In a recent argument I had, I looked my opponent dead in the eyes, licked the spittle off of my lips, and spat at them, “UNLESS YOU STUDY THE PAST, YOU ARE DOOMED TO REPEAT IT!” Needless to say, my 8 year old niece ran screaming from the room to tattle on me to her father. But instead of crying, the little ingrate should have heeded my words. To be successful, you have to learn why something failed…and why something succeeded.
So I once again offer you a blog post of how I came to be. With a simple strategy that anyone could learn, I went from a middle of the road used car salesman to what I affectionately call a “gawazillionaire.”
In August of 2009, I didn’t understand stocks. I didn’t understand P/E ratios, chart mapping, Fibonacci numbers, or who the hell Downtown Josh Brown (@ReformedBroker) was. All I knew is that I wanted to invest in things I knew about and things I believed in.
I had made some nice money on Las Vegas Sands $LVS at that point, as the stock sat a 6x at what I had bought. Not wanting to ‘be a piggy,’ I would sell off on every other multiple (4x, 6x, 8x etc) just to protect myself. When I sold off my profit, I’d find other companies I wanted to invest in—besides, I was playing with the House’s money.
I didn’t make any drastic financial moves (new house, new car, Chinese escort) back then. While my savings account had essentially sextupled, I didn’t think there was any way this could keep going (SPOILER ALERT: it kept going until 30x on $LVS). One night as I pored over the charts and graphs that were as foreign to me as the rules of a MFF threesome, the urge for food hit. Still considering myself an everyman who wished to live within his means, I knew my dinner options were limited: ice chips, toaster leavings, or pizza.
There was a Domino’s Pizza $DPZ a few blocks away. Rather than use my precious cell phone minutes (AT&T $T), I got online to www.dominos.com and saw two words that would again lead me to a whole new way to invest. The two words were perched next to logos, texts, and pictures of tantalizing pizza: ORDER NOW.
I greedily clicked on the link. I was guided through an easy-to-use interface that let me order EXACTLY what I wanted. They verified my address. They took my payment. And my perception was elevated as they let me look in on my personal pizza making process. I saw the name of the person prepping the dough. I saw when my pizza went in the oven and for how long. I saw the name of the delivery man and an estimate of how long until he arrived at my door. When the doorbell rang, the name tags matched. I was mesmerized.
I was so impressed and so blown away by this little process that I wanted to be a part of this company. I wanted to franchise it, I wanted to work there, and I wanted to tell all of my friends how amazing it was that I just watched a minute-by-minute process of my pizza on the computer. I wanted to be a part of the Domino’s company. And there, in my infant state of investing, came to a startling revelation. If Domino’s was publicly held, I could be a part of them.
I raced back to my computer, fingers caked in delicious delicious pizza grease and researched to see if Domino’s was publically held. It was, under the ticker $DPZ and it sold for around $8/share. I immediately moved a healthy portion of my Las Vegas Sands’ profits over to Domino’s Pizza.
Again, at this point in my life, I knew little to nothing about the stock market. I knew I liked pizza. I knew what brand of pizza I preferred. And I knew that they appeared to have a leg up and found a way to differentiate themselves from their competitors, like Pizza Hut $YUM and Papa John’s $PZZA.
Every stock you buy spends their fair amount of time in the oven. While Las Vegas Sands produced quickly and exponentially, Domino’s took a little longer to bake. Through it all, I held and I held, because I used and believed in the product. To me, this is but one topping of the pizza that the analyzers ignore. We can argue that pepperoni are those aforementioned P/E ratios, and that green peppers equate those chart mappings…but YOUR BELIEF and YOUR FAITH in the company and the product is the cheese that holds it all together.
P.S. Today, Domino’s Pizza trades for $45/share, an increase of approximately 462%.
