The Investing for Beginners Podcast - Your Path to Financial Freedom

Announcer:                        00:00                     You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners, led by Andrew Sather and Dave Ahern. To decode industry jargon, silence crippling confusion, and help you overcome emotions by looking at the numbers, your path to financial freedom starts now. Dave:                                    00:37                     All right folks, we’ll welcome to investing for beginners podcast. This is episode 132 tonight Andrew and I are going to listen to a few clips from our uncle Warren Warren buffet that is, and we’re going to, I picked out some different interviews and picked out some different clips, and I’m going to play them for us. And then Andrew and I are going to comment on those as well. So hope you guys enjoy, and without any further ado, I’m going to go ahead and turn it over to uncle Warren and let him do his thing. Warren Buffett:                01:06                     Well, yeah, if you own stocks like it on a farm or apartment house, you don’t get a quote on those every day or every week. And I think you look, you look at the business, and the value of American does. This depends on how much it delivers in cash to its owners over between now and judgment day. And I don’t think it changes by 10%. Andrew:                              01:23                     Yeah, I liked this one. Was this from a recent Berkshire meeting? It sounds very familiar. It’s an interview that he gave on TV about a year ago. Yeah, I remember that interview. I think it was with Becky Quick on CNBC. That’s correct. I’m everything out now. Okay, cool. Yeah. Yeah. So yeah, I liked that quote by Buffet. When you look at the market, and you see the wild swings, we’ve, you know, one of the things that have been on my mind lately is the big moves and a lot of these different stocks based on just the smallest of news. And so you’ll see these huge swings and it goes against what you know is a business losing, let’s say 10% of its earning power or gaining 10%...

Announcer:                        00:00                     You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners, led by Andrew Sather and Dave Ahern. To decode industry jargon, silence crippling confusion, and help you overcome emotions by looking at the number, your path to financial freedom starts now. Dave:                                    00:36                     All right folks, we’ll welcome to investing for beginners podcast. This is episode 131 tonight. Andrew and I are going to talk a little bit about the upcoming year. So Andrew had a great idea, and we’re going to talk about the year 2020 and things to consider for your investing and your personal finance in upcoming years. So Andrew’s got a whole list of things for us to talk about. So I’m going to go ahead and turn it over to my friend and we’ll get going. Andrew:                              01:03                     Well, thank you, friend. You’re welcome. So many of the different things we can talk about. I want to talk about like the fed politics things and big themes to look out for next year. All sorts of things. I think it’s good to start with unemployment statistics. The latest figures for unemployment this is last month, November 2019, it’s down to 3.5%. So to me, when I think about what that means and how we look at the course of our finances, right? You want to make hay while that while the sun is shining and you, you want to look at a time like this where unemployment is so low as a time where you should be saving and not spending. Andrew:                              01:55                     So I think if you think about, you know if you’re gainfully employed, and you know, I’m assuming a lot of people who listen to us now probably are, and they’re looking to grow their money. This needs to be a time where you build an emergency fund, you increased contributions to the various personal finance

Announcer:                        00:00                     You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew Sather and Dave Ahern. To decode industry jargon, silence crippling confusion, and help you overcome emotions by looking at the number, your path to financial freedom starts now. Dave:                                    00:36                     All right folks, we’ll welcome to Investing for Beginners podcast episode 130 tonight. Andrew and I are going to try a little experiment. Well, Andrew is going to test some stuff out on me so he had a great idea for the show and I don’t know exactly what we’re going to do. I do, but what’s going to happen is that Andrew is going to read some information from a tank K and some footnotes, and we’re going to talk about a possible value trap. And so I’m going to be a little bit of his Guinea pig tonight, so it is like if you, and he and I were talking to you guys as listeners, I’m going to be kind of the listener tonight, so this should be kind of fun. So without any further ado, I’m going to turn it over to Andrew and he’s going to do some pocket. Andrew:                              01:18                     Yeah, let’s do it. I wanted to give like kind of a fresh perspective where you’re somebody who has no idea what’s going on, kind of a thing, and you can interject on when you have ideas or thoughts and see where the conversation goes from there. Andrew:                              01:35                     Basically, what I’m going to do in today’s episode is I’m going to do like, like let’s sit down as if we were going to try to find a stock today. So we’re going to use a screener, we’re going to use some, some financial metrics. So for you to understand where this conversation is going, you’re going to want to know the basics of that. So like I say, over and over and over again,

Announcer:                        00:00                     You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew Sather and Dave Ahern. To decode industry jargon, silence crippling confusion, and help you overcome emotions by looking at the numbers, your path to financial freedom starts now. Dave:                                    00:36                     All right folks, welcome to the Investing for Beginners podcast. This is episode 129 tonight. Andrew and I are going to go back to the well, and we’re going to answer a listener’s question. We got a great one the other day, and Andrew thought this would be a great conversation for us to have with you guys, so I’m going to go ahead and read the question, and then Andrew will take the first stab at it. All right, so here we go. I have been practicing using the VTI Excel sheet and pick Starbucks since they are a large company that has been around for a while and doesn’t seem to be going anywhere. When I input their numbers into the spreadsheet, it put on a VTI of 1428 I see. They have more way abilities than assets. Their dividend has decreased from last year, and their shareholder equity seems to be in a negative. Yet when I read articles online, they say it as a good buy. How do you reconcile these articles with the data we are receiving through the VTI process. Thank you, and love all the content. Andrew, what are your thoughts on this? Andrew:                              01:35                     Yeah, super good question. First off, and I think there’ll be a lot of fun to talk about Starbucks and take a deep dive into it. Just for kind of clarification for people who don’t know what the listener is talking about, we need to says VTI that stands for value trap indicator. It is a formula that I created and use on every stock I buy. And so basically it takes some of the financial numbers around the company and does some calculations and tells you generally whether it’s a good buy or not. So 1428, that’s a very high number in the range of VTI world. That’s definitely like in strong sell territory or at the very least, do not buy a territory. So I think you know it. It’s a great question and a great thing to think about. Because you have, you have on let, let’s start maybe with a disclaimer.

Announcer:                        00:00                     You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew Sather and Dave Ahern. To decode industry jargon, silence crippling confusion, and help you overcome emotions by looking at the number, your path to financial freedom starts now. Dave:                                    00:36                     All right folks, we’ll welcome to the Investing for Beginners podcast. This is episode 120 gig tonight. Andrew and I are going to talk about a couple of subjects that we have not talked a lot about or in some cases, not at all. If you are enjoying the show, please subscribe here. So we’re going to talk a little bit about taxes and a couple of tax vehicles that you could use to help save you some money on taxes. One of the vehicles we’re going to talk about is an HSA. And we’re also going to talk a little bit about a Roth IRA. So, Andrew, I know you’ve had some recent experience with an HSA, so why don’t you tell me your thoughts on that, and we could chat a little bit. Andrew:                              01:09                     Well, let’s chat less about my experiences with okay. Medical issues and expenses because that will piss me off. Yep. But you know, an HSA is something that a lot of people can take advantage of. And even if you think you can’t, I think maybe you can. So HSA, what is that? And you know, how can it help the average person? I think when you kind of look at the landscape of, particularly if you live in the United States and the way that our, the expenses and hospital bills and doctor bills and surgery bills and how it’s just through the roof and astronomical and it’s, you know, if you don’t have good insurance and even when you do have good insurance, a lot of times these, the healthcare system in America is just the way it’s structured has really made a lot of services. Be expensive. Andrew:                              02:12                     And you know, I, I remember reading a stat somewhere a while ago that said, one of the biggest causes of bankruptcy is medical debt. And it’s also one of the

Announcer:                        00:00                     You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew Sather and Dave Ahern. To decode industry jargon, silence crippling confusion, and help you overcome emotions by looking at the number, your path to financial freedom starts now. Andrew:                              00:35                     All right folks, we’ll welcome to the Investing for Beginners podcast. This is episode 127 tonight, Andrew and I are going to take some listener question and answer them for you. If you are enjoying this show please subscribe for future shows. We’ve got some great questions recently, and so we thought we would read through those and do our a little back and forth and give and take. So Andrew, why don’t you go ahead and read us the first question. Andrew:                              00:57                     Sounds good. So this one’s from Stefan L. He says, I’ve been following your podcast and your newsletter for about two or three months now considering signing up for your Eli there, but first and they work out the best way to invest in the US market from abroad. He says, I live and work in Bulgaria. He says I’m interested in investing in the S and P 500 during the dollar-cost averaging with monthly installments of about $300; however, the options to buy an ETF from a local broker are terrible. They want to charge me 4% commission plus $2.20 per month plus bank transaction and currency exchange fees, which roughly amounts to six and a half to 7% given that the average growth ofS and P 500 is around 8% of the year, I can hardly make any money in the long run. Andrew:                              01:44                     Have another option to buy stocks slush funds through interactive brokers where I’ll costs amounts of two and a half to 3% however, based on the audiobooks that I’ve been listening to money mastering the...

Announcer:                        00:00                     You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners, led by Andrew Sather and Dave Ahern. To decode industry jargon, silence crippling confusion, and help you overcome emotions by looking at the number, your path to financial freedom starts now. Scott:                                    00:36                     All right folks, we’ll welcome to Investing for Beginners podcast. This is episode 126 tonight; we’re going to have some fun. We are going to interview an author, gentleman named Scott Chapman. He wrote this amazing, fantastic book called Empower your Investing, and we’re going to chat about this tonight. So without any further ado, I’m going to turn it over to Scott. Scott, why don’t you tell us a little bit about yourself? Scott:                                    01:00                     Well, thanks to Dave and Andrew, that’s a pleasure to join you tonight. A little bit of background about myself. I’m a professional portfolio manager. I founded my firm about six years ago called Chapman investment management. And this, this book that you mentioned in power, you’re investing. The subtitle is adopting best practices from Peter Lynch, John Templeton, and Warren buffet. This whole project started about 25 years ago and I had gone through and gotten my MBA in finance and had gone through the CFA or chartered financial analyst program, which is a three-year program with at that time, at one test given each year you have to pass those to be success with tests. Scott:                                    01:52                     And the pass rate was somewhere around the 30 or 40% range. Three years later, I had that certification, and in 1993 I was named the portfolio manager for our large-cap growth fund, which had a one-star rating by Morningstar, which was the lowest star rating they gave.

Announcer:                        00:00                     You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew Sather and Dave Ahern. To decode industry jargon, silence crippling confusion, and help you overcome emotions by looking at the numbers, your path to financial freedom starts now. Dave:                                    00:35                     All right folks, we’ll welcome to the Investing for Beginners podcast episode 125 tonight. Andrew and I are going to continue our ongoing discussion about the no commission news that hit the stock market last week, and we had some other additional thoughts that we wanted to share with you about a couple of different topics. So the first one we’re going to talk about is something that I broached with Andrew earlier this week, and we’ve talked a little bit about it off air and we thought this would be something that might be of interest to you guys and see if it was something that might help you with your investing. So the thought that I had was, how is this going to affect ETFs? And the reason why I thought that was because before when you would go on ally, for example, and buy an ETF, let’s say a VOO, which is an ETF that tracks the top of P E an S and P 500 has got 516 stocks, I believe. Dave:                                    01:38                     So it tracks the majority of the S and P plus a few extras. So what’s to stop you from doing something a little bit different? So in the past, when you buy this particular ETF on ally, you would pay four 95 for your trade like everybody did for any other stock. And then, during the year, the ETF would also charge you a fee to manage and operate the ETF for you. Now in this particular case, it’s a 0.3, so it’s quite small, but it’s; still, it’s money that is taken from your returns at the end of the year. And so my thought was, is now that you don’t have to pay that four 95, why would you pay for the commission on not the commission, but why would you pay the management fee on the ETF? And my thinking was is that you look at, when you look at an ETF, you can see a breakdown of what it is that they are holding in that ETF.

Announcer:                        00:00                     You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew Sather and Dave Ahern to decode industry jargon, silence crippling confusion, and help you overcome emotions by looking at the number, your path to financial freedom starts now. Dave:                                    00:36                     All right folks, welcome to the Investing for Beginners podcast. This is episode 124 tonight, Andrew, and I thought we would take a break from Listener questions and maybe some of the other formats that we’ve talked about lately and talk a little bit about some current news. So for those of you out there living in a black hole of news, there was some big, big news in the stock market recently this week and there was some news that a lot of the online brokers have dropped to zero fees and Andrew and I wanted to talk a little bit about that. So Andrew, did you have some thoughts? I hear I hear you take it in. Take a breath. Andrew:                              01:19                     Somebody hold me back. Hold me back. Yeah, I think it’s like we’re watching history being made, right? And for somebody like me, I’m trying to encourage people to invest. Now. There’s no excuse. You had the emergence of Robin hood and what made Robin, what made everybody flock to Robinhood was the fact that you could trade, and there would be no commission fees. And this week just, it was like dominoes, and they just fell one after the other. So I logged into my ally account and saw this little message on the top that said, Hey, starting October nine, we are not charging commission fees anymore. Ally used to be a four 95 portray commission, and now it’s not. And then, you know, I think I think before that was what were we, what were we saying? I was like interactive brokers before that. Yup. Yup. They were one of the first ones. Goldman Sachs was I think those were one of the first two that, that went that route. And then like you said, the dominoes kind of started to fall. Schwab was the next really big one that kind of really shook up the investing world. And then soon after that followed Dave:                                &nb...

Announcer:                        00:00                     You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew Sather and Dave Ahern to decode industry jargon, silence crippling confusion, and help you overcome emotions by looking at the numbers, your path to financial freedom starts now. Dave:                                    00:36                     All right folks, we’ll welcome to Investing for Beginners podcast, this is episode 123 tonight. Andrew and I are going to answer some of our listener questions. We’ve got some great ones recently, and we wanted to take a stab at answering them for you on the air. So I’m going to go ahead and read the first question and then Andrew and I will do our little thing. So our first question is, hi Andrew. I currently make over six figures,  and my wife stays at home with our 20-month-old twins. Wow. We have a few school loans left, roughly 15,000. I am still balling the payments as well as to pay off quicker. My question is, should I continue to dollar cost average and invest or take that amount and put it towards the loans? I also put a little bit aside for my paychecks for my daughters. I also have a 401k with my company. I get a fully vested 3% than 100% of my first 3% and 50% of the following 3%. So I don’t want to lose out on the free money. Does it make sense? I just turned 34 last week, as well. Thank you to you and Dave for all the advice constantly. Andrew, what are your thoughts? Andrew:                              01:46                     Hmm. So this kind of hits home a little bit because like I can relate with it and I think it’s something that more and more people who are a little, I’ll say like coming up, but you know, starting their careers, starting to look into investing. A lot of younger people have student loans. And so this is one of those things where, you know, not only are you trying to figure out, you know, how do I make a budget? And then it’s like, well, how does the stock market work? How does investing work? And then now it’s like, well, should I invest or should I pay off that? And there’s get millions of different answers. So let’s tackle that back half first. And I want to see what you think about the 401k to Dave. So basically, basically, I look at a 401k matches free money, and I think that takes priority over anything.

Announcer:                        00:00                     You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners, led by Andrew Sather and Dave Ahern to decode industry jargon, silence crippling confusion and help you overcome emotions by looking at the number, your path to financial freedom starts now. Dave:                                    00:35                     All right, folks, we’ll welcome to the Investing for Beginners podcast, episode 122 tonight we’re going to do part two of analyzing the growth of the stock. And one of the things that are going to be a theme tonight is appearances can be deceiving. Not all growth is equal, so you never know what you’re going to get until you get into it. So like Forrest Gump used to say, life has a box of chocolates; you never know what you’re going to get. So tonight I think, you know, worst you’re going to get, but Andrew and I are going to talk a little bit. So Andrew, once you go ahead and start us off and then we’ll chat a little bit. Andrew:                              01:11                     Yeah, sounds good. I’m excited to hear about the example that we talked about off air. I think that kind of ties it in nicely, and it’s, you know, we’ve been talking about growth and, you know, if you haven’t listened to the last episode, I would recommend doing that. But bottom line, you know, a business grows, a stock goes higher in the stock market because it’s able to grow earnings and profits over time. And so as an investor, there are so many different ways, and like a box of chocolates, I guess. There are different flavors of ways that you can try to reevaluate a stock’s growth. And what’s frustrating is there’s never one perfect way. And you know, one, if you have some indicator that you found this year that’s worked to help you pick stocks that grew, maybe that, that indicator doesn’t work next year. Andrew:                              02:06               ...

Announcer:                        00:00                     You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew Sather and Dave Ahern to decode industry jargon, silence crippling confusion and help you overcome emotions by looking at the numbers, your path to financial freedom starts now. Dave:                                    00:35                     All right folks, we’ll walk up to Investing for Beginners podcast. This is episode 121 tonight. Andrew and I are going to talk about Benjamin Graham and growth. Andrew has been on a bit of a Ben Graham kick lately. He’s been writing some great blog posts about some of the stuff that he’s been discovered in the intelligent investor as well as security analysis, and we thought this would be a perfect time for us to talk a little bit about growth and Ben Graham, we teased this a little bit a few weeks ago and tonight is the night, so Andrew, why don’t you go ahead and start us off and we can have our little conversation. Andrew:                              01:08                     Yeah, thanks, Dave. I think it’s always a good idea once you are established and you have a good base of knowledge when it comes to investing, and I think it’s good to reread stuff because now that you have a new context, you have a greater understanding. You can pick up things I didn’t pick up the first time. So you know, a few select books, whether that’s Benjamin Graham, obviously a huge, he’s an investing legend. Not only was he Warren Buffett’s mentor he taught Warren Buffett at Columbia. He also had his investment funds, and we return 17% per year. Quite a nicest performance. And I think it was over like 30 years. So not only was he a great teacher, but he also walked the walk and made some fantastic returns. And so his books his most popular one, the intelligent investor, that one’s probably one of the best selling investment books of all time. Andrew:                              02:08                &...

Announcer:                        00:00                     You’re tuned in to the Investing for Beginners podcast. Finally, step-by-step premium investment guidance for beginners led by Andrew Sather and Dave Ahern, to decode industry jargon, silence crippling confusion and help you overcome emotions by looking at the numbers, your path to financial freedom starts now. Dave:                                    00:37                     All right folks, well welcome to Investing for Beginners podcast. This is episode 120 tonight Andrew and I are going to talk about about the dividend aristocrat list, and there were four new companies added in 2019, and we wanted to take a little brief overview of those four companies to kind of fill you in on some of the companies are added to that list. So for those of you who are not familiar with what a dividend aristocrat is, a dividend aristocrat is a company that has been paying a growing very key growing dividend for 25 years is listed in the s and p 500 and has met certain liquidity and market cap restrictions. And there are 57 companies I believe, that are considered dividend aristocrats right now. And there are also dividend kings, but where those are 50 years or more. But tonight we’re going to talk about dividend aristocrats. These are the more popular ones, and these include companies like Disney, Hormel, things of that nature. Dave:                                    01:36                     So these are great companies that have been paying a dividend and growing dividend for 25 years. And these are some companies that could be fantastic investments for you if you know when to get into them and what to look for in the companies. Now keep in mind, these are, some of these companies are not always going to be great investments. They could be overvalued at a particular time. So they may not be the right thing for you to invest in, but they certainly would be worthy of putting on a waitlist or a watch list to keep your eye on in case the market takes a downturn, and you would have an opportunity to buy into some of these when they would be cheaper for you. So without any further ado, why don’t we go ahead and chat. Andrew, why don’t you talk about one of the first companies? Andrew:                           ...

Announcer:                        00:00                     You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew Sather and Dave Ahern to decode industry jargon, silence crippling confusion and help you overcome emotions by looking at the numbers, your path to financial freedom starts now. Dave:                                    00:36                     All right folks, we’ll welcome to the Investing for Beginners podcast. This is episode 119, tonight, Andrew and I are going to talk a little bit about the companies that have helped Warren Buffet grow all of his wealth the most. And what we’re going to focus on today is, you guessed it, insurance companies who, who exciting. Fun. It is interesting, and it is fun. I promise you Andrew, and I always bring the fun. So this will be interesting, and we’ll come at this from a beginner’s aspects. So we’ll talk a little bit about what an insurance company is, what they do, how they make money. Maybe a little bit of accounting, not too much cause I don’t want to put you to sleep. And then we’ll also talk a little bit about some valuation metrics. So we’ll go ahead and start a little bit. Andrew, did you want to say hi? Andrew:                              01:24                     I did want to say hi. I think this is a very interesting topic to me because, do you think about Warren Buffet, what makes him so great? He’s, he’s a cool people person, he’s probably a great manager, all of those things. But his biggest strength is his ability to allocate capital. And so in a lot of different businesses, you have CEOs who have to make those type of decisions with their capital. You know, we’ve talked about that before. It’s like, do I want to pay out a dividend? Do I want to buy back shares? I want to reinvest in the business in Buffett’s case. And the way that they structured Berkshire, they buy these businesses and then have the business buffets. So Buffett will buy like Geico. So I think we’ll talk about that a little bit. They’re an insurance company. Andrew:                             

Announcer:                        00:00                     You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew Sather and Dave Ahern. To decode industry jargon, silence crippling confusion and help you overcome emotions by looking at the numbers. Your path to financial freedom starts now. Dave:                                    00:36                     All right folks, welcome to Investing for Beginners podcast. This is episode 118 we are back with another session of answer question mode. We got some other fantastic questions. You guys are sending us some great stuff, and this was a lot of fun. So Andrew and I get to answer some questions and try. I hope you guys weren’t a thing or two. So I’m going to go ahead and read our first question and Andrew and I, we’ll do our little give and take. So, first of all, it says hi Andrew. I want to start by saying thank you for the time and effort you put it into your podcast. As a beginner, I can honestly say that every podcast I’ve listened to so far has been a little pot of gold for gaining knowledge and investing. I appreciate it. I’m a 21-year-old from the UK who recently came into some inheritance due to my father passing away unexpectedly. I’m looking for the wisest ways to invest this and creating a solid portfolio I can build on. Dave:                                    01:26                     At the moment I’ve invested a large sum of money through Hargraves Landsdowne stocks and shares Isa into Vanguard strategy at 100% equity, which I plan on keeping it there to grow over the next 10 15 years. But I feel like there isn’t any anywhere near enough. I have a few questions. I hope you’d be able to find the time to answer. The first question I hear you talk about aiming for around 20 funds to invest in to minimize any loss. Would you advise that I invest in 20 funds over a course of say two years or aim to invest larger sums of money into four to five funds over a course of two years and keep adding from the money, which is returning from the Andrew, what are your thoughts? Andrew: