The Investing for Beginners Podcast - Your Path to Financial Freedom

Welcome to Investing for Beginners podcast episode 57, Andrew and I are going to take a stab at talking about some of our favorite books. Books are a fantastic way to learn and as Andrew and I are both self-taught investors we thought we would share some of the books that have helped shape our views and philosophies. So without any further ado, I’m going to turn it over to Andrew and he’s going to talk about his first book. Andrew: yeah love to talk about them and it’s so crucial right if you want any chance at jumping into the stock market I think it’s important to instead of immersing yourself immediately in the media and in the charts and everything that’s going on the business world. You can build a base and a foundation and get some wisdom from people who’ve done this for decades. Getting a huge head start on the rest of the investors who are going to they’ll go out and they’ll learn these expensive lessons where you can kind of shortcut all of that and you can really get your skill set get that at a much higher level in the beginning and the only compound from there. I mean there’s some books while Dave and I don’t have like the whole financial educational background we do have a huge passion when it comes to reading these books. I’ve personally been reading these books voraciously and I’m just constantly reading new investing books so you start to get to a point where a lot of the books start to say the same things and that becomes a good point because then you understand which parts of these books are really crucial which ones have worked for a ton of investors and not just maybe one or two who sound really opinionated. But has worked for the majority and then you start to get the collective wisdom of all these smart people and so I’ve always been just going through all these different books ever since I started out. So it gets hard for me to kind of pinpoint in and there’s so many different recommendations that I want to give out. I’ll say this like what we’ll talk about the Intelligent Investor and that’s an obvious must read for everybody. It’s a book Buffett that highly praises it’s the foundation of any value mister you talk to they’re going to talk about the Intelligent Investor but I really think that books a little tough from a readability standpoint I think you need like a quick win you need to you need to get confidence you need to get excitement and you need a book that like starts to kind of it’s like baby food right. It’s something that can start you out and until you get to some bigger more intense concepts that you can really chew on. so for me personally and I really lucked out like it’s kind of funny the way I got into it was I don’t know how I ended up at this bookstore I was out of Barnes and Noble. I don’t even know if those yeah they’re still around today right so I know there’s one down the street from where I work but I went into Barnes & Noble and I went over to the investing section and didn’t have really a clue right. Outside of a couple of conversations, I have with the guy who really pushed me in the direction of investing kind of listening to him talk about some of the general principles of investing like dollar cost averaging was a big one that you really espouse in my head from the outset. Outside of those like little discussions, I didn’t have much of a foundation when they came to educating myself in the stock market and investing as a whole. so I literally went to the investing section and I just had an open mind I had no idea which books I was going to pick out and just saw if anything really stuck out and I saw Beating the Street by Peter Lynch and literally like my thought process was what that named Lynch sounds really familiar like sounds like Merri...

  Welcome to episode 56 of the Investing for Beginners podcast. In this week’s episode we’re going to talk about something that Warren Buffett dropped in his latest shareholders letter and he was also mentioned on a video on CNBC that was released recently and this is relating to new GAAP figures that are going to potentially inflate earnings figures and we’re going to dive into that. Andrew is going to start us off and talk a little bit about some of the background and then we’re just kind of go back and forth, so Andrew one should go ahead and start us off there big guy. * New GAAP accounting rule will affect financial institutions, like banks, insurance companies. * This new rule could inflate earnings for said companies. * Isn’t the first times accounting rules have changed * If you invest in these types of companies you need to be aware as the rule takes effect. Andrew: yeah sounds good and like my M.O. for this podcast has been kind of to hate on CNBC. I just have to say like they put up a new video series and it’s probably the best thing on YouTube other than my own stuff obviously. Okay great there they did like three hours with Warren Buffett on Squawk Box and edit it down and I think it’s about an hour to an hour half of the content on their YouTube channel right now and this was back in I think early February’s when they interview him mid-February is when it was released so he’s that’s straight from the Oracle himself talking about some of the stuff we saw with Bitcoin a lot of the market volatility we saw at the beginning the year and most importantly. Which kind of from my understanding from the way I’m kind of interpreting all of this he just mentioned something as an aside and they talked about it briefly but like the whole majority of the finance industry right now is completely ignoring this and it’s going to have a big impact for a certain group of companies. And it’s relating to what they’ve referred to with these GAAP which is generally accepted accounting principles or practices. And it’s the way that these companies are having to report the financial data that’s all audited and it’s how they come up with the earnings number. And so it’s going to be a big kind of thing and it’s all in a hand in hand with like the new tax reform stuff that we’re seeing and so it’s like this unprecedented thing and it’s definitely something we need to discuss. We’re going to try to keep everything basic explain everything from the very top down and keep it in simple terms but it’s something that’s important to understand so we can know how to approach these type of businesses moving forward. It’s not going to necessarily affect every single company that’s out there right now but it is something that we should definitely talk about. I guess the first thing Dave I will ask you how would you break down some of the major aspects of this are going to be net income and marketable securities and then how those are defined so can you for the beginner that’s out there who doesn’t have an accounting background can you break down what net income is and then marketable securities after that? Dave: okay so I’ll go ahead and take a stab at this so net income is really the easiest way to think of it is the money you make on the money, you make. In simple terms think about your own paycheck when you bring home your paycheck and you pay all of your expenses the money you have left over there’s your net income so after you pay your rent your utilities maybe your cell phone bill maybe you got to get your dog washed or groomed any of those kinds of things that money that’s left over ...

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%...

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.

  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...

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...

  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. Welcome to Investing for Beginners for podcasts. Today we have another great interview for you today our guest is Alex from Wall Street Oasis. Andrew: Wall Street Oasis is a website that’s been around for a very long time it’s one of the top websites out there. Resources for people who are looking to get into the financial world particularly when it comes to investment banking, venture capital, kind of that whole space. That website has a ton of resources about you know whether you want to get in as for your career and like interview tips and all these sorts of things and they really cover just a ton of topics related to investing finance Wall Street and so I’m really happy to bring Alex on the show today. Alex thanks for coming on Alex: yeah thanks for having me Andrew happy to be here. Andrew: can you talk about your background for a bit and your role over at Wall Street Oasis to give our listeners some context for our interview today. Alex: yeah sure happy to I let’s see I recently graduated from Business School I got my MBA from UCLA Anderson last May so almost a year ago. In so now my life’s been pretty different after school but let me tell you what I did before school. So I’m 31 so for seven years I worked in investment banking at. First I worked for JP Morgan and then for Houlihan Lokey it’s kind of a smaller investment bank, but I focused on what’s called restructuring Investment Banking where you’re working with distressed companies and bondholders. And so did the investment banking stuff for a while and then I actually left to go work for a digital media company. essentially just doing internal investment banking you know buying and selling websites stuff like that setting the strategy for the for the business. And those were cool jobs but I always wanted to do something more entrepreneurial, and so I thought Business School would be a good way to kind of bridge my two worlds the finance hardcore finance stuff and then kind of my passion and work in startups and for myself. Not get told what they do all day long I mean I like working hundred hour days like you do in 100 hour weeks like you do in banking but I wanted to be doing those for myself. So I went to business school try to find that entrepreneurial spirit that was somewhere inside of me, and now I’m finding it. And let’s see I went from making lots of money and Investment Banking to now I literally make hundreds of dollars per week in the start-up world. That’s a change but in terms of fulfillment in terms of like career goals and objectives on checking off every single box right now. Besides the money one so I’m confident that the money will come soon and as far as the Wall Street Oasis in business school one of the entrepreneurial things I did was I started the podcast and the guys on Wall Street Oasis heard it, and they liked it and they said why don’t you just come make a podcast for us and so now my podcast where I speak with top business leaders, CEOs, investors bankers, all that kind of stuff founders. We have it it’s called The Wall Street Oasis podcast, and it lives there and we kind of talk about the ups and downs of someone’s career how they got to where they are the cool stuff then not cool stuff and kind of you know tip what tips they would have for trying to follow in their steps. Andrew: that’s awesome you know I love the idea of kind of pursuing your own path and obviously you kno...

  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.

Welcome to episode 49 of the Investing for Beginners podcast. In today’s show, Andrew speaks to Nick McCallum from Sure Dividend. You might remember Ben Reynolds from episode 7; Ben’s the founder of suredividend.com.  Nick writes for him, and together they are starting a new podcast called the sure investing podcast. And so you know I’m kind of friends with Ben, and we’ve been going back and forth so I thought it’d be a good time to release this episode. This interview that I’m going to do here with Nick around the same time that Ben and Nick are releasing their podcasts out into the world. It would be a great opportunity for you guys to check them out and if you’re at all interested in dividends you can listen to Ben’s interview, we did in episode 7. Listen to today’s interview and get a lot of insights on the power of basically combining value stocks and dividend stocks and creating the best types of compounding interest and wealth that you can. Andrew: To start off first off thank you, Nick, for coming on. Nick: my pleasure I’m excited to be here. Andrew: and one of my favorite articles you wrote it is called the better investment dividend stocks or growth stocks. I love that idea because especially in today’s environment everybody, and it doesn’t matter what asset class we’re talking about. Everybody wants to gravitate towards capital appreciation everybody wants to talk about what has doubled what’s tripled what’s could triple. Obviously, we thought with all the tech stocks today we saw biotech in previous years, and we see it with the crypto, and it has fallen off a bit. But you see a lot of momentum build on itself, and a lot of that momentum when you’re talking about the stock market starts from these companies that might not necessarily be so profitable, but they’re growing at a fast rate in whatever metric Wall Street likes to use for the day. Basically these growth stocks create really big increases in share price, and it creates a sort of craze, and you can see a lot of these different bubbles and you kind of get like that contrasted with a dividend stock where people might think that that’s maybe a little bit more boring. Have you done any research on dividend stocks versus growth stocks and maybe what were some of the simple findings you got from that and we can kind of take that more in depth from there. Nick: well I guess the first thing that’s worth pointing out is that the whole stigma of dividend stocks versus growth stocks is a little bit misleading because there are growth stocks that pay dividends. And there are dividend stocks that are growing, and I would say there are quite a few stocks that meet those criteria. the research that we’ve done suggests that dividend stocks tend to be better than growth stocks and in fact, stocks with higher yields tend to perform better than stocks with your lower yields almost being equal. Now we’ve seen evidence that says the highest-yielding quintile of stocks that performs the lowest yielding quintile stocks by about 2% per year over long periods of time. We’ve also seen evidence that says stocks that grow their dividends beats those with unchanging dividends by two and a half percent per year. I think that that that description of stocks that grow their dividends over time is the sweet spot between dividend stocks and growth stocks and you could say you know classify them as dividend growth stocks. I think that they get the benefits of both dividend stocks and growth stocks and they also capture other unintended benefits that aren’t characterized in another one of those other two groups. Andrew: do you have any examples off the top of your head of some stocks that we’ve seen in the past that were able ...

  Welcome to Investing for Beginners podcast this is episode 48. Andrew and I are going to talk about distressed businesses or negative earnings, negative shareholder equity we’ve never really delved into that aspect of investing and kind of what to look for in companies that having falling stock prices. We’re going to talk a little bit about maybe some cautionary tales as you’re looking for companies to invest in for your potential retirement, * The importance of the price to cash ratio * The impact of declining shareholder’s equity * The impact of declining earnings * What to look for in the financials of a falling company * Not every falling company is failing Without any further ado, I’m going to turn it over to Andrew as always and let him start us off. Andrew: yeah so I mean we did a bunch of episodes on beginning with the basics. I think let’s dive in we haven’t done anything pretty technical in a while, and I always love to talk about I know some at least some of our listeners like to hear about it. I thought maybe we could like stay relevant. Obviously there’s been a couple of things that have happened lately, and I realized in the podcast world by the time this comes out it’s going to be months old news. But we had Tesla lose taxpayers billions of dollars we’ve talked about Tesla before so I’m not going to talk about that story with the whole SpaceX thing. But there is another one, and it’s Sears Holdings it’s on CNBC, and the media and everybody talks about the fall of retail and talks about how Amazon’s taken over that space. And then made a lot of businesses fail and it is very true, and I thought this could be one that we’ll look at a little bit deeper and see. Because obviously if you look at the stock chart it’s been beaten down and with stocks that are being down sometimes that comes an opportunity. Because then you can buy a low price for Sears, in particular, I will look at like a basic price to cash. The price of cash is 1.8 which means if you’re buying this stock you’re almost getting the cash if the price the cash was 1. That means let’s say you’re paying a hundred million dollars to get a hundred million dollars in cash like that’s like almost getting like free cash. It sounds like a like a great value play, but I think you’ll find as we dig deeper into the numbers that there’s more to this story and that even though you see a couple of good metrics from a value standpoint. Because the complete picture isn’t all there than it is a cautionary tale and there are several different symptoms with Sears right now that signal a business in decline. I think those are some of the things that you should look at when you’re looking at evaluating various stocks particularly in ones where industries are being I don’t want to say under attack or siege. But going through a lot of change so obviously retail is one of those and with a lot of change comes a lot of opportunities. But also a lot of risks anytime you’re getting into what’s almost called like a devalue with really distressed companies it’s very important that you are differentiating between opportunity or risk. Dave: yeah exactly and I think the big thing was Sears is you look at the evolution of the company over the last eight, nine years, and they’ve been in a kind of a scramble mode to try to figure out how to stay relevant and stay alive. And as Andrew and I were talking about preparing for this episode tonight I was looking at just a price chart of the company in since 2009. They were at the height of 122 dollars a share and currently they’re at three dollars and 33 cents a share. That is quite a precipitous drop the city of the least a...

This is part 5 of the 5 episode “Back to the Basics” series from The Investing for Beginners Podcast. Each episode covers the fundamentals of the stock market and investing to provide a solid foundation for those who are looking to compound their wealth over time. Here are the links to each of the episodes: Back to the Basics Pt 1: The Anatomy of Stocks and Shares –Defining what a stock is –Talk about the big 3: the cash flow statement, balance sheet, and income statement –Earnings manipulation Back to the Basics Pt 2: Share Dilution on Wall Street –What is a stock –What are stock buybacks and how they affect us –What are share dilutions –What happens when we buy or sell a stock Back to the Basics Pt 3: Stocks vs Other Investments –Peer to peer lending –Real Estate –Gold and other precious metals –Bitcoin and other cryptocurrencies –Bonds Back to the Basics Pt 4: Investing 101 and Compound Interest –The importance of buy and hold –Compound interest and how it can make you wealthy –Using a compound interest calculator –The power of dollar cost averaging Back to the Basics Pt 5: Dividend Stocks and Value Investing –The advantages of buying low and selling high –Dividends and the power of compounding Welcome to Investing for Beginners podcast this is episode 46. Andrew and I are going to continue talking about back to the basics. Today we’re going to follow up on we’ve finished last week talking about compound interest, dollar cost averaging and we’re going to talk a little bit more about dividends today. Of course, that’s Andrews favorite thing to talk about, and we’ll also talk a little bit about buying low and sell high.  Without any further ado, I’m going to turn it over to Andrew to get our chat started, and we’ll just go from there. * The advantages of buying low and selling high * Dividends and the power of compounding Andrew: cool so dividends yes let me get started because we were looking at the backbones of it. We’re looking at you know we talked about the anatomy of stocks and what shares represent. Whether dividends and how do they relate and why are they powerful for us. Dividends are pieces of earnings that companies are going to pay out to shareholders. It’s in my opinion which is it’s debatable because of a lot of people kind of look past this. But I see investments as the whole point of having an investment is to receive an income. When you buy an investment you are taking on a certain amount of financial risk there’s a chance that you could lose all of your capital. There’s a chance you could be given your money the Bernie Madoff, and he’s running off with it there’s a chance that you’re putting money into a business that decides to light it on fire and goes bankrupt after a couple of years. It’s a lot of risks that are involved, but that’s where the reward comes in. Are you’re getting you’re going to get paid for those risks back to you, and in my opinion, the most reliable source of that would be interest and income. And so we see that with loans, and we talked about that a bit. We’re discussing all the different types of investments that are out there besides the stock market it gets lost on investors,

This is part 4 of the 5 episode “Back to the Basics” series from The Investing for Beginners Podcast. Each episode covers the fundamentals of the stock market and investing to provide a solid foundation for those who are looking to compound their wealth over time. Here are the links to each of the episodes: Back to the Basics Pt 1: The Anatomy of Stocks and Shares –Defining what a stock is –Talk about the big 3: the cash flow statement, balance sheet, and income statement –Earnings manipulation Back to the Basics Pt 2: Share Dilution on Wall Street –What is a stock –What are stock buybacks and how they affect us –What are share dilutions –What happens when we buy or sell a stock Back to the Basics Pt 3: Stocks vs Other Investments –Peer to peer lending –Real Estate –Gold and other precious metals –Bitcoin and other cryptocurrencies –Bonds Back to the Basics Pt 4: Investing 101 and Compound Interest –The importance of buy and hold –Compound interest and how it can make you wealthy –Using a compound interest calculator –The power of dollar cost averaging Back to the Basics Pt 5: Dividend Stocks and Value Investing –The advantages of buying low and selling high –Dividends and the power of compounding   Welcome to Investing for Beginners podcast this is episode 46. Andrew and I are going to continue our series on back to the basics, and today we’re going to talk about buy and hold and why that’s important. As well as compound interest and some other interesting topics. So without any further ado, I’m going to turn it over to Andrew, and he’s going to start off our chat. * The importance of buy and hold * Compound interest and how it can make you wealthy * Using a compound interest calculator * The power of dollar cost averaging Andrew:  If you’ve read any investing books and gotten involved with the whole scene, these are a lot of the things that are similar themes. I’m hoping with these episodes that we’re going at such an in-depth level that you’re still picking up things that are valuable. The whole goal of this is to get things to stick. Because it’s one thing to hear something but if you can take these basics and master them– give yourself the reasons why and give yourself not just the how but the why. Give yourself a firm foundation and understanding on why these things are applicable and why, when things get tough, you’re going to have these values to stick to. It’s important to get this mastery rather than just floating through the wind, and when adversity comes, if you don’t have this foundation you might forget about all these lessons or you just might be stubborn and not listen to what’s been proven. And this kind of like conventional logic when it comes to the stock market and investing and so I think it really can have a big impact on your final results as you navigate through the stock market. I think that applies whether you’re an absolute beginner or even if you are more seasoned. Getting these lessons drilled and mastered can go a long way. I would recommend going through them I think there’s a lot of good value here and obviously, today even if you’ve heard that you should buy and hold or you should diversify or you should dollar co...

This is part 3 of the 5 episode “Back to the Basics” series from The Investing for Beginners Podcast. Each episode covers the fundamentals of the stock market and investing to provide a solid foundation for those who are looking to compound their wealth over time. Here are the links to each of the episodes: Back to the Basics Pt 1: The Anatomy of Stocks and Shares –Defining what a stock is –Talk about the big 3: the cash flow statement, balance sheet, and income statement –Earnings manipulation Back to the Basics Pt 2: Share Dilution on Wall Street –What is a stock –What are stock buybacks and how they affect us –What are share dilutions –What happens when we buy or sell a stock Back to the Basics Pt 3: Stocks vs Other Investments –Peer to peer lending –Real Estate –Gold and other precious metals –Bitcoin and other cryptocurrencies –Bonds Back to the Basics Pt 4: Investing 101 and Compound Interest –The importance of buy and hold –Compound interest and how it can make you wealthy –Using a compound interest calculator –The power of dollar cost averaging Back to the Basics Pt 5: Dividend Stocks and Value Investing –The advantages of buying low and selling high –Dividends and the power of compounding Welcome to Investing for Beginners podcasts this is episode 45. Andrew and I are going to continue our conversation about back to basics with stocks and tonight’s topic is going to stock versus other investment options. So Andrew and I are going to talk a little bit about some crypto maybe a little gold maybe a little real estate we’ll just kind of give a brief overlay of those ideas and then talk about how those could be good or bad investments for you versus stocks so Andrew why don’t you go ahead and take it away, and we’ll just chat away. * Peer to peer lending * Real Estate * Gold and other precious metals * Bitcoin and other cryptocurrencies * Bonds Andrew: Yeah, I feel like with every episode we do we keep saying we’re going back to the basics so now I want to take another step back and let’s go back to the basics again and let’s talk about even before we jump into stock let’s talk about investing in general. And so once you’ve made a decision that you want to invest money and put it to work making these dollars work for you to make more money and to be able to start this compounding that’s going to create hopefully massive wealth for you in the future. Create future income streams before we do all that you have to take a step back and understand that there’s a lot of different places that you can put your money. A lot of different ways you can make it work for you, some of them are going to be good and some of them will do better than others. Certain time periods will be better for a certain type of individual and so on. So it all depends, and it’s a subjective I think it’s a great place to start and you want to know what all the options are because if you’re going to jump into the finance world and it doesn’t matter if you’re going to become a complete DIY. You know live and breathe the markets type of investor or if you’re going to be somebody who’s just going to be completely passive either of those approaches will work well.

This is part 2 of the 5 episode “Back to the Basics” series from The Investing for Beginners Podcast. Each episode covers the fundamentals of the stock market and investing to provide a solid foundation for those who are looking to compound their wealth over time. Here are the links to each of the episodes: Back to the Basics Pt 1: The Anatomy of Stocks and Shares –Defining what a stock is –Talk about the big 3: the cash flow statement, balance sheet, and income statement –Earnings manipulation Back to the Basics Pt 2: Share Dilution on Wall Street –What is a stock –What are stock buybacks and how they affect us –What are share dilutions –What happens when we buy or sell a stock Back to the Basics Pt 3: Stocks vs Other Investments –Peer to peer lending –Real Estate –Gold and other precious metals –Bitcoin and other cryptocurrencies –Bonds Back to the Basics Pt 4: Investing 101 and Compound Interest –The importance of buy and hold –Compound interest and how it can make you wealthy –Using a compound interest calculator –The power of dollar cost averaging Back to the Basics Pt 5: Dividend Stocks and Value Investing –The advantages of buying low and selling high –Dividends and the power of compounding Welcome to the Investing for Beginners podcast this is episode 44. Andrew and I are going to continue our discussion on back to the basics with the stock market and last week we talked a little bit about stocks and today we’re going to talk some more about stocks.  Because you know that’s our favorite thing to talk about besides that baseball and so without any further ado Andrew ahead something you wanted to say as we got started. * What is a stock * What are stock buybacks and how they affect us * What are share dilutions * What happens when we buy or sell a stock Andrew: yeah so obviously last week I had a big thing about you know how shares kind of work and the whole premise behind the stock market. Behind why Wall Street’s there what the value is and how it provides value for really the whole world and how we can take part in that. I think the next thing that we should really cover is how that applies to Wall Street today so obviously Wall Street’s very intimidating and it can seem like if you don’t have a double-double MBA and in finance that there’s no way that you can really have a shot at understanding it and making it work for you, and that’s so far from the truth and everything we try to do with this podcast is really to try to alleviate that and especially with this series that we’ve come up with here with going back to the basics. We’re really hoping when you can go from just the average person who might not know anything and really start to put some of the pieces together and use that momentum and it can really take you in some far places and so it was really exciting to be kind of a part of that so with the whole discussion last week I talked about how company issues shares and how they can use those share you know they can essentially it’s called raise capital you hear this a lot in Silicon Valley and yeah you know on Shark Tank and with private equity it’s really a place for companies to incubate and get a jump start and go from either they’ll go from nothing to something with a great idea...

This is part 1 of the 5 episode “Back to the Basics” series from The Investing for Beginners Podcast. Each episode covers the fundamentals of the stock market and investing to provide a solid foundation for those who are looking to compound their wealth over time. Here are the links to each of the episodes: Back to the Basics Pt 1: The Anatomy of Stocks and Shares –Defining what a stock is –Talk about the big 3: the cash flow statement, balance sheet, and income statement –Earnings manipulation Back to the Basics Pt 2: Share Dilution on Wall Street –What is a stock –What are stock buybacks and how they affect us –What are share dilutions –What happens when we buy or sell a stock Back to the Basics Pt 3: Stocks vs Other Investments –Peer to peer lending –Real Estate –Gold and other precious metals –Bitcoin and other cryptocurrencies –Bonds Back to the Basics Pt 4: Investing 101 and Compound Interest –The importance of buy and hold –Compound interest and how it can make you wealthy –Using a compound interest calculator –The power of dollar cost averaging Back to the Basics Pt 5: Dividend Stocks and Value Investing –The advantages of buying low and selling high –Dividends and the power of compounding Dave: Welcome to Investing for Beginners podcast, this is episode 43. Andrew and I are going to be talking about some beginning stuff. As my baseball coach used to say it’s all about the basics and we used to drill it into our heads every single week, but it works it helped us a lot we were a good team, and we won a lot of games, and so it was awesome. * Defining what a stock is * Talk about the big 3: the cash flow statement, balance sheet, and income statement * Earnings manipulation So I think going back to the basics is always a great thing and you can never know enough, and it’s always good to just learn the foundation and kind of build from there. Andrew: yeah let’s talk about stocks. I mean if there is a way to change the archive so this would be the first one. And people would just kind of follow a progression that would be awesome and hopefully this is an episode that we can reference in the future and tell people hey if you’re completely beginner and you want to understand how the stock market works and why it works the way it does and what it all means from the most basic perspective. Hopefully, this episode will cover that so basically you know we talked about this a lot how a stock is part owner of a company. But you know what does that mean exactly what is the stock market at all and then you know why it even they exist is. So you have to think about the way the business world works for a minute, and I’m not going to use the lemonade example because I feel like everybody uses a lemonade stand. So let’s say you have a coffee shop it’s very successful you got the line up the door and demands high to grow the business. You have a couple of options as the business owner; you can use cash which might take a little while because you need to collect more cash save it up and use that to build a new store or in your shop or whatever or you know you could go the bank get a loan.