The Investing for Beginners Podcast - Your Path to Financial Freedom

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, welcome to Investing for Beginners podcast. This is Episode 156 tonight, Andrew and I are going to take a few moments, answer some listener questions. We’ve got another great batch of them this weekend. So we wanted to take a little bit of time to answer those for you guys on the air. So I’m going to go ahead and read the first question, and then I’ll throw it over to Andrew, and then we’ll do a little give and take. So first I have, hi Andrew. I’ve been listening to your archived podcast for the last few weeks, and I like what I hear. Long story short. I’m coming late to the party. I’m 61, and some inherited stocks and mutual funds for my parents. I’ve just let them sit and ride for the past couple of decades. And they’ve done very well. This COVID market crash got me interested in investing in some value stocks that have hit bottoms through no fault of their own. I’ve already made some small missteps and what to avoid more. My question is, at my age, is it too late to realize much profit from drip? I’m in good health, but logically we’ll need to rely on savings and portfolio balances within ten years. Thanks, Diana. Andrew, what are your thoughts on her question?

Andrew (01:39):

Well, I think it’s a question that’s impossible to answer. We don’t know what percentage of the money is in stocks versus mutual funds versus, you know, how much is there in cash. I think maybe we can put ourselves in, in the footsteps of maybe let’s take two different scenarios. This is not professional advice or anything, but you know, how would I react now? So maybe firstly, how would I react if I had, let’s say, I don’t know. I don’t know what the numbers are. Let’s say a $500,000 and stocks and mutual funds. And let’s say that that’s supposed to fund my retirement and I’m going to retire in 10 years in a situation like that. I think generally anybody who knows about personal finance has learned about it, been educated. They’ll generally tell you the closer you get to retirement, the more you want money in bonds versus stocks.

Andrew (02:53):

And the reason for that’s very simple, the stock market has gone up for a very long time, and over the very long term, it’s gone up for a very long time. And the reason for that is because there are very few things in the world, like a public corporation and businesses and the ability for businesses and people inside of businesses to grow businesses, to create more cash flows and serve more customers. And there’s nothing like that. And so as condominiums have grown and as busin...

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 155 tonight. Andrew and I are going to take a moment, answer some listener questions. We got some great questions recently, and we thought we would take a few minutes, which, who are we kidding. It’s going to be longer than a few minutes and answer some of those questions for you guys. So I’m going to go ahead and turn it over to Andrew. He’s going to go ahead and read our first question to us. So Andrew, why don’t you go ahead and take us away, big guy?

Andrew (01:01):

Yeah, let’s do it. So this one is from Alex. He says either question about inside their training metrics, several websites keep track of inside their training, not the illegal kind. And I was wondering what you thought about this qualitative metric. Is there any data showing inside their training as being indicative of a stock’s future performance or anything you’ve noticed from your personal experience? So, Dave, I know you just wrote a blog post about this, coincidentally, so you’d be the man to answer this one.

Dave (01:33):

Okay. Yeah. Thank you. So yeah. Alex. Yeah, that’s a great question. So there is no specific metric that I’m aware of that will tell you that this is a bonus for the company to drastically improve their stock performance because insiders are trading on the company. Generally, if you see an insider, we’re talking about, let’s back up for just a second. So insiders, what are insiders considered any sort of management that’s involved in the company? Most people think of more of the upper-level management, like a CEO, CFOs CEOs, people of that nature, like the C suite kind of people. Still, it also does involve a district manager vice presidents, lower-level managers of that elk. So anybody that has a substantial amount of wealth tied up in the company. Part of the shares that they get for compensation for working for the company.

Dave (02:40):

so Isn’t, it, it doesn’t correlate to, let’s say a private banker, our banker that works at Wells Fargo. That’s investing his 401k in a company. It’s not that it’s more about the stock options that are given to an employee as a form of compensation or pay for the employee. So when they exercise those options, that’s considered insider trading. There, they call it insider trading because they’re insiders. They work for the company.

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 152 tonight we have a special guest with us. We have Andy Schuler with us tonight. Andy is a regular contributor to Andrew’s blog, einvesting for beginners. Andy has a lot of great articles on there, some fantastic ones that we’re going to talk a little bit about some of those tonight. So, Andrew, would you like to say hi to everybody?

Andrew (00:58):

Andrew or Andy? I mean, I guess we could go by both, right? We can go by with, Oh, welcome on Andy. I did want to ask you’ve had some great posts lately. Something that clicks with my passions. And it kind of relates not just to personal finances or investing but to a lot of different endeavors. And that’s this idea of the importance of tracking. So talk about that for a little bit and tell us your thoughts and why you’re so adamant about tracking things.

Andy (01:30):

Yeah. So tracking is, I think honestly, it’s the best way you’re probably ever going to get results just in anything. I’m a very firm believer in smart goals, specific, measurable, attainable, realistic, and sensitive. Like, and I feel like the tracking portion of actually being able to fact check how you’re doing and see your progress is the best way for you ever to make any sort of improvements in what you’re doing. So, I mean, my, I’ll say my, my introduction came to it actually when I was a kid. My dad got me an Excel at a very, very young age track and baseball stats or attracted strikeouts and singles RBIs, you know, just any, any stats that I could and just try to figure out, you know, it was more or less just for me just to see how I was doing. I could see how I did from one game to the next or at the beginning of the season to the end of the season.

Andy (02:32):

And I just liked identifying trends, and I think it picked out for me when when I was in college or ballooned to a pretty, pretty high weight in college. So I know a lot of people talk about the freshmen 15 I think I had like the freshmen 50, I don’t know if it was quite that high, but I mean it was, it was pretty obnoxious. So like if, if you’re ever looking for how to lose weight, I guarantee I can find your information that says one thing is good and doing that same thing is also bad. So I felt like the only way for me ever truly to find out what would be to track. So I mean, I would track my food and Excel.

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.

New Speaker (00:36):

Welcome to Investing for Beginners podcast. This is episode 151 tonight. Andrew and I are going to continue our discussion economy. This is going to be an economy 101 part three, and tonight we’re going to do kind of a wide range discussion of a variety of different topics. The first one we’re going to start off talking about is a little bit about government debt and treasury bonds and bills and T and P note T bonds and kind of how all that stuff works. So I’m going to talk a little bit about that, and then I’ll turn it over to Andrew. So let’s talk about government debt. So government debt is, when I’m referring to government debt, I’m talking about two different aspects of it. So the first part I’m talking about is there’s the federal reserve balance sheet, which we’ve discussed in length in the past. And that is more about the federal, federal reserve bank of the United States taking on debt to try to infuse money into the system to try to create more liquidity, which hopefully will stimulate the economy with what’s going on with the pandemic and the lockdowns and most of the economy being shut down.

Dave (01:49):

Thirty million people, I believe, are out of work right now, which is a staggering number. The fed has been trying to pump more liquidity into the system by creating money for the reserves as well as buying T bonds and T-bills back from banks to put on their balance sheets that give the banks talking commercial banks like JP Morgan, Wells Fargo, Bank of America, us bank, and on and on. More liquidity to lend to us to be able to buy things as well as businesses. So the other aspect of that debt is the Treasury, the Treasury is, those are the people that sell us the T-bills and the bonds and the notes. And so on. And they just recently announced that they’re going to be having a large offering here in the upcoming week or so I believe. I don’t remember the exact amount off the top of my head, but it was quite extensive, three or $4 trillion somewhere in that range.

Dave (02:50):

And what that does is that helps give them ammo to sell to the banks to create more liquidity. And so that is, of course, a huge part of the government debt. Now, one of the strengths of the US dollar right now is the attractiveness of those bills. Now, most of that money, not most, a lot of it is sold overseas. So for example, countries like Japan, Russia, China, Great Britain, France, Italy, whoever. A lot of those people will buy our bonds because they’re very highly rated there that that debt is assured that to PB paid, and that helps them earn interest. Now granted,