The Investing for Beginners Podcast - Your Path to Financial Freedom

Announcer (00:02):

I love this podcast because it crushes your dreams and getting rich quick. They actually got me into reading stats for anything you’re tuned in to the Investing for Beginners podcast led by Andrew Sather and Dave Ahern. Step by step premium investing guidance for beginners, your path to financial freedom starts now.

Dave (00:25):

All right, folks, welcome to Investing for Beginners podcast episode 164. Tonight, we have a special guest. We have Vitaliy Katsenelson with us. He is the founder and blog writer of one of my favorite blogs, the Contrarian Edge, and he writes some fantastic stuff. He’s also an investor, a very smart investor, and we’re going to go and chat with him. We had him on a while back, and he’s graced us with his presence again. So we really appreciate you taking the time to talk to us again. So thank you, Vitaliy, and welcome back to the show.

Vitaliy (00:56):

Well guys, thank you so much, Andrea and Dave, congratulations on 163 podcasts. That’s a lot of podcasts.

Andrew (01:02):

So thanks for getting up there in age now. Yeah, hopefully, a tiny bit wiser.

Andrew (01:12):

So Vitaly, last time we had you on the show, you know, since then we’ve had the coronavirus and a lot of change through that recently we’ve had a devaluation of the dollar very recently, actually in the past month or so I guess a lot of things to talk about. What, what, how have you been dealing with the past? Let’s say six months compared to where we were about a year ago when we talked to.

Dave (01:43):

You know for a very, very long time, I was not a big believer in the kind of owning gold and the, for like the very lot of good reasons for that, because it’s kind of unproductive asset that sits there in the volt or us safe and shines and doesn’t do anything. But like, as, as, as a look, as the United States, I can see how the United States has been busy given this privilege of having a reserve currency. And we earned that privilege because we are countries surrounded by two oceans. You know, they have a kind of a very polite neighbor in the North and kind of a fun neighbor in the South.

Vitaliy (02:30):

And you know, it’s an alone yet. It’s the largest democracy, at least by GDP in the world become a very solid economy.

Announcer (00:00):

You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew Sather and Dave Ahern. To decode industry jargon, silence crippling confusion, and help you overcome emotions by looking at the numbers, your path to financial freedom starts now.

Dave (00:36):

All right, folks, we’ll welcome to Investing for Beginners podcast. This is episode 157 tonight, We’re going to return to the well, and we’re going to answer something, Listener questions. We’ve got some more great ones, and we thought we would take some time and answer those for you guys on the air. So without any further ado, I’m going to go ahead and read the first question.

Dave (00:54):

So I have to whom it may concern. I am currently beginning to understand slash calculate ratios recommended by Andrew, such as P E P S and PB I E price to earnings price, to sales and price to book where I am caught up is about the idea that one of these right ratios might carry more importance than another. For example, the canopy, the company canopy growth company, a CGC has a current PE of zero and a PS of 18, assuming most likely due to new slash growing company. I know that these are not normal numbers. For example, JP Morgan or JPM has a PE of 11.16, a PS of 2.06, and a price to book of 1.05 that indicates a discount price and a great buyer returning to CGC. Their price to book ratio is currently 1.76 again, indicating a sort of sale. I know this is not a great example of the normal PE and PS ratios. However, I found it a great example of prioritizing with ratios matter. Please let me know if there is any analysis slash information you can provide into weight given to these ratios and which one might take priority, and how are these affected by new companies? Thank you, Ethan. Andrew, what are your thoughts on Ethan’s question?

Andrew (02:13):

Yeah, it’s a very good one. So the whole point of these price ratios is to try and get some context on the numbers. So there’s not some magical Excel file anywhere out there that says, you know, if your PE is a 12 and not a 13, then you’re going to be golden. The stock market isn’t that it’s not some game with boundaries where you can just put in ingredients and get the magical result. So where these price ratios come into play is it tells me when a stock is very, very expensive compared to a lot of other different stocks. And so, you know, even you talk about here, how you say that this isn’t a great example. I think it’s maybe the perfect example to illustrate where price ratios can be very helpful because, as you said, the company has a PE of zero and the price to sales of 18.

Andrew (03:18):