Unbeatable Black Friday Stock Deals

Bryce: [00:00:26] Welcome to Get Started Investing, a podcast where we help you learn to invest in 15 minutes or less. Each episode we take one real world business story and apply a key investing lesson to help you build your investor toolkit. If you're joining us for the very first time, welcome. We strongly recommend that you scroll up and start at episode one. And while we are licenced, we are not aware of your personal circumstances. All information on this show is for education and entertainment purposes. Any advice is general advice only. But with that said, let's crack on. My name is Bryce and as always, I'm joined by my equity buddy, Ren. How are you? 

Alec: [00:01:04] I'm good, bro. Sorry, I am a bit distracted. I have got my computer in front of me and I'm just looking at some deals. 

Bryce: [00:01:12] Yes. Unlike you, you know, the biggest retail shopper. 

Alec: [00:01:16] It's Christmas present season baby. 

Bryce: [00:01:18] Deals on the market. 

Alec: [00:01:19] I should say that's what we're going to talk about today. But no, I'm actually on Amazon.com.au. 

Bryce: [00:01:25] Well played, not sponsored, but yes, it is Black Friday. Well, it was Black Friday over the weekend. And that got us thinking about the relationship between how we think about sales in the world of consumables and sales on the stock market.

Alec: [00:01:40] Yes. Yes. And so for this episode for 15 minutes, we're going to say if rather than buying one Tesla in 2010, you had bought one share of Tesla, today you would have $1 million. 

Bryce: [00:01:51] Oh, my goodness. But no. 

Alec: [00:01:53] But yeah, you're right. We think about retail sales and we think about stock market sales a little bit differently. And so we're going to talk about that. Let's start with the retail side of it because it feels like a couple of maybe a month ago we were asking, when did Halloween become such a global holiday? Well, when did Black Friday become such a global holiday for us? Yeah, because it's like it's so American. 

Bryce: [00:02:18] I feel like I've known it for nine, about like ten years culturally. 

Alec: [00:02:22] American, you know, discount, you know, where Black Friday came from.

Bryce: [00:02:26] Nuts. 

Alec: [00:02:27] 1960, Philadelphia, Thanksgiving on a Thursday Army-Navy football game on a Saturday. The police were called because there were such big crowds on Friday they would call it Black Friday. And then the retailers wanting to take advantage of the big crowds started putting on sales. 

Bryce: [00:02:44] Well played to the retailers. 

Alec: [00:02:45] A little bit of trivia for.

Bryce: [00:02:46] There you go. So you're I ran it well now it's more than Black Friday. It's also Cyber Monday.

Alec: [00:02:51] No. I was right. I was writing something that's now Cyber Week. 

Bryce: [00:02:55] Well, yeah, I think it starts. It's already. Well, I mean, has. 

Alec: [00:02:58] It starts. 

Bryce: [00:02:58] Yeah. Big time. They get all the retailers iconic 30% off koala mattresses, 25% off. 

Alec: [00:03:05] That's probably why our book is $19, down from $32 on Amazon. 

Bryce: [00:03:10] Yes, big discounts there at amazon.com.au to get Get Started Investing for only 19 toys. Best investment you could ever make. But yeah. And look, the day after Thanksgiving has become one of America's biggest shopping holidays. And as we've just said, it is spreading around the world. It is a global shopping bonanza in America.

Alec: [00:03:30] According to the National Retail Federation, 155 million Americans shop on Black Friday. It's got a population of like 350 million. [

Bryce: [00:03:38] So yeah, define a shop there. How many shops just on any other day, I wonder. 

Alec: [00:03:43] You ask very insightful questions for us. Lastly, I do not have an answer for that. I would say not a third of the country, you know, almost half the country. 

Bryce: [00:03:51] Wouldn't shop on any. 

Alec: [00:03:52] Well, yeah, you're right. If I go and get a coffee from Starbucks. 

Bryce: [00:03:55] Spending cash anyway, technicality. But this is what got me. The average spend per person of those hundred and 55 million is $430. 

Alec: [00:04:05] Yeah, that is huge. Yeah, that is. It's Christmas present size average. What do you mean, average average spend? Oh. 

Bryce: [00:04:11] I think 155 million people. I was really proud of myself two years ago. I did all my Christmas shopping on Black Friday and it was good. It's a lot of money. 

Alec: [00:04:21] How do you know? In person or online? 

Bryce: [00:04:23] Online. 

Alec: [00:04:24] Yeah. 

Bryce: [00:04:25] Just bang, bang, bang. Done. Save to save the junk. 

Alec: [00:04:28] Nice. 

Bryce: [00:04:28] Yeah, a little money anyway. 

Alec: [00:04:30] What are you going to get me this year? 

Bryce: [00:04:33] You're not in our Kris Kringle roster, so unfortunately, he fall out. 

Alec: [00:04:36] Really? All right. Well, but the reason that we thought this was relevant to talk about today is because, you know, Black Friday is known for its big discounts. We found some numbers on the average discount by category and price point electronics, less than $100 is the biggest. This is the biggest discounted category, 29% off on average Amazon devices, 13% off if they're under 100 bucks, 28% off if they're over 100 bucks. Home and kitchen on average, 11% off clothing and shoes, 14% off beauty and personal care, 15% off toys and games, 13% off. And it just made us think people go crazy when they can get 13% off some toys and games. They'll queue up outside Wal Mart the night before and then run over the security guards when the doors open at 6 a.m. on Black Friday. 

Bryce: [00:05:28] Sounds like you know what's going on. He's done. 

Alec: [00:05:30] That. No. But have you seen those videos? Yeah, yeah, yeah. But when the stock market is 13% off, people will run for the hills. 

Bryce: [00:05:36] I know. Well, not only go crazy for it, but go into debt as well. 

Alec: [00:05:40] For today's episode, the lesson that we want to pull out of Black Friday is we want to tell you why you should think about the stock market. Like you think about Black Friday sales. We were in the Army with the information to know that when stocks are on sale, it's a good time to buy. Just like when TVs are on sale, it's a good time to buy. 

Bryce: [00:05:57] What's the saying? Why pay more for it's not? Why pay more for less? That is a sign. That is a sign. Yeah, but it doesn't apply here. 

Alec: [00:06:03] I guess. You know, TV's 11% off or whatever, whatever it was, the S&P is off 17% this year. S&P 500 in America, the ASX 200 is only 5% off. For all the doom and gloom that we've spoken about in 2022, it's only down 5%. Well, that's pretty good. 

Bryce: [00:06:22] Yeah. Last night. 

Alec: [00:06:23] Not well. I mean, the stock market, like that's.

Bryce: [00:06:24] Where I should be diversified. 

Alec: [00:06:26] But yeah, look, even 5% down in Australia, less than 20% down in America. People have got scared and that needs to change. And the reason it needs to change is because the stock market has a really great track record of bouncing back and bouncing back strongly and it should get you excited. When stocks are on sale. You should be excited. Hold that excitement because we're going to take a quick break to hear from our sponsors and then we'll give you the information. People are shopping earlier because they're trying to avoid price increases. They're also trying to deal with the cost of living pressures. 

Speaker 5: [00:06:59] Over four days from this Friday to the following Monday, Australians are expected to spend a record $6.2 billion.

Alec: [00:07:07] All right, Bryce, before the break, we spoke about Black Friday and we wanted to explain why when the stock market is on sale, we should be just as excited as when the Equity Mates get started investing book is on sale on Amazon. So give me the numbers. Why should we be excited when the stock market's on sale? 

Bryce: [00:07:24] Our answer here, the numbers here is why we should be just as excited about taking the opportunity of a fall in the stock market just as much as we are discounts on Amazon like you were at the start of this episode. So at its max, in the current downturn, the ASX has been down about a maximum of 15%. The S&P 500 has been a down a maximum of 25% from it's all time high. Pretty significant discounts, but here's why we should be excited and here are some of the numbers. So we took the S&P 500 and looked at it. Historically, what has happened post a 20% fall from record high? Keeping in mind that we have experienced that at this current full six months after the S&P 500 has fallen 25% or more, on average it's bounced 4%. Yep. Now there's been a number of instances, there's probably two, four, six, eight, ten, 11 times that it's fallen about 25% or more since 1950. And the good news is around 60% of those times it's fallen. You're bouncing back.

Alec: [00:08:28] Within six.

Bryce: [00:08:29] Months, within six months. 

Alec: [00:08:30] So six months after it's fallen 20%, you're in positive territory. You're back, you've made it. 

Bryce: [00:08:35] It's back in business. But that's not the most exciting part. Ren If we then look at what has happened a year after, if we took advantage of those discounts and we got into the market a year later, you're up 15% on average and 70% of the time you're up in Ukraine. You're in the positive. Yeah, how could you? We should. 

Alec: [00:08:55] Be clear. You're in the positive from when you bought. 

Bryce: [00:08:56] From when you bought. Yeah. Yeah. 

Alec: [00:08:58] It doesn't keep collapsing. No, no, yeah, yeah. 

Bryce: [00:09:00] Yeah, yeah. But then it gets even better. 

Alec: [00:09:03] Let's pause it one year because you're right, there's, I think there's ten instances here going back from 1957 all the way up to the COVID crash of March 2020. So a statistically meaningful dataset. Yeah, in that range. One year later, 1973 and 2008, you had a tough time. You were down 27% further in 1973. So it fell 20%, then it fell another 27% in 2008 it fell 20% and it fell another 29%. So there, they're there. The times we are like, I'm not going to get excited about this. This isn't a good discount. And one other time in 2001, you fell 1% further. So those were the three times that you fell. Every other time the market rebounded and every other time. One year later it was up double digits from there.

Bryce: [00:09:50] Yeah, 2020. If you'd taken advantage of the discount and bought a year later, you're up 59%. 

Alec: [00:09:57] Yeah, it went from 11% in 1970 to 25% in 66, 26% in 62. There's 23% in 87, but yeah, 59% in 2020. So I guess like that's a lot of numbers to listen to on a podcast. But the point in those numbers is when stocks are on sale, historically this is based on the US market. It rebounds aggressively. 

Bryce: [00:10:23] Yeah, aggressively and it keeps going. Let's zoom out even further and take a look at what has happened after three years. So let's just say where we are now. We've, we've dropped 25%, we buy in on average in three years time we'd be up 29% on average. There are some whopping numbers in there as well, 82 year up 62% and the percentage chance of that occurring is 89%. Yeah, 89%. 

Alec: [00:10:52] 89% your three years later from when you bought you're. 

Bryce: [00:10:55] Europe. Yeah. I mean if these numbers don't get you excited about taking the opportunity when the market falls, having a long term view about historical view about what could happen then I don't know what's going to get you excited. 

Alec: [00:11:08] The only so they don't have 2020 numbers because we're not in 2023 yet we're not three years light up yet. Of the nine that we've got here, there's only one that is down in 2001. Three years after that, you would have been down 6%. 

Bryce: [00:11:25] Amazing. 

Alec: [00:11:26] Everything else was positive even in 2008. How bad it was then if you'd bought when it was, the market was down 20%, just like six months. So you bought when it was down 20%, six months later you're down another 27%. A year later that's now 29%. So you're hurting two years later. It's rebounded a little bit, but you're still down 7%, 17%. But time cures everything because three years later, if you hold through that tough period. Up 6%. 

Bryce: [00:11:54] Love it. Absolutely love it. We ran. It begs the question, though. Okay. So we've taken a tumble. I'm getting excited. I'm hearing what you're saying. I want to take advantage. But is now the time she can can this 25% discount that we're saying? Can that become a 30% discount? 40% discount, or should I wait?

Alec: [00:12:15] Don't buy on Black Friday, buy on Cyber Monday. Is is the stock market going to fall further? So I just read this book by Nick McCauley. Good book. I might have butchered his surname. Just keep buying. There are two stats from that book that I wrote down and I think really illustrate why it doesn't make sense to wait. So this was interesting between 1930 and 2020, if you randomly pick today, there's a 95% chance that the Dow would close lower at some point in the future. 

Bryce: [00:12:45] Okay. 

Alec: [00:12:46] So the point is, chances are whenever you buy, there's a one in 20 chance you will not buy at the bottom, there will be a lower day. And sometimes that takes years. Like he was saying that there were some periods where it was like 12 years later. But that does make you think, oh, well, if the stock market's going to be lower in the future, why shouldn't I just wait until that point? The point is, you don't know. Number one, you don't get perfect foresight. No one knows when it's going to be number two, the way that you invest as someone who earns an income and takes part of that income and then puts it in the stock market, is your natural dollar cost averaging? Yeah, through the ups and through the downs. This second stat I think really illustrates the power of dollar cost averaging. So if you picked a random month from 1926 to today, any month, and you started buying the Dow Jones Industrial Average, which is like an index over in America, if you bought once a month, every month for a decade, the median outcome would have been 10.5% per annum returns. So just pick any month. 1929, the Great Depression and you just bought it for ten years through the Great Depression. If you bought in the 2000s in the lost decade of the tech wreck and then the GFC, if you bought in at the end of the eighties when the market crashed in 87, like just pick, pick any month in that period and you just consistently buy for a decade, your median result is 10.5% per annum. 

Bryce: [00:14:16] Nothing wrong with that. Oh, you would take that for sure. 

Alec: [00:14:19] You would most likely have professional fund managers. 

Bryce: [00:14:22] Yeah, absolutely. 

Alec: [00:14:23] Yeah. 

Bryce: [00:14:24] Well, so I guess the moral of the story is don't wait. Get started, get excited, get excited. Kick the doors in. 

Alec: [00:14:31] In the same way you kick the door doors in a Wal-Mart. 

Bryce: [00:14:33] Yeah. So every time you log on to Amazon.com, iconic or whatever it may be for a Cyber Monday or a Black Friday, just think about why you're not getting as excited and refer back to this episode to get as pumped as we are about the opportunities that are presenting themselves in the market at the moment and the long term implications of that over, as we've talked about, 1 to 3 is the percentage chance tearing up in ten 2430. But anyway, we have hit over our 15 minutes, but we should just call out as well that we are super excited and very, very proud of Equity Mates team because last week we were awarded the Best Business Podcast at this year's Australian Podcast Awards for our newest show, The Dive that you have been absolutely charging ahead with with Darcy and Sascha as well. It is a take on business news 3 episodes a week.

Alec: [00:15:26] People are watching on YouTube. You can see the award behind Bryce. He's set it up in the studio now he's just holding it. 

Bryce: [00:15:31] There you go. How good? It's real. It's real. But yes, very excited. Best Business Podcast at the Australian Podcast Awards. If you're not already listening to the dive, make sure you jump across and give it a whirl. Yeah, but anyway, then we'll leave it there. We'll pick it up next week. 

Alec: [00:15:45] Sounds good.