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

September 15, 2017 IFB30: Quotes of Wisdom from Baupost Group's Seth Klarman
Welcome to episode 30 of the Investing for Beginners podcast. In today's show, we discuss some of the timeless wisdom of Seth Klarman. One of the finest value investors out there, he has loads of great quotes and advice to help make you a better investor.

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29 min
September 08, 2017 IFB29: Betrayal by Recency Bias and Other Psychological Factors
Welcome to episode 29 of the Investing for Beginners podcast. In today's show, we will discuss some of our thoughts on biases that can affect your investment decisions.

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35 min
August 25, 2017 IFB28: To Pay or Not to Pay, for Investment Services?

Welcome to episode 28 of the Investing for Beginners podcast. In today’s show, we will discuss Andrew’s eLetter and whether or not you should pay for investment advice.
To pay or not to pay for investment services, is the title of our show tonight. Andrew recently had an email subscriber write him a note asking him questions about his service and how it would be of benefit to him.
The format tonight will be Andrew answering the questions on air, and we will have a short discussion about them.

* We are all consumers of online products
* When we find value, the price becomes less of an issue
* Sometimes it is great to have a mentor to help guide
* Value investing has been proven it’s the way to go
* Paying for financial services, when you receive value for it can be beneficial.

So, I am going to read the letter, and then Andrew will offer his responses.
Dave: The letter starts “At $29 a month, that’s just under $14,000 per subscriber for you, you and Dave discussed how much needs to happen to overcome a transaction fee with a stock purchase and focus a lot on percentages.
But you seem to have a reverse opinion on the subscription. If someone follows you for 40 years, at $150 a month with a goal of one million dollars, they will be $14,000 short after the subscription. That would equate to 2812 transactions.
What’s the plan to overcome that? I love your guy’s show but find my mind contemplating things like this. And I in no way intend to think that you shouldn’t charge for your services. After all, you’re a professional, but wouldn’t it be more prudent to charge a percentage of growth or somehow correlate it to the actual value earned?
It’s the biggest problem I have with anyone in this industry. They all want to help, but they want money up front and require blind faith.
Brian.
All right Andrew, what are your thoughts on that?
Andrew: Yeah, I love the question, if one person is taking the time to write this out. You know at least ten people or more probably have this question in their mind. I think it is a great thing to ponder.
I recall back early into my investing journey, having a similar thought process. I still go through this thought process when I think about other investments in my life. When I talk about other investments, I am not talking about the stock market sense, but more in the other product and services that can better my life in many different ways.
First thing I want to say, I am going to hit a couple of points and go a little bit out of order, but they’re all kind of tie into together and lead into the big answer at the very end. I think some of this stuff needs to be addressed first, and kind of builds on itself afterward.
Firstly I am consumer just as much as a producer, I will say that right away. Even right now I pay for a premium podcast, I’ve paid for premium podcasts in the past on investing. I’ve paid for an investment newsletter, and entrepreneurial newsletter which was $99 a month, gave an ROI much greater than that.
I’ve been there and had to make that decision-making process, is this money I’ve worked and toiled for, is it worth giving to someone else, particularly on the internet. Who you’re not seeing it face to face, not able to swipe at the counter and trust that it is going to do great things for me.
This might not apply to everybody; I am sure there are people who have been scammed in the past. In my own experience, I’ve had a lot of great blessings come into my life from the different types of opportunities that I’ve seen online.
I’ve mentioned the investment newsletter, entrepreneurial newsletter, there is a great entrepreneur, his name is Pat Flynn, from the
43 min
August 25, 2017 IFB28: To Pay, or not to Pay for Investment Services
Welcome to episode 28 of the Investing for Beginners podcast. In today's show, we will discuss Andrew's eLetter service and a response to a note written by a listener in regards to that service.

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43 min
August 19, 2017 IFB27: 6 Unconventional Investing Principles for Beginners

Welcome to episode 27 of the Investing for Beginners podcast. In today’s show, we will be discussing six unconventional investing principles. These are ideas that Andrew has come up with that help you with some of the more difficult emotions related to investing.
These ideas are sometimes hard to implement, but when you are aware of them, it does make it easier to make a conscious effort to be more diligent about correcting our thinking.

* Let go of the results
* Don’t sign up for deals stacked against you
* Always build your power
* Don’t rely on one stock
* Don’t take pessimism too seriously
* Lose the ego

Andrew: Again I am going to talk about some principles today, and there is some good mindset stuff in here, and it’s not anything I’ve seen talked about in books or online. It’s just some stuff that came to me, trying to look from a mastery perspective and how some things and some experiences I’ve seen.
How can we kind of draw that in together and organize into useful tips?
For number one:
Let go of the results.
I think this is a mindset trap, where you see a lot of beginners particularly get into this. Everybody is, so results-focused and wanted to buy a stock and have it double it in a year. They want to get in on the next AMD, Amazon; they want just to have money and make that money grow very quickly and be able to realize those profits very quickly.
It makes people feel like they’re experts. Obviously, you become richer. It becomes such a focus where you’re deceiving yourself into thinking you’re becoming a better investor because you’re getting these short term results.
over the long term then could be unsustainable results, they could be negatively affecting you in the long term. Especially if you are getting into stocks that are very expensive and you may be at the tail end of a bubble curve for example.
So you could be getting some short term nice gains, only to see it crash right at the tip of a bear market, or market crash.
I think having this mindset where you let go of the results, focus on the things you can control. I like to do this too, and I talk about it in the eLetter all the time.
I’ll have months that are spectacular and see these performance numbers that makes my ego feel great, makes me feel like the portfolio is moving in a direction I want to see it go.
You have to take it with a grain of salt and understand if you are going to have a level head, you need to have a level head, especially in bear markets and turbulence. We’ve talked about all this before, and you can hear about time and time again, if you are going to have any success in the market, it’s going to come because of your holding for the long-term. You are riding out the ebbs and flows, ups and downs of the market.
You’re letting when the bear market comes you’re going to ride the recovery when the bull cruises along you are going to ride it up as well.
When you have a mindset where you don’t care too much about the results, you can be free to have this level head, to be stoic in both victory and defeat. If you have periods where you are underperforming, we have talked about Warren Buffett having periods where he was underperforming, Seth Klarmann has had them. I have had periods as well.
Understanding that those can be some short-term setbacks and you decide with your mindset how you want to perceive that and if you want to accept that and let it affect you emotionally or not.
It works on the flip side when you are doing great and just crushing it, and your stocks are really on the hot streak, all these stocks keep going up. The trick is to stay humble, stay stoic and understand just because there is a bunch of green in the portfolio today doesn’t’ mean that it is going ...
46 min
August 18, 2017 IFB27: 6 Unconventional Investing Principles for Beginners
Welcome to episode 27 of the Investing for Beginners podcast. In today's show, we are going to discuss some of Andrew's 6 unconventional investing principles. These are some great ideas that are not talked about enough and can help you in your investing.

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50 min
August 11, 2017 IFB26: Combining Earnings Yield and the Return on Capital Formula
Welcome to episode 26 of the Investing for Beginners podcast. In today's show, we discuss the Magic Formula and how it is put together. We break down the numbers and formulas to help you understand this great tool.

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39 min
August 05, 2017 IFB25: Tulip Mania, Intrinsic Value, and the Student Loan Bubble
Welcome to session 25 of the Investing for Beginners podcast. In today's session, we discuss to the formation of bubbles and how they operate. Using the lessons learned from Tulip Mania we talk about the bubble that is forming around student loan debt.

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43 min
August 04, 2017 IFB25: Tulip Mania, Intrinsic Value, and the Student Loan Bubble

Welcome to session 25 of the Investing for Beginners podcast. In today’s show, we will discuss bubbles and how they pertain to student loans and whether or not we have a bubble in the student loan arena.

* Whether or not we are in a student loan bubble
* Different types of bubbles in the past
* How investments can impact your thought processes in regards to school.
* Determining your best intrinsic value and return on investment for a college education
* Finding your way during bubbles by practicing value investing strategies

Andrew: Yeah, so I kind of personally see a bubble that is going on right now, I know it might be kind of a crazy idea, there are some people who agree with me. Experts are putting their name out there, claiming this to be true.
I am not the kind of person to say that yes, this is going on, but this is the way that I perceive the world.
I see a sort of bubble going on with the student loan space; I just see it if you look at it the way that prices for education and colleges have risen, and the amount of debt that is accumulating at my age and for my generation.
We haven’t seen the effects of people defaulting or anything like that as of yet. But it’s no secret, you talk to the media or online, or out in the real world. The return on investment on a lot of college education these days is not what it used to be. And with the growing costs and the ease of borrowing it’s becoming awful as the days go on.
It’s hard to say if it will ever pop or if it’s going to be more a deflate thing. Or it could even continue into the future. Obviously, student loan debt is different in the sense that it’s not excused in bankruptcy, as all other debts would be.
It is interesting to watch this play out. But I think it makes for an interesting lesson. Number one we can look back at history and see where there are other parallels. Number two, it’s happening right now so something that we can observe.
Third, there is something that we can do for ourselves or for our children that can mitigate this.
And number four, it does give extra insights into how intrinsic value kind of works. And how I see the way that some of these big financial decisions that we make as individuals draw and have a lot of similarity to the types of decisions you should be making if you’re going to buy individual stocks.
And it is not black and white and drawing that to light today can potentially help some people that are, having some trouble conceptualizing everything that we talk about. When we talk about intrinsic value and buying at a discount to that value and having a margin of safety and getting the best part of buy low and sell high.
I look at the student loan bubble, and it makes me want to look at past bubbles. If you want to understand the stock market, understanding how Mr. Market works, you can find that in episode 20. It’s a great way to find confidence in the fact that you can realize that the future is always uncharted and everything is going to be new.
There is always these dependable cycles or seasons. These things that are predictable and consequences and effects of a financial market. Something that is as big and expensive as the stock exchange.
One of those things is bubbles; there is a great movie that I watched years ago, I don’t remember what exactly the name of it was. Shia Lebouef was the main character; there is a scene where he main character is inside this old Wall Street dude’s apartment, and there is some painting on the wall.
And it’s mostly making up this bubble, and the character asks about it and gets a whole lesson about how all the different bubbles, I don’t remember if he talked about the Tulip bubbles which are the fi...
39 min
July 28, 2017 IFB24: Examples of Everyday People Who Became Millionaire Investors

Welcome to session 24 of the Investing for Beginners podcast. In today’s show we are going to discuss some average, everyday investors who used the principles that we discuss here to become millionaire investors.
In today’s show we look at a few ordinary people that were able to generate incredible returns over their lifetimes, in fact, they earned more money than they could spend in their lifetimes. So much so that they ended up giving the majority to charity, much like Warren Buffett intends to do with his wealth.
We are going to discuss some inspirational stories for you tonight, these people that we will discuss have taken a lot of the strategies and ideas that we propose and have put them to good use. We want to give these stories to you as a way of helping inspire you to continue down the path that you have already started.

* Buy and hold can be a very lucrative strategy
* Reinvesting the dividends is a great way to double compound your money
* You don’t to have a large portfolio with tons of stocks
* With patience and diligence you can become wealthy by sticking to your strategy over the long-term
* The strategies that we discuss can be successful even for average investors like ourselves.

Andrew: I am going to quote what is here on the Wall Street Journal because of I love the way they started this, it reminds me of that commercial for Dos Equis, the most interesting man in the world.
It goes: “She lived in a tiny, one bedroom cottage in Lake Forest, Illinois. She bought her clothes at rummage sales, didn’t own a car, and worked most of her life as a secretary for a pharmaceutical company.”
The Wall Street Journal article talked about Grace Groner, and at age 100 she left $7 million to be used for scholarship. The story behind her is exactly like the intro makes it sound. She is just your average joe, what she did she was able to buy a couple of shares of a stock, and she held onto for a very long time.
She turned a small amount of money into millions of dollars. It was the stock Abbot Laboratories, and anybody who’s been following the market is kind of familiar with some of the bigger stories that have happened.
And bigger success stories will know that Abbott for a very long time has been super successful at compounding money and paying out dividends, growing the dividends, and the stock price has just shot up. The earnings, dividends have been shooting up and even recently too, in the past decade.
It’s been one of those companies that are the pinnacle example of American capitalism, really the American dream. They have been able to create all this revenue, jobs, earnings and dividends and it created some wealth.
That wealth has done some great things for a lot of people through Grace. That stocks were called Abbott, it was $60 a share when she bought it. She bought three shares, and this was in 1935.
It turned into $9 million dollars and when they stopped counting it when she died. It was around 2010; we are talking about very long time, 75 years. What she did was just let it grow, the shares they were splitting over time, and she was just reinvesting the dividends.
That small pile of money or small ownership stake in the company was growing over time, getting compounding interest. And seeing the stock price continue to go up as well.
It’s inspiring to me because it shows how there are a cou...
27 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.