Richard Branson's Virgin Galactic Flight Opens Door to Space Tourism; This Is Tax Evasion, Plain and Simple; My crazy, scary experience in Istanbul; Lessons from The Art of Playing Defense
1) Space-tourism company Virgin Galactic (SPCE) was back in the news yesterday...
Its founder, British billionaire Richard Branson, rode a company rocket to the edge of space and safely returned: Richard Branson's Virgin Galactic Flight Opens Door to Space Tourism.
My colleague Enrique Abeyta and I nailed it when we recommended buying shares of SPCE to Empire Investment Report subscribers in December 2019 at $10.20.
Our sell recommendations were spot on as well – we told our subscribers to sell their remaining Virgin Galactic positions at $50 per share on January 27, the day the "meme stock" bubble peaked. SPCE shares have traded below that level pretty much ever since, falling to $15 in mid-May before turning around and closing at $49.20 on Friday.
I'm happy for Branson and Virgin Galactic – but I'm not even tempted to recommend the stock again. Even though SPCE shares were up earlier this morning in pre-market trading, there's a high risk that this could be a huge "buy the rumor, sell the news" situation (as the markets opened, the stock is down big)...
As I wrote in my July 2 e-mail:
If you're going to invest in highly volatile, speculative stocks like Virgin Galactic, you need to be smart, patient, and disciplined enough to buy them either: a) before they've been discovered and become a darling of the Reddit crowd... or b) after they've soared and crashed, such that you can get in before a possible second bounce.
But don't chase them on days like today...
P.S. The average return of all our Empire Investment Report stock picks since the newsletter's inception in April 2019 is 52%, more than double the 25% return for the S&P 500 Index.
To learn more about Empire Investment Report – including how to get 40% off the regular price for the first year – click here.
2) In Thursday's e-mail, I shared an article, Seven Charts That Explain the Economic Recovery So Far, which shows how much stronger the current economic recovery is than the tepid one that followed the global financial crisis.
Speaking of interesting charts, this article, This Is Tax Evasion, Plain and Simple, has two:
I'm not going to dive into the highly charged economic and political issue of what the appropriate corporate tax rate should be. But it seems obvious to me that when corporations transfer valuable assets – like the Nike (NKE) "Swoosh" – to shell companies in tax havens, it goes far beyond tax evasion to outright fraud. Do you think China's government would tolerate this for one millisecond? Not a chance!
3) You'd think that taking a guided Segway tour of Istanbul during my 10-hour layover there on Saturday would be enough of an adventure, but things went haywire and some local bullies beat up my guide, Tarik (fortunately he's OK, though they broke his nose pretty badly).
I posted the entire, crazy, scary story on Facebook, and here are some pictures:
(I'm now in Uzbekistan for five days and will be sharing my observations and pictures in future e-mails.)
I wouldn't exactly say I'm freaked out by what happened to Tarik, but I've never seen anyone beaten up before – he could have easily been killed – so I keep thinking about what happened and how it could have been avoided.
So as not to further traumatize Tarik, I didn't share all of the details on Facebook. But at a number of points during the escalating dispute, Tarik could have disengaged... However, he let his big mouth, pride, and ego get the better of him.
For example, he didn't have to say anything to the family of the little boy who laughed at me. Or, when the bullies first said something to him – or at any point later, as the back-and-forth got more heated – he could have simply said, "You're right, I apologize," and walked away. Even if he didn't mean it, when you're outnumbered 5-to-1, you say whatever is necessary to get out of there safely.
I was involved in a somewhat similar situation, which I described in my new book, The Art of Playing Defense: How to Get Ahead by Not Falling Behind:
I had a little incident a while ago. I was backing my car into a tight spot and bumped the car parked behind me. When I finished parking, I was about to walk up the street to my apartment building when I saw a very large and intimidating guy with a lot of tattoos standing next to the car I had bumped. He said, "Hey, you hit my car!"
You can imagine the many ways this situation could have gotten ugly. I was pretty nervous, so I said, "I'm really sorry. I didn't mean to. Was there any damage?" He replied, "You broke this," and pointed to a little plastic ornament attached to the front grill of his car. I could see that I'd broken it, but it probably could be glued back in place in about thirty seconds or replaced for a few dollars. Rather than argue the point, I said, "If I gave you $20, would we be good?" He smiled and said, "Sure!" Problem solved.
It's actually sometimes quite easy to admit you made a mistake, apologize, and make up for it.
But it doesn't come naturally to most people – my younger self included. I've gotten a lot better at it over the years. It's the right thing to do, and it makes big problems smaller – and little problems go away entirely. (By the way, if you can make a problem disappear by throwing an affordable amount of money at it, then it's not even really a problem!)
In contrast, I (like Tarik) was much less wise in my youth. In 1992, at the age of 25, I was visiting my sister Dana in Guilin, China, and we hired a small auto rickshaw (called a "tuk tuk" in many countries) for a short ride. Before we got in, Dana, who speaks reasonable Chinese, negotiated the price – it was probably the equivalent of $1.
But when we arrived at our destination, the driver demanded $2 – $1 for each of us – whereas we thought the price he quoted us was for the tuk tuk, not per person (to this day, it's not clear to me whether this was an honest misunderstanding or not). Dana argued with him, gave him $1, and we marched away.
But the driver followed us, yelling and threatening and getting in my sister's face. I got in between them and cocked my fist, ready to deck him if he made a move. We were in a very public place (a train station, I think) and a crowd gathered.
Things were quickly getting ugly...
Of course, at any point we could have instantly resolved things by giving the guy $1! But we were young and stupid and frustrated at the way we were constantly getting nickeled-and-dimed, so we dug in our heels and the standoff continued.
It only ended when a young man – I think he was a ticket clerk – came over and gave the guy $1. After the crowd broke up, I went over to him and offered to repay him, but he wouldn't accept it – and that made me even more ashamed of my behavior, which stood in stark contrast to his wisdom and kindness...
There are two big lessons here:
a) Don't be a hothead and let your emotions overwhelm your common sense. It's a good way to get beaten up – or killed... And b) Don't hesitate to be generous and/or throw small amounts of money at problems, especially when you're dealing with someone who has a tiny fraction of your financial resources. Here are two recent examples...
When I met up with Tarik on Saturday evening (after he'd been released from the hospital) to pick up my backpack and catch the taxi he'd arranged to the airport, I handed him a little over $200 in cash – the $180 that we'd agreed upon plus a tip, exactly what I'd always planned to pay him.
But he wouldn't accept it because he felt so badly about what happened, as it had totally upended our tour of the city, a cruise on the Bosphorus, and dinner together. Instead I spent four hours on my own, which was fine, but not nearly as fun and interesting of an experience as I was counting on. So I could have easily justified simply saying "thank you" and accepting his offer not to pay him.
But I didn't and insisted that he take the money. I felt so badly for him – and he sure needs it more than I do, especially since his nose will likely require surgery.
Then, a few hours later when I arrived in Tashkent and met my dad, he negotiated a fare of $3 (yes, $3!) with an elderly taxi driver to take us to our hotel. It should have been a 20-minute ride, but it took an extra 10 minutes, since the driver – perhaps because he didn't speak any English and misunderstood our destination – kept making wrong turns (though we did get a nice tour of downtown!). Fortunately, we had Google Maps, so we were eventually able to guide him to the Hilton.
Tipping isn't customary in Uzbekistan, and the driver had wasted our time and caused us a bit of aggravation, but as we got out of the taxi, I told my dad to give him $4. The extra $1 is nothing to us... but a 33% tip is meaningful to him.
Best regards,
Whitney