend…
I also like SHOP – I bought it a couple of months ago, mostly for the dividend.
As far as I know, SHOP does not pay a dividend…
Hence his name offtopictom 
Andy
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So happy I could set you up for that punchline, OTT!
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how did you get SHOP only down by 5.4% in June? it was close to triple that- down 15%.
I may be missing something but in all those concentrated portfolios spoken about here, all seems to show a slight gain this month. Considering the composition, I cannot square they were all up slightly. What is the stock that pull the rest up? are trading and edging kept you up? in that case that is a lot of work and a lot of skillful work.
tj
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SHOP:
May 31 close: $91.86
June 30 close: $86.90
Difference: $4.96
4.96 / 91.86 = 5.39%
TJ,
It seems like you post in quite a bit of a hurry. I for one would appreciate it if you would look a little more carefully before filling up the board with things you could easily look up.
Bear
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The other thing that gets me is when people look at a stock, “see see, SHOP is down 15%, NVDA is down 12%…” yeah, but each are up more than 200% since we bought them in the last two years, 6 months, etc.
I hate cynics and nit pickers. I love honest and good faith critics. That is what this board is about. Not cynics and nit pickers.
People put themselves out there on this board. They get $0 in compensation for it. they don’t necessarily want cheerleaders. What they want, and what they are owed is honest and good-faith critics, and honest and good-faith supporters. That is what makes this board great.
Tinker
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Hi Bear,
I was reading back through your post and noted this quote again:
I said to myself: “I own 12 of the most exciting, fastest growing, innovative companies I know of…and Yelp.” When I realized that, I sold it immediately.
I LOVE IT! You should frame it and hang it on your wall. And anyone who is still hanging on to some legacy holding which is going nowhere, and just tying up funds in his or her portfolio, ought to reread what you just said.
Thanks,
Saul
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I said to myself: “I own 12 of the most exciting, fastest growing, innovative companies I know of…and Yelp.” When I realized that, I sold it immediately.
I LOVE IT! You should frame it and hang it on your wall. And anyone who is still hanging on to some legacy holding which is going nowhere, and just tying up funds in his or her portfolio, ought to reread what you just said.
Thanks, Saul. It really was a watershed moment for me. But just in case anybody isn’t really following our enthusiasm on this point, here’s another example:
My dad recently owned Chevron stock. He was starting to come around to the idea that the future is uncertain for the legacy energy companies, and that his money might be better placed with companies like Amazon, Facebook, and Google/Alphabet – companies where the future looks bright. Even though he felt this way, it was hard for him to cut Chevron loose, partially because it was down (maybe 5%) since he had bought it. He said to me, “I just don’t want to sell now, because I know it will come back up.” I said, “It may very well come back up, but what if that happens in summer 2018? Or even this December? Look at all the time and opportunity you will have lost! Amazon could very well be up 10%, 20% or 30% by the time Chevron breaks even. So you avoid losing 5% on Chevron by losing several times that in potential gains on AMZN. That’s opportunity cost.”
Now of course I don’t know what will happen with Chevron and Amazon – I just feel the opportunity with one is better than the other. Same with Yelp, and the rest of my holdings. As I said before, Yelp will probably go up from here. But I’m more convinced - and actually excited about - the companies I continue to own.
Bear
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SHOP: yes it is quite volatile. Two days later it was up 10% then down 15% from there. Still it is surprising when most components are down to be up in aggregate. Maybe it is just a wrong impression.
Sometimes you want it to go up and it just does not and then you don’t pay attention to it it is up by a large amount.
It was a simple question- quite neutral really. The interesting thing is the strong reaction.
tj
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Maybe it is just a wrong impression.
If you are really trying to learn, here is a lesson.
Do not go by impressions when there are actual numbers available. As you have shown, impressions are subject to wild inaccuracy. Use the actual numbers!
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GauchoChris -
Bizklkr already responded. I don’t have a lot to add. I worked at a fortune 50 Company in the IT department. Virtually every company of any size these days protects its data and its IT operations by mirroring the data at multiple remote locations as well as making sure that all line of business critical applications are hosted and functional in separate locations as well.
For sure, a natural disaster at HQ would be a disruption, no one would deny that. But it would not cripple operations for an extended time period. Especially asset light businesses (i.e., s/w oriented tech companies) are able to continue operations with very little down time.
Manufacturing companies have a much harder time with respect to recovery from natural disaster. The '65 Puget Sound earthquake crippled Boeing operations due to the fact that both plants in South Seattle and Renton (the Everett plant had not yet been built at the time) were built on landfill/mud flats which undergoes liquefaction more easily than locations with more solid underpinnings.
There is no place that is immune from some potential natural hazard. Given the potential hazard from climate change which possibly endangers the entire planet where would you suggest we look for company locations, mars perhaps?
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For sure, a natural disaster at HQ would be a disruption, no one would deny that. But it would not cripple operations for an extended time period. Especially asset light businesses (i.e., s/w oriented tech companies) are able to continue operations with very little down time.
Brittlerock,
You are underestimating the effect of a major earthquake in a populated region. I am talking about a major earthquake striking a populated area. In 1906 the population was small. In 1989 the earthquake was epicentered about 70 miles away so the damage was not devastating. A major earthquake would be many times worse than Katrina was to New Orleans and there would be zero advanced warning. New Orleans had warning so evacuations could begin before the event hit.
The risk is not to IT or data; those are largely backed up. The risk is to operations specifically to the employees’ ability to continue working. Many could not get to work potentially for months. Many would not have electricity, water, internet, etc potentially for months. Many would have working spouses and children in school which must be considered…point here is that a company could not simply relocated to a location outside the region and expect all employees to move there. Furthermore, all of Bear’s companies that are SF based are in SF or on the peninsula to the South. SF is on the Northern top of the Peninsula. If the Bay Bridge and Golden Gate Bridge get damaged then there is only one way in or out making transportation a major issue. Who is going to worry about commuting when thousands are homeless, repair crews can’t easily get in or out, there is no electricity or water, food can’t be easily delivered to stores (and it spoils without refrigeration). You think people are going to think out going to work?
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When your read about Katrina you would think it was some third world country. Social order broke down, the “authorities” mostly did nothing , joined in the looting, or made things worse by turning away volunteer help. At the federal level they mostly shuffled papers . I doubt if anything has changed.
It would be worse in a bad earthquake, the flooding prevented many of the bad guys from leaving their homes.
But I suppose while a major earthquake is inevitable the risk of it occurring during a stock holding period is small. A meteorite might strike NYC too, but the risk is so small we ignore it.
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