I'm glad to see a new development at Vanguard; Check out a recent interview with Netflix's Reed Hastings; Bad news for the luxury market in China; Job cuts at Southwest Airlines; Nikola's long-overdue bankruptcy filing

Today, let's cover a few quick catch-ups on companies and topics I've written about previously...

1) Up first, Vanguard has probably saved more investors more money than any other company in history – it's truly an exemplar.

Other financial companies look to exploit/gouge/take advantage of their customers – exhibit A is Charles Schwab (SCHW), about which I've written many times in the context of making sure you're getting a market interest rate on your cash (here, here, here, and here).

But as this Wall Street Journal article from earlier this month explains, Vanguard is doing the opposite: Vanguard Delivers Its Biggest Fee Cut Ever. CEO Salim Ramji Explains Why. Excerpt:

In the first major initiative in Ramji's six-month run as chief executive, Vanguard on Monday slashed the fees on nearly half of its U.S. funds. By reducing the expense ratios by an average of 20% across 87 funds, it said it would save customers $350 million this year.

The fee cuts are the steepest in the almost 50-year history of a money manager that practically invented the principles of low-cost investing, and led the push to popularize funds that tracked market indexes. "In investing, you get what you don't pay for," Vanguard founder Jack Bogle often said. And his company rode this revolution as few have, emerging as a financial colossus with more than $10 trillion in assets.

It's scandalous what so many of these financial firms are doing, so I'm glad to see developments like this.

(For the sake of disclosure when it comes to brokers, I'll note that we here at Stansberry Research don't recommend or endorse any brokers, dealers, or investment advisers. We aren't affiliated with any brokerage and do not receive any compensation for mentioning a particular firm.)

2) My friend Reed Hastings of Netflix (NFLX) is also an exemplar – as a human being (was in the Peace Corps and is incredibly philanthropic) and as an entrepreneur and wealth creator. Netflix currently has a more than $440 billion market cap, and he's responsible for much of that.

For some context, here are links to a few of the many e-mails I've written about my experience with Hastings and the stock:

• Netflix Prepares to Send Its Final Red Envelope; Advice I gave to Reed Hastings (September 27, 2023)
• Why I made the big call to cover my Netflix short (June 7, 2024)
• How a painful short led to the best investment of my career (June 10, 2024)
• How I snatched an ultimate defeat from the jaws of victory with Netflix (June 11, 2024)

I recently came across a great interview that Hastings did a couple months ago on First Time Founders with Ed Elson. In it, Hastings talks about Netflix's path from DVD rentals to video streaming... the importance of company culture... what it was like when he left Netflix... and his newest venture: a ski resort in Utah.

I highly recommend checking it out – you can see it on YouTube via Scott Galloway's Prof G Pod channel right here.

3) This WSJ article from earlier this week, China's Love Affair With Luxury Has Cooled, has implications for a number of stocks I've discussed previously – and captures a main reason I haven't pulled the trigger on any of them. Excerpt:

Luxury's luster is fading in China. A sluggish economy, the austere political mood and the feeling among some consumers that pricey brands are passé have combined to end the boom that has propelled the industry in recent years.

Last year, China's luxury market shrank by about a fifth from a year earlier, consulting firm Bain estimates. The industry leader, Louis Vuitton owner LVMH said its fourth-quarter sales in Asia excluding Japan– a figure that mainly consists of China sales – dropped 11% year-over-year. At Gucci owner Kering (KER), the same China-centered sales figure was down 24%.

"The period of hyper-exponential growth will no longer be here. It's going to be much more modulated," said Bain partner Weiwei Xing.

Here are links to relevant e-mails:

• My first look at LVMH and Pernod Ricard (November 14, 2024)
• A deeper look at LVMH (part 1) (November 21, 2024)
• A deeper look at LVMH (part 2) (November 22, 2024)
• Updates on LVMH, Lululemon Athletica, and Five Below (January 17, 2025)

4) Here's the latest from the WSJ on a new development at Southwest Airlines (LUV): Southwest Airlines to Slash Corporate Workforce in First Mass Layoff. Excerpt:

Southwest Airlines is slated to shed 15% of its corporate workforce, eliminating about 1,750 jobs in an effort to cut costs and streamline the carrier's operations.

The cuts are a first for Southwest, which hadn't previously conducted a mass layoff in its 53-year history. They mark one of the most tangible signs of a shift in the airline's practices after a battle with activist investor Elliott Investment Management last year.

I covered Southwest several times last year – here are links to those e-mails:

• Taking a 'first look' at Southwest Airlines (August 28, 2024)
• A deeper dive into Southwest Airlines (September 3, 2024)
• I'm glad to see Southwest Airlines shaking up its board (September 12, 2024)
• Why I'm glad to see two new developments from activist investors at Air Products and Chemicals and Southwest Airlines (October 16, 2024)
• Updates on four stocks I've been keeping an eye on (October 22, 2024)

The stock is flat since I last wrote about it, and it's still a wait-and-see story for me.

5) As expected, hydrogen-truck maker Nikola (NKLA) finally filed for bankruptcy yesterday...

I've been warning my readers about this stock for years – starting with my September 11, 2020 e-mail, in which I concluded that "Nikola is toast."

Here's the WSJ with more on the bankruptcy story: Nikola, Once a Darling of Green Investment, Files for Bankruptcy. Excerpt:

Now a penny stock, Nikola filed for chapter 11 on Wednesday in a Wilmington, Del., court, joining other Tesla wannabees that have run out of road before their zero-emissions visions were realized. The Wall Street Journal reported earlier this month that Nikola was nearing a bankruptcy filing.

Nikola rode a green-investment boom that has since cooled amid rising costs, slowing acceptance of zero-emissions products among consumers and a shifting political landscape. The growing pile of green auto companies that have wound up bankrupt also includes EV manufacturers Fisker, Lordstown Motors and Electric Last Mile Solutions.

The stock still trades, closing yesterday at $0.47, but it should be a zero – the shares are worthless.

Best regards,

Whitney

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