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Reggie Fils-Aimé talks web3, AR and his gaming SPAC

In February 2019, Reggie Fils-Aimé announced that he would be leaving Nintendo after 16 years — 13 of which were spent as the president and COO of the…

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In February 2019, Reggie Fils-Aimé announced that he would be leaving Nintendo after 16 years — 13 of which were spent as the president and COO of the company’s North American division. It was a fruitful run, filled with more ups (Wii, Switch) than downs (Wii U) during a time of tremendous growth for the gaming industry.

A lifelong serial executive, Fils-Aimé has retired from that aspect of the industry, while still maintaining a presence in gaming. He sat on GameStop’s board (later resigning in 2021), joined investment and consulting firm Brentwood Growth Partners, and even briefly hosted a gaming podcast (as one does during a global pandemic).

Earlier this month, he released the book “Disrupting the Game“, which charts his journey from the Bronx to the Nintendo boardrooms. We caught up with Fils-Aimé to discuss his time at Nintendo, plans for a $200 million SPAC and where he sees gaming headed.

I was going to ask how retirement is going, but “retirement” may be too strong a word.

My form of retirement is doing things that I like, with people I like doing them with. So whether it’s board service, whether it’s the SPAC that I’m involved in, whether it’s been writing and launching the book, it’s my form of retirement, and I’m having a lot of fun.

What are the plans for the SPAC?

The SPAC is in the broad digital entertainment space. We went public in December of last year. We were oversubscribed by about a billion dollars, so we went public. $230 million is our war chest. But with a billion dollars left on the table, it means we can go after a fairly large acquisition and take it public through the SPAC process. We’ve got until September of next year to identify our target and execute the transaction. We’re in the process of meeting with a lot of different companies and a lot of potential players.

Image Credits: Brian Heater

What trends in gaming are you specifically most excited about?

I do believe that web3 is going to create some opportunities. In particular, I think blockchain could lead to some unique types of digital entertainment. I also believe that the creator economy has unique opportunities. Everyone wants to be a creator. These tools and companies that are leveraging this have an opportunity to do quite well. Another thing I would highlight is that, while there have been a number of large acquisitions in the gaming space, I do believe that’s going to give rise to new, independent companies, led by creators who just don’t want to be part of these larger organizations.

Three companies have dominated the console space for so long. Do you see room for another player?

I do. There are a number of companies that are approaching the creation of that next platform in new and unique ways. Look at what Valve is doing on the PC side. You’ve got Steam and Steam Deck. What they’re trying to do is create a portable experience for largely PC-type games. That could grow to be a separate platform, potentially. I think what Epic is doing is very interesting. Obviously, you’ve got Unreal, that’s become a foundation for game developers. Unreal now is also being used by animators and people in the film industry. That can become a different type of platform. Unity is playing in the same space, though I think they’re a little bit further behind. I do think that there is room for other platforms, but they’ll be defined differently than, say, a Sony, Microsoft, Nintendo.

Are you bullish on AR and VR?

I’m very bullish on AR. I think that AR leads to more communal-type of experiences, and there are already proof points as to what AR gaming can be. I am not sold from a gaming perspective on VR. I think VR has some very interesting business applications, but I haven’t yet seen a great gaming experience in VR. One of the lessons from Virtual Boy is not letting the hardware fully dictate the content. Obviously that pre-dates you, but there were struggles with the Wii U, as well.

Absolutely. Nintendo has heeded that message, more times than not, and I think more times than any other older platform. Their mentality has always been, it’s got to be about the games, it’s got to be about the gameplay. Their developers always want to bring unique forms of gameplay. And that’s what drives the tech to bring it to life. It’s always got to be in the games.

Image Credits: HarperCollins Leadership

From the outside, there were frustrations covering the company, including the speed with which it embraced technologies like smartphones. Nintendo seemed to be dragging its heels. You arrived as an outsider. Did you experience similar frustrations inside the company?

Myself and my team embraced the role of educating the developers in Kyoto around what were key trends to be thoughtful about, to be aware of how the industry was shaping up. The fact is, you need to communicate these forward-looking pathways constantly. And you need to repeat yourself constantly, in order to get traction. But once the company would really believe in a direction and come up with a unique approach, then typically, they would break through with incredible successes.

Is Nintendo more nimble — or at least more open — than when you started?

I do believe that’s true. I think a lot of that started with Satoru Iwata. He very much embraced new and different ideas. And I think he certainly drove the company in that direction. The company has always had a history of innovation and a history of doing things quite uniquely. But under his leadership, there was an embrace of taking risks and moving forward aggressively. And I do believe that continues today.

One of the things I appreciate about the book is the discussion around relative failures. It’s safe to say the Wii U wasn’t the success you were hoping for. What lessons did you take away from the experience?

The game pad, as an innovation, did not deliver in the way we hoped. The company really believed it would allow different types of gameplay maybe best exemplified by Nintendo Land. In the end, the company was not able to deliver on that proposition. The second thing I would highlight was the pace of content was not sufficient in order to maintain momentum. For the launch, the games came out way too slow. The third piece I would highlight was that we still utilized predominantly internal development software that was not easy for external developers to utilize, and therefore to create content for the system, which further exacerbated the lack of content, because the first party wasn’t able to deliver the games on time.

Those were some very harsh lessons that we’ve positively applied to the Nintendo Switch. The core proposition of the Switch, that you could play on your big screen TV and then undock the platform, take it with you, is a core proposition that resonated for the player.

What are those conversations like behind the scenes, when it’s clear to you that it’s time to sort of cut your losses and move on to the next thing?

The conversations are incredibly tough. The fact of the matter is, there’s not always agreement. I pushed incredibly hard, as an example, to try and get the complete proposition down to $99. I was convinced if we could do that, we would have sold another 50 million units of hardware for the Wii and an associated level of software. But unfortunately, the economics of the system didn’t allow that to happen.

For the Wii U, it became clear after we’d already done a price decline — after we’d already used traditional tactics, skill bundles and color changes — the platform still was not performing to our expectations. It was an incredibly tough conversation with the key developers in the Kyoto headquarters to begin working on the next system and begin thinking about what that would be. But also, back at Nintendo of America, to keep focus on engaging with the retailers, keeping focus on launching some key pieces of software to maintain some semblance of momentum.

Image Credits: Nintendo

Looking back on your time at Nintendo in writing this book, are there any major regrets?

I look back at moments, key decisions, and acknowledge that the end decision didn’t go the way I wanted. The pricing decision for the Nintendo 3DS is a classic example from my Nintendo days. I was convinced that launching at $249 was not going to go well and argued to the best of my ability to launch at a $199 price point. In the end, Mr. Iwata had the ultimate decision, and he said “no.” Within months, we had to do a massive price decline down to $169. I believe if we had launched at a $199 price point, we would have been successful from the start. But what do you learn from that? How do you, in the future, be more effective in selling that type of controversial decision?

You seem to enjoy the flexibility this new life has afforded, but if the right opportunity came along, would you consider taking an executive role again?

You never say never. But I don’t believe so. Right after I retired, I was approached to lead a significant organization. Like any smart person, you evaluate it, but in the end, I decided that running a large business isn’t something that today excites me. What excites me is making a trip to the Bronx, and spending time with young people and sharing my story and encouraging them, to follow their passions and to live their dreams. What excites me is writing the book, and sharing my principles. What excites me is being in the boardroom and sharing my experiences with other senior leaders to help them grow and manage their business more effectively. Those are things that I can’t do at the scale I’m doing now as an executive.

We talked a bit about the SPAC. It could be that as we find a private company, and look to take them public, that I may need to play a role with that company, maybe be chair of the board or some other type of role. Certainly if that comes to pass, it’ll be something that I’ll consider and do. But my mindset right now is to share my experiences and to encourage and empower that next generation of business leaders.

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Spread & Containment

A Slowdown in Showings

Today, in the Calculated Risk Real Estate Newsletter: A Slowdown in ShowingsA brief excerpt: The following data is courtesy of David Arbit, Director of Research at the Minneapolis Area REALTORS® and NorthstarMLS (posted with permission). Here is a lin…

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Today, in the Calculated Risk Real Estate Newsletter: A Slowdown in Showings

A brief excerpt:
The following data is courtesy of David Arbit, Director of Research at the Minneapolis Area REALTORS® and NorthstarMLS (posted with permission). Here is a link to their data.

The first graph shows the 7-day average showings for the Twin Cities area for 2019, 2020, 2021, and 2022.

There was a huge dip in showings in 2020 (black) at the start of the pandemic, and then showing were well above 2019 (blue) levels for the rest of the year. And showings in 2021 (gold) were very strong in the first half of the year, and then were closer to 2019 in the 2nd half.

Click on graph for larger image.

Note that there were dips in showings during holidays (July 4th, Memorial Day, Thanksgiving and Christmas), and also dips related to protests and curfews related to the deaths of George Floyd and Daunte Wright.

2022 (red) started off solid but is now below the previous three years.
There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/

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Stocks

Top 10 Long-Term Stocks For Investors To Buy and Hold

Building a portfolio with the top 10 long-term stocks can help investors build long-term wealth over time.
The post Top 10 Long-Term Stocks For Investors…

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Building a portfolio with the top 10 long-term stocks can help investors build wealth over time. The key to long-term wealth-building prospects and managing risk is having a good foundation.

New investors should look for stocks that offer the best combination of potential and risk aversion. So, the best long-term stocks listed below should serve as good starting points.

What is a Long-Term Stock?

Day trading stocks should not get confused with the best long-term investments. In contrast to traders that seek to profit from intraday volatility and low-priced stocks, long-term investors are more concerned with the long-term performance of companies.

In other words, the best long-term stocks are not necessarily the best performers today, but those that have the most potential to capitalize on secular trends in the long run. With that said, here are the top 10 long-term stocks to buy and hold.

Top 10 Long-Term Stocks To Buy and Hold

Coca-Cola (Nasdaq: COKE)

Coca-Cola is one of America’s most popular beverage companies, providing more than 4,100 drinks under 500 well-known brands. This includes…

  • Coca-Cola
  • Diet Coke
  • Coca-Cola Zero
  • Sprite
  • Fanta
  • Minute Maid
  • Powerade

Even outside of America, it has a strong brand. Coca-Cola is a globally recognized company known by consumers around the world, including Europe, Latin America, Asia and Africa. With 250 bottling companies, 900 manufacturing plants and 27 million retail outlets, the company has a massive global scale. Moreover, Coca-Cola stock has been a part of Warren Buffett’s portfolio for decades. And it pays a respectable dividend of 2.8%.

Johnson & Johnson (NYSE: JNJ)

Johnson & Johnson is one of the biggest consumer healthcare product companies in the world. In every drugstore, Johnson & Johnson products can be found on the shelves. With its consumer health, pharmaceuticals and medical device products leading the way in sales, Johnson & Johnson is a mainstay in the economy. Some of its popular consumer health product brands include…

  • Band-Aid
  • Listerine
  • Visine
  • Aveeno
  • Neutrogena
  • Neosporin
  • Benadryl
  • Sudafed

Moreover, the company offers more than over-the-counter products. Johnson & Johnson sells surgical tools, hip and knee replacements, blood glucose monitoring equipment and catheters in its medical devices segment. Investing in healthcare is a safe bet because people will always need healthcare products. And the essential nature of Johnson & Johnson’s products enables the company to maintain its scale as an industry leader. Furthermore, the stock pays a healthy dividend yield of 2.3%.

Alphabet (Nasdaq: GOOGL)

With the help of Google and YouTube, Alphabet dominates the search engine universe and online video. The company became the fourth company to reach a market cap of over $1 trillion on January 16, 2020. Moreover, you probably use Alphabet’s services every day. The company’s products and services include…

  • Google Chrome
  • Android
  • Nest
  • Fitbit
  • Waze
  • Google Search
  • Google Maps
  • Gmail
  • YouTube

Moreover, the company doesn’t stop there. It provides many other apps and services as well. Its three business divisions are Google Services, Google Cloud and Other Bets. If you aren’t familiar with Other Bets, it’s Alphabet’s venture capital and private equity division. This division is home to emerging companies at various stages of development.

Alphabet has announced that its stock will be split 20-for-1 on July 15. By splitting its stock, the tech giant could gain entry into the Dow Jones Industrial Average. Following the split, GOOGL stock might become more accessible to retail investors.

Berkshire Hathaway (NYSE: BRK.A)

Investing in Berkshire stock is like betting on Warren Buffett, the world’s fifth-richest person with a net worth of $112 billion as of May 13, 2022. Furthermore, it means owning a slice of both renowned and obscure companies. Berkshire owns a wide variety of businesses, some in their entirety, others in part. The second group consists mostly of common stocks of major American companies. Its four major holdings account for a big part of Berkshire’s value, consisting of…

  • Apple (Nasdaq: AAPL)
  • Bank of America (BYSE: BAC)
  • American Express (NYSE: AXP)
  • Coca-Cola (NYSE: KO)

Buffett took control of the company in 1965. Had you invested $1,000 then, your investment would have been worth millions of dollars by 2022. So, it’s no surprise this company made the list of top 10 long-term stocks.

Shopify (NYSE: SHOP)

Globally, Shopify is one of the top e-commerce stocks. Shopify allows online retailers of all sizes and experience levels to create their online presence or “Shopify” websites. The company makes it easy for any business to maintain an online presence in today’s increasingly competitive online market.

New investors still have time to add Shopify to their portfolios even though it’s seen a large run-up in recent years. Although the transition from retail to online e-commerce was already well underway, the COVID-19 pandemic emphasized the need for businesses to operate online. Almost every business needs an online presence today, and Shopify provides the perfect solution.

Apple (Nasdaq: AAPL)

It’s no surprise that this company made the list. Apple’s product offerings and services consistently drive record financials for this tech giant. Moreover, Apple became the first U.S. company to land a market capitalization of $1 trillion in 2018.

Moreover, a global brand like Apple hasn’t escaped Warren Buffett’s attention. That’s why Berkshire Hathaway is one of Apple’s largest shareholders. As of May 2022, Apple is the largest holding in the Berkshire Hathaway portfolio. The company owns 887.1 million shares with a market value of $157.5 billion.

This company dominates other tech stocks. As of the third quarter of 2021, Apple held a 47% share of the U.S. smartphone market. As of the fourth quarter, it had a market share of 29.2% in the tablet industry. Furthermore, this company isn’t going anywhere anytime soon. It continues to be a key player in its industry, giving long-term investors of AAPL stock a unique opportunity.

Netflix (Nasdaq: NFLX)

Internationally and domestically, Netflix is recognized as one of the leading video streaming services. However, the company has a reasonable price tag, given its position as an industry leader.

Additionally, Netflix stock has already turned ordinary investors into millionaires, and the momentum is still going. In the years to come, Netflix hopes to make new highs, and there’s nothing that suggests it won’t be a market leader for the foreseeable future.

With traditional cable companies losing market share and the rest of the world becoming more internet-accessible, Netflix will benefit most from the growing addressable market. Investing in Netflix now will most likely make investors happy ten years down the road, even after the incredible run.

Keep Reading This Article and Find Out the Final 3 Long Term Stocks to Buy and Hold!

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Economics

How to Invest in a Bear Market: 5 Tips to Boost Returns

Keep reading for a few tips to help you learn how to invest in a bear market and still make money. Let’s get started.
The post How to Invest in a Bear…

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Investors are bracing for the worst as the market continues selling off, and talks of a recession are rising. If you wish to boost your returns this year, learning the ins and outs of how to invest in a bear market is a good place to start.

Stocks are in a bear market when major indexes fall over 20%. For example, the pandemic was the last time it happened, causing the SPDR S&P500 Trust (NYSE: SPY) to fall over 35% from its ATH.

The fallout was short-lived as the Federal Reserve (Fed) eased policies to support the economy. Will this time be different?

With inflation up 8.3% in the past year, the Fed is changing its pro-growth policy stance to focus on calming the overheated economy. Furthermore, the tension in Ukraine is heating up as nations continue proposing sanctions to dampen Russia’s ability to raise war funds.

Analysts are predicting a global economic slowdown as a result. There has never been a better time to get defensive between slowing economic conditions and the rising price of goods. Keep reading to learn how to invest in a bear market and get your portfolio back in the green this year.

How To Invest in a Bear Market and Still Make Money

Bear markets are a natural part of the financial system and can happen anytime. Although they are typically short-lived compared to bull markets, they can wreak havoc on your portfolio. Learning how to invest in a bear market can help protect your account from significant drawdowns while boosting returns over time.

In bull markets, growth opportunities are abundant. But, in a bear market, the chances of finding quality growth stocks are much more difficult. Therefore, it’s important to follow a set of rules to keep you focused and grounded during the panic. Below are a few tips to help you learn how to invest in a bear market and still make money.

No. 5 Reassess Your Conviction

With many stocks already down 30, 40 and 50% from their highs, it may be a good time to rethink your investments. Go through your portfolio and consider if you still feel the same way about the company now as when you bought it. Ask yourself…

  • Why did you invest in the company in the first place?
  • Do you feel the same as when you first invested?

If you do, the stock is likely worth holding. Bear markets are not forever. Then again, it would be best if you also consider your investment goals and time horizon. If you are a long-term investor, giving the market time to bounce back will help multiply returns in the long run.

If you bought the company on a whim or heard it was “going to the moon,” now may be the best time to reconsider. Does the company still have the ability to grow and generate earnings?

These are just a few questions to ask yourself when learning how to invest in a bear market. Focus on companies with strong free cash flow and a history of paying dividends.

No. 4 Buy Leaders

In the stock market, leaders tend to lead. In other words, companies with solid cash flow, bulletproof balance sheets and the ability to generate earnings.

More important, market leaders with pricing power (the ability to raise prices without significant loss of demand) are best positioned for long-term growth. A few questions to ask yourself…

  • Is there a better substitute?
  • With less income to spend, will consumers still buy it?

If there are better or cheaper alternatives people will buy instead, you might want to avoid it. Otherwise, if there are no better alternatives and consumers will continue spending, it sounds like a long-term leader.

Keep reading to learn more about how to invest in a bear market.

No. 3 Cash Is King

In a bear market, if you answered “Yes” to either question above, you may want to park your money somewhere else. For instance, holding cash allows you to purchase when the time is right. Furthermore, you can set price targets and average down if you plan to do so.

Holding cash in a bear market is better than owning a company with no solid plans for future growth. Otherwise, setting price targets for buying leaders can help create maximum long-term returns. Other than the obvious holding cash, looking for companies that generate earnings with strong cash flow can also help in a bear market.

No. 2 Don’t Put All Your Eggs in One Basket

The old saying “don’t put all your eggs in one basket” comes from an ancient proverb, suggesting you risk dropping it and losing everything if you do. You can apply the same meaning to the stock market.

Investing all your money in one stock or asset risks losing everything if something goes wrong. Instead, buying leaders in different markets can help cushion downfalls and provide even greater upside. For example, if your portfolio heavily favors tech stocks, investing in consumer defensive stocks such as Walmart (NYSE: WMT) will diversify your account.

No. 1 How to Invest in a Bear Market: Be Patient, Stay Calm

The first rule for investing in a bear market is to stay calm. With this in mind, the last thing you want to do is panic sell and miss out on long-term returns.

Learning how to invest in a bear market is no easy task. In particular, every bear market is different. These markets can appear out of nowhere, lasting days to years, and can produce significant losses.

However, if you go into it with a plan, it can be an opportunity to accelerate long-term returns. If you stay patient, wait for good entry points and buy leaders, history has shown us the market is in your favor in the long run.

Lastly, bear markets are not known to be long-lasting. According to recent research, the average bear market lasts 9.6 months while bull markets last 2.7 years. In other words, if you are a long-term investor, keep your sights set on more significant returns in the long run. Now is the chance for you to adjust your portfolio for optimal growth going forward.

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