Thread by @ThyConsigliori

17 October 2020 #AtThyConsiglioriBizAnalysis

Logistics. Who Doesn't Love Logistics? UPS - 1 of 10.

I have an amazing friend. He's the greatest logistician in the world. His name is David Schneider. Check him out!

wearethepractitioners.com/index.php

2) David has given me 10 logistics companies to analyze. UPS is the first and here we go. My standard method will be this. We take the long term max numbers, then the 5 year numbers, then this year. First the raw chart. Second my own lines.

3) I don't know if I'll always have to do this. But the time frame for each chart matters. Greatly. Our first chart, no lines drawn, shows about 20 years worth of UPS stock data. Obviously, it's a good stock!

4) And then there's obviously a line-drawn surprise! Who could have imagined? The resistance line is nice and steady. American business gently grows over the decades. Smooth. Almost predictable. What a lovely line! And then...

5) Obviously! Corona Virus explodes in 2020. It's truly obvious, really. COVID makes us all stay at home. All of our malls collapse. Our local stores go out of business. Truly, so sad. But UPS explodes. Home delivery is everything now. Logistics takes over, completely.

6) More. We all learn the words: Supply Chain. Who knew, other than geniuses like David Schneider, about supply chains before? Okay. There were many. Why? Napoleon Bonaparte taught us that an army runs on its stomach. That means Supply Chain.

7) Before business understood it, LONG before, the military mastered the art of the Supply Chain. No soldier can fight long after his need for water or food. This is the stuff of wars. Water and food. Bullets too, of course. But they're less important than water and food.

8) So, it's obvious also that UPS had had a good run in its stock price long before COVID came around. It was doing just fine. Ha! And then came the Corona Virus. Lockdown. Everyone stays at home. Malls and small stores go out of business. We buy online. It's shipped to us.

9) But I'm getting ahead of my story! Look now at the 5 year run. It's dramatic. Try to feel how dramatic it actually is.

10) There can be no question that a fundamental shift has occurred. I can easily look up who the leaders are, and what their compensation is. I hold nothing against them for the millions upon millions. I don't. But anyone can see it was NOT leadership that led this.

11) A shift has occurred in the entire world of business. This may even be more true over the entire world than it is here. But here, with the UPS numbers, we can see how vast the shift really is.

12) Take a look at this! Here's a 5-year resistance line simply blown away. Here's a 5-year support line that seems utterly meaningless under current conditions. Be honest now, you million-dollar executives. You did NOT cause this to happen! COVID did.

13) Let's pause here. I am a strong proponent of a little known theory. I did not create the theory, others led the way.

The theory is: Stock Price as a Management Input.

That is, how a company's stock is faring SHOULD, absolutely SHOULD be a part of their decision making.

14) I read things like this. No, you probably don't want to. It's as boring as hell. Maybe worse. Maybe even Satan can't read this kind of stuff, okay? But, I promise, I'll try NOT to require such effort. Meaning, I'll take care of the boring stuff!

faculty.darden.virginia.edu/brunerb/Bruner…

15) Let's bring it back to just the pure simple. There's this thing called stakeholders. The most important of them are those who buy your stocks. They believe in you. They bet their cash on your progress. As a leader, you're supposed to care about these people and their cash!

16) It goes deeper. Your company's operations are judged by a market of buyers. If your stock price is rising, then your buyers are happy with what you provide. If falling, your buyers are not happy. Your customers' happiness should be the 1 and ONLY greatest target.

17) Pushing forward, take at look at UPS 1-year numbers. Wow. Anyone can see. it's been a good year for UPS!

18) Here are my lines. The red line is previous resistance. The blue line is current support. It's very important that we analyze this information honestly. UPS itself - its management - had NOTHING to do with the crossover. That's just COVID.

19) I say "just COVID." Yet it's not a "just." It is an absolutely fundamental transformation. UPS will never be the same after, as it was before. A fundamental transformation has occurred. UPS gets no intelligent credit for this. It just happened. Yet...it happened.

20) I don't know if I care enough to analyze UPS' leadership. If I did, my question would be: did you rise to the opportunity? Or, did the opportunity merely overtake you?

Good luck is NOT a good prognosticator.

21) Let's discuss philosophy again. Leadership is NOT about good luck. It is about doing the right things so that when good luck appears you're ready to capitalize upon it. But when bad luck appears you're ready to face it. Think on that.

22) As a stock buyer, it's impossible for me to NOT recommend UPS. But, that says NOTHING, not one thing, about their management. It says EVERYTHING about COVID. Look at the good luck line again...

23) You might be the greatest manager in history. You do NOT get to take credit for that kind of good luck. Luck is just that. No small store or mall owner feels the same way. Small America lost the luck draw over COVID. That UPS won it is in NO way due to its management.

24) I could NOT recommend a sell order on UPS. It's likely to continue to rise. COVID has not been defeated. But, there is another hand. The future does NOT belong to COVID. A cure will occur. Once it does, normal business forces will return.

25) Who are we not talking about? Restaurant owners. They are the opposite of UPS. They deliver value locally, not through distribution. If I'm laying down my bets, I'm focusing on local creation of value as COVID dissipates. UPS will still do fine. But its trajectory will lower.

Thread ends at #25.

17) COVID means that an outfit like UPS is going to automatically get MASSIVE increases in usership. Massive. Beyond normal. A total transformation in usage. Massive.

18) Peter Drucker teaches us to watch two things. Unexpected successes, and unexpected failures. The successes show our future, if we get it right. The failures reveal our past, and indicate our future if we don't adjust. It's brilliant.

19) UPS needs to watch its current unexpected success and reimagine its future with this new information. But, it needs also to log is past failures and correct against them. These charts show precisely where to look.

20) Still, at least until COVID is done, I'm NOT issuing any sell orders on UPS stock. Even they can't stop this kind of good luck. No way.

Thread ends at #20.