Monthly Market Debrief

It’s been a heck of a month for the stock market and an eventful start to the year, to say the least. Let’s dive in.

Market Snapshot

Say it with me… ALL TIME HIGH, BABY!

The US stock market entered the new year on a roll, finally reaching a new record high on multiple days in January and surpassing the previous benchmark hit in January 2022.

I can’t say the same for international markets, who have gotten off to a rocky start this year. The S&P International 700 is down 0.67% since the new year.

Bitcoin has hit a slump so far this year, even with the recent approval of Bitcoin ETFs, now held by major brokerages such as Fidelity and BlackRock. Bitcoin is down around 3.75% year to date.  

As for the Federal Reserve, there has been no movement of the key interest rate yet, but it is widely expected to decrease at an undetermined point in the semi-near future. Wall Street is optimistic that the Federal Reserve policy committee may announce interest rate cuts in their March meeting. Wilson strongly disagrees.

Company Highlight - Stanley

Unless you’ve been in a coma for the past few years, you’ve probably heard of the Stanley Cup. No, not the trophy you get for winning the National Hockey League championship. I’m talking about the 40oz cup that took the world by storm and grew Stanley into a $750 million business due to its revolutionary technology like… a handle.

For the better part of the past 110 years, Stanley found its niche among outdoorsmen and blue collar workers. Prior to the boom, they made a respectable $70 million in annual sales and looked to continue the trend of consistent, modest success by keeping soups and coffee warm for days.

Enter the Quencher in 2016, a 40oz insulated cup with a straw that fits conveniently in a car’s cup holder. The Quencher yielded mediocre sales from 2016 to 2019, leading Stanley to stop marketing and stocking the cup, letting it slowly die like every plant my wife has ever owned.

Things were looking bleak for the Quencher, until the moms got involved. A group of women in Utah who ran a commerce blog known as The Buy Guide, led by Ashlee LeSueur, refused to let their favorite cup die. In 2020, freshly appointed Stanley president Terence Reilly partnered with LeSueur, offering her the chance to save her beloved cup by selling 5,000 Quenchers directly to her Buy Guide audience. Those cups sold out in days, sparking the Stanley revolution.

After a perfect storm of social media buzz and effective marketing toward Stanley’s new target audience (women), Stanley’s revenue grew from $73 million in 2019, to $94 million in 2020, and ultimately up to $750 million in 2023.

Google dictionary defines a cult as “a misplaced or excessive admiration for a particular person or thing.” By definition, I’d call the admiration many have to the Quencher cult-ish. They’ve become a status symbol and collector’s item for many, with some individuals owning up to 47 Quencher cups in different colors. Why? Well, you can’t go out with a bottle that doesn’t match the fit.

Is it good marketing or is it voodoo magic? I suspect it’s a sprinkle of both. But how has this success translated to stock price?

After a stretch of market success from 2020 to 2021, 2022 and beyond have been a period of pain for Stanley. This year alone, Stanley’s (SWK) stock value has fallen 4.89%.

What’s the takeaway from this story? I don’t even know, I’m just astounded by the obsession over these cups. Maybe the takeaway is to stick to index funds and ETFs because even when a company increased profits by 927% over five years, their stock still went down. 

Current Event - Showdown at the Texas Border

Things have gotten spicy between Texas and the federal government regarding security and jurisdiction disagreements at the Texas-Mexico border.

This all started on January 10th, when the Texas National Guard blocked the Border Patrol from placing surveillance equipment at Shelby Park in Eagle Pass, TX and denied Border Patrol access to several miles of the border.

Around the same time, Texas authorities began setting up razor wire, fencing, and gates to restrict access to Shelby park and other local areas federal agents had been using as a holding area for migrants. To say the least, President Biden and company weren’t fans.

January 17th became the Department of Homeland Security-imposed deadline for when Texas authorities must end its blockade of Eagle Pass, to which Texas responded with a resounding “get wrecked, nerds” and began arresting migrants who had crossed illegally. The Supreme Court even voted 5-4 to allow Border Patrol agents to remove razor wire on site, to which Texas responded again with “suck an egg, nerds” and continued to block their access.

The Lone Star State isn’t standing alone in this skirmish. 25 states with Republican governors have signed a letter supporting Texas in their fight for border security.

How will this all end? Who knows, but we’re on the verge of potential federalization of the Texas National Guard, which will surely diffuse the situation and make everyone happy.

Debrief on Deck

Speaking of tax season, next week, Wilson is going to dive into itemizing for deductions. I don’t want to spoil anything, but you cannot itemize all your Stanley Quencher bottles for tax write-offs.