The Investing for Beginners Podcast - Your Path to Financial Freedom

By Andrew Sather, Stephen Morris, and Evan RaidtBusiness Investing

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The Investing for Beginners Podcast - Your Path to Financial Freedom episodes

April 11, 2018 IFB55: The Worst Money Advice that Beginners Always Hear

Welcome to episode 55 of the Investing for Beginners podcast. Tonight Andrew and I are going to discuss some of the worst money advice you can get.

* Invest 10% of your income
* Investing in a quick fad to make money quickly
* Try to get to cute and taking on more complexity just for the sake of it.
* Buy a ETF index fund and be done with it.
* Don’t get caught up in all the hype of the market.
* Budget till it hurts

Andrew: yeah so I kind of I kind of made a list here. It’s kind of long try that keep it I’ll try to be concise but you we always know how that goes right so.
You see all the time and the more that time goes on the more and more people go to the internet looking for advice on how to handle their money a lot of times you’ll have people talk about hey I got $20,000 I got $40,000 maybe I have an inheritance what should I do what should I do what should I do?
And then you get all these people come out of the woodwork with all their different biases and all their different ideas and beliefs and all their personal experiences and they all kind of throw it in there and some of it can be good but a lot of it’s bad.
We want to talk about why that’s bad what things that you’ll tend to hear and how to kind of process that and make sure you don’t fall into these same traps and that’s really important because this is a huge part of learning how to handle your money and that’s not even just about investing or financial freedom or personal finance it really comes down to money itself and if you think about all the time when we spend 40 hours a week most of us working for money and then a lot of us don’t even spend a couple hours within our lifetime to really learn what to do after we make the money.
It just kind of flows in the now and then it becomes just this pointless thing to put food on the table when there’s actually plenty of opportunity to make that do much more for yourself than there currently does and unfortunately like we a lot of people like to kind of bemoan the fact that’s not really discussed in school and it’s not taught in school. A lot of people don’t learn about it unless either you seek it out or you’re lucky to have somebody kind of bring that advice to you.
And so obviously financial education is really important and part of that is learning whether a lot of the common misconceptions whether a lot of the kind of average pieces of advice that people give out to beginners and what how can we interpret it and kind of tackle this tackle it and really make it useful for us instead of hurtful.
I’ll start with an easy quick one you hear this all the time you hear people say invest 10% 20% 50% of your income and if we’re really being honest it’s an unrealistic thing to expect of people because percentages when you’re talking about income that’s going to vary a lot depending on how much you bring in.
Somebody who makes twenty thousand dollars a year cannot invest 10 percent of their income because if they do that they won’t be able to pay the light bill. Whereas somebody makes a hundred thousand could easily invest twenty percent of their income and have a very cushy life style outside of that.
I think that’s something first and foremost this the percentages when you talk about investments and income and personal finance it’s one of those kind of rules of thumb that we really need to kind of put an asterisk on. I think a good general rule Dave we talked about in one of the episodes with the Richest Man in Babylon the whole 10% rule I think once you kind of reach over a certain point of poverty that becomes a good rule of thumb and there’s ways like 401ks and IRAs that we’ve discussed before in different ways that you can kind of best efficiently invest that 10%...
32 min
April 10, 2018 IFB55:The Worst Money Advice that Beginners Always Hear
Welcome to episode 55 of the Investing for Beginners podcast. In today's show, we discuss some of the worst money advice you can get as a beginning investor.

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36 min
March 29, 2018 IFB54: Company and Industry Maturation in the Stock Market

Welcome to Investing for Beginners podcast this is episode 54. Andrew and I are going to talk about the maturation of different industries. We’re going to discuss how when you’re looking at companies to invest one of the things you want to look at is
how the industry that it’s in is maturing and what stage of growth they might be in along that path. Without any further ado, I’m going to turn over to Andrew and he’s going to get us started.
Andrew: thanks Dave, this is something that actually really haven’t read anything about when it comes to investing and everything it’s just one of those things I kind of noticed as I was looking through financial statements, kind of trying to observe like how different stocks kind of move throughout the years.
I’ve done a ton of research and a post on my blog about companies that have failed also companies that have really succeeded and looking at the financials and trying to piece together what happened in the very beginning and then how did it play out as the years went on and I’m sure this is probably like common sense stuff for I don’t know business majors econ majors whatever.
But we’re DIY investors and we’re just trying to soak in as much information as we can and it’s good to keep our eyes open try to be observant in a similar fashion to one of the previous episodes where I talked about unconventional investing rule to have for your portfolio I figured this would be kind of another cool thing to discuss and talk about.
I mean it’s obvious when you look at a single stock standpoint that stocks will mature and they will reach a point where I don’t want to say it’s like too big to fail but they do get to a point where they’re kind of too big to grow in a sense. I talked about this in one of the daily emails several weeks back where if you look at a company like Amazon as they trade today it’s somewhere around 700 almost 800 billion dollars in market cap you have the high valuations and I love the company I absolutely use them I think they’re revolutionizing the world they are changing the world they are making everything convenient I have an Amazon package at my front door probably once a week.
I love the company however as an investment and looking at the valuation metrics it’s just not something that I want to take a bite out of and you’ll see you’ll continue to see much rationalization when it comes to people who are following the stock and just the average Joe investor who wants to spout his opinion online, and and you can tell a lot of it’s just strictly uneducated they have no concept of valuation no concept of any sort of fundamentals and they’ll just kind of quote random facts that fits their narrative and has a confirmation bias where it it just looks bullish and they are bullish on the stock.
And I don’t want to say that the stock won’t continue the client from here I mean it could easily climb in our 10 20 percent and I don’t see that as not being out of the realm of possibility. However when I look at stocks I’m looking at the very long term we discussed last week about me selling strategies and I discussed how ideally I would like to hold a stock and hold it for forever that means collecting dividends all along the way that means the stock is growing its dividend I’m reinvesting that dividend. And that also means that the stock is at least growing close to obviously ideally better than the average but close to the average stock market appreciation point which historically has been 10%, and you can see just so many studies out there that have shown that and the US stock market 10 percents been the average for over a hundred years.
36 min
March 29, 2018 IFB54:Company and Industry Maturation in the Stock Market
Welcome to the Investing for Beginners podcast. In today's show, we discuss the maturation of industries and companies. And how that can affect your investment decisions.

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40 min
March 22, 2018 IFB53: Dave and Andrew Debate Negative Net Income (Earnings)

Welcome to Investing for Beginners podcast this is episode 53, Andrew and I are going to take a stab at talking about negative earnings. We had some interesting event happened this week in Andrew and I were having a conversation prior to coming on here today and we wanted to talk a little bit about negative earnings.
Just to kind of give you a little of a bit of a backstory, so last week Andrew sent me a text message telling me that one of the companies that he and I both own had negative earnings on their 10k and this caught me completely by surprise. That was shocking and I had no idea that if that happened and I was a little bit like wow Oh crazy and I was it kind of caught me because it I felt like it came from out of out of the blue.
And I had no idea that that this company had happened and you know I wasn’t paying that close of attention honestly and so something that really caught me off guard and as Andrew and I were talking about it it’s you know Andrew and I see eye to eye on almost everything but in this particular case we differed a little bit on our viewpoints of how we handled it and so it was kind of an interesting snapshot into how value investors think about things and it’s not always exactly the same.
And so I had a different viewpoint and Andrew had a different viewpoint I thought it would be interesting for us to talk a little bit about that tonight so Andrew why don’t you go ahead and tell your side of the story if you will and then I can tell mine.
Andrew: well what is this a divorce are we fighting hardly well let me get my lawyer and we’ll have somebody in between and they can relay this message and then you can calm down think it over maybe take a walk cool off.
Yeah but no this will be fun like you said we kind of agree on everything and it’ll be fun to have a little bit of a debate I’m not really going to call it a debate. I’m just going to present how I do it you we kind of talked before coming on them and you talked about some of the reasons why you’re doing what you’re going to do and so I see that side a lot and I think a lot of it has to do with the way we’re structuring our portfolios and the different strategies that we try to take.
For me it’s kind of simple and it’s not much to talk about I’ve talked about over and over again how the way I structure my strategy is I split my portfolio into two basic segments. I have the regular portfolio with a 25% trailing stop attached and those I tend to focus more on the margin when it comes to margin of safety rather than the safety.
In those cases I look for things that are really undervalued they tend to have a lot of negative sentiment around them when they’re so steeply undervalued. So might have to you know buck the trend but also have chances for quick gains. Or you know a stock that has really high growth but because of that they don’t pay much of a dividend or don’t have any dividend growth.
You know I still always buy stocks with dividends but that could be the case as well and that would be a regular position for me. And then obviously I have the dividend Fortresses which are companies that I look for that are growing their dividend looked to grow them for a very long time and obviously still trade the good price and a good safety when it comes to margin of safety with more emphasis on the safety.
Though what one of the rules that I implement and so this is generally just for the dividend fortress sell but this particular position is it’s applying to this position as well and it’s one with a 25% trailing stop. So definitely it’s important to have strict rules for where you’re going to sell.
I think that’s key number one and number two is when you set these rules do not make exceptions so in my case once I once Dave told me the justi...
34 min
March 22, 2018 IFB53:Dave and Andrew Debate Negative Net Income (Earnings)
Welcome to episode 53 of the Investing for Beginners podcast. In today's show, we discuss negative earnings and how you should handle them.

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39 min
March 15, 2018 IFB52: The Art of Finding Undervalued Stocks

Alright, folks well welcome to Investing for Beginners podcast. This is episode 52 Andrew and I are going to talk about balancing the art and science of intrinsic value.
Today we’re going to talk a little bit about intrinsic value, one of my favorite subjects and Andrew’s as well and this should be a little bit of fun so Andrew why don’t you go ahead and start us off.
Andrew: yeah sure so basically you know we’ve been doing that back to the basic series this one’s going to be admittedly pretty technical so if you’re not as far along maybe skip this one save it for later go back to the back to the basic series. But this is going to be for those of you who are following along starting to look at the intrinsic value of companies trying to figure that out for ourselves and figure out how can we determine when the stocks undervalued when it’s overvalued and really just try to take that process to the next step.
Because on one side it sounds really easy to say just buy low sell high it’s really easy to say buy with a low p/e only to say it’s easy to say a lot of those things but when you really get down to it there’s a just a myriad of different ways you can evaluate intrinsic value.
Same with evaluating the margin of safety and when you just talk about value investing, in general, there’s so many moving parts and so I think it’s important for us to kind of just discussing the whole beast so to say so.
I remember when I first started out and when I was doing the blog and stuff I interviewed Jae Jun from Old-School Value and it was a great interview it’s up on YouTube still if people want to go check it out. But he basically talked about the fact that there’s a science and an art to value investing and so that’s really key and a lot of times when people talk about it they talk about the quantitative side versus the qualitative side.
You know the quantitative of just looking strictly at the numbers whereas the qualitative or things like you know things you can’t really use numbers to evaluate. So things like how’s the integrity of management how is the business kind of going along what ‘s the corporate structure look like what’s the corporate culture look like how are the competitive advantages as they as you kind of speculate them outside of a numerical market share type thing.
Yeah I mean you could go on and on and on but we’ve definitely had a couple episodes about focusing on the quant episode 10 was an example of one of those we did. Episode 12 we kind of talked qualitative stuff but I think about the art of valuation in terms of value however you want to say that to me it’s more I’m not talking about getting into the art and referring to it as a qualitative thing.
I still kind of don’t lean that way if that makes sense what I want to do is take the numbers figure out what that whole picture is and then instead of trying to break it down to an exact science. We’re looking at a business and saying you know what this business earns this much has this much cash flow as it has these many assets therefore this business is worth blank like 75 dollars a share.
I think that’s kind of going overboard on the quant stuff and on the science part of it I think where the art part comes in is where you kind of need to look at okay maybe this stocks more generally valued around sixty to ninety and you know whatever that range maybe I mean that’s a very loose range it’s obviously not going to be that maybe that loose of a rang...
30 min
March 13, 2018 IFB52:The Art of Finding Undervalued Stocks
Welcome to the Investing for Beginners podcast. In today's show, we will discuss the art of intrinsic value and how to find value stocks.

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34 min
February 27, 2018 IFB50: Discussing the Popular FANG Stocks Interview with Braden Dennis

Welcome to Investing for Beginners podcast, Andrew and I are going to do a little blast from the past today. We’re going to talk to our second guest actually when we started the podcast. We’re going to have Braden from Stratosphere Investing talk to us tonight, this is going to be a lot of fun Braden is going to catch us upon what he’s been up to and see all the crazy things that he’s doing so without any further ado. Andrew and Braden why don’t you guys started us off.
Andrew: yeah Braden welcome to the show I think it’ll be very interesting for everybody because last time we talked to you were still beginner kind of. With a lot of different questions and seem like you’re forming an approach and a lot of intelligent questions.
You could tell that a lot of the basics were digested and it was just about finding exactly where you were comfortable and then actually getting that experience in the market.
Take us through how you got started and how you’re able to evolve your approach to now. We talked before the show about how you’ve had some fantastic returns with your stocks lately so kind of walk us through that.
Braden: yeah that’s right well thanks for having me on guys. I’m Braden Dennis and wow what a journey it’s been I guess since even before even before this show to now and kind of I guess midpoint where I came on the show for the second episode I had already kind of digested like you said that we get the basics my questions won’t come and just you know where do I start?
It’s I have this now formed a strategy and how do I how do I continue to grow it and some other questions that maybe others had as well and then fast forward to now I’ve started my blog and podcast. Shameless plug here at Stratosphereinvesting.com and now it’s you know I guess brings me back two years ago, and I had you know the foundations of investing.
I’ve always thought what makes me a good investor is I have the very good temperament. I’m able to block out some of the noise and kind of the other manias that tend to happen in financial markets and really to gain that temperament and have that outlook when I started investing. I mean we started in the middle of a bull market, and now it’s continuing to roar on if you don’t learn from history and you don’t study the Great’s and see the kind of changes that happen in the markets over a long period.
If you don’t study that how are you supposed to know how to protect you know minimize downside risk protect from vicious drawdowns if you don’t understand what’s happening in the past. So I’ve operated with a margin emerging of safety, picked fantastic businesses known my businesses incredibly well.
I’m a Canadian, so you know where I got a look at a little differently my benchmark is the TSX, and it’s not the S&P; 500 I mean some could argue that the S&P; could be my benchmark is now I could just pick up an index fund but not only is that incredibly boring is you know at the end of the day though ETFs are actually carrying an extreme amount of risk in my eyes. their market capitalizing market capitalization weighted and what that really have what that really does is a large portion of that fund is now dumped in what we’ll call the FANG stocks and if you don’t know what the FANG stocks are it’s Facebook, Amazon, Netflix, and Google and depending on who you talk you might throw some other A’s and ends in that mix.
But really at the end of the day, they’ve gone to irrational highs, and you’re carrying that way that that risk of potential massive drawdowns if you own that fund.
46 min
February 27, 2018 IFB50:Discussing the Popular FANG Stocks Interview with Braden Dennis
Welcome to episode 50 of the Investing for Beginners podcast. In today's show, we will discuss Canadian stocks and their market with Braden Dennis of Stratosphere Investing.

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50 min

About The Investing for Beginners Podcast - Your Path to Financial Freedom

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The Investing for Beginners Podcast teaches you how to buy your first stocks and build long-term wealth in the stock market— without the hype or confusing jargon.