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 (00:35): All right, folks, we’ll welcome to Investing for Beginners podcast episode 162 tonight, Andrew and I are going to go back to the well, and we’re going to talk about the circle of competence. Again, this is going to be part two. So we had some other thoughts that we wanted to expound upon. After last week’s episode, we enjoyed making that conversation, and we had some other ideas that we wanted to talk a little bit about. A circle of competence is a very important subject. It’s a very important topic, and I think it needs to be explored as much as we possibly can. So without any other conversation for me, I’m going to turn it over to my friend, Andrew, and we’re going to go ahead and get started. Andrew (01:14): I completely agree with that. I think it is a topic that does need extensive coverage and particularly because there’s more to it than we talked about. So I got this idea from three different sources. One was a podcast with Jeremy grants. You’re familiar with him, right, Dave? Yes. Maybe you can intro why we should listen to him. Dave (01:43): Well, he is a partner for a firm called GMO if I remember correctly, and he is a value investor, very, very smart guy, but his specialty is fixed income, particularly bonds. That’s where I’m familiar with him. And that’s frankly, all I know, I just know he has like a ton of money and has had a good track record. And he’s, he’s one of those like value investing legends. I then know about the bonds part, but I also know, I think he either, he was like how the really popular book is academic, really popular academics. So they, I can’t remember. But anyway, so he, he brings up this idea or this, this kind of finding that he, he came across. Andrew (02:32): And so he was talking about how there’s a lot of opportunity for people. And I believe he was talking about investors too, but there’s a lot of opportunity in the holes that people are filling. So, you know, you have a world where everything is getting so specialized, that it’s the overlap of that specialization that can make huge opportunities and leads to a lot of great discoveries ideas. So he gave an example where he said that you know, climate change is a thing that’s been on people’s minds a lot lately, and it’s something that scientists are trying to fix. And so, on the one hand, you have the climate change scientists. On the other hand,

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 (00:37): All right, folks, welcome to Investing for Beginners podcast. This is episode 161 tonight, Andrew and I are going to talk about the circle of competence. And ironically, we have a great question that we got from Alan that we’re going to talk about in regards to that, which will help us talk a little bit about the circle of competence. So I’m going to go ahead and kind of start us off. And so the first part of the question is Andrew. I am a new list, or to your, and these podcasts, and due to company analysis, I have a couple of questions, one short and one, not so short of answering. So we’re going to take the second part of the question and answer that first. So we’re going to do this a little and reverse for Alan. Still, Andrew and I have been talking a little bit about a circle of competence and lately, and I am trying to branch out of my comfort zone, I guess there is the best way of putting it and trying to find other companies that could be of interest to me as well as helping me make more money for my investment. Dave (01:36): Just like we’re all trying to do. And I have certainly become more comfortable with the financial company world I E banks and insurance companies. But when I started kind of going beyond that, I started struggling a little bit. So Andrew has worked in and out of this summer semiconductor industry for a little while now, and he’s far more fluent in that language than I am. And so I happen to be reading a 10 K the other day, and the numbers all look fantastic for this company. But when I started reading about the products and those kinds of things, my eyes started to gloss over because I had zero ideas of what they were talking about. And so Andrew and I were kind of going back and forth about all this. And I am coming at this from a level of, I’m trying to branch out on my circle of competence. Dave (02:29): And so we talk about the circle of competence. We talk a little bit about things that you’re comfortable and things, you know, and you have some area of expertise or passion. And I don’t know that semiconductors for me personally is going to be something that’s going to be a passion. Still, it may be something that I could develop a passion for and would be something that I could expand my knowledge about because when you’re passionate about something, then you’re going to be far more dedicated to learning as much about it as you can. After all, it’s something that a huge interest to you. And so tonight, Andrew and I thought we would answer Ellen’s question, but we also had kind of used that as a way of explaining a circle of competence. And,

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 (00:35): All right, folks, we’ll welcome to Investing for Beginners podcast. This is episode 116. Tonight. We have an old friend. We have Braden Dennis from the Canadian investor and Stratosphere Investing.com back with us tonight for another show. So without any further ado, I’m going to turn it over to the boys. And we’re going to go ahead and get started. So Brayden wants to say hi, and Andrew says hi. Braden (00:57): Hello friends. Good to be back, guys. Yeah, you bunkered down over there. Keeping safe and things are starting to feel a little bit more like summer, but still got a long way to go. Andrew (01:12): I think I got; I got frisky the other day. I went to the gas station and didn’t buy gas. I just want it cause I wanted to get something else. Wow. You rebel you speaking of risk. So we’ve had some good questions about investors who are in the UK, for example, investors who are in Canada. Andrew (01:40): They’re maybe interested in buying into us stock market, but you know, there’s a lot of hurdles that tend to come along. So maybe from your perspective, being a Canadian investor, the way I see it is there’s a risk. If you’re not getting exposure to the US and there’s a long list of reasons, I don’t want to go through all of them. But the fact of the matter is, is so much of the world’s economy today runs on US dollars. And so if you take the coronavirus as an example, obviously that was something that hit the global economy on a scale that we’ve never seen before. And so central banks had to print money to try and inject, and then kind of bring this sputtering economy back to life. And so different central banks in different countries did that. But the scale with which the fed did that here in the United States was a much bigger factor than let’s say happened in the EU. Andrew (02:44): And a lot of that has to do with the fact that there are so many dollars circulating all around and that it’s in such high demand, that a lot of money can be injected into the system. And so I think there’s a risk, particularly if you look through history at a lot of different countries and stock markets, where if they are not able to keep up with the standard with curren...

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 (00:38): Welcome to the Investing for Beginners Podcast episode 159 tonight, Andrew and I are going to pick some time out, and you’re going to talk About some listener questions that we got recently. We’ve got some fantastic ones as always. And so we thought we would take some time and answer those on the air for you guys. So I’m going to go ahead and read the first question. It’s in two parts. So I’ll go ahead and read the first part of the question. We’ll answer that. And I know we’ll come back to the second part. Dave (01:00): So the first part is, hello, Andrew. My name is Tim, and I started investing in January of this year. I’ve been listening to the investors podcast around episode 42 now, and have been very grateful for the advice that both you and Dave have shared as it has helped me get a broad understanding of the stock market and the confidence to get my feet wet. I’ve also appreciated that I choose your podcast. I chose your podcast and ebook to get started as all the metrics and strategy of value investing general makes sense to me as a nerd who likes numbers, yay. Dave (01:32): The ratios and rationale behind them make so much sense. So the first question is listening through the podcast so far, I’ve heard both you and Dave talk about the importance of setting trailing stops to stop your losses before they get too far down, which makes sense at the time I am 27 years old, and I’m, it makes sense to hold for the longterm and not to buy and sell all the time. Both of these strategies seem to clash heads a little bit in the current environment of a stock market collapse. From what I have learned, I would think that the trailing stops are when the market is relatively stable, and stock is still hitting the trailing stop that you are talking about—otherwise, everything you need to be sold. And then the compounding of drip would not take effect. Also, I know that I have not lost money until I finally sell, from listening to some of the more recent episodes. It seems at times like those, it seems at times like these, that it is about whether you trust it and the research you’ve done in choosing a good company, is this the correct way to think of things? Or am I missing something? Andrew? What are your thoughts? Andrew (02:36): Yeah, this is a great question, Tim. So it kind of comes down to one of those ideas where it sounds nice, but in practicality, it’s not the greatest strategy depending on how ...

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 (00:38): Welcome to the Investing for Beginners Podcast. This is Episode 100 Tonight, Andrew and I are going to talk about stock picking for dummies. So we have some stories we’d like to pass along to you guys, and we have some ideas that might help you along the way with picking out some stocks. So, Andrew, would you like to talk first, or would you like me to talk first? Andrew (00:58): I think your story is the better one. So maybe it’s such a perfect illustration of how, when you’re picking stocks, it’s really easy to get caught up in the numbers or get caught up in a narrative or get caught up in your biases, tore the stock. And sometimes depending on what price you’re paying with for the stock, it’s creating these expectations that you don’t realize might be unreasonable. So tell your story first. Dave (01:30): Okay. All right. We’ll do so. A lot of you know that I have been watching the videos that Professor Aswath Damodaran does on YouTube. Dave (01:41): And I’ve been studying valuation with his MBA classes as well as his undergrad classes. And it’s very interesting and very enlightening. And he was telling a story on one of his lectures the other day that I thought was kind of fascinating. And I shared it with Andrew a while ago, and we thought this would be a perfect illustration of what we’re going to talk about tonight. So what the professor related to all of us was that he had a student that part of their project is to do a valuation of a company at the end of the semester. And so one of his students presented his findings at the end of the semester, and everything was really good except for one small detail. So he called the student in and had him come in and talk to him about his, his work and everything. Dave (02:29): And the professor went over everything and said, there was a lot of great stuff in there. And he asked him why he chose the company, and the company he chose was Tesla. And so without talking about any of our biases about the stock, the young man said told the professor that he liked Tesla. I thought it was a great company, really like the Elon Musk, and had a lot of respect for him and, and those kinds of things.

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):

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 150 people. Andrew and I are going to talk about garbage in garbage out. We’re going to talk a little bit about how you focus and what you take in. Can it impact how you think about things, Andrew and I were talking off-air about some of our ideas of, of some of these things, and we thought we would share some of those with you tonight. So, Andrew, I’m going to go ahead and turn it over to you, and why don’t you go ahead and get us started? Andrew (01:06): Yeah, definitely. So I think as investors, something you need to keep in mind is, and I hope I don’t come across this way when we talk about investing, but in my opinion, investing isn’t something you can just snap your finger and go and expect good results. Particularly if you’re going to be kind of poking around and trying to get involved with the businesses, understanding the businesses you own and understanding the principles of investing, you know, we’re doing this for the longterm, we’re diversifying where we’re making good habits and depositing money and investing money over time. These are all sorts of basic foundations of good financial sense. Good investing sense. And so when you talk about the mindset that goes behind it and the thoughts, what comes in your inputs and then how that translates to the type of businesses you’re investing in. I think it’s worth the conversation to, to maybe audit how you’re doing that and understand that it’s not going to be a snap of a finger. Andrew (02:17): There is going to be some effort involved. I think if you want to be good at anything, you’re going to have to put effort into it, and there are no shortcuts. And so if you can supercharge those efforts and make things as effortlessly as possible, that can do a lot for your end goals and maybe reaching financial freedom one day. And so there’s been a lot of chaos with media these days. I would say, personally, I feel media exhausted, and this hasn’t been necessarily that intentional for me lately. I kind of stumbled it, but in the past few weeks have been making it more intentional. That’s the idea that you need to. What I found for myself is I didn’t realize how, how, how many things I was letting to come into my valuable space, and my valuable time. And so I don’t know how much of this has to do with the way technology has changed the way things are, you know, back in the 1950s you had the daily newspaper get delivered to your door, right? Andrew (

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 (00:30): Alright folks, welcome to Investing for Beginners podcast. Tonight. Andrew and I are going to go back to archives and we’re going to pick out some more questions. We’ve got some great questions. We recently, and we have had some great guests so we haven’t had chance to answer them, but we’re going to answer them tonight. So we have three of them. We’re going to talk about a little bit tonight. I’m going to go ahead and read the first question and Andrew will go ahead and give us the answer and we’ll kind of do our little good, give and take. So here we go. Dave (01:04): So I work for Walmart logistics and they offer a company stock option. If I buy $1,800 worth of stock in a year and they match me $300, I own about 13 shares before I ever  started taking investing seriously. Putting Walmart in the VTI, I’ve got a number in the mid four hundreds. Do you think this money is better off somewhere else or do you feel that extra $300 off sets a lack luster? BPI score? Andrew, what are your thoughts on his question? Andrew (01:32): So just to give some perspective to new listeners. When the reader, the listener is talking about VTI, that is a formula I created called the value trap indicator. Basically it takes the financials from a company and spits out an numerical value based off of that. If it’s low versus if it’s high, that signals for example, if it’s above 800, then that signals a strong sell. So the mid four hundreds that’s relatively high for a stock. So to, I guess there can be two different parts of this question. The first part, getting company stock options. In general, it’s a good thing to participate in, particularly if they’re giving you any sort of the match. So a $300 match on $1,800 of stock, that’s like a 16.6% return right off the bat. You could find out in the stock market. But I don’t think most of us can find that reliably, consistently over and over and over again, particularly when you consider that over this great economic boom we’ve had in the United States over the last 100 years, since about the 1910s and 1920s the average stock market return has been around 10% a year. Andrew (02:54): So you’re getting higher than that just from the company match. So I would take advantage of as much as you financially comfortably can. And you know, even if you have a stock that you feel is suboptimal compared to a different stock...

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,

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 150 tonight; we’re going to continue our discussion on the economy. Talk a little bit about economic basics. This is going to be part two. We’re going to talk a little bit about inflation, deflation, hyperinflation, money, some of those fun topics. And we’ll try to make it interesting for you guys, so you don’t go into a snooze fest. I was just kidding. So I’m going to start us off a little bit and talk about a few of the basics. So let’s talk a little bit about inflation and deflation. So basically, inflation is the increase in prices for supply and demand. So goods and services. So when goods and services and their prices rise, so that would be considered inflation. The opposite of that would be deflation. So that when the prices of supplies and, or I’m sorry, goods and services decrease, that would be deflation. Now, most people think that inflation is a bad thing, and it’s not a when prices are rising; generally, that’s a good thing because, along with that, typically then wages are going to rise at the same time. Dave (01:50): So inflation can be a good thing and the only, there are times when it’s going to be bad. So, for example, something like hyperinflation, hyperinflation is when the prices rise more than 50% in a month. And that’s not good because wages are not going to increase at that weight, at that rate, which means that things are going to cost more and we’re not going to be able to buy as much. And as we’ve talked about before, that all kind of feeds into the economy. So when we’re talking about inflation and deflation, we’re also talking about the monetary supply. So the monetary supply, how that impacts both of those is when there’s credit expansion, and there’s too much money in this system. Kind of like what’s happening right now is the cysts. They’re flooding the economy with a lot of money. And what they’re trying to do is they’re trying to tamp down on inflation by doing that because when there’s too much money in the supply system that just me or the monetary system, that means that there’s too much money chasing prices and it helps lower the prices. Dave (02:58): Now, if they contract the money, in other words, they make credit harder to get, and the money in the system gets harder to get out into the system.

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 (00:41): All right folks, welcome to Investing for Beginners podcast. Tonight Andrew and I have been talking, and he thought we would do it all basics of the economy. So we haven’t taught, we’ve touched a little bit on economics in the past, and we thought maybe this would be a good time considering everything that’s going on with the economy in the world that there’s going to be some dues of different things happening over the next six months to a year plus that the talking heads on the news, we’ll talk about things and it might upset people a bit. And so we thought maybe we could spend a little bit of time and talk about some of those issues and some of the things that are going on and help clear things up a little bit so that when you come across things you, it helps ease your mind a little bit. So Andrew, why don’t you go ahead and kind of start us off, and we can chat a little bit about this. Andrew (01:29): Yeah, sure. I think it’s very important to kind of understand the economy and the right context. Obviously, as investors, we are a big part of the economy and what the comment, what the economy does is going to affect the businesses we own, the businesses in our portfolios, and how they perform. Andrew (01:49): And so I think it’s very easy as an investor to get caught in our little sliver of, well I have this business, I have that business. And then you kind of take what you hear on the news, take what you hear, what you see from the different publications, and you get little snippets from it, and that’s great. But if you don’t understand the big picture and you don’t zoom out and try to get a grasp of that, I think sometimes looking at that can be more harmful than helpful. So as an example, it’s very easy for us to look. So if you’ve listened to our podcast at all, you know that I am very, very big on learning from the past and trying to understand that things move in cycles and things that happened in the past tend to happen again, sometimes in a different form. Andrew (02:51): So history doesn’t necessarily repeat, but it tends to rhyme. And so it’s very easy for investors to make simplified ideas and make big investment decisions out of those. And those don’t always turn out in the

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 (00:35): All right, folks, we’ll welcome to the Investing for Beginners podcast. This is episode 140 tonight. Andrew and I are going to talk about which brokers to avoid in 2020. Andrew has some stories you’d like to share with us, as well as I do. And we wanted to talk a little bit about some of the brokers that we’ve worked with and some of them we’ve had some success with as well as some that are you need to avoid. So I’m going to go ahead and turn it over to Andrew, and he’s going to go ahead and start our little diatribe here, Andrew (01:04): Diatribe. It’s, gets it done. So I guess let’s talk about the big one first. Let’s talk about Robin hood, one that neither of us has personal experience with; however, many, many people have. And I guess if you’re not a part of forums where Robin Hood is a popular platform, you might not be aware of the issues that have happened. So I think we should bring light to that cause it can have some serious implications for investors, particularly because we get so many questions about Robinhood. Like still, even though we’ve, we’ve covered Robin hood in the past on the podcast, I still get questions about that all the time. It tends to be one of those brokers that attracts a lot of new investors. And so be aware of what some of these brokers don’t offer compared to what some of them do because there’s a big difference between a good broker and a bad broker. And it could burn you at the worst time when you’re not expecting it. So Dave, tell us about some of the things that have been happening with Robinhood lately. Dave (02:10): Okay. Well, there are three things that I am aware of as far as issues that they’ve had recently. And when I say recently, I’m talking about in the last two or three months. So two times that they have had issues with their platform have stopped. No has stopped working completely where people have not been able to trade buy or sell anything on their platform for a period of time. So with all the craziness that’s been going on lately with the stock market, there have been several days where people have not been able to sell any of their companies or by any of their companies because they have lost the ability to them to do anything on their platform. So that in itself is a huge problem. So let’s say just for example, you’re in a company, a Tesla, and you see that the stock price is falling from $800 a share to have, I have $100