Holy S*** I Dodged a Major Block Bullet-I AM A GOD OF INVESTING+Small Portfolio Reposition+Jesus is King is a Great Album

When you sell a stock early, and miss out on some gains, it does not feel awesome. In fact, it makes you feel pretty bad. Do you know what does not make you feel bad? In fact, this experience makes you feel pretty awesome about the world. Selling a stock before it crashes 20% based on problem points you identified. Yes, I am talking about Block stock (XYZ). #SQ era>XYZ era.

So, I sold at a little over $89 on December 23rd. I thought that competition had grown to a point that was becoming uncomfortable and revenue growth was slowing. It seemed like the company was transitioning to earnings growth over revenue growth, which is now what I am interested in at a company like Block, so I sold. Almost exactly two months later, Block fell 20% in one day after a truly bad quarter, bringing the total depreciation to 25% in two months. I would have lost a quarter of my position had I held, so I have been thanking God (@bigJesus) ever since I saw that CNBC headline.

Block crashed so hard because they missed both aspects of their report. You can miss on your estimates as long as your guidance is good, and you can sometimes get away with slightly worse guidance if you crush your immediate numbers. However, you can never get away with missing on your numbers if your guidance is also crap.

Block was supposed to get to EPS of 87 cents per share, but they only got to 71, missing by 20% (ironic). Revenue was $6.03 billion, as opposed to the $6.29 billion predicted. Profit was decent, at $2.31 billion, up 14% y/y, but even profit was below expectations.

Basically, Block is facing stiffer and stiffer competition, and their moat is practically nonexistent at this point. Toast, Fiserv, Clover, and Shift4 have all entered Block’s airspace in recent years, and now they are laying down serious damage on Block’s territory. And Block has zero Evas (Evangelion Ref. to defend their territory). Block continues to try and stand on their profit numbers, but I just do not care that much. I’d rather have 10% of a billion dollars than 50% of a hundred million dollars, so I simply do not care that they keep dangling these “errrmmm but our profit next quarter will be good.”

Cash App, for example, continues to be more profitable. They are picking up 16% gross profit, but they have not grown their user base for a year straight. Yeah, sure, the ecosystem is pretty good. I like Afterpay, I like that CashApp and Square interact well, and I like that Block is well-positioned to profit from the American addiction to buying things that are out of their reach, but this company is supposed to be a techy-growth company, yet they are trapped in stagnancy.

They have harmed me though, not monetarily, obviously, but in terms of my psyche. I might be a little more scared next time, more likely to pull the trigger on selling when I shouldn’t. Beyond being a scared lil coward, there is a genuine lesson to learn here. I need to stick to my fundamentals more, a structure that Block always struggled to fit into. No genuine competitors, good leadership, and good revenue growth, those are the core tenets of where I want to be. Block had pretty good leadership, but they had growing competition, and I always wanted them to be more than they were. In the end, I was extremely lucky to get out with my shirt.

A company that mogs Block is Ferrari. Ferrari has been doing so well recently that I will be forced to do a doing a repositioning of my holdings. Ferrari has surged 20% in the past month, making them far and away the largest company in my portfolio. GigaCloud has slipped a tad, while Microsoft has been completely flat for the past year. I will sell a bit of Ferrari, bringing them back under Costco in terms of weighting, and put most of the funds into Microsoft, a company that is looking more and more appealing, especially as the price has refused to move upwards. The rest will go into GigaCloud, a company that continues to be really appealing, but one that is trending more and more into flop territory based on my optimism.

I’ll elaborate more on why I like Microsoft, especially at the current price, but do not take this as hate for Ferrari or as love for GigaCloud. Ferrari continues to be an awesome company to hold, and GigaCloud continues to be a place that I am putting too much hope in.

Finally, Jesus is King, Kanye West’s ninth studio album. Right now is a touchy moment in terms of listening to Kanye West because he has become such a sad, weird, and gross human being. Do not take this as an endorsement from me, or from Pax Romana Capital (CEO, CFO, COO, Chairman, head of HR, security guard, pervy old guy, young and overworked intern, etc, all filled by me) of Kanye West. But oh my Lord, some of his stuff is really good. I’m not sure what prompted me to do this, but I have been completing a complete listen-through of all of his songs, and there are some albums I had previously overlooked.

Kids See Ghosts, Donda, and Jesus is King were all albums that I had always overlooked, JIK in particular.

I always thought JIK was just shoddy evangelizing, but songs like “Selah” and “On God” are truly excellent, even if you are not a Christian. The album is bursting with emotion, but not in a weird, unwelcome way.

Ye is also much better than I remember. Obviously, I had “Violent Crimes” and Ghost Town” down, but “Yikes” and “Wouldn’t Leave” were both really solid.

I have one massive playlist (yeah, I’m one of those), and every song from Kids See Ghosts is on there. I had always liked “4th Dimension” and “Kids See Ghosts,” if just for the fye hooks, but I guess I had overlooked the rest of the album. “Feel The Love,” “Fire,” and “Freeee” are all genuinely very good.

Donda probably had the lowest hit rate out of these listed, but when the songs from the album hit, they really hit. There are 27 songs on Donda, and I could probably cut half of them. “No Child Left Behind,” “Moon,” “Hurricane,” “Off The Grid,” and “Jesus Lord” were all really good in particular. They just felt so Kanye. The beats are great on these songs, like seriously immaculate, with a touch of Black Church chorus, and since the album is entirely about his dead mom, I mean, it’s just so good.

Also, Graduation was even better than I remembered.

MBDTF was actually worse than I remembered though, and Vultures One and Two are just not even worth mentioning, although “Back to Me” is quite crispy.

Like I said, it is an awkward time to be a Kanye fan. I think you can work your way into a “just separate the art from the artist man” argument if you want, but I think it’s also okay to just accept that this deeply troubled man made some genuinely insane art.

Seriously, go listen to Jesus Lord.