If the stock market is anything, it’s humbling. I sold elf to increase my position in Axon enterprises. Granted, I believe that a difficult economy will push up elf’s sales. Well Este Lauder, the best of the premium cosmetics, reported Organic net sales decreased 2%, primarily reflecting ongoing softness in overall prestige beauty in mainland China.
This is likely the cause for a 17% rise in elf last week. Consumer shifts like these may, indeed, fuel a rise in elf. I could be completely mistaken with my elf sale. That said, elf is still trying to move it’s manufacturing business away from China, which will increase costs. They still face ongoing shipping struggles from Houthi rebels attacking the Red Sea shipping lane.
Because of those two headwinds, I am happy to sit on the sidelines for a quarter or two. Additionally, Axon, enterprises developed software that will write much of a police report based on body cam recordings. I think that will create incredible tailwinds for them.
Was I right in making the switch? Not this week, but time will tell, and if the next quarterly report is strong enough, I will likely reopen a elf beauty position.
Is Elf still making great quality cosmetics at a great price? Then, maybe the thesis is still intact. I consulted my resident expert and was told they’re great for basic needs, primer, sunscreen, brushes, and conveniently available at our local grocery store. In the worst of times, cosmetics will sell. I held my position.
I understand your point, but my thesis is that elf makes great cosmetics at a great price with good margins. The third part of my thesis was the problem with me holding through the next two quarters. I think that sometimes it’s a mistake to hold until the turbulence gets sorted out.
I used to be a long term buy and hold no matter what investor. I still will hold a stock longer than many will so long as my thesis is intact. Monday.com is a good example. Many sold, while I am holding to see how its price increase and CRM software do. I was rewarded for that this quarter, and my return on MNDY improved to 44.3% this year .
Now I love the Fool’s business and the service they provide investors. I think that the Fool has a LTBH limitation that comes with providing services to thousands or millions of people. If they move in and out of a stock, like I just did with elf, they could crash the stock. People who either don’t have the time or won’t take the time to dig into the stocks they hold are better off finding great stocks and following the LTBH strategy. IMO people, like you, who are digging in deeper, by virtue of reading posts on this page, can improve over those gains.
Take Warren Buffet, who LTBH people will quote, studies companies like we do and moves in and out of companies too. His actions agree with those who get out of the way when they see trouble.
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