The Investing for Beginners Podcast - Your Path to Financial Freedom

  Welcome to Investing For Beginners podcast, this is episode 42. Andrew and I are going to do something fun tonight; we’re going to answer some reader questions. * Correction about how to treat capital gains when selling a stock. * What options are there to check the financials of a company before year’s end. * Different strategies to utilize when prices fall to help protect your investments. * Tips to find the right broker for you. We’ve gotten some emails in the last week, or so that had some interesting questions. Andrew and I thought we would chat a little bit about those so without any further ado Andrew I’m going to turn it over to you big guy and let you start us off. Andrew: yeah let’s catch up on some of these huh yeah okay first one person. Alan, he says “hey Andrew in the last episode 39 the question was asked when you buy stocks over time and then you sell which gets sold first, the ones you bought or later ones? Alan says you and Dave said it didn’t matter from a profit standpoint is correct, but for calculating capital gains tax, it can mean the difference between long-term and short-term capital gains. So if I buy ten shares of stock XYZ a year and a half ago assuming long-term capital gains kicks in after one year and I bought another ten shares three months ago and today I sell ten shares will I pay short-term or long-term capital gains on the sale? So, Alan, you’re right it does matter as far as capital gains taxes go. I mean like we mentioned in the episode there’s that cut off time of 12 months, and so if you’ve held the stock for less than 12 months, it’s short-term capital gains. Longer than that’s long-term so in essence, if you were to sell the shares that you can hold for as long then yes that would affect how much you get in at the end of the day because you’ll be getting short-term and long-term capital gains. The way I look at it, Dave you can correct me if I’m wrong, but either the brokers going to do that for you and then if they don’t because it’s a thing right where the broker is going to give you a form while your tax implications based on your buys and sell. And then you will either take that to an accountant or if you’re doing a Turbo Tax thing whatever that may be. But at least with my accountant, I’m usually telling him like my dollar amounts as far as how much stock I sold and then saying if it’s a long-term or short-term capital gains. I don’t know if that’s the case I’m assuming if you’re doing a Turbo Tax that’s value you will enter it manually. So I’ll be aware of it yourself and then interact so you know if you’re buying 20 shares ten of them would be long-term ten short terms and you’re selling just the long-term capital gains. Be aware that worth to the IRS that and then if there are any discrepancies if you get audited by the IRS the trade histories all going to be there with your broker. So if anything anybody wants to challenge what you’ve inputted it’s just the case of looking back, and it’s a simple math thing, and you’re just look looking at the difference between the dates and then looking at the activity I don’t see it being an issue, but it is good that you look. But because there is that difference, and we didn’t clarify that an episode 39, again I’m not a tax professional. This isn’t any professional advice but for my honor for my understanding the capital gains things are things that you are self-reporting to the IRS. And in the case of an audit, you should have the proper documentation from your broker that they sent in the mail. Dave: Yeah,

  Welcome to Investing for Beginners podcast, I’m Dave Ahern, and Andrew Sather is here with us as well. Welcome to episode 41, tonight we’re going to talk to Brad Conway who’s coming all the way from merry old England. Brad is a newer investor, and he’s got some great questions for us tonight. So without any further ado, I’m going to hand it over to Andrew and Brad. A special note I had some audio difficulties with my speaking tonight, my computer was not working so I had to use my phone. So the audio quality for me will not be so great, so I apologize for that in advance, thank you for your patience, and I hope you guys enjoy the show. * How trailing stops and the best ways to utilize them * Lessons we learned from our stock losers * Margin of safety, emphasis on safety * Debt to equity, price to book and other important metrics   Brad: excellent yeah, thanks, Dave. So the first question and I want to ask is around stopgaps and there are you know listen to all the podcasts and you talk about I believe you said it’s 25% less of the value that you bought it out of stock and we’re on though is when that gets triggered and are you instantly just selling or do you do little bit of digging around what’s the reasons behind that? Andrew: so this is very personal depending on how people want to utilize trailing stops I’ve talked on the podcast in the past about how I split my portfolio into two. So I have the part of the portfolio that’s strict with trailing stops and then the part that is more of like what you’re talking about where if something goes wrong I’m going to dig into a deeper look to see if the stock price that’s fallen is really because of bad fundamentals, bad company financials, or if it’s just because the crowds kind of lost their mind. In a sense where they’ve had pessimism, but you know that from a fundamental standpoint it’s just temporary and that the company will be able to recover over the long-term health. If the company is not compromised when I saw when I do trailing stops I stick very strictly to those and that is because I’m making that portfolio I talk about how sometimes it’s a little bit more risky in the sense that I’ll maybe chase stocks with less of a track record of like growing the dividend for example. Maybe less stability, I’ll get more of more of the margin part of the margin of safety but always within the context of having a good balance sheet, having low debt. So because that’s the parameters of those stocks that I’m picking, then I’m super strict to the trailing stop. It’s once the end of day closes at 25% loss or greater then I’m selling that next business day. Other people can kind of look at trailing stops in a different way you can approach trailing stops differently if you’re let’s say like another way that I could see somebody doing it that would work out well. Would be to do trailing stops and be flexible on the upside and not the downside. So what I mean by that is let’s say a stock just went straight down 25 percent when you bought it don’t you know that you that trailing stop is there to protect your downside. So don’t let that like don’t debate it at all just follow the challenge stop at that point. But let’s say your stock went up 50% and then lost 25%, maybe at that point you want to say okay well I’m already up on the position I don’t have to be as strict necessarily. I’m protecting my downside because the stocks already made such a great profit and then kind of dig in from there and see okay do I see this as just a short obstacle that I will eventually overcome and that the company will eventually overcome, and so it turns out I was right with the pic,

Welcome to Investing for Beginners podcast, this is episode 40 in which Andrew and I are going to talk about “The Richest Man in Babylon” a book that was written by George S. Clasen.  This was written back at, but we even know the 30s is that correct? * Learn to save money * Put your money to work for you * Find a way to increase your income, either from a side job or a raise at work * Use compounding to your advantage Andrew: yeah man I don’t have a clue, hopefully, glean something out of it. Dave: okay fair enough, so we’re not exactly sure when the book was written without having it in front of us. Yeah but it’s one of the easiest books to read, and it is amazingly insightful, and it has a lot of great advice about personal finance. And it was one of the first books I read when I started digging into investing in kind of personal finance. And again the name of the book was The Richest Man in Babylon, and we’re going to talk about the seven cures for fattening the purse. So he has seven different cures that Andrew and I are going to go through and talk a little bit about so I’m going to have Andrew go ahead and start us off with number one. Andrew: Yeah, I mean I think everybody out there who wants to complain about finances. If sees himself in as a tough situation and wants to crawl out of it should read this book and listen to this episode over and over again. Because a lean purse I mean you can just see that imagery and when you hear those words and this very powerful love. The ancients you know these dislike very ancient mythological kind of theme that he put to this book. So and yes it was one that I also recommend it, I recommend it in my Seven Steps to Understanding the Stock Market. I have a post where I recommend various investing books, and this is definitely up there it was one of the first I also read and just picked it up. Probably didn’t put it down until I finished reading through, it’s an easy read, and that’s super insightful, and it can inspire you because then you feel like you know what to do next because that’s the thing about a lot of these concepts we like to talk about on the podcast. If you’ll notice Dave and I will focus more on timeless principles rather than you know what’s what was hot on CNBC yesterday I think there are certain principles and fundamental philosophies and foundations that really will work no matter if it’s 2017 or if it’s 3017. You know what I mean it’s just one of those things and we’ve seen it like you say I think is the 1930s. I’ll put them through the book looks like he has versions from late 1920, the 1930s and 1950s. Even so, I’m sure there’s plenty of versions of this book, so this is something that you know they say when you talk about books. The longer, the older the book is, the more valuable it probably is. Because if people are still talking about it today I mean just really stood the test of time and The Intelligent Investor is o...

Welcome to Investing for Beginners podcast, this is episode 39. Andrew and I are going to respond to an email that Andrew got asking us some questions. So today we’re going to talk a little bit about some of his questions, go in-depth and answer those for him. So without any further ado, I’m going to turn it over Andrew, and he’s going to take us through some of the questions. * How trading fees can affect your investments * How IRAs work * The differences between a Roth and a Traditional * The benefits of a 401k * Some pros and cons of Robinhood Andrew: thanks, Dave, okay this is from Kurt.  Kirk says “Hi Andrew, I recently less than two weeks ago came across your podcast and found it so useful and informative. Then I went back to the beginning and then in the process of binge listening to my way through the list of 30 some episodes.” Andrew: which by the way I say that I highly recommend doing that I remember when I first started listening to podcasts I went through archives of the ones I liked and that’s a great way to you know get knowledge and get acclimated with what’s going on with these topics of these podcasts. so continuing to read on with the email “before discovering the Investing for Beginners podcast I loaded RobinHood on my phone and began thinking about which stock or fund to purchase. I’m glad I found you when I did, I still don’t have a clue which will be my first purchase, but I now understand that my original selection would have been based on greed for something that is likely overpriced or has other indicators of a poor investment.” Andrew: sidebar again, that’s very insightful and good job there Kurt at recognizing that and potentially you know you probably saved yourself thousands of dollars in losses and pain by stumbling onto this resource and really taking it to heart and picking it up really quickly, so that’s great back to the email Kurt says so “I set up my account with Ally, and I’ll keep reading and doing company research. I hope to make my first of many regular monthly investments around Thanksgiving, possibly sooner if something happens to cause the market to dip. thanks again for educating beginners like me to save us from ourselves.” Andrew: you’re welcome, very well put. “I’m finding this to be fun and refreshing after 20-some years of dealing with mutual fund and annuity managers who offer little help and don’t have a clue on how to be an intelligent investor. Andrew: Now to the questions. Do they, so he’s talking about Ally’s  $4.95 trading fee. He asked: do they charge both buying and selling or one or the other? So some of these are just going to rapid fire. Dave, I know you know the answer. Dave: that would be yes. Andrew: yes so you got a fee on the buy fee on the sell. How much does the investment need to appreciate before one makes that back? Andrew: I mean that’s going to depend on how much you’re putting in. So I believe we’ve talked about it before but on 150 dollars a month that’s anywhere from one to three percent of a loss like right off the bat. If you’re going to invest more than that obviously making $4.95 back isn’t that big of a deal. That’s a big reason why I always talk about you know try to have at the bare minimum one hundred and fifty dollars to invest. So you’re not losing five, ten, fifteen percent straight off the bat just off of a transaction fee. When you when you talk about a thousand dollars or more it that $4.95 is unsubstantial and you know you don’t have to make you don’t have to worry about it you don’t have to wait a long time to make that up. and even in the grand scheme of things I mean you’re going to see stocks go up in you could see him go up a...

  Welcome to Investing for Beginners podcast, this is episode 38. I’m Dave Ahern, and we have Andrew Sather here with us tonight. Tonight we’re going to have some, the fun we have a special guest with us tonight. So we’re going to be interviewing Maj and Maj is from Geo Investing.   * The differences between minor caps and small caps * Defining information arbitrage * The advantages of reading press releases * How to confirm management statements * The importance of footnotes in financial statements, especially subsequent events     that’s the name of his company, and he’s a very very interesting guy, and this is going to be a lot of fun so without any further ado, Maj would you take a moment and tell everybody about you and kind o fwhat you do and who you are where you from and all that kind of fun stuff. Maj: excellent yeah well thanks guys for having me here. This is an opportunity; I love talking to other investors and learning new things and every day and hopefully be a little bit today from each other. So you know Geo Investing was launched in 2007 when our tenth year anniversary geoinvesting.com and you know it’s you know it’s a site that we brought I co-founded with my partner Dan and you know we launched it with the intent to help educate investors about the advantages of investing and smaller capitalized companies. Small caps, minor caps you know and it to help understand how they can get an investing advantage doing that. And you know in the increasingly competitive environment and you know we’ve been doing that and we it’s been an awesome ride, and we bring our products to our members through morning emails, through model portfolios, through a lot of proprietary research. And you know and our we call our investing call to actions which are what we’re buying and selling. We do a lot of long stuff, mostly long stuff, but you know we pay attention to risk factors so once in a while you’ll be losing called portfolio protection and if we find some bad apples in the smaller capitalized space. We’ll talk about it because we think there are too many bad apples out there you know surprisingly since 2008 you can be less. But you know we’re out there to help protect our membership base and our subscribers from you know finding these value traps, unsavory management teams and you know we were a unique blend in that you know you resource is intense. You know you’re either going to love us like this is crazy, and we’re very we disclose everything we do, and we know what this unique blend offers our members to be able to hey you know one of these guys doing this. I’ve been doing this for almost thirty years now, so I want to experience, and I’ve made a lot of mistakes myself, and they get to learn from that, but it’s also for the investor who wants to do their research. you know we have a proprietary research of over 1,000 research pieces on needing honest on the space and I kind of make it akin, like I make acomparison with like the value line from like our caps you know value line is a great source that you I learned and did use when I knew first getting into investing. Studying Peter Lynch and the kind of you know started my whole routine and what part of my routine when I was younger wow I wish that existed for really really small companies. The few quality ones out there, so that’s kind of what you know where we’re at these days. And well I love our reasons we’re tracking a reason for tracking is like really quick. Again if you don’t have internet I’m you know quick five to ten reasons I like a stock we’re getting into it, and it takes the system I remember through our whol...

Welcome to Investing for Beginners podcast, this is episode 37. I’m Dave Ahern, and Andrew Sather is here as well. Tonight we’re going to talk about Peter Lynch quotes. This is one of Andrews’s absolute favorite investors. He read his book quite a while ago called Beating the Street and One Up on Wall Street, and he loved them, and so we thought maybe we would chat a little bit about quotes that Peter Lynch has. * Find businesses that sell to other businesses or B2B * Know what you’re buying and why you’re buying it * All the math you need to invest you learn in fourth grade * Investment ideas can come from anywhere And talked a little bit about his investing philosophy and his ideas and saw how they could help you with your investing. So without any further ado, I’m going to have Andrew go ahead and take us away. Andrew: just as a disclaimer, I haven’t read One Up on Wall Street yet, that’s on my to-do list. Oh, guess I’m missing out right but Beating the Street was the first investing book I ever read. It’s super easy to read like I just couldn’t put down the book and I mean I guess I could say the same thing about the Intelligent Investor.  But I’m aware that the Intelligent Investor is a lot harder to get through, it’s a lot drier but Beating the Street, he writes in very conversational tone. It’s almost like a story following his journey in his career and for people don’t know Peter Lynch. He ran the Magellan fund from Fidelity, so super successful in those times he had beaten the SP500 for 11 of the 13 years he ran the fund. He turned 18 million dollars in assets into more than 14 billion, so he did the whole Michael Jordan thing. if Michael Jordan would have stayed retired where he became the best and then just retired at that point. You know 13 years is such a small period as an investor, so he came out on top and just stopped there. I know I think he talks about just having more of a really easy life and how he didn’t want to be researching as much as he was to find this kind of deals. One of the things he talks about one of the terms he uses is called a ten bagger. so that was his idea of basically when a stock you buy gets 10x of its value, he calls that ten baggers and he has different strategies in Beating the Street of how he tries to pursue these ten-baggers. That was one of his unique takes that he contributed to the investing world, and obviously, the two books which you know Dave obviously recommends One Up on Wall Street, I highly recommend Beating the Street. These books have sold millions of copies, and he has had contributions there, and he’s also had some great quotes just talking about the stock market in general that we would like to share with you that you should keep in mind. We’ve had quotes from Warren Buffett Seth Klarman, we did a Benjamin Graham episode, so put these in your back pocket. And if you’re taking notes may be put these quotes down in your notes, and you know we talked about checklists the other day with one of the episodes. They had a great breakdown on different buy and sold checklists. I just actually got an email from a listener today who said that he’s working on his stock checklist and so he’s finding the resources we’re providing to be very helpful for that so hat tip to Dave and if that’s the kind of thing that you’re doing with your investing style. Have something that you can refer to over and over again and you know it’s it might not be easy to read a whole book like some of these legends has written and authored.

  Welcome to Investing for Beginners podcast this is episode 36, I’m David Ahern, and Andrew Sather’s here as well. Tonight we’re going to talk about Tesla. Tesla’s going to be our whipping boy tonight, so I’m going to start off by chatting a little bit about an article that Andrew forwarded to me. He subscribes to the Stansberry digest, and Porter Stansberry is one of Andrews mentors and one of his favorites He sent me this email a few weeks ago that was kind of awesome, and it talks a lot about Tesla. So I thought that would be a great place for us to start and we’ll just kind of riff off of that. So I wanted to talk a little bit about just kind of quote here from the article real quick and then we’ll kind of get into it as Porter says. “As we explained many times. It’s not that we have a problem with the electric carmaker’s products rather it’s Musk’s questionable ethics and the fact that it’s simply a terrible business Tesla has missed virtually every manufacturing deadline and sales target it has ever set. It loses money on every car it sells, I’m going to say that again it. Loses money on every car it sells. despite forcing taxpayers to subsidize a huge portion of the cost and has burned through nearly 10 billion since 2012, 10 billion, holds another 10 billion in debt and has never ever turned a profit. And yet somehow we’re supposed to believe the company is worth more than 56 billion today. I believe it is the largest by market cap automaker in the United States as we speak today.” Which is just obscene, so I think those facts kind of speak for themselves. But I know Andrew has a few things you’d like to say about this, and we’ll get going Andrew: oh yeah, I mean that fires me up, so it was a very timely email to because one was it back in October 3rd, so that’s when I got this email from them. And then today it’s the 14th when we’re recording this, and it’s big in the news right now that Tesla just laid off 400 workers. So when you talk about like the whole ethics of Tesla, the company and you know obviously we’re going to get into the financials and the valuation and the stock price and how all of that relates to itself. And so you have to know just like we talked about with snapchat and one of our previous episodes just like we’re always pounding the table about how there are these bubbles. There’s been bubble mania, tulip mania all these sorts of things that we’ve seen historically and Teslas like a spitting image of that. Today with the way that its stock price has gone and what it’s continuing to do despite the fact that like you just said they are losing money. Not only from a complete earnings perspective as far as total annual earnings but their car sold. That’s kinda ridiculous, and that’s bad, and a reason that I have such a big problem with it is not only is it against what I how I try to invest. Obviously, I’m always we’re always talking about going for a margin of safety with the emphasis on the safety. So preservation of our capital is number one, we’re trying to get into these companies that are very strong financially, and Tesla unchecks all those boxes. It’s not in a great strong financial position, it’s not creating lots of earnings and profits and dividends for its shareholders. Not only that but there’s like the email said there’s like a moral, ethical side to this that that’s not discussed much. And you know I’ll be far from the first person to say that I’m some altruistic guy who has great intention. You know I’m not like the Pope okay, I’m very, very selfish and a lot of the things I do are very stuff selfishly motivated.

Welcome to Investing for Beginners podcast this is episode 35. Andrew and I are going to talk about the dividend discount model today. So we’re going to have a little conversation about a formula, this is something we haven’t done a whole lot of, and without any further ado I’m going to have Andrew go ahead and start us off What we will learn today: * What the dividend discount model is * How to find the info to plug into the model * Intrinsic value can be found using this formula * Works best for dividend-paying companies Andrew: Yeah, actually I was just going to give a little intro. So Dave and I are working on something on the side. Still too early to say what it is yet. But I’m excited because we’re working on something big, and it’s something that people have asked for. I think it’s one of the best things you know we’ve ever done even with all these podcast episodes. So today’s episode is going to be kind of derived from that. Some of the lessons that we’ll learn here really parallel. So I’m excited for this one. I also wrote an email earlier today about dividends, and obviously, I do that a lot. But in a way it was relating dividends with evaluations, so this is kind of like perfect timing to take what we’ve been working on. Take what Dave’s been working on behind the scenes and give you guys a sneak peek of what’s to come in the future. Dave wanted to start off with a dividend discount model or models that you have been worth looking at any kind of studying. Dave: okay, all right awesome so well thank you for that. So dividend discount model, so this is a formula, and we’re going to talk a little bit about that formula. The dividend discount model is one of the easiest ways to value a company that pays a dividend. And there are many ways to do valuations; there is the Benjamin Graham formula, there’s a discount of cash flows. Dividend discount model is one of the easiest ones to do. There are only three inputs to it, so it’s super simple. You don’t have to have higher math skills to be able to do this. It’s not extremely complicated; there’s not lots of different variables and formulas and things you have to figure out. It’s information you can gather pretty easily and put it together, and it can give you kind of a framework and a guideline to look at when you’re trying to value a company. Especially a company that pays dividends, so what this company, what this model will work great for are any company that’s going to pay a dividend. So whether it’s going to be something like a REIT, which we talked about last week, whether it’s going to be just a normal company like let’s say Microsoft. Or somebody of that ilk you know anybody that pays a dividend this will work for. What it won’t work for are companies that do not pay a dividend so, for example, Tesla, Facebook, and Netflix. So notice those are really big companies, Google none of these companies pay a dividend so this particular model will not work with them. So that being said let’s talk a little bit about the formula. So the formula is also known as the Gordon growth formula, there’s a professor back in the 1960s that popularized it. It was created in the 1930s, but in the 1960s it’s kind of really when it became more popular and was utilized much more. When we buy a stock when an investor when we buy a stock we expect cash flows to come from two areas. One is the current and the future dividend payments. The other one is to increase is an increase in the value of the company as its being held. So as we don’t hold a company over the course of its lifetime, as it goes up in value that’s going to be one of the other cash flows that we’re goi...

  Welcome to Investing for Beginners podcast I’m Dave Ahern, and Andrew Sather is as well. Tonight we’re going to have a special guest with us. What we are going to learn in this episode: * The difference between fundamentals and technical analysis * Having a great mental state of mind helps your investing. * The motivation behind analysts recommendations * How to make education part of your everyday routine His name is Sasha, and we’re going to have a little conversation between all of us so without any further ado Sasha, wouldn’t you go ahead and tell the two or three people that are not familiar with you out there a little bit about you. Sasha: Hey thanks for having me. A little bit about me as far as I guess my background goes that’s related when it comes to stock trading. I mean I got into stock trading when I was a young teenager, and a lot of that comes from taking the funds that I had when I used to do a lot of web development. So my mom was into investing simply because she was a private healthcare nurse and all the older folks. What they did in Florida was watch their investors, watch what their investments and see how things were going. And slowly she got interested in that and slowly I got interested in that and all the money that I made from the web development, graphic design field and marketing as well. As time went forward, I went ahead and put those on investments, had a lot of losses at the beginning of course. One of the larger ones was around fifteen sixteen thousand dollars when I was still a teenager. And you know took me probably about seven-eight years to put the puzzle pieces together slowly after college there started to put things together and that’s when a lot of things fell into place and a lot more consistent at that point. So I was always big into education, teaching martial arts as well early on in my years and because I loved education. Was a study not read a lot of books, video courses anything I could get my hands on. I decided to sell a bunch of my old businesses like my web design business photography business, a lot of the graphic design entities that I owned and went into just teaching investing. Now doing full-time investing in teaching investing pretty much or business related things. So that’s the quick summary as far as my background in history. And now that’s kind of what I do is I just in my spare time I write books and create video courses and online videos. Most of it 99% is free, and I’m watching my investments pretty much every single day. And as I look at the screen left, and right I’ll also dabble in write a little book. So that’s kind of what I do on a day to day basis. Andrew: you’re very modest because you do have a large time on YouTube over at tradersfly.com. Can you talk just a little bit by the way you approach the markets? Is there I know there is a general strategy can you just maybe cover that on a like 101 basic level of how you look at the markets and where you see opportunity and how like what the action plan is to capitalize on that opportunity? Sasha: okay the way I look at the markets is going to be more different than I think many other people look at it. And I say this because I’ve had a lot of coaching students that I’ve worked with especially at the beginning of the way that I see initially people get attracted to the markets. The way that they see things in the way that I look at things a lot of people look we’re trained especially through a lot of the news media through a lot of articles. And even so many books to concentrate and focus a lot on fundamentals and focus a lot on the company’s focus. What the companies do and that’s great from a larger perspective when you’re looking at a 5-10 year investment or hold period.

  Welcome to Investing for Beginners podcast, I’m David Ahern, and Andrew Sather’s here tonight. We’re going to talk about REITs. We have episode 33 tonight, and we’re going to talk a little bit about REITs. What we will learn today: * What a REIT is * How to value them, hint: the same way as any other stock * How a REIT can help your portfolio * REITs can give you exposure to the real estate asset class * How to treat dividends in REITs from a tax perspective * Whether or not they are a good investment for you. We had a listener comment on our podcast earlier a couple of episodes ago, and we wanted to go ahead and answer his question and speaking of answering this question. Andrew has his comment up, and he wanted to go ahead and get us started. Andrew: yeah so this is from Bart. He says this was a comment he left on the blog on one of the episodes. He says “guys love the show. The quick question whether your thoughts on REITs, they seem to pay high dividends but is there a catch?” So maybe we should start off and introduce what a is REIT. Its REIT stands for Real Estate Investment Trust; it is basically like it says in the title it’s a trust and it usually holds a portfolio of real estate different properties. And there are different categories that you can see when it comes to these. Some of them will hold commercial real estate so think the malls and office buildings and the real estate that’s attached to those. Some of them do residential real estate, there are other types which I don’t know the nitty-gritty on all of them. But there are quite a few different industries around REITs. And so basically they hold these basket of real estate properties, and they hold them and their income-producing properties. Then what the owners will do is they’ll reallocate those whatever income comes from the trust then gets distributed to shareholders. So it works like a stock as in you can buy it in the stock market on an exchange. You can see that price go up or down you get paid a dividend based on what the earnings are, and so it has a lot of similarities to stocks, but it also has some technicalities which I think we can get into as. Dave: well yeah they’re they’re interesting, they’re different beasts for sure. They’re you know the valuations of them are a little different than other regular stocks. Just because of the way that they’re set up. And you’re right on the money about the different types of REITs and you know I’ve read different things about REITs in some information about them and you know I’ve seen different blogs and listen to podcast people talking about them. Preston and Stig, two of our favorites had a great interview; I guess another interview I’m sorry they had a question-and-answer session not too long ago that Andrew was telling me about before we went on air. That they talked a little bit about REITs on there well, and they had some great comments on the REITs as well. And so there’s a lot of great information out there about REITs and you know the thing that I kind of like about the REITs is I remember when I was a young kid my dad told me once that land was one of the greatest investments you could ever have because it’s a tangible asset. And it’s something you can always own. Being somebody that’s not coming from a lot of wealth you know having the wherewithal to buy large plots of land to just kind of sit on and try to recoup that money at some point in the future is not something that’s really kind of in my nature. The whole buying the house thing and flipping thing that’s just not me but REITs gives you that. The cool thing about them is they can give you a kind of an entry level into having a bit of real estate in your portfoli...

Welcome to investing for beginners podcast I’m David Ahern, and Andrew Sather is here with us tonight. We’re going to talk about investing checklists; we’re going to talk a little bit about when to use checklists and how they can help you when you make buying stock decisions as well as selling stock decisions. * Checklists can help control your emotions * They are great at helping you avoid mistakes * They can be as short as four questions or as long as hundreds * Stock checklists are perfect for buying and selling decisions I’m going to start us off and talk a little bit about my friend Mohnish Pabrai. I’ve talked about him in the past, he’s an investor that’s originated from India, and he’s a value investor cut right out of the Charlie Munger, Warren Buffett ilk. He’s very conservative, and he’s been very very successful with his investments I believe he’s in the high40% range in returns over the last ten years or so so he is one of those gentlemen who has a very concentrated portfolio. I believe he only has six or seven stocks in his portfolio right now and the majority of them is in actually one or two companies. He’s written a book called the Dhando Investor, and if you have not read this book, it is fantastic. It’s effortless to read, and he lays out a lot of his investing principles in the book. He’s very very well-read, and he’s a great writer I’ve talked about this before, and I enjoy his writing, and he’s just he’s one of those people that’s so smart that he’s good at explaining things. It makes it sound easy and Andrew, and I have talked a lot about this. These are simple ideas that we talk about, but they’re not easy to do. So with some of the checklists that he speaks about in his book, I’m going to kind of outline those a little bit. These are some of the things that I use when I’ve created my checklist, and one of the things that I wanted to kind of say well as we talked about checklist tonight these are personal decisions that you make. Andrew and I are going to give you some ideas of some things that we use and our checklist. But I agree on withMohnish Pabrai. He has never revealed his complete checklist, as well as Charlie Munger, has not and Warren Buffett because these are personal ideas. These are things that you have to experiment with on your own. You can use some of the things that Andrew and I talked about today as guidelines, but you know as you get more experience with your investing. I would highly encourage you to create your checklist kind of go from there. some of the things that I kind of use is a guideline for me. * focus on buying an existing business * buying simple businesses and industry with a superslow rate of change * buy distressed businesses and distressed industries * buy businesses with a moat that is a big one * bet heavily with the odds are overwhelmingly in your favor * buy businesses at big discounts to their underlying intrinsic valuing-ding-ding that’s huge for us * we’re low-risk high uncertainty businesses, This is a great place to start as a framework for a checklist, and I’m going to cheat a little bit about each of these a little bit, review so you can throw your two cents worth as well. Focus on buying existing businesses for me this is all about looking for companies that are already out there. We’ve talked a lot about IPOs in the past and IPOs are can be a very dangerous thing to get into. So looking for a company that’s already in businesses already doing what they’re doing for several reasons. One you’re gonna know where the sales are coming from where the profits are coming from where the earnings are coming from whet...

Alright, folks well welcome to Investing for Beginners podcast I’m David Ahern, and we have Andrew Sather with us tonight we’re going to do a little something different off our normal beaten path. We’re going to interview someone tonight; we have a guest with us tonight who has found success with finding freedom from money, and his name is Justin. * You can retire early if you plan and stick to your plan * You don’t need to make seven figures to retire early * The 4% rule and how it is your friend * Patience is a virtue in the stock market * Being frugal and enjoying the simple things can lead to lifelong happiness We’re just going to go ahead and chat a little bit so without any further ado Justin could you give us a brief synopsis of your life up to this point tell us how you got where you are. Justin: Yeah, sure thing, so I’m Justin I retired at 33 four years ago almost to the day. I used to work as an engineer here in Raleigh North Carolina about ten years right out of college. Started working and you know to save my money invested it bought a pretty basic house here in Raleigh and just did not upgrade the house didn’t upgrade the cars until after I retired. I married my wife is also retired now she just she retired in her 30s, and she’s just crossed another big milestone birthday. So I’m not going to say how old she is but probably best yeah she might if she listens to this but she probably will she’ll probably do some, so she’s 29 again. We also have three children age in12 and five, and as a few days from now, they will get all three in school all day, so it’s a big transition period for us to have some free time during the school week and yeah that’s that’s pretty much you know me in a nutshell. Andrew: nice I love it. I’d like what your typical day sounds like because I a lot of us who are listening to the podcast. We see financial freedom as kind of the ultimate goal and that all mean different things, for different people. You know what’s there’s a lot of work a lot of discipline and a lot of saving and investing. And so you know why should we go through all that and what kind of things can we look forward to if we do finally achieve financial freedom. Justin: yeah sure I guess the at the big picture level there’s sort of a bipolar lifestyle I’m living during the school year when our kids are in school from roughly September through the end of May early June about nine months per year they’re in school. And, so we’re here in Raleigh NorthCarolina I’ve taken an easy kind of slow pace of life lots of relaxation. Simple stuff around town and then the another part of our lifestyle personality is a big summer trip. We’ll go somewhere big for the summer this year we went to Europe for nine weeks. in the past, we’ve gone to Mexico for seven weeks a road trip across the US and Canada for three weeks three and a half weeks. We did that kind of trip twice in the past few years, so you know summertime big trip. School year more laid-back local stuff around town on a daily basis it varies every single day between I might have some volunteer stuff at one of their school’s other stuff in the community. I have to go on you know going out for a walk going out for a hike around here somewhere in a nearby park walking down to the grocery store. You know getting coffee with a friend or somebody new that I’ve met hanging out people on the weekends having dinner parties over here having people over for you know pizza and beer kind of stuff. I enjoy video games, and Netflix is another pastime of mine. I also enjoy my hammock with a goodbook, it really depends today we spent several hours at a Children’s Museum in the mi...

Welcome to investing for Beginners podcast I’m David Ahern, and we have Andrew Sather here as well tonight. We’re going to do a review of an article that I came across from a blog that I read on a daily basis. It’s called the Acquirers Multiple, and it is owned by a gentleman named Tobias Carlisle. He’s a very very amazing writer, and he’s written some great books. And he has this blog that he’s a member of that one of his authors that work for him writes some great articles. The article that I came across I shared it with Andrew a couple of weeks ago, and we both liked it, and we thought this would be a great opportunity for us to talk a little bit about a gentleman named Seth Klarman. We’ve talked about him a little bit in the past before, but this article that was written kind of outlines 13 tips on how to find bargains. Seth Klarman if you’re not familiar with him has written an amazing book on the margin of safety, and it’s unavailable more or less. You can buy an Amazon I believe for a cool thirteen hundred dollars a book if you wish. Apparently, he did not release a lot of copies of the book and so it’s very very rare and hard to find I was fortunate enough to be able to find it. I read it through the professor of the local college had it, and the finance professor was kind enough to allow me to borrow it to read it. Andrew and I are going to kind of pick and choose through the tips that the gentleman shared in this article. It’s a commentary from the collected wisdom of Seth Klarman, and it’s a compilation of quotes from the by Baupost Group founder Seth Klarman. He writes an annual letter just as Warren Buffett does, but it’snot available to the public. It’s usually only available to his you know the people the insiders the people that invest in his fund. What we will learn in today’s episode: * How to find a Margin of Safety * You need to do your research to find great companies * Be patient and wait for your pitch * Buy low and sell high, look for fear and greed in the market * Don’t try to time the market, look for your value and buy with a margin of safety So I’m going to read a couple of the quotes and talk a few minutes about them and then Andrew is going to do the same. I also will link to the article in the show notes for this episode so that you will be able to find this article and read through them as you wish and find some things that you might like. The first one that I came across that I liked was “great investments don’t just knock on a door and say buy me.” That is so true, and they do not just stand up and say hey here by me I’m cheap I’m going to make you tons and tons of money. It takes work to find great investments; there’s a lot of due diligence that you have to put into to be able to find a great investment. You know Andrew, and I talked a lot about you know buying with a margin of safety, and this is a huge proponent of Seth Klarman’s investment philosophy, and there is a lot of effort that takes to go to find these bargains or these gems if you will. They’re not things that are readily available or that just kind of leap out at you. A lot of times you have to look under a lot of rocks to try to find you know the one that you like and I think that’s a great quote and that struck me when I read the article that was one of the first things that kind of jumped out at me.

Welcome to the Investing for Beginner’s podcast I’m Dave Ahern, and we have Andrew Sather. Tonight we’re going to talk about investing with your brain we’re going to talk a little bit about how your thoughts can affect the decisions that you make when you invest. Charlie Munger is one of my big heroes, and he has written many great articles, speeches, a few books about biases and tonight we’re going to talk about some of the more common biases and Andrews going to go ahead and start us off by talking about the recency bias. Andrew: yeah so obviously we’re all human beings, and something I love to preach constantly is how the stock market is very emotional. We got fear, we got greed, and it’s because it’s made up of all these people and there are some common psychological aspects that we as human beings all share that as investors that can affect the way we behave. Many of times we’re not aware that this is things that are influencing our decisions. So, if we can kind of cut that off at the beginning before it can negatively affect it can help our performance recency bias this is the idea that something that just happened is more likely to happen. An obvious example of this is when you see trend followers, and you know they see a 1-month chart and it just has the price going straight up. The recency bias would say that you know as an investor you expect that stock to continue that trend or you may have the stock that’s been flat for like two years because you see that this price is moving. And the price has nothing to do with the value of the business what’s going on in the business. We’re not digging into the financials and looking at how are the assets changing are the earnings changing strictly looking at the charts. I remember particularly when I first started out I would often let the last two years or last five years or even six months of stock price data kind of influence how I perceived the future of the stock to be likely to happen. And it’s completely just a ridiculous thought there’s like it’s like a coin flip where you know if you start to see heads consecutively. We have this idea where there are things like momentum and things like you know superstitions that certain streaks can continue some in some areas like sports. You know this can happen when you have human beings, and they’re you know their confidence and things like that effect how their performance is going to go on. But when you have companies and things that you know things that are very mathematical in the sense that if the company gets great earnings, it’s going to. It’s you know if a company sells X number of products it’s going to have this amount of earnings, and as the stock prices fluctuate through the years, the chances of a stock going up or down can be close to 50%. You look over a very long period of the time I’ve seen the numbers, and I have looked at the sp500. And took all the daily changes in price and put them out on the big spreadsheet and looked and the percentages are very close to 50/50 slightly tilts towards the market going up. While it does fall further when it does fall well more of the days go up and down, but so you have really like a problem a probability kind of like a game of chance kind of like a coin flip on whether a stock can well go up or down the following day. It’s it’s not something that they’ve done Studies on this – don’t quote me particularly on the exact study but they have a study that says basically whatever a stock did the day before does not correlate whatsoever with how the stock will perform in the next day the next week. Things of that nature so that is a big aspect of recency bias and it’s something that can kind of cloud the way that we look at stocks t...

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