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

May 31, 2017 IFB18: Your Path to Financial Freedom Explained
Welcome to session 18 of the Investing for Beginners podcast. In today's show, we discuss the ideas and methods behind starting down the path of financial freedom. Each person's path is going to be a little different, but the basic ideas and philosophies are all going to be the same. Save money, invest it, watch it grow and enjoy your life.

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29 min
May 26, 2017 IFB17: Cash Flow Statement: Operating Activities, Investing, and Financing

Welcome to session 17 of the Investing for Beginners podcast. In today’s session, we will be discussing a very interesting topic that is near and dear to my heart, an in-depth analysis of the cash flow statement. If you are not an accountant, never fear because this will help explain some of the terms and give a better explanation of how they function.
In today’s session we will learn:

* What a cash flow statement is
* How it relates to the other financial statements included in the companies 10-k
* Breaking down the sections of the cash flow statement
* Highlighting some of the important line items to look for
* The differences between free cash flow and net cash

In this session, we are going to talk a little bit about Berkshire Hathaway, in honor of the recent annual meeting that they hold every year. We will look at how Warren Buffett, the master, lays out his cash flow statement.
Andrew: I think it’s important to understand where the cash flow statement lands when it comes to the financial statements in general. Every company needs to submit an annual report, and this is any company that is listed on any us stock exchange, they are all regulated by the SEC and are all required to submit what’s called a form 10-k. Which is an annual report, it shows the past three years of financial data on the income and the cash flow, and then the last two on the balance sheet.
When you hear these different statements that we are referring to. there are three major ones that are broken down into an income statement, which let me explain in a simple way what each of these three mean.
There is an income statement, balance sheet, and a cash flow statement. A great way to understand what happens on a business level is to compare to how it happens on a personal level because we all know how the personal level of finances work because we all live it. When you look at an income statement that’s the same as looking at someone’s tax return. What’s going to be on an income statement is how much money somebody makes as a salary from their job. Simple enough, really when you look at companies in the stock market, it’s the same way. It’s calculating how much they are earning every single year; it factors things like taxes, other accounting terms like depreciation and interest and all those types of things.
At the end of the day, you have this thing called the bottom line, and that’s the called the bottom line. Or another way to say profits, and it’s the bottom line on an income statement. That tells you how much a company earned, what their profits are and it’s the same way with you in your life. How much you bring home from your job, you can think of your gross income as what the revenue row is on the company’s income statement and then however much you pay in taxes. Then you have a net income, and that’s the same as the net income on the company’s income statement.
The next one would be the balance sheet if you think about a balance sheet for a company it is the same as a persn’s net worth. If you the person would add up everything you own minus all of your debts that gives you your net worth. Let’s say you have a spreadsheet; you have your house on there, the resale value of your car, and then maybe a couple of brokerage accounts, maybe a savings account or two, maybe a couple of retirement accounts. Then you have your debts, credit card, student loan, home equity line of credit and add all those things up on a spreadsheet they make your assets minus your liabilities which equals your net worth.
42 min
May 24, 2017 IFB17: Cash Flow Statement: Operating Activities, Investing, and Financing
Welcome to session 17 of the Investing for Beginners podcast. Today we talk all things cash flow statement. We give you a run down on how to read a cash flow statement and what to look for, and what to look out for. This is an interesting discussion as we dive deep into Berkshire Hathaway's cash flow statement. This statement provides us with the free cash flow that the company can use to reinvest or pay us a dividend. Join us to learn more about cash flow statements and how to unravel some of their mysteries

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46 min
May 17, 2017 IFB16: The Market Has Seen the Snapchat Stock Story Before

Welcome to session 16 of the Investing for Beginners podcast. In today’s session, we are going to discuss IPOs and why you shouldn’t invest in them. We are going to use the recent Snapchat stock IPO as well as their latest earnings reports to help us understand why Snapchat stock is not a good investment at this time, or if it will ever be a good investment.

* Snapchat had a recent IPO, and since then the company has been under siege.
* Yesterday’s earnings report was dismal, included were a drop in revenue as well as customer interactions.
* Buying a stock is risky enough, do you need to incur more risk by investing in an IPO.
* Remember that the ones making money from an IPO are the players, pitchers, team officials.
* Having a checklist to go over when investing is critical
* The Margin of Safety is a must, with a focus on the safety part of it.

Without any extra preamble let’s jump into the podcast and see what Andrew and Dave are cooking up.
Andrew: Yeah, let’s talk about IPOs and the most recent one everyone is talking about, Snapchat, the dirty pick app. A lot of people that I know use it, and it is obviously a very popular among millennials. We’ve mentioned before on the show, and I think it was you, Dave, that how a big percentage of users on Robin Hood had bought Snapchat stock, so we’ve riffed about it and maybe degraded it a little bit just for fun as one of our whipping boys.
But I think it is a good opportunity to look specifically at the numbers and maybe let’s diagnose why it’s it’s tanking like it is. As of today the stocks is down to $18.05, and it’s started up around 27 or 28, and a lot of investors or so-called investors, people that think they are investors, people that bought Snapchat stock have already seen a significant loss, 33%. To make up a 33% loss you are going to have to make, I don’t have the specific numbers here in front of me, but I want to say it’s a 50% gain, or something close to that range.
It’s a tough hill to climb, and when you lose that much money the more money you lose, it’s a higher percentage that you have to earn in the future to make that up. To be an investor, especially a beginning investor and to have a loss like that not only mathematically a terrible proposition but the kind of things that it can do to your confidence as an investor. It’s something that can turn people off and just make them think let’s just forget this whole thing, and I don’t want anything to do with the stock market. And if anything is crippling and troubling for someone’s financial future is to forget or try to ignore the stock market completely.
Dave: Yeah exactly, that’s the scary thing about something that happens with an IPO or a newer company and going public with Snapchat. The analysts that were doing the analysis for the bank that was going to be putting up the money for the IPO recently they admitted that they made some errors in their financial analysis of the company, which should have adjusted what they thought the company should start selling the stock for when it went public. Instead, they left it exactly where it was, and it hurt the investors that got into it.
Like you said a lot of the millennials, the people that were using the app Robin Hood, the majority of those people were millennials and they are getting burned by this. People walk into something like this a little bit unaware, and I’m saying not saying I’m a guru by any stretch of the imagination. But I think that the thing to me that is most disappointing about this is that people were. I don’t want to say mislead, that is maybe not the right word,
26 min
May 17, 2017 IFB16: The Stock Market Has Seen the Snapchat Stock Story Before
Thank you for joining us for session 16 today. In today's session, Andrew and I are going to discuss IPOs and the dangers of investing in unknown company's like Snapchat. With the recent earnings report, which was the first since Snapchat had gone public, the stock tanked 20% in one day and has not done well since its IPO. Andrew and I discuss why and how you can avoid these value traps in your investing.

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29 min
May 10, 2017 IFB15: What Other Investing Strategies Are Out There?
Welcome to session 15 of the Investing for Beginners podcast. In today's session we chat with Allan, who is a new investor, just started two weeks ago. He has some great questions for us today and the main discussion centers around the different styles of investing out there. Of course, Andrew and I have fun taking turns talking about some of the other strategies, in addition to value investing, which is our main style. Join us as we discuss the different styles as well as many other topics, such as dividend investing, shorting stocks and more.

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53 min
May 03, 2017 IFB14: Why Investing Metrics Are More of a Guideline than a Blueprint
Welcome to session 14 of the Investing for Beginners podcast. In today's show, we discuss why investing metrics are a guideline as opposed to a blueprint. We go into depth on why you use these metrics to guide you, not make your decisions for you. We also discuss some other great topics, such as dividends, stock screeners, and much more.

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52 min
April 26, 2017 IFB13: The Unreliability of Forward P/E and 10% Dividend Stocks
In session 13 we have a Q&A with Steven who is a beginning investor with some terrific questions about dividends and the forward P/E.

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44 min
April 19, 2017 IFB12: The Validity of Scuttlebutt Investing and Qualitative Analysis
Quantitative investing versus qualitative is an ongoing battle but utilizing scuttlebutt investing and numbers is a great way to find awesome companies. In today's session, Andrew and I discuss our thoughts on quantitative versus qualitative. Andrew is very much a numbers guy and I am more a mix of the two. We both agree that using scuttlebutt has its merits but should be used in conjunction with quant investing.

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33 min
April 12, 2017 IFB11: A Complete Guide to to the Most Useful Stock Valuation Methods

Today we are going to talk about stock valuation methods. Andrew has a great ebook that he wrote a while back that talks a lot about how to value a stock. These are methods that I use personally every day .

* A breakdown of the 7 valuation metrics that we use
* P/E ratio and its importance
* P/B ratio and the relevance to value investing
* Debt to Equity is probably the most important ratio

Andrew: There are a lot of different ways you can evaluate a stock, there are a lot of different models. I want to talk about some of the simplest ones that you’ll approach, you can always take the subject a bit further. You can talk to experts, they like to talk about things like EV or EV/EBITDA, that is enterprise value to earnings before interest, taxes, depreciation and amortization. You could do a discounted cash flow valuation you can do free cash flow valuations.
There are all these different metrics that someone can use to really value a stock. some of the most basic ones I actually use. We are going to talk about 7 of them and they’re all part of the seven steps that I wrote about in my ebook. IT is also the same 7 metrics I use for my value trap indicator system. All of these combined are what I use to formulate my approach and it’s the exact same method I use to buy every single stock that I buy.
Now, keep in mind you certainly can use one of these. Some people do, you have the Peter Lynch approach where people just strictly look at a PEG ratio, which can be a combination of two of them that we are going to talk about today. You certainly could use just one, there is the Ben Graham approach, which early one was one that Warren Buffett used which he calls the “net, net” approach. Kind of like, the metaphor they use is picking “cigar butts.”
And they really use a price-to-book, more focused on net tangible assets. This is another variation of a valuation method that we are going to talk about today. My whole point is that you could center on any one of these valuations, I argue that when you value a stock, you don’t want a laser focus on making one ratio that much more important than the others. I think you want to take a complete picture approach, understand that there are three financial statements that every single stock needs to post to the SEC.
The SEC puts it on their website and it’s freely available information to us. A lot of investors will look at one little tiny sliver of the financial statements, completely ignore the other ones and get blindsided when they don’t account for things they aren’t looking for.
We are going to look at the whole picture, all seven of these and not so much that they are all excellent but they are all good enough to where you can feel comfortable that number one we are getting a stock at a good price. And number two, that were are getting a stock that has a great business model, and is likely to continue and gives us gains in the future.
The first method valuation method I want to talk about is probably the most common and every single novice investor knows of this ratio. And that is the Price to Earnings ratio or P/E. What this is going to tell us is, if you think about what a business does, the business will basically spend money and they are going to try to make more than they spend, and that difference is a profit.
And profit really becomes the number one goal of the business, which is something that gets lost in the wash. A lot of people focus on other things, but really at the end of the day, the goal of a business is to turn a profit. Price to earnings ratio helps ensures us that as investors we are getting a fair share of the profit...
1 hr 4 min

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

From the publisher's feed

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.