Want Investing Research Directly to your Inbox? Sign-up for my Free Substack: https://diyinvestingstocks.substack.com/subscribe? Mental Models discussed in this podcast:  Second-Order Effects Mean Reversion Factor Investing  Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing Show Outline  Selling Series  A lot of time is spent on buying stocks. Yet, almost just as important, if not more is knowing when to sell stocks.  I find this area relatively underexplored, so I want to begin a long-term series on selling stocks from the framework of a value investor.  Previously talked about selling in a single episode on Ep. 106   Today’s focus: Strategy matters  There is no one-size fits all approach How you buy stocks will influence how you sell them Your portfolio allocation strategy will matter THe number of stocks you review in a year will matter Whether you plan to own a cash position or not will matter.   Excluded from this series:  Won’t be discussing momentum investing Won’t be discussing trading or technical analysis investing (except as a marginal part of value investing when relevant) Entire focus assumes that you are a value investor of some sort (whether deep value, compounder, graham value, quality, etc…)   Deep Value:  Buy at 2/3rds of value and sell at “full price”   Compounders:  You want to hold for a long-time.  Sell when compounding ends, plateaus or you were wrong   Net-Nets  Hold a year then reassess   Waterfall Stocks:   Hold so long as dividend yield is sufficient to provide target return   Dividend Growth Investing:  Buy companies that pay dividends and grow them and sell them when they cut or eliminate their dividends   Buy and Hold  “Never sell” Works for a subset of stocks Tends to overlap well with compounders and Dividend Growth investing   

Want Investing Research Directly to your Inbox? Sign-up for my Free Substack: <a href="https://diyinvestingstocks.substack.com/subscribe" rel="noopener nofollow" target="_blank">https://diyinvestingstocks.substack.com/subscribe?</a> Mental Models discussed in this podcast: <ul> <li>Second-Order Effects</li> <li>Mean Reversion</li> <li>Factor Investing</li> </ul> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: <a href="https://twitter.com/TreyHenninger" rel="noopener nofollow" target="_blank">@TreyHenninger</a> YouTube Channel: <a href="https://www.youtube.com/channel/UCD0lzw3BdPwhx6jwrIofI0g" rel="noopener nofollow" target="_blank">DIY Investing</a> Show Outline <ul> <li>Selling Series <ul> <li>A lot of time is spent on buying stocks. Yet, almost just as important, if not more is knowing when to sell stocks. </li> <li>I find this area relatively underexplored, so I want to begin a long-term series on selling stocks from the framework of a value investor. </li> <li>Previously talked about selling in a single episode on Ep. 106</li> </ul> </li> <li>Today’s focus: Strategy matters <ul> <li>There is no one-size fits all approach</li> <li>How you buy stocks will influence how you sell them</li> <li>Your portfolio allocation strategy will matter</li> <li>THe number of stocks you review in a year will matter</li> <li>Whether you plan to own a cash position or not will matter.</li> </ul> </li> <li>Excluded from this series: <ul> <li>Won’t be discussing momentum investing</li> <li>Won’t be discussing trading or technical analysis investing (except as a marginal part of value investing when relevant)</li> <li>Entire focus assumes that you are a value investor of some sort (whether deep value, compounder, graham value, quality, etc…)</li> </ul> </li> <li>Deep Value: <ul> <li>Buy at 2/3rds of value and sell at “full price”</li> </ul> </li> <li>Compounders: <ul> <li>You want to hold for a long-time. </li> <li>Sell when compounding ends, plateaus or you were wrong</li> </ul> </li> <li>Net-Nets <ul> <li>Hold a year then reassess</li> </ul> </li> <li>Waterfall Stocks:  <ul> <li>Hold so long as dividend yield is sufficient to provide target return</li> </ul> </li> <li>Dividend Growth Investing: <ul> <li>Buy companies that pay dividends and grow them and sell them when they cut or eliminate their dividends</li> </ul> </li> <li>Buy and Hold <ul> <li>“Never sell”</li> <li>Works for a subset of stocks</li> <li>Tends to overlap well with compounders and Dividend Growth investing</li> </ul> </li> </ul>

136 - Selling Stocks for Value Investors (Part 1: Strategy Matters)

Want Investing Research Directly to your Inbox? Sign-up for my Free Substack: https://diyinvestingstocks.substack.com/subscribe? Mental Models discussed in this podcast:  Second-Order Effects Mean Reversion Factor Investing  Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing Show Outline  Today’s podcast will focus on a single precept: You can’t predict the future First and Second Order Effects  Margin of Safety Preference for cash now vs cash later (Plays into want for profitable companies) Time value of money.  Growth is important because it can correct for mistakes, but you know you can’t predict it   Some of what you “know” about investing may not be true Importance of Zero-Based Thinking (what is the best decision today based on what you know today)  Wrong because past price performance can’t predict the future (it may, but it may not)   Wrong because it assumes that winners will keep on winning and losers will keep on losing    “Don’t catch a falling knife” “Hold onto winners, trim your losers”  The central problem with rebalancing  It is definitely true that successful rebalancing CAN add value It is also true that it is IMPOSSIBLE to know if your rebalancing will be successful How then do you behave? How do you invest in the face of uncertainty?     First order: Second order:  Investing in the face of uncertainty  You cannot assume business momentum. You plan for it and buy stocks you think will have it, but your strategy cannot assume it will continue. You cannot assume reversion to the mean. You plan for it and buy cheap stocks because it offers the opportunity of reversion to the mean, but your strategy cannot assume stocks WILL mean revert in the time frame you want. You cannot assume that growth will continue. You cannot assume a specific growth target will be hit. You cannot assume that your predictions about business quality will be better on company A than on company B.   The only thing you can know to be true is that the future is uncertain.   I personally use some absolute rules (like no margin debt, no options, and no shorting). Not because they’re optimal, but because they limit my risk and allow me to take risks in other areas.     Some of your decisions will be a mistake. That doesn’t mean you don’t make a decision. Indecision is a decision.  Selling some winners may be correct and selling others may be a mistake. Your strategy needs to incorporate that understanding. “Absolute rules” can be helpful to limit mistakes, but they will inherently be suboptimal.   What is my point:  It would be a mistake NOT to trim when I am given the opportunity to do so. Failing to take advantage of opportunities that ignore zero based thinking will result in me having lower returns across an investment lifetime.  You want to build a strategy that follows this precept: “If I lived my life 10,000 times, what strategy would result in a favorable outcome across the most possible lifetimes?”  Don’t optimize for the “perfect” scenario. Don’t optimize for the “worst case” scenario.  Optimize for uncertainty. Prepare for the worse, plan for the best, and adjust daily.     There are aspects of my strategy that go against established norms. However, there are clear reasons for that. I know that I cannot predict the future.  Therefore, I am willing to sell or trim my winners when I believe it improves my potential returns and reduces my risk.    Summary:     You cannot predict the future. Be more humble.    

Want Investing Research Directly to your Inbox? Sign-up for my Free Substack: <a href="https://diyinvestingstocks.substack.com/subscribe" rel="noopener nofollow" target="_blank">https://diyinvestingstocks.substack.com/subscribe?</a> Mental Models discussed in this podcast: <ul> <li>Second-Order Effects</li> <li>Mean Reversion</li> <li>Factor Investing</li> </ul> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: <a href="https://twitter.com/TreyHenninger" rel="noopener nofollow" target="_blank">@TreyHenninger</a> YouTube Channel: <a href="https://www.youtube.com/channel/UCD0lzw3BdPwhx6jwrIofI0g" rel="noopener nofollow" target="_blank">DIY Investing</a> Show Outline <ul> <li>Today’s podcast will focus on a single precept: You can’t predict the future</li> <li>First and Second Order Effects <ul> <li>Margin of Safety</li> <li>Preference for cash now vs cash later (Plays into want for profitable companies) Time value of money. </li> <li>Growth is important because it can correct for mistakes, but you know you can’t predict it</li> </ul> <ul> <li>Some of what you “know” about investing may not be true</li> <li>Importance of Zero-Based Thinking (what is the best decision today based on what you know today) <ul> <li>Wrong because past price performance can’t predict the future (it may, but it may not)</li> </ul> <ul> <li>Wrong because it assumes that winners will keep on winning and losers will keep on losing</li> </ul> </li> <ul> <li>“Don’t catch a falling knife”</li> <li>“Hold onto winners, trim your losers”</li> </ul> <li>The central problem with rebalancing</li> <ul> <li>It is definitely true that successful rebalancing CAN add value</li> <li>It is also true that it is IMPOSSIBLE to know if your rebalancing will be successful</li> <li>How then do you behave? How do you invest in the face of uncertainty?</li> </ul> </ul> </li> <ul> <li>First order:</li> <li>Second order:</li> </ul> <li>Investing in the face of uncertainty</li> <ul> <li>You cannot assume business momentum. You plan for it and buy stocks you think will have it, but your strategy cannot assume it will continue.</li> <li>You cannot assume reversion to the mean. You plan for it and buy cheap stocks because it offers the opportunity of reversion to the mean, but your strategy cannot assume stocks WILL mean revert in the time frame you want.</li> <li>You cannot assume that growth will continue.</li> <li>You cannot assume a specific growth target will be hit.</li> <li>You cannot assume that your predictions about business quality will be better on company A than on company B. </li> </ul> <li>The only thing you can know to be true is that the future is uncertain.  <ul> <li>I personally use some absolute rules (like no margin debt, no options, and no shorting). Not because they’re optimal, but because they limit my risk and allow me to take risks in other areas. </li> </ul> </li> <ul> <li>Some of your decisions will be a mistake. That doesn’t mean you don’t make a decision. Indecision is a decision. </li> <li>Selling some winners may be correct and selling others may be a mistake. Your strategy needs to incorporate that understanding. “Absolute rules” can be helpful to limit mistakes, but they will inherently be suboptimal. </li> </ul> <li>What is my point: <ul> <li>It would be a mistake NOT to trim when I am given the opportunity to do so. Failing to take advantage of opportunities that ignore zero based thinking will result in me having lower returns across an investment lifetime. </li> <li>You want to build a strategy that follows this precept: “If I lived my life 10,000 times, what strategy would result in a favorable outcome across the most possible lifetimes?” </li> <li>Don’t optimize for the “perfect” scenario.</li> <li>Don’t optimize for the “worst case” scenario. </li> <li>Optimize for uncertainty. Prepare for the worse, plan for the best, and adjust daily. </li> </ul> </li> <ul> <li>There are aspects of my strategy that go against established norms. However, there are clear reasons for that. I know that I cannot predict the future. </li> <li>Therefore, I am willing to sell or trim my winners when I believe it improves my potential returns and reduces my risk. </li> </ul> </ul> Summary:  <ul> <li> <ul> <li>You cannot predict the future.</li> <li>Be more humble. </li> </ul> </li> </ul>

135 - Investing in the Face of Uncertainty

Want Investing Research Directly to your Inbox? Sign-up for my Free Substack: https://diyinvestingstocks.substack.com/subscribe? Mental Models discussed in this podcast:  Look-Through Earnings Dollar Cost Averaging Earnings Yield Opportunity Cost  Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing

Want Investing Research Directly to your Inbox? Sign-up for my Free Substack: <a href="https://diyinvestingstocks.substack.com/subscribe" rel="noopener nofollow" target="_blank">https://diyinvestingstocks.substack.com/subscribe?</a> Mental Models discussed in this podcast: <ul> <li>Look-Through Earnings</li> <li>Dollar Cost Averaging</li> <li>Earnings Yield</li> <li>Opportunity Cost</li> </ul> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: <a href="https://twitter.com/TreyHenninger" rel="noopener nofollow" target="_blank">@TreyHenninger</a> YouTube Channel: <a href="https://www.youtube.com/channel/UCD0lzw3BdPwhx6jwrIofI0g" rel="noopener nofollow" target="_blank">DIY Investing</a>

134 - Dollar Cost Averaging into Individual Stocks

Mental Models discussed in this podcast:  Dead Money Opportunity Cost Time is Money Intrinsic Value Compounding  Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing Show Outline The Dead Money Problem and Solution  “If you remember only one thing today: Time is Money”  What is Dead Money?   Any asset you own that is not growing intrinsic value over a period of time.  The focus here is on the fundamentals of the business. NOT the stock price. We can’t predict stock prices. We’re not going to try.   Why is this a problem?   The longer you hold a dead money position the worse off you are.   Principle: Time x Position Sizing x Expected Return of Alternatives = Lost value   By using this formula you can anticipate how much exposure you have to dead money losses.   The Solution:   The impact is large (Big “lost value” bucket) [&gt;&gt; 1%] The likelihood of success is high (Big difference in expected return between opportunities)  At least 10%   Passivity is better than action. Action leads to errors. Always remember that you had good reasons for your original buy decisions.    Summary: Time is Money! Investors lose value on any asset they own that is not growing intrinsic value over time. This episode provides value investors with my solution on how to optimize their portfolio in the face of dead money assets and potential opportunities

Mental Models discussed in this podcast: <ul> <li>Dead Money</li> <li>Opportunity Cost</li> <li>Time is Money</li> <li>Intrinsic Value</li> <li>Compounding</li> </ul> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: <a href="https://twitter.com/TreyHenninger" rel="noopener nofollow" target="_blank">@TreyHenninger</a> YouTube Channel: <a href="https://www.youtube.com/channel/UCD0lzw3BdPwhx6jwrIofI0g" rel="noopener nofollow" target="_blank">DIY Investing</a> Show Outline The Dead Money Problem and Solution <ul> <li>“If you remember only one thing today: Time is Money” </li> <li>What is Dead Money?  <ul> <li>Any asset you own that is not growing intrinsic value over a period of time. </li> <li>The focus here is on the fundamentals of the business. NOT the stock price. We can’t predict stock prices. We’re not going to try.</li> </ul> </li> <li>Why is this a problem?  <ul> <li>The longer you hold a dead money position the worse off you are.</li> </ul> </li> <li>Principle: Time x Position Sizing x Expected Return of Alternatives = Lost value  <ul> <li>By using this formula you can anticipate how much exposure you have to dead money losses.</li> </ul> </li> <li>The Solution:  <ul> <li>The impact is large (Big “lost value” bucket) [&gt;&gt; 1%]</li> <li>The likelihood of success is high (Big difference in expected return between opportunities) <ul> <li>At least 10%</li> </ul> </li> <li>Passivity is better than action. Action leads to errors. Always remember that you had good reasons for your original buy decisions.</li> </ul> </li> </ul> Summary: Time is Money! Investors lose value on any asset they own that is not growing intrinsic value over time. This episode provides value investors with my solution on how to optimize their portfolio in the face of dead money assets and potential opportunities

133 - How to Solve the Dead Money Problem?

Mental Models discussed in this podcast:  Incentives Skin-in-the-Game Accredited vs non-Accredited Investors  Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing Show Outline Key Concepts for thinking about compensating a Portfolio Manager  Management Fees   Management Fees are priced a percentage of the assets under management.  A 1% management fee means that you will pay 1% of your assets being managed to the investment manager regardless of the returns you receive on your investment.  If you have $100k invested at the beginning of the year, you’ll pay $1k in fees, if your investment doubles, and $1k in fees if your investment gets cut in half. (ignoring the weighted average effect) Management fees can be charged to both accredited and non-accredited investors   Performance Fees   Performance fees are priced as a percentage of the profit earned on investments over the course of a year.  For instance: A 10% performance fee would provide the manager with 10% of the total profits earned during the year. If you invested $100k, and the $100k grew to $200k, then the investment manager would earn $10k. (10% of the 100k gain).  However, if the investment fell to $50k, the investment manager would earn nothing.  Performance fees can be charged only to accredited investors.   Hurdle Rates   Hurdle rates are often paired with performance fees to ensure that investment managers only earn performance fees above a certain level of return.  For instance: A hurdle rate of 5% would mean that the profit sharing only kicks in after 5% returns have been earned for the year. In our prior example, if you invested $100k that doubled to $200k, then the “profit pool” is instead $95k, because the first $5k is exempt. The investment manager then only earns $9.5k.   High Water Marks   High water marking is where hurdle rates are compounded across multiple years.  In this case, let’s assume you invest $100k, and the hurdle rate is 5% per year.  In year 1: your investment declines to $80k. You pay no performance fees.  In year 2: Your investment grows to $110k. You still pay no performance fees because despite earning 37.5% rate of return in year 2, the hurdle rate of 5% compounded in each year, so the investment manager only starts to earn fees after 10% (5% + 5%) on the original $100k. So they would only earn returns above $110k in year 2.  In year 3: They only earn performance fee returns above $115k (ignoring compound growth here).   The Buffett Model   0 % management fee, 6% hurdle rate (w/high water marks), 25% performance fee  I think this is an attractive setup and I’d prefer to structure any future fund of mine with a similar arrangement.  This is the best alignment of incentives in my view. You don’t get paid for AUM growth (directly), and only get paid for performance that beats a certain hurdle rate.  However, to do so excludes non-accredited investors. Therefore, if I want to serve non-accredited investors I’d have to charge a management fee at least for them.   What is the right answer then?  Non-accredited:  You only have management fees. You obviously want a manager willing to charge them, or you don’t get that manager at all.   Accredited:  Performance Fees may be your instinctual first option. They tend to align your interests with management. However, there are also downsides for you.  May encourage managers to take more risk. Unless they beat a hurdle, they don’t earn anything. They’ll never be 100% aligned with you.  Without a management fee, you are limiting yourself to investment managers who are already financially independent and can afford to have years without income.     Personally: I would be willing to pay or charge both sets of fees. My ideal setup is the Buffet arrangement: 0, 6, 25%. However, this isn't ideal for all investors. I could see the benefit of a 0, 10, 50% setup. I can see the benefit of only charging management fees (especially for retired investors who are seeking wealth preservation, not growth)  As always: The answer is it depends. But, I hope that I have given you the information you need to understand how it applies for you.      Summary: As an investor, you want to properly align your interests with your portfolio manager. A key consideration is how to compensate and incentivize that manager with either management fees, performance fees, or both.

Mental Models discussed in this podcast: <ul> <li>Incentives</li> <li>Skin-in-the-Game</li> <li>Accredited vs non-Accredited Investors</li> </ul> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: <a href="https://twitter.com/TreyHenninger" rel="noopener nofollow" target="_blank">@TreyHenninger</a> YouTube Channel: <a href="https://www.youtube.com/channel/UCD0lzw3BdPwhx6jwrIofI0g" rel="noopener nofollow" target="_blank">DIY Investing</a> Show Outline Key Concepts for thinking about compensating a Portfolio Manager <ul> <li>Management Fees  <ul> <li>Management Fees are priced a percentage of the assets under management. </li> <li>A 1% management fee means that you will pay 1% of your assets being managed to the investment manager regardless of the returns you receive on your investment. </li> <li>If you have $100k invested at the beginning of the year, you’ll pay $1k in fees, if your investment doubles, and $1k in fees if your investment gets cut in half. (ignoring the weighted average effect)</li> <li>Management fees can be charged to both accredited and non-accredited investors</li> </ul> </li> <li>Performance Fees  <ul> <li>Performance fees are priced as a percentage of the profit earned on investments over the course of a year. </li> <li>For instance: A 10% performance fee would provide the manager with 10% of the total profits earned during the year. If you invested $100k, and the $100k grew to $200k, then the investment manager would earn $10k. (10% of the 100k gain). </li> <li>However, if the investment fell to $50k, the investment manager would earn nothing. </li> <li>Performance fees can be charged only to accredited investors.</li> </ul> </li> <li>Hurdle Rates  <ul> <li>Hurdle rates are often paired with performance fees to ensure that investment managers only earn performance fees above a certain level of return. </li> <li>For instance: A hurdle rate of 5% would mean that the profit sharing only kicks in after 5% returns have been earned for the year. In our prior example, if you invested $100k that doubled to $200k, then the “profit pool” is instead $95k, because the first $5k is exempt. The investment manager then only earns $9.5k.</li> </ul> </li> <li>High Water Marks  <ul> <li>High water marking is where hurdle rates are compounded across multiple years. </li> <li>In this case, let’s assume you invest $100k, and the hurdle rate is 5% per year. </li> <li>In year 1: your investment declines to $80k. You pay no performance fees. </li> <li>In year 2: Your investment grows to $110k. You still pay no performance fees because despite earning 37.5% rate of return in year 2, the hurdle rate of 5% compounded in each year, so the investment manager only starts to earn fees after 10% (5% + 5%) on the original $100k. So they would only earn returns above $110k in year 2. </li> <li>In year 3: They only earn performance fee returns above $115k (ignoring compound growth here).</li> </ul> </li> <li>The Buffett Model  <ul> <li>0 % management fee, 6% hurdle rate (w/high water marks), 25% performance fee </li> <li>I think this is an attractive setup and I’d prefer to structure any future fund of mine with a similar arrangement. </li> <li>This is the best alignment of incentives in my view. You don’t get paid for AUM growth (directly), and only get paid for performance that beats a certain hurdle rate. </li> <li>However, to do so excludes non-accredited investors. Therefore, if I want to serve non-accredited investors I’d have to charge a management fee at least for them.</li> </ul> </li> <li>What is the right answer then? <ul> <li>Non-accredited: <ul> <li>You only have management fees. You obviously want a manager willing to charge them, or you don’t get that manager at all.</li> </ul> </li> <li>Accredited: <ul> <li>Performance Fees may be your instinctual first option. They tend to align your interests with management. However, there are also downsides for you. <ul> <li>May encourage managers to take more risk. Unless they beat a hurdle, they don’t earn anything. They’ll never be 100% aligned with you. </li> <li>Without a management fee, you are limiting yourself to investment managers who are already financially independent and can afford to have years without income.</li> </ul> </li> </ul> </li> <li>Personally: I would be willing to pay or charge both sets of fees. My ideal setup is the Buffet arrangement: 0, 6, 25%. However, this isn't ideal for all investors. I could see the benefit of a 0, 10, 50% setup. I can see the benefit of only charging management fees (especially for retired investors who are seeking wealth preservation, not growth) <ul> <li>As always: The answer is it depends. But, I hope that I have given you the information you need to understand how it applies for you.</li> </ul> </li> </ul> </li> </ul> Summary: As an investor, you want to properly align your interests with your portfolio manager. A key consideration is how to compensate and incentivize that manager with either management fees, performance fees, or both.

132 - Is it better to pay management fees or performance fees?

Mental Models discussed in this podcast:  Opportunity Cost Alpha Superpower of Incentives Competitive Advantages Process vs Results  Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing Show Outline Key Concepts for selecting a Portfolio Manager  Choosing an investment manager is a lot like choosing a stock  Don’t invest in anything you don’t understand - this includes managers What is their process? How do they earn alpha? Do you need alpha?   What are your financial needs?  Wealth preservation? Wealth Growth? Do you need alpha?  Not every manager can provide alpha.  Not every manager seeks alpha Not every investors NEEDS alpha     Value  Cost - How are they paid? What is the expense structure? How does it compare to alternatives? Management Fees  Performance Fees  Next podcast will be a whole podcast on fee structure, so I’ll limit my discussion on it here.   Growth  Investment managers inherently benefit from growing AUM. This is unavoidable. Regardless of pay structure. However, you want to understand what drives them. Is investing a passion or a money seeking endeavor?  Are they trying to grow AUM? Do they plan to shut down growth at some point?     Quality  Competitive advantages?  How are they different from other investors?   Communication?  How do they communicate with clients?  Do you understand their process? Are you comfortable with them?   Style  Size of stocks Liquidity Value vs Growth vs Quality?  Overlooked companies? Index hugging? Concentration vs Diversification       Custom Portfolios vs Investment Fund   Some managers will setup a customized portfolio just for you Or do you simply want to own a portion of a mutual fund or hedge fund.   Past Performance - Luck vs Skill  It is difficult to analyze a portfolio manager based on past performance Instead, focus on their process.   If you understand their process you can potentially understand the odds of future outperformance (if you even need outperformance)      Summary: Choosing an external investment manager for your wealth is a difficult decision. In this episode, I outline the key concepts you should consider when evaluating someone to be your personal portfolio manager.

Mental Models discussed in this podcast: <ul> <li>Opportunity Cost</li> <li>Alpha</li> <li>Superpower of Incentives</li> <li>Competitive Advantages</li> <li>Process vs Results</li> </ul> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: <a href="https://twitter.com/TreyHenninger" rel="noopener nofollow" target="_blank">@TreyHenninger</a> YouTube Channel: <a href="https://www.youtube.com/channel/UCD0lzw3BdPwhx6jwrIofI0g" rel="noopener nofollow" target="_blank">DIY Investing</a> Show Outline Key Concepts for selecting a Portfolio Manager <ul> <li>Choosing an investment manager is a lot like choosing a stock <ul> <li>Don’t invest in anything you don’t understand - this includes managers</li> <li>What is their process?</li> <li>How do they earn alpha? Do you need alpha?</li> </ul> </li> <li>What are your financial needs? <ul> <li>Wealth preservation?</li> <li>Wealth Growth?</li> <li>Do you need alpha? <ul> <li>Not every manager can provide alpha. </li> <li>Not every manager seeks alpha</li> <li>Not every investors NEEDS alpha</li> </ul> </li> </ul> </li> <li>Value <ul> <li>Cost - How are they paid? What is the expense structure? How does it compare to alternatives?</li> <li>Management Fees </li> <li>Performance Fees </li> <li>Next podcast will be a whole podcast on fee structure, so I’ll limit my discussion on it here.</li> </ul> </li> <li>Growth <ul> <li>Investment managers inherently benefit from growing AUM. This is unavoidable. Regardless of pay structure. However, you want to understand what drives them. Is investing a passion or a money seeking endeavor? <ul> <li>Are they trying to grow AUM?</li> <li>Do they plan to shut down growth at some point?</li> </ul> </li> </ul> </li> <li>Quality <ul> <li>Competitive advantages? <ul> <li>How are they different from other investors?</li> </ul> </li> <li>Communication? <ul> <li>How do they communicate with clients? </li> <li>Do you understand their process? Are you comfortable with them?</li> </ul> </li> <li>Style <ul> <li>Size of stocks</li> <li>Liquidity</li> <li>Value vs Growth vs Quality? </li> <li>Overlooked companies?</li> <li>Index hugging?</li> <li>Concentration vs Diversification</li> <li> </li> </ul> </li> </ul> </li> <li>Custom Portfolios vs Investment Fund  <ul> <li>Some managers will setup a customized portfolio just for you</li> <li>Or do you simply want to own a portion of a mutual fund or hedge fund.</li> </ul> </li> <li>Past Performance - Luck vs Skill <ul> <li>It is difficult to analyze a portfolio manager based on past performance</li> <li>Instead, focus on their process.  <ul> <li>If you understand their process you can potentially understand the odds of future outperformance (if you even need outperformance)</li> </ul> </li> </ul> </li> </ul> Summary: Choosing an external investment manager for your wealth is a difficult decision. In this episode, I outline the key concepts you should consider when evaluating someone to be your personal portfolio manager.

131 - How to choose an Investment Manager?

Mental Models discussed in this podcast:  Stress Testing Time Horizon Stoicism  Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode130 Key Concepts for Investing during a Crisis  Stress Testing - Bankruptcy Risk?  Goal: Survive Stress test businesses not stocks   Focus on Fundamentals  Long-term is where all of the value is at The next 1 or 2 years is only 10-20% of the value most of the time.   War somewhere is not inherently a crisis for your portfolio  Are your specific businesses being affected? Land war in your country? Destruction of infrastructure owned by your companies? Sanctions against your companies? There has been almost constant war for the entirety of the last 100 years somewhere in the world   Doomsday Scenarios  It is usually worth betting on optimistic outcomes If you're wrong, you likely won't be around to deal with it. (Nuclear war)    Summary: The Russian Invasion of Ukraine has created a situation where three crisis grip the world: War, Inflation, and COVID-19. How should investors think and act during such a crisis?  Stress test your portfolio. Focus on the Fundamentals. Does the war affect you directly? Avoid doomsday thinking.

Mental Models discussed in this podcast: <ul> <li>Stress Testing</li> <li>Time Horizon</li> <li>Stoicism</li> </ul> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: <a href="https://twitter.com/TreyHenninger" rel="noopener nofollow" target="_blank">@TreyHenninger</a> YouTube Channel: <a href="https://www.youtube.com/channel/UCD0lzw3BdPwhx6jwrIofI0g" rel="noopener nofollow" target="_blank">DIY Investing</a> Show Outline The full show notes for this episode are available at <a href="https://www.diyinvesting.org/Episode130" rel="noopener nofollow" target="_blank">https://www.diyinvesting.org/Episode130</a> Key Concepts for Investing during a Crisis <ul> <li>Stress Testing - Bankruptcy Risk? <ul> <li>Goal: Survive</li> <li>Stress test businesses not stocks</li> </ul> </li> <li>Focus on Fundamentals <ul> <li>Long-term is where all of the value is at</li> <li>The next 1 or 2 years is only 10-20% of the value most of the time.</li> </ul> </li> <li>War somewhere is not inherently a crisis for your portfolio <ul> <li>Are your specific businesses being affected?</li> <li>Land war in your country?</li> <li>Destruction of infrastructure owned by your companies?</li> <li>Sanctions against your companies?</li> <li>There has been almost constant war for the entirety of the last 100 years somewhere in the world</li> </ul> </li> <li>Doomsday Scenarios <ul> <li>It is usually worth betting on optimistic outcomes</li> <li>If you're wrong, you likely won't be around to deal with it. (Nuclear war)</li> </ul> </li> </ul> Summary: The Russian Invasion of Ukraine has created a situation where three crisis grip the world: War, Inflation, and COVID-19. How should investors think and act during such a crisis?  Stress test your portfolio. Focus on the Fundamentals. Does the war affect you directly? Avoid doomsday thinking.

130 - How to invest during a crisis?

Mental Models discussed in this podcast:  Catalyst Activation Energy  Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode129 Catalysts in Value Investing  Catalyst Definition Trade vs Hold Return Free Call Option Catalysts speed up the rate of multiple expansion leading to a high IRR "trade" return Business Catalysts vs Stock Catalysts Solitron Devices Example    Summary: Catalysts can supercharge investing returns for value investor if utilized properly OR they can distract from a central thesis and cause you to make poor decisions. A catalyst should be seen as a free call option that boosts a "trade" return. 

Mental Models discussed in this podcast: <ul> <li>Catalyst</li> <li>Activation Energy</li> </ul> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: <a href="https://twitter.com/TreyHenninger" rel="noopener nofollow" target="_blank">@TreyHenninger</a> YouTube Channel: <a href="https://www.youtube.com/channel/UCD0lzw3BdPwhx6jwrIofI0g" rel="noopener nofollow" target="_blank">DIY Investing</a> Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at <a href="https://www.diyinvesting.org/patron" rel="noopener nofollow" target="_blank">DIYInvesting.org/Patron</a>. Show Outline The full show notes for this episode are available at <a href="https://www.diyinvesting.org/Episode129" rel="noopener nofollow" target="_blank">https://www.diyinvesting.org/Episode129</a> Catalysts in Value Investing <ul> <li>Catalyst Definition</li> <li>Trade vs Hold Return</li> <li>Free Call Option</li> <li>Catalysts speed up the rate of multiple expansion leading to a high IRR "trade" return</li> <li>Business Catalysts vs Stock Catalysts</li> <li>Solitron Devices Example</li> </ul>   Summary: Catalysts can supercharge investing returns for value investor if utilized properly OR they can distract from a central thesis and cause you to make poor decisions. A catalyst should be seen as a free call option that boosts a "trade" return.

129 - What is the role of a Catalyst in Value Investing?

Mental Models discussed in this podcast:  Investing Ratios Break Points  Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode128 Key Investing Ratios  P/E:  Goal: 15% Ideal: &gt;20%   Gross Margin:  Higher the better (&gt;50%) Stability is more important than the absolute number   Focus: Limits and Break Points Source:   https://twitter.com/solvealways/status/1486992514196324354?s=20&amp;t=xGDVCwWNDXmL9VM7hpQN2A      Summary: The important thing to remember about the key investing ratios is to understand that they are always relative. What you're looking for is understanding the limits you don't want to pass, and key break points that signify certain things about the business. Above all, stability is critical when evaluating a high quality business. 

Mental Models discussed in this podcast: <ul> <li>Investing Ratios</li> <li>Break Points</li> </ul> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: <a href="https://twitter.com/TreyHenninger" rel="noopener nofollow" target="_blank">@TreyHenninger</a> YouTube Channel: <a href="https://www.youtube.com/channel/UCD0lzw3BdPwhx6jwrIofI0g" rel="noopener nofollow" target="_blank">DIY Investing</a> Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at <a href="https://www.diyinvesting.org/patron" rel="noopener nofollow" target="_blank">DIYInvesting.org/Patron</a>. Show Outline The full show notes for this episode are available at <a href="https://www.diyinvesting.org/Episode128" rel="noopener nofollow" target="_blank">https://www.diyinvesting.org/Episode128</a> Key Investing Ratios <ul> <li>P/E: <ul> <li>Goal: 15%</li> <li>Ideal: &gt;20%</li> </ul> </li> <li>Gross Margin: <ul> <li>Higher the better (&gt;50%)</li> <li>Stability is more important than the absolute number</li> </ul> </li> <li>Focus: Limits and Break Points</li> <li>Source: <ul> <li><a href="https://twitter.com/solvealways/status/1486992514196324354?s=20&amp;t=xGDVCwWNDXmL9VM7hpQN2A" rel="nofollow" target="_blank"> https://twitter.com/solvealways/status/1486992514196324354?s=20&amp;t=xGDVCwWNDXmL9VM7hpQN2A</a></li> </ul> </li> </ul>   Summary: The important thing to remember about the key investing ratios is to understand that they are always relative. What you're looking for is understanding the limits you don't want to pass, and key break points that signify certain things about the business. Above all, stability is critical when evaluating a high quality business.

128 - Key Investing Ratios: P/E, P/S, ROA, ROE, Gross Margin

Mental Models discussed in this podcast:  Scuttlebutt Quality Investing Capital Stack Dark Stocks  Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode127 Scuttlebutt on Overlooked Companies - Areas of Focus  Capital Stack:  Clean is better. Ideally only common stock. No lending to insiders or other self dealing. Has management issued themselves options in the past? Were the prices reasonable? How much of the company does this represent? "Overdue or delayed payment to insiders."  Red flag. This basically menas the company is in default putting your equity at risk. Can't even really mount a proxy fight because the management could force the company into bankruptcy.     Filings:  Current or pink limited on filings with the SEC I want to see financials. (They don't have to be audited) Some sort of management commentary is nice. (Shows shareholder friendliness)   Business Model:  Change  New products New management Growth of some kind     Asset Base:  Ideally assts to cover the market cap (providing a margin of safety)   Earnings Power:  Profitable (every year for 10 years, no more than one loss in 10 years)      Summary: Overlooked companies are often cheap. Therefore, scuttlebutt on overlooked companies needs to focus on filtering for the quality of the business. High-quality and cheap makes for a great stock. Look for abnormal signs of positive potential. 

Mental Models discussed in this podcast: <ul> <li>Scuttlebutt</li> <li>Quality Investing</li> <li>Capital Stack</li> <li>Dark Stocks</li> </ul> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: <a href="https://twitter.com/TreyHenninger" rel="noopener nofollow" target="_blank">@TreyHenninger</a> YouTube Channel: <a href="https://www.youtube.com/channel/UCD0lzw3BdPwhx6jwrIofI0g" rel="noopener nofollow" target="_blank">DIY Investing</a> Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at <a href="https://www.diyinvesting.org/patron" rel="noopener nofollow" target="_blank">DIYInvesting.org/Patron</a>. Show Outline The full show notes for this episode are available at <a href="https://www.diyinvesting.org/Episode127" rel="noopener nofollow" target="_blank">https://www.diyinvesting.org/Episode127</a> Scuttlebutt on Overlooked Companies - Areas of Focus <ul> <li>Capital Stack: <ul> <li>Clean is better. Ideally only common stock.</li> <li>No lending to insiders or other self dealing.</li> <li>Has management issued themselves options in the past? Were the prices reasonable? How much of the company does this represent?</li> <li>"Overdue or delayed payment to insiders." <ul> <li>Red flag. This basically menas the company is in default putting your equity at risk. Can't even really mount a proxy fight because the management could force the company into bankruptcy.</li> </ul> </li> </ul> </li> <li>Filings: <ul> <li>Current or pink limited on filings with the SEC</li> <li>I want to see financials. (They don't have to be audited)</li> <li>Some sort of management commentary is nice. (Shows shareholder friendliness)</li> </ul> </li> <li>Business Model: <ul> <li>Change <ul> <li>New products</li> <li>New management</li> <li>Growth of some kind</li> </ul> </li> </ul> </li> <li>Asset Base: <ul> <li>Ideally assts to cover the market cap (providing a margin of safety)</li> </ul> </li> <li>Earnings Power: <ul> <li>Profitable (every year for 10 years, no more than one loss in 10 years)</li> </ul> </li> </ul>   Summary: Overlooked companies are often cheap. Therefore, scuttlebutt on overlooked companies needs to focus on filtering for the quality of the business. High-quality and cheap makes for a great stock. Look for abnormal signs of positive potential.

127 - Scuttlebutt on Overlooked Companies

Do you want to learn how to manage your own investments? Are you ready to stop paying investment management fees and start building wealth? The DIY Investing Podcast is dedicated to providing you with the knowledge, skills, and resources you need to be a better investor. Learn how to make investments through the use of fundamental analysis, mental models, and business management insights. Please visit our website and subscribe to our mailing list at DIYInvesting.org for guides, videos, and resources to help make you a better investor.

Like treys very detailed look and tactical explanations

Great

Love it

Do you want to learn how to manage your own investments? Are you ready to stop paying investment management fees and start building wealth? The DIY Investing Podcast is dedicated to providing you with the knowledge, skills, and resources you need to be a better investor. Learn how to make investments through the use of fundamental analysis, mental models, and business management insights. Please visit our website and subscribe to our mailing list at <a href="http://DIYInvesting.org" rel="nofollow" target="_blank">DIYInvesting.org</a> for guides, videos, and resources to help make you a better investor.

The DIY Investing Podcast

Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience.  Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast.  How to calculate Intrinsic Value using Discounted Cash Flows (DCF) - Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode27 What is Intrinsic Value?  The present value of all future free cash flows produced by a business.   Time Value of Money  Cash today is worth more than cash in the future. Therefore, you need to discount future cash flows to be worth less than their stated value.   The simplified discounted cash flow formula  Intrinsic Value = Owner's Earnings/(Discount Rate - Growth Rate)  Discount Rates: 10% (nominal) or 6.5% (real) Growth Rates: Bounded between 0% and 5% Owner's Earnings: Manually calculated by adjusting Net Income    Complex Discounted Cash Flow Calculations  When to use:  Company is in a high-growth phase of its business (has not yet saturated the market) You are highly confident in short-term projections and the business is predictable Reported earnings have a lot of temporary adjustments that make the next few years not match the long-term   When not to use:  Almost always Why?  Complex calculations can trick you into thinking you have a better understanding of the business than you do You'll likely rely heavily on growth and fast growth assumptions are very risky to make      References:  Part 1: Episode 23 - Discount Rates Part 2: Episode 25 - Long-Term Growth Rates Part 3: Episode 26 - Owner's Earnings Example Intrinsic Value Reports [$10+/month Patrons receive exclusive access] 

Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience.  Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at <a href="https://www.diyinvesting.org/patron" rel="noopener nofollow" target="_blank">DIYInvesting.org/Patron</a>. You can find out more information by listening to episode 11 of this podcast.  How to calculate Intrinsic Value using Discounted Cash Flows (DCF) - Show Outline The full show notes for this episode are available at <a href="https://www.diyinvesting.org/Episode27" rel="noopener nofollow" target="_blank">https://www.diyinvesting.org/Episode27</a> What is Intrinsic Value? <ul> <li>The present value of all future free cash flows produced by a business. </li> </ul> Time Value of Money <ul> <li>Cash today is worth more than cash in the future.</li> <li>Therefore, you need to discount future cash flows to be worth less than their stated value. </li> </ul> The simplified discounted cash flow formula <ul> <li>Intrinsic Value = Owner's Earnings/(Discount Rate - Growth Rate) <ul> <li>Discount Rates: 10% (nominal) or 6.5% (real)</li> <li>Growth Rates: Bounded between 0% and 5%</li> <li>Owner's Earnings: Manually calculated by adjusting Net Income</li> </ul> </li> </ul> Complex Discounted Cash Flow Calculations <ul> <li>When to use: <ul> <li>Company is in a high-growth phase of its business (has not yet saturated the market)</li> <li>You are highly confident in short-term projections and the business is predictable</li> <li>Reported earnings have a lot of temporary adjustments that make the next few years not match the long-term</li> </ul> </li> <li>When not to use: <ul> <li>Almost always</li> <li>Why? <ul> <li>Complex calculations can trick you into thinking you have a better understanding of the business than you do</li> <li>You'll likely rely heavily on growth and fast growth assumptions are very risky to make</li> </ul> </li> </ul> </li> </ul> References: <ul> <li>Part 1: Episode 23 - <a href="https://www.diyinvesting.org/Episode23" rel="noopener nofollow" target="_blank">Discount Rates</a></li> <li>Part 2: Episode 25 - <a href="https://www.diyinvesting.org/Episode25" rel="noopener nofollow" target="_blank">Long-Term Growth Rates</a></li> <li>Part 3: Episode 26 - <a href="https://www.diyinvesting.org/Episode26" rel="noopener nofollow" target="_blank">Owner's Earnings</a></li> <li><a href="https://www.diyinvesting.org/my-portfolio/value/" rel="noopener nofollow" target="_blank">Example Intrinsic Value Reports</a> [$10+/month <a href="https://www.patreon.com/join/DIYInvesting" rel="noopener nofollow" target="_blank">Patrons receive exclusive access</a>]</li> </ul>

27 - How to calculate Intrinsic Value using Discounted Cash Flows (DCF)

Dan Schum

How to connect with Dan Schum  Follow his work on Twitter: @NoNameStocks  Dan Schum's Website:  NoNameStocks.com    Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode56 Part 1: Dan Schum's Investing Process  Large diversification 30-60+ stocks Buy "NoNameStocks" that no one else has heard about Target characteristics:  Left for dead companies Often unprofitable Dark or Deregistered from the SEC A long-term chart that shows abandonment by investors    Part 2: Example Stocks  HemaCare Corporation $HEMA - Dan's 100 bagger in 4.5 years (From $0.25 to $25.40 buyout on the podcast recording date of 12/16/2019) Clancey Systems International $CLSI - A wild ride on a shell company with no assets leading to a 1000% gain in a few months Dewey Electronics $DEWY - A company that just won't die, but with hidden real estate assets worth more than the market cap.  

How to connect with Dan Schum <ul> <li>Follow his work on Twitter: <a href="https://twitter.com/NoNameStocks" rel="noopener nofollow" target="_blank">@NoNameStocks</a> </li> <li>Dan Schum's Website: <ul> <li><a href="http://www.nonamestocks.com/" rel="noopener nofollow" target="_blank">NoNameStocks.com</a></li> </ul> </li> </ul> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: <a href="https://twitter.com/TreyHenninger" rel="noopener nofollow" target="_blank">@TreyHenninger</a> YouTube Channel: <a href="https://www.youtube.com/channel/UCD0lzw3BdPwhx6jwrIofI0g" rel="noopener nofollow" target="_blank">DIY Investing</a> Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at <a href="https://www.diyinvesting.org/patron" rel="noopener nofollow" target="_blank">DIYInvesting.org/Patron</a>. You can find out more information by listening to <a href="https://www.diyinvesting.org/episode11" rel="nofollow" target="_blank">episode 11</a> of this podcast. Show Outline The full show notes for this episode are available at <a href="https://www.diyinvesting.org/Episode56" rel="noopener nofollow" target="_blank">https://www.diyinvesting.org/Episode56</a> Part 1: Dan Schum's Investing Process <ul> <li>Large diversification 30-60+ stocks</li> <li>Buy "NoNameStocks" that no one else has heard about</li> <li>Target characteristics: <ul> <li>Left for dead companies</li> <li>Often unprofitable</li> <li>Dark or Deregistered from the SEC</li> <li>A long-term chart that shows abandonment by investors</li> </ul> </li> </ul> Part 2: Example Stocks <ul> <li>HemaCare Corporation $HEMA - Dan's 100 bagger in 4.5 years (From $0.25 to $25.40 buyout on the podcast recording date of 12/16/2019)</li> <li>Clancey Systems International $CLSI - A wild ride on a shell company with no assets leading to a 1000% gain in a few months</li> <li>Dewey Electronics $DEWY - A company that just won't die, but with hidden real estate assets worth more than the market cap. </li> </ul>

56 - HemaCare 100-Bagger with Dan Schum

Tim Eriksen Interview

Tim Eriksen

How to connect with Tim Eriksen  Follow his work on Twitter: @eriksen_tim Reach out by email  Tim@eriksencapital.com    Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Show Outline: Interview with Tim Eriksen The full show notes for this episode are available at https://www.diyinvesting.org/Episode50 Part 1: Tim Eriksen's Investing Process  Own 20-25 positions Top 5 positions will be generally 50% of the portfolio Microcap stocks outperform large, mid, or small-cap companies Stability and modest growth investor Target low P/E stocks Stable earnings are punished in the current market  Part 2: Example Stocks  Beaver Land Company $BVERS - 50,000 acres in the United States leased out and royalty revenue Western Capital Resources $WCRS - A net-net closely tied to a private equity firm in Maryland P10 Holdings $PIOE - A private equity management company. They earn asset management fees. JG Boswell $BWEL - Own 150,000 acres north of Baker's Field in California including 400,000-acre feet water rights. 

How to connect with Tim Eriksen <ul> <li>Follow his work on Twitter: <a href="https://twitter.com/eriksen_tim" rel="noopener nofollow" target="_blank">@eriksen_tim</a></li> <li>Reach out by email <ul> <li>Tim@eriksencapital.com</li> </ul> </li> </ul> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: <a href="https://twitter.com/TreyHenninger" rel="noopener nofollow" target="_blank">@TreyHenninger</a> YouTube Channel: <a href="https://www.youtube.com/channel/UCD0lzw3BdPwhx6jwrIofI0g" rel="noopener nofollow" target="_blank">DIY Investing</a> Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at <a href="https://www.diyinvesting.org/patron" rel="noopener nofollow" target="_blank">DIYInvesting.org/Patron</a>. You can find out more information by listening to episode 11 of this podcast. Show Outline: Interview with Tim Eriksen The full show notes for this episode are available at <a href="https://www.diyinvesting.org/Episode50" rel="noopener nofollow" target="_blank">https://www.diyinvesting.org/Episode50</a> Part 1: Tim Eriksen's Investing Process <ul> <li>Own 20-25 positions</li> <li>Top 5 positions will be generally 50% of the portfolio</li> <li>Microcap stocks outperform large, mid, or small-cap companies</li> <li>Stability and modest growth investor</li> <li>Target low P/E stocks</li> <li>Stable earnings are punished in the current market</li> </ul> Part 2: Example Stocks <ul> <li>Beaver Land Company $BVERS - 50,000 acres in the United States leased out and royalty revenue</li> <li>Western Capital Resources $WCRS - A net-net closely tied to a private equity firm in Maryland</li> <li>P10 Holdings $PIOE - A private equity management company. They earn asset management fees.</li> <li>JG Boswell $BWEL - Own 150,000 acres north of Baker's Field in California including 400,000-acre feet water rights.</li> </ul>

50 - Tim Eriksen Interview: MicroCap Investing $BVERS $WCRS $PIOE $BWEL

Geoff Gannon

How to connect with Geoff Gannon  Follow his work on Twitter: @FocusedCompound  Managed by Geoff's partner Andrew Kuhn   Check out his website:  FocusedCompounding.com Weekly Email and Watchlist   Listen to his podcast:  The Focused Compounding Podcast    Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Show Outline: Interview with Geoff Gannon of Focused Compounding Capital Management The full show notes for this episode are available at https://www.diyinvesting.org/Episode45 Part 1: Background and Geoff's Investing Process  How have you developed as an investor over time? Willow Oak Partnership - Hedge Fund Launch Geoff Gannon's Investing Process:  Concentrated (5 positions - 20% each) Overlooked stocks (Low liquidity, low beta) High Quality &amp; Value Focus   What to look for in corporate management Does selling stocks add value? Village Supermarket (VLGEA), Activision (ATVI), Coinstar (now private)  Part 2: Example Investments - NACCO ($NC)  Up 90% YTD (as of October 3rd, 2019) Finding value during spin-offs How to earn infinite returns on capital while mining coal   Part 3: Stock Talk - Karelia Tobacco (KARE.AT), Nekkar (NKR), Truxton Trust (TRUX)

How to connect with Geoff Gannon <ul> <li>Follow his work on Twitter: <a href="https://twitter.com/FocusedCompound" rel="noopener nofollow" target="_blank">@FocusedCompound</a> <ul> <li>Managed by Geoff's partner Andrew Kuhn</li> </ul> </li> <li>Check out his website: <ul> <li><a href="https://focusedcompounding.com/" rel="noopener nofollow" target="_blank">FocusedCompounding.com</a></li> <li><a href="https://www.focusedcompoundinggazette.com/" rel="nofollow" target="_blank">Weekly Email and Watchlist</a></li> </ul> </li> <li>Listen to his podcast: <ul> <li><a href="https://podcasts.apple.com/us/podcast/focused-compounding/id1352422076" rel="noopener nofollow" target="_blank">The Focused Compounding Podcast</a></li> </ul> </li> </ul> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at <a href="https://www.diyinvesting.org/patron" rel="noopener nofollow" target="_blank">DIYInvesting.org/Patron</a>. You can find out more information by listening to episode 11 of this podcast. Show Outline: Interview with Geoff Gannon of Focused Compounding Capital Management The full show notes for this episode are available at <a href="https://www.diyinvesting.org/Episode45" rel="noopener nofollow" target="_blank">https://www.diyinvesting.org/Episode45</a> Part 1: Background and Geoff's Investing Process <ul> <li>How have you developed as an investor over time?</li> <li>Willow Oak Partnership - Hedge Fund Launch</li> <li>Geoff Gannon's Investing Process: <ul> <li>Concentrated (5 positions - 20% each)</li> <li>Overlooked stocks (Low liquidity, low beta)</li> <li>High Quality &amp; Value Focus</li> </ul> </li> <li>What to look for in corporate management</li> <li>Does selling stocks add value?</li> <li>Village Supermarket (VLGEA), Activision (ATVI), Coinstar (now private)</li> </ul> Part 2: Example Investments - NACCO ($NC) <ul> <li>Up 90% YTD (as of October 3rd, 2019)</li> <li>Finding value during spin-offs</li> <li>How to earn infinite returns on capital while mining coal </li> </ul> Part 3: Stock Talk - Karelia Tobacco (<a href="http://KARE.AT" rel="nofollow" target="_blank">KARE.AT</a>), Nekkar (NKR), Truxton Trust (TRUX)

45 - Geoff Gannon Interview: Concentrated Investing in Overlooked Stocks ($NC, $KARE.AT, $NKR, $TRUX, $VLGEA)

Mental Models discussed in this podcast:  Tax Shelters  Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. How to invest in an HSA - Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode42 What is a Health Savings Account or HSA?  High Deductible Health Plan Definition:  Minimum annual deductible of $1,350 (single) or $2,700 (family) based on 2019 requirements Maximum out-of-pocket expenses of $6,750 (single) or $13,500 (family) based on 2019 requirements   Contribution Limits:  Individuals = $3,500 per year Family = $7,000 per year   HSAs or Health Savings Accounts are tax shelters designed for maximum benefits when used to cover medical expenses. These limits and requirements can change on an annual basis.   Health Savings Accounts are the best tax shelter for employees in the United States of America  Triple Tax Savings:  Up-front tax deduction (Traditional IRA benefit) Tax-deferred growth (Tradition and Roth IRA benefit) Tax-exempt withdrawals (Roth IRA style benefit)  Only when used for qualified medical expenses     The only tax shelter that avoids payroll taxes (Social Security and Medicare)  Equivalent to 7.65% for individuals and 15.3% for self-employed workers.  Must use paycheck withholding for deposits    Documentation Management is critical for HSAs You will want a detailed set of documentation for each of your medical expenses. I use a spreadsheet to collect a master data sheet to track ongoing and past expenses since I opened my HSA.  I also keep scanned copies of my Explanation of Benefits (EOB), Invoice, and payment receipts for each medical expense.  I make no guarantees that this is sufficient documentation. Consult a tax lawyer or CPA.  Cash Buffer Planning Have a cash buffer of at least 1 full year of "maximum out of pocket expenses" as defined by your health insurance plan before investing your HSA savings.  This cash buffer allows you to weather any volatility in the portfolio.  An even better buffer would be 2 full years of "maximum out of pocket expenses" because this prevents the problem of a December injury or illness running into January and maxing out two years worth of health expenses.  Maintain this cash buffer throughout the investing process Consider avoiding illiquid stocks  While I normally find illiquid stocks to offer increased opportunity, you should consider carefully the additional risks this involves for HSA based investing.  I place my highest liquidity stocks in my HSA, but otherwise, manage them like a traditional or Roth IRA in terms of stock selection.    Summary A health savings account is the best tax-advantaged account currently available for workers in the United States. Thus, it is important to have a plan and understanding of how to invest your HSA money and maximize the benefits of this unique tax shelter. References  https://www.irs.gov/irb/2019-22_IRB#REV-PROC-2019-25 https://www.forbes.com/sites/ashleaebeling/2019/05/29/irs-announces-2020-health-savings-account-limits/#284466d43f3c http://www.hsacenter.com/how-does-an-hsa-work/2019-hsa-contribution-limits/ 

Mental Models discussed in this podcast: <ul> <li>Tax Shelters</li> </ul> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at <a href="https://www.diyinvesting.org/patron" rel="noopener nofollow" target="_blank">DIYInvesting.org/Patron</a>. You can find out more information by listening to episode 11 of this podcast. How to invest in an HSA - Show Outline The full show notes for this episode are available at <a href="https://www.diyinvesting.org/Episode42" rel="noopener nofollow" target="_blank">https://www.diyinvesting.org/Episode42</a> What is a Health Savings Account or HSA? <ul> <li>High Deductible Health Plan Definition: <ul> <li>Minimum annual deductible of $1,350 (single) or $2,700 (family) based on 2019 requirements</li> <li>Maximum out-of-pocket expenses of $6,750 (single) or $13,500 (family) based on 2019 requirements</li> </ul> </li> <li>Contribution Limits: <ul> <li>Individuals = $3,500 per year</li> <li>Family = $7,000 per year</li> </ul> </li> <li>HSAs or Health Savings Accounts are tax shelters designed for maximum benefits when used to cover medical expenses.</li> <li>These limits and requirements can change on an annual basis. </li> </ul> Health Savings Accounts are the best tax shelter for employees in the United States of America <ul> <li>Triple Tax Savings: <ul> <li>Up-front tax deduction (Traditional IRA benefit)</li> <li>Tax-deferred growth (Tradition and Roth IRA benefit)</li> <li>Tax-exempt withdrawals (Roth IRA style benefit) <ul> <li>Only when used for qualified medical expenses</li> </ul> </li> </ul> </li> <li>The only tax shelter that avoids payroll taxes (Social Security and Medicare) <ul> <li>Equivalent to 7.65% for individuals and 15.3% for self-employed workers. </li> <li>Must use paycheck withholding for deposits</li> </ul> </li> </ul> Documentation Management is critical for HSAs You will want a detailed set of documentation for each of your medical expenses. I use a spreadsheet to collect a master data sheet to track ongoing and past expenses since I opened my HSA.  I also keep scanned copies of my Explanation of Benefits (EOB), Invoice, and payment receipts for each medical expense.  I make no guarantees that this is sufficient documentation. Consult a tax lawyer or CPA.  Cash Buffer Planning Have a cash buffer of at least 1 full year of "maximum out of pocket expenses" as defined by your health insurance plan before investing your HSA savings.  This cash buffer allows you to weather any volatility in the portfolio.  An even better buffer would be 2 full years of "maximum out of pocket expenses" because this prevents the problem of a December injury or illness running into January and maxing out two years worth of health expenses.  Maintain this cash buffer throughout the investing process Consider avoiding illiquid stocks <ul> <li>While I normally find illiquid stocks to offer increased opportunity, you should consider carefully the additional risks this involves for HSA based investing. </li> <li>I place my highest liquidity stocks in my HSA, but otherwise, manage them like a traditional or Roth IRA in terms of stock selection.  </li> </ul> Summary A health savings account is the best tax-advantaged account currently available for workers in the United States. Thus, it is important to have a plan and understanding of how to invest your HSA money and maximize the benefits of this unique tax shelter. References <ul> <li><a href="https://www.irs.gov/irb/2019-22_IRB#REV-PROC-2019-25" rel="noopener nofollow" target="_blank">https://www.irs.gov/irb/2019-22_IRB#REV-PROC-2019-25</a></li> <li><a href="https://www.forbes.com/sites/ashleaebeling/2019/05/29/irs-announces-2020-health-savings-account-limits/#284466d43f3c" rel="noopener nofollow" target="_blank">https://www.forbes.com/sites/ashleaebeling/2019/05/29/irs-announces-2020-health-savings-account-limits/#284466d43f3c</a></li> <li><a href="http://www.hsacenter.com/how-does-an-hsa-work/2019-hsa-contribution-limits/" rel="noopener nofollow" target="_blank">http://www.hsacenter.com/how-does-an-hsa-work/2019-hsa-contribution-limits/</a></li> </ul>

42 - How to invest in a Health Savings Account (HSA)

Mental Models discussed in this podcast:  Velocity - Direction matters Relative vs Absolute measures Volatility / Beta Risk  Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Shorter Holding Periods are Better (Investing First Principle) - Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode36 What is Risk?  Merriam Webster has a few definitions for us:  Possibility of Loss or Injury Someone or something that creates or suggests a hazard The chance of loss or the probability of loss The chance that an investment (such as a stock or commodity) will lose value   What this should suggest to you is that there are many different types of risk.  This is especially true for investing risk. Each type deserves its own discussion and it would be a mistake to believe that  Two Key Elements to risk:  Uncertainty, Negative Event    Volatility / Beta - the size of uncertainty or risk related to the size of changes in a security's value. (Reference: Investopedia)  Problems: the definition of volatility is based solely on the size of fluctuation.  The more volatile the stock, the riskier the stock. However, this fails to account for only negative volatility. Instead, you can calculate high volatility for a stock that goes up quickly. This would not be a risk though. High returns are the exact opposite of risk.  Often used as a relative measure. Relative measures are not useful to an individual investor, because all they care about is their own personal results. The focus should be on absolute results.   Price Risk - The potential for short-term downside fluctuations in stock price below the intrinsic value of the company and below your purchase price  Focus is only on the downside  Highlights the importance of price fluctuations being short-term in nature Price relative to intrinsic value is what matters Price relative to your purchase price is important solely for the psychological harm it can cause if you lack the proper temperament for long-term investing.  Unavoidable - present in all investments Can be mitigated by only purchasing stocks below their intrinsic value. Purchasing overvalued companies will increase your price risk.   Summary Risk involves two key elements: Uncertainty and Negative Events. Volatility and Beta are false measures of investments and make key errors in their assumptions. They measure both upside and downside price movements as risk and they equate stock prices to stock values. You should ignore calculated measures of volatility in your investment decisions. Price risk is the key focus. Price risk is the potential for short-term downside fluctuations in stock price below the intrinsic value of the company and below your purchase price. You can mitigate price risk by only buying companies below their calculated intrinsic value. 

Mental Models discussed in this podcast: <ul> <li>Velocity - Direction matters</li> <li>Relative vs Absolute measures</li> <li>Volatility / Beta</li> <li>Risk</li> </ul> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at <a href="https://www.diyinvesting.org/patron" rel="noopener nofollow" target="_blank">DIYInvesting.org/Patron</a>. You can find out more information by listening to episode 11 of this podcast. Shorter Holding Periods are Better (Investing First Principle) - Show Outline The full show notes for this episode are available at <a href="https://www.diyinvesting.org/Episode36" rel="noopener nofollow" target="_blank">https://www.diyinvesting.org/Episode36</a> What is Risk? <ul> <li><a href="https://www.merriam-webster.com/dictionary/risk" rel="nofollow" target="_blank">Merriam Webster</a> has a few definitions for us: <ul> <li>Possibility of Loss or Injury</li> <li>Someone or something that creates or suggests a hazard</li> <li>The chance of loss or the probability of loss</li> <li>The chance that an investment (such as a stock or commodity) will lose value</li> </ul> </li> <li>What this should suggest to you is that there are many different types of risk. </li> <li>This is especially true for investing risk. Each type deserves its own discussion and it would be a mistake to believe that </li> <li>Two Key Elements to risk: <ol> <li>Uncertainty,</li> <li>Negative Event</li> </ol> </li> </ul> Volatility / Beta - the size of uncertainty or risk related to the size of changes in a security's value. (Reference: <a href="https://www.investopedia.com/terms/v/volatility.asp" rel="noopener nofollow" target="_blank">Investopedia</a>) <ul> <li>Problems: the definition of volatility is based solely on the size of fluctuation. </li> <li>The more volatile the stock, the riskier the stock. However, this fails to account for only negative volatility. Instead, you can calculate high volatility for a stock that goes up quickly. This would not be a risk though. High returns are the exact opposite of risk. </li> <li>Often used as a relative measure. Relative measures are not useful to an individual investor, because all they care about is their own personal results. The focus should be on absolute results. </li> </ul> Price Risk - The potential for short-term downside fluctuations in stock price below the intrinsic value of the company and below your purchase price <ul> <li>Focus is only on the downside </li> <li>Highlights the importance of price fluctuations being short-term in nature</li> <li>Price relative to intrinsic value is what matters</li> <li>Price relative to your purchase price is important solely for the psychological harm it can cause if you lack the proper temperament for long-term investing. </li> <li>Unavoidable - present in all investments</li> <li>Can be mitigated by only purchasing stocks below their intrinsic value. Purchasing overvalued companies will increase your price risk. </li> </ul> Summary Risk involves two key elements: Uncertainty and Negative Events. Volatility and Beta are false measures of investments and make key errors in their assumptions. They measure both upside and downside price movements as risk and they equate stock prices to stock values. You should ignore calculated measures of volatility in your investment decisions. Price risk is the key focus. Price risk is the potential for short-term downside fluctuations in stock price below the intrinsic value of the company and below your purchase price. You can mitigate price risk by only buying companies below their calculated intrinsic value.

36 - What is Risk? Price Risk, Volatility, and Beta (Types of Investing Risk)

Joshua Sheats

In today’s episode, I will be discussing Joshua Sheats’ Framework for Wealth Building.  The 5 Key Parts of Personal Finance  Increase Income Decrease Expenses Invest Wisely Avoid Catastrophe Optimize Lifestyle  Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast Show Notes available at DIYInvesting.org The full show notes for this episode, including my outline for today's podcast, are available at https://www.diyinvesting.org/Episode16 Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. On an iOS platform such as an iPhone or iPad, you can do so by following these steps:  In your podcast app, click the search icon that looks like a magnifying glass in the bottom right-hand corner. Type “The DIY Investing” into the search bar. This podcast should be one of the first shows that display. Select the podcast show icon. Scroll down to the “Ratings &amp; Reviews Section” and click on the button that says “Write a Review”. Write a short one or two sentence review and give me a rating that matches how you feel about the podcast. 

In today’s episode, I will be discussing Joshua Sheats’ Framework for Wealth Building.  The 5 Key Parts of Personal Finance <ol> <li>Increase Income</li> <li>Decrease Expenses</li> <li>Invest Wisely</li> <li>Avoid Catastrophe</li> <li>Optimize Lifestyle</li> </ol> Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at <a href="https://www.diyinvesting.org/patron" rel="nofollow" target="_blank">DIYInvesting.org/Patron</a>. You can find out more information by listening to episode 11 of this podcast Show Notes available at <a href="http://DIYInvesting.org" rel="nofollow" target="_blank">DIYInvesting.org</a> The full show notes for this episode, including my outline for today's podcast, are available at <a href="https://www.diyinvesting.org/Episode16" rel="nofollow" target="_blank">https://www.diyinvesting.org/Episode16</a> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. On an iOS platform such as an iPhone or iPad, you can do so by following these steps: <ol> <li>In your podcast app, click the search icon that looks like a magnifying glass in the bottom right-hand corner.</li> <li>Type “The DIY Investing” into the search bar. This podcast should be one of the first shows that display.</li> <li>Select the podcast show icon.</li> <li>Scroll down to the “Ratings &amp; Reviews Section” and click on the button that says “Write a Review”.</li> <li>Write a short one or two sentence review and give me a rating that matches how you feel about the podcast.</li> </ol>

The Joshua Sheats Framework for Wealth Building (Episode016)

Mental Models discussed in this podcast:  Liquidity Risk Insurance First Principles  Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Liquidity: Risks and Opportunities - Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode37 What is Risk?  Merriam Webster has a few definitions for us:  Possibility of Loss or Injury Someone or something that creates or suggests a hazard The chance of loss or the probability of loss The chance that an investment (such as a stock or commodity) will lose value   What this should suggest to you is that there are many different types of risk.  This is especially true for investing risk. Each type deserves its own discussion and it would be a mistake to believe that  Two Key Elements to risk:  Uncertainty, Negative Event    Liquidity Risks  Personal  Value of an Emergency Fund Value of Life Insurance   Investment  Liquidity Risk - Time to receive your money back in cash More liquid stocks reduce liquidity risk    Opportunities offered by Liquidity  Personal  Large sums of cash provide flexibility  Move across the country Make investments Get a good deal on a car     Investment  Liquidity Opportunity - Less liquid stocks tend to have higher returns than high liquidity stocks    When is Liquidity Important?  Time-Bound: On the personal side, liquidity is important when you need to spend a large sum of money. Can either be planned for or it is an emergency. When you want to sell: On the investment side, liquidity is important only when you sell a stock. You don't really care about liquidity when you are purchasing a stock. The key point is that you want to be able to sell a stock at a price close to its fair value at the time you determine you need to sell.   If done optimally, you can buy illiquid stocks during your buying period and when yous ell them, they will have transitioned into liquid stocks.     Liquidity First Principle: More liquid stocks are better than less liquid stocks because they reduce liquidity risk.   "All else Equal" Considerations:  Unfortunately, this statement is only true when we can rely on everything else being equal.  In practice, less liquid stocks tend to have higher returns.  Therefore, you really have to make a tradeoff. Would you rather have low liquidity and high returns or high liquidity and low returns? The reason this first principles still holds true is that there may be circumstances where high liquidity can offer high potential returns. When that occurs, it would be preferable to low liquidity options.     Summary Liquidity is a topic that offers both risks and opportunities. Lack of liquidity is fraught with risk, especially in your personal life. However, a lack of liquidity can offer many opportunities when it comes to investment potential. You should manage your liquidity risk across all spectrums of your life such that you can receive optimal returns with minimal risk of a total loss of principal.

Mental Models discussed in this podcast: <ul> <li>Liquidity</li> <li>Risk</li> <li>Insurance</li> <li>First Principles</li> </ul> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at <a href="https://www.diyinvesting.org/patron" rel="noopener nofollow" target="_blank">DIYInvesting.org/Patron</a>. You can find out more information by listening to episode 11 of this podcast. Liquidity: Risks and Opportunities - Show Outline The full show notes for this episode are available at <a href="https://www.diyinvesting.org/Episode37" rel="noopener nofollow" target="_blank">https://www.diyinvesting.org/Episode37</a> What is Risk? <ul> <li><a href="https://www.merriam-webster.com/dictionary/risk" rel="nofollow" target="_blank">Merriam Webster</a> has a few definitions for us: <ul> <li>Possibility of Loss or Injury</li> <li>Someone or something that creates or suggests a hazard</li> <li>The chance of loss or the probability of loss</li> <li>The chance that an investment (such as a stock or commodity) will lose value</li> </ul> </li> <li>What this should suggest to you is that there are many different types of risk. </li> <li>This is especially true for investing risk. Each type deserves its own discussion and it would be a mistake to believe that </li> <li>Two Key Elements to risk: <ol> <li>Uncertainty,</li> <li>Negative Event</li> </ol> </li> </ul> Liquidity Risks <ul> <li>Personal <ul> <li>Value of an Emergency Fund</li> <li>Value of Life Insurance</li> </ul> </li> <li>Investment <ul> <li>Liquidity Risk - Time to receive your money back in cash</li> <li>More liquid stocks reduce liquidity risk</li> </ul> </li> </ul> Opportunities offered by Liquidity <ul> <li>Personal <ul> <li>Large sums of cash provide flexibility <ul> <li>Move across the country</li> <li>Make investments</li> <li>Get a good deal on a car</li> </ul> </li> </ul> </li> <li>Investment <ul> <li>Liquidity Opportunity - Less liquid stocks tend to have higher returns than high liquidity stocks</li> </ul> </li> </ul> When is Liquidity Important? <ul> <li>Time-Bound: On the personal side, liquidity is important when you need to spend a large sum of money. Can either be planned for or it is an emergency.</li> <li>When you want to sell: On the investment side, liquidity is important only when you sell a stock. You don't really care about liquidity when you are purchasing a stock. The key point is that you want to be able to sell a stock at a price close to its fair value at the time you determine you need to sell.  <ul> <li>If done optimally, you can buy illiquid stocks during your buying period and when yous ell them, they will have transitioned into liquid stocks. </li> </ul> </li> </ul> Liquidity First Principle: More liquid stocks are better than less liquid stocks because they reduce liquidity risk.  <ul> <li>"All else Equal" Considerations: <ul> <li>Unfortunately, this statement is only true when we can rely on everything else being equal. </li> <li>In practice, less liquid stocks tend to have higher returns. </li> <li>Therefore, you really have to make a tradeoff. Would you rather have low liquidity and high returns or high liquidity and low returns?</li> <li>The reason this first principles still holds true is that there may be circumstances where high liquidity can offer high potential returns. When that occurs, it would be preferable to low liquidity options. </li> </ul> </li> </ul> Summary Liquidity is a topic that offers both risks and opportunities. Lack of liquidity is fraught with risk, especially in your personal life. However, a lack of liquidity can offer many opportunities when it comes to investment potential. You should manage your liquidity risk across all spectrums of your life such that you can receive optimal returns with minimal risk of a total loss of principal.

37 - Liquidity: Risks and Opportunities

Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience.  Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Books Referenced in this Podcast  Stocks for the Long Run by Jeremy Siegel  You can support the podcast by purchasing the book through one of my affiliate links:  Available in Hardcover Available for Kindle Available as an Audio Book (from Audible)  *Disclosure: If you make a purchase through one of these links, I may earn a commission.  This commission comes at no additional cost to you.  Please understand that I have personally read all the books that I review.  I recommend them because I believe they are helpful and useful, not because of any small commission I might receive.  Please do not spend any money on these books unless you feel you need them or that they will help you achieve your goals.* Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode23 Trey's Discount Rates:  Nominal Discount Rate = 10% Real Discount Rate = 6.5% Long-Run Inflation Expectations 3.5%  How to Select a Good Discount Rate: Your discount rate should be based upon the rate of return you expect to earn on your investments. If you want or need to earn 8% on your investments, then your discount rate should be 8%.  If you want or need to earn 10% on your investments, then your discount rate should be 10%.  When to use Nominal versus Real Discount Rate: You should use a Nominal discount rate when you are uncertain whether the company you are analyzing will be able to always grow their earnings at least at the rate of inflation.  You should use a Real discount rate when you are confident that a company will be able to automatically adjust their prices at least as fast as the inflation rate. In other words, the company must have pricing power. This behavior is typically only seen in high-quality companies.  Use the Same Discount Rate for ALL Companies The discount rate you use heavily impacts the result of your valuation analysis. Therefore, it is critical to base this discount rate off of your expected rate of return.  You should also not adjust the discount rate you use based upon the risk of one company versus another. If you make this mistake, then you are likely investing in companies that are too risky to make reliable forward estimates of long-run earnings.  If you find yourself wanting to use a higher discount rate for a single company, take that as a red flag. 

Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience.  Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at <a href="https://www.diyinvesting.org/patron" rel="noopener nofollow" target="_blank">DIYInvesting.org/Patron</a>. You can find out more information by listening to episode 11 of this podcast. Books Referenced in this Podcast <ul> <li>Stocks for the Long Run by Jeremy Siegel</li> </ul> You can support the podcast by purchasing the book through one of my affiliate links: <ul> <li><a href="https://amzn.to/2GcpKEo" rel="noopener nofollow" target="_blank">Available in Hardcover</a></li> <li><a href="https://amzn.to/2IqYzsa" rel="noopener nofollow" target="_blank">Available for Kindle</a></li> <li><a href="https://amzn.to/2Uzl8Cc" rel="noopener nofollow" target="_blank">Available as an Audio Book (from Audible)</a></li> </ul> *Disclosure: If you make a purchase through one of these links, I may earn a commission.  This commission comes at no additional cost to you.  Please understand that I have personally read all the books that I review.  I recommend them because I believe they are helpful and useful, not because of any small commission I might receive.  Please do not spend any money on these books unless you feel you need them or that they will help you achieve your goals.* Show Outline The full show notes for this episode are available at <a href="https://www.diyinvesting.org/Episode23" rel="noopener nofollow" target="_blank">https://www.diyinvesting.org/Episode23</a> Trey's Discount Rates: <ul> <li>Nominal Discount Rate = 10%</li> <li>Real Discount Rate = 6.5%</li> <li>Long-Run Inflation Expectations 3.5%</li> </ul> How to Select a Good Discount Rate: Your discount rate should be based upon the rate of return you expect to earn on your investments. If you want or need to earn 8% on your investments, then your discount rate should be 8%.  If you want or need to earn 10% on your investments, then your discount rate should be 10%.  When to use Nominal versus Real Discount Rate: You should use a Nominal discount rate when you are uncertain whether the company you are analyzing will be able to always grow their earnings at least at the rate of inflation.  You should use a Real discount rate when you are confident that a company will be able to automatically adjust their prices at least as fast as the inflation rate. In other words, the company must have pricing power. This behavior is typically only seen in high-quality companies.  Use the Same Discount Rate for ALL Companies The discount rate you use heavily impacts the result of your valuation analysis. Therefore, it is critical to base this discount rate off of your expected rate of return.  You should also not adjust the discount rate you use based upon the risk of one company versus another. If you make this mistake, then you are likely investing in companies that are too risky to make reliable forward estimates of long-run earnings.  If you find yourself wanting to use a higher discount rate for a single company, take that as a red flag.

23 - What is a good Discount Rate to use for Discounted Cash Flow Calculations?

David Flood

How to connect with David Flood (Elementary Value)  Follow his work on Twitter: @ElementaryValue Check out his website:  ElementaryValue Investing Blog   The company articles discussed in this podcast:  Pinelawn Cemetary (PLWN)  Intro Post Follow-up with financials   Beaver Coal Co. (BVERS) Network-1 Technologies (NTIP) Mirriad Advertising (LON: MIRI)  Intro Post Follow-up   Hemagen (HMGN)     Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Show Outline: Interview with David Flood of ElementaryValue.com The full show notes for this episode are available at https://www.diyinvesting.org/Episode48 Part 1: David Flood's Investing Process  How have you developed as an investor over time? David Flood's Investing Process:  Basket of Stocks (20-30+ positions - 2.5-5% each) Overlooked stocks (Low liquidity, sub $10 million market cap) Deep Value Price charts to identify stocks at all-time lows and long-term base   Investing in Net-Nets vs Nano-Cap Chart-based deep value SEC seeking to ban quotation of Dark Companies Wants to find and own companies no one else has written up  Part 2: Example Stocks  Pinelawn Cemetary ($PLWN) - Dividend yield of 9-10%, nearly zero liquidity Beaver Coal Co. ($BVERS) - Misunderstood land company 50,000 acres diversified with coal, gas deposits, timberland, log cabins, and mobile home parks Network-1 Technologies ($NTIP) - A net-net with catalyst. Cash bucket patent troll. Mirriad Advertising (LON: $MIRI) - Video insertion tech company partnered with Tencent Hemagen (HMGN) - Market Cap: $155k USD. Dark since 2013. 

How to connect with David Flood (Elementary Value) <ul> <li>Follow his work on Twitter: <a href="https://twitter.com/ElementaryValue" rel="noopener nofollow" target="_blank">@ElementaryValue</a></li> <li>Check out his website: <ul> <li><a href="https://www.elementaryvalue.com/investing-blog" rel="noopener nofollow" target="_blank">ElementaryValue Investing Blog</a></li> </ul> </li> <li>The company articles discussed in this podcast: <ul> <li>Pinelawn Cemetary (PLWN) <ul> <li><a href="https://www.elementaryvalue.com/investing-blog/pinelawn-cemetery-plwn-a-dark-otc-pinksheet-stock-with-an-9-dividend-yield" rel="noopener nofollow" target="_blank">Intro Post</a></li> <li><a href="https://www.elementaryvalue.com/investing-blog/pinelawn-cemetery-plwn-putting-some-meat-on-the-bones" rel="noopener nofollow" target="_blank">Follow-up with financials</a></li> </ul> </li> <li><a href="https://www.elementaryvalue.com/investing-blog/beaver-coal-co-ltd-bvers-a-dark-pinksheet-with-a-19-dividend-yield" rel="noopener nofollow" target="_blank">Beaver Coal Co. (BVERS)</a></li> <li><a href="https://www.elementaryvalue.com/investing-blog/network-1-technologies-inc-ntip-a-micro-cap-with-downside-protection-and-50-upside-potential" rel="noopener nofollow" target="_blank">Network-1 Technologies (NTIP)</a></li> <li>Mirriad Advertising (LON: MIRI) <ul> <li><a href="https://www.elementaryvalue.com/investing-blog/mirriad-advertising-plc-miri-a-nano-cap-tech-firm-trading-below-net-cash" rel="noopener nofollow" target="_blank">Intro Post</a></li> <li><a href="https://www.elementaryvalue.com/investing-blog/mirilon-enetlon-these-nano-cap-tech-firms-have-sprung-to-life" rel="noopener nofollow" target="_blank">Follow-up</a></li> </ul> </li> <li><a href="https://www.elementaryvalue.com/investing-blog/hemagen-diagnostics-inc-hmgn-left-for-dead-but-theres-still-a-pulse" rel="noopener nofollow" target="_blank">Hemagen (HMGN)</a> </li> </ul> </li> </ul> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: <a href="https://twitter.com/TreyHenninger" rel="noopener nofollow" target="_blank">@TreyHenninger</a> YouTube Channel: <a href="https://www.youtube.com/channel/UCD0lzw3BdPwhx6jwrIofI0g" rel="noopener nofollow" target="_blank">DIY Investing</a> Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at <a href="https://www.diyinvesting.org/patron" rel="noopener nofollow" target="_blank">DIYInvesting.org/Patron</a>. You can find out more information by listening to episode 11 of this podcast. Show Outline: Interview with David Flood of <a href="http://ElementaryValue.com" rel="nofollow" target="_blank">ElementaryValue.com</a> The full show notes for this episode are available at <a href="https://www.diyinvesting.org/Episode48" rel="noopener nofollow" target="_blank">https://www.diyinvesting.org/Episode48</a> Part 1: David Flood's Investing Process <ul> <li>How have you developed as an investor over time?</li> <li>David Flood's Investing Process: <ul> <li>Basket of Stocks (20-30+ positions - 2.5-5% each)</li> <li>Overlooked stocks (Low liquidity, sub $10 million market cap)</li> <li>Deep Value</li> <li>Price charts to identify stocks at all-time lows and long-term base</li> </ul> </li> <li>Investing in Net-Nets vs Nano-Cap Chart-based deep value</li> <li>SEC seeking to ban quotation of Dark Companies</li> <li>Wants to find and own companies no one else has written up</li> </ul> Part 2: Example Stocks <ul> <li>Pinelawn Cemetary ($PLWN) - Dividend yield of 9-10%, nearly zero liquidity</li> <li>Beaver Coal Co. ($BVERS) - Misunderstood land company 50,000 acres diversified with coal, gas deposits, timberland, log cabins, and mobile home parks</li> <li>Network-1 Technologies ($NTIP) - A net-net with catalyst. Cash bucket patent troll.</li> <li>Mirriad Advertising (LON: $MIRI) - Video insertion tech company partnered with Tencent</li> <li>Hemagen (HMGN) - Market Cap: $155k USD. Dark since 2013.</li> </ul>

48 - David Flood Interview: Dark Stock Investing ($PLWN, $BVERS, $NTIP, $MIRI, $HMGN)

Mental Models discussed in this podcast:  Circle of Competence Habits Resulting (read: "Thinking in Bets" by Annie Duke)  Focus on Process over Results   Networking Effects Signal vs Noise  Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode58 How to think about investing goals  The important thing to remember about goals is that you need to focus on what you can control. You don't control investing outcomes, you can only control your investing process.  Therefore, any goal that explicitly mentions a specific investing outcome is bound to result in disappointment and frustration. (Such as "My goal is to earn a 10% return this year." Replace 10% with whatever number you like, it's not a helpful goal.)  Parts of the Investment Process Worthy of Goals  Your research process Investing Habits Growing your circle of competence Building a network of investors Refining your investing strategy (Finding weaknesses)  My personal investing goals for 2020:  Identify one company worthy of investing 20% of my portfolio.  Actually invest in that company.   How might I do that?  Filter through a lot of companies. Maybe I set a goal of reading one 10k a week. That allows me to read over 50 10k's in the year. Perhaps after looking at 50 companies, I might find one worth investing money in. Focus on identifying high-quality companies. If a company is unlikely to be of high quality, it probably shouldn't fit in my list of 50 companies to review in detail.  Focus on cheap companies. If the company isn't cheap, it's unlikely to be a stock I invest in this year.  Focus on companies with the ability to distribute a large amount of cash to shareholders. I tend to prefer capital-light businesses, so I should focus my time and effort there.    Investing Habits: Identify and eliminate one bad investing habit that I'm currently doing, and implement one new investing habit that should have a positive outcome.  In 2018, my focus was on removing investing noise from sources like CNBC.  In 2020, I think my goal is to only check stock prices once a week.    Grow your circle of competence:  In 2020, I really want to better understand banks and the banking industry. Banks seem like fertile ground for new long-term investments especially when interest rates are low. So, I want to focus on building expertise as a bank investor.   Building a network of investors:  In 2020, I want to interview 12 different investors on my podcast. Each interview teaches me something new about investing and grows my network of investors to learn from and source ideas.  In addition, in 2020 I want to grow my Twitter following to surpass 1,000 followers. I have found FinTwit (Financial Twitter) to be a huge boon in helping me learn more about investing. As I connect more with other investors on Twitter, I hope to become an even better investor.    Refining my investing strategy (Finding my weaknesses)  If I knew my investing weakness that I would discover today, it wouldn't be a goal. So, I'll simply plan to complete a post-mortem analysis on each of the companies that I sold in 2019 to see what I can learn from those investments.  I wish I had already completed those post mortems, but I should have time to complete it in 2020.     Summary: In summary, focus on improving your investing process. Only by focusing on what you can control and improve on, will you actually see long-term improvements in your investing results. Simply making a goal to improve investment results will not help you. You have to identify your weaknesses and eliminate them. Meanwhile, grow and build on your strengths. Over time, and executed on each year, you should become a much better investor.

Mental Models discussed in this podcast: <ul> <li>Circle of Competence</li> <li>Habits</li> <li>Resulting (read: <a href="https://amzn.to/2PC5emt" rel="nofollow" target="_blank">"Thinking in Bets"</a> by Annie Duke) <ul> <li>Focus on Process over Results</li> </ul> </li> <li>Networking Effects</li> <li>Signal vs Noise</li> </ul> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: <a href="https://twitter.com/TreyHenninger" rel="noopener nofollow" target="_blank">@TreyHenninger</a> YouTube Channel: <a href="https://www.youtube.com/channel/UCD0lzw3BdPwhx6jwrIofI0g" rel="noopener nofollow" target="_blank">DIY Investing</a> Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at <a href="https://www.diyinvesting.org/patron" rel="noopener nofollow" target="_blank">DIYInvesting.org/Patron</a>. You can find out more information by listening to <a href="https://www.diyinvesting.org/episode11" rel="nofollow" target="_blank">episode 11</a> of this podcast. Show Outline The full show notes for this episode are available at <a href="https://www.diyinvesting.org/Episode58" rel="noopener nofollow" target="_blank">https://www.diyinvesting.org/Episode58</a> How to think about investing goals <ul> <li>The important thing to remember about goals is that you need to focus on what you can control. You don't control investing outcomes, you can only control your investing process. </li> <li>Therefore, any goal that explicitly mentions a specific investing outcome is bound to result in disappointment and frustration. (Such as "My goal is to earn a 10% return this year." Replace 10% with whatever number you like, it's not a helpful goal.)</li> </ul> Parts of the Investment Process Worthy of Goals <ul> <li>Your research process</li> <li>Investing Habits</li> <li>Growing your circle of competence</li> <li>Building a network of investors</li> <li>Refining your investing strategy (Finding weaknesses)</li> </ul> My personal investing goals for 2020: <ul> <li>Identify one company worthy of investing 20% of my portfolio. <ul> <li>Actually invest in that company.</li> </ul> </li> <li>How might I do that? <ul> <li>Filter through a lot of companies. Maybe I set a goal of reading one 10k a week. That allows me to read over 50 10k's in the year. Perhaps after looking at 50 companies, I might find one worth investing money in.</li> <li>Focus on identifying high-quality companies. If a company is unlikely to be of high quality, it probably shouldn't fit in my list of 50 companies to review in detail. </li> <li>Focus on cheap companies. If the company isn't cheap, it's unlikely to be a stock I invest in this year. </li> <li>Focus on companies with the ability to distribute a large amount of cash to shareholders. I tend to prefer capital-light businesses, so I should focus my time and effort there. </li> </ul> </li> <li>Investing Habits: Identify and eliminate one bad investing habit that I'm currently doing, and implement one new investing habit that should have a positive outcome. <ul> <li>In 2018, my focus was on removing investing noise from sources like CNBC. </li> <li>In 2020, I think my goal is to only check stock prices once a week. </li> </ul> </li> <li>Grow your circle of competence: <ul> <li>In 2020, I really want to better understand banks and the banking industry. Banks seem like fertile ground for new long-term investments especially when interest rates are low. So, I want to focus on building expertise as a bank investor.</li> </ul> </li> <li>Building a network of investors: <ul> <li>In 2020, I want to interview 12 different investors on my podcast. Each interview teaches me something new about investing and grows my network of investors to learn from and source ideas. </li> <li>In addition, in 2020 I want to grow my Twitter following to surpass 1,000 followers. I have found FinTwit (Financial Twitter) to be a huge boon in helping me learn more about investing. As I connect more with other investors on Twitter, I hope to become an even better investor. </li> </ul> </li> <li>Refining my investing strategy (Finding my weaknesses) <ul> <li>If I knew my investing weakness that I would discover today, it wouldn't be a goal. So, I'll simply plan to complete a post-mortem analysis on each of the companies that I sold in 2019 to see what I can learn from those investments. </li> <li>I wish I had already completed those post mortems, but I should have time to complete it in 2020. </li> </ul> </li> </ul> Summary: In summary, focus on improving your investing process. Only by focusing on what you can control and improve on, will you actually see long-term improvements in your investing results. Simply making a goal to improve investment results will not help you. You have to identify your weaknesses and eliminate them. Meanwhile, grow and build on your strengths. Over time, and executed on each year, you should become a much better investor.

58 - Investing Goals for 2020

Mental Models discussed in this podcast:  Concentration vs Diversification Expected Value Probabilistic Thinking  Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode63 Not every stock is right for every Value Investor  Just because a company is cheap doesn't mean you should own it You need to learn to recognize the types of stocks that appeal to you and your strategy, while at the same time ignoring those stocks which don't work for your strategy.   Focus Areas to Discuss:  Deep Value Stocks Quality Stocks Momentum Stocks Growth Stocks Concentrated vs Diversified Portfolios  Summary: Portfolio management is a critical means by which an investor implements their investing strategy. Everything flows from your portfolio decisions: including returns, risk, and your general feeling and emotions of investing. Therefore, it is critical to align your portfolio and stock selection with your chosen strategy. Concentrated investors should not be buying deep value stocks. By the same token, diversified portfolios are better able to incorporate coin flip stocks with binary potential and high expected value. Don't make the mistake of building a diversified portfolio with stocks that fit a concentrated portfolio and vice versa. 

Mental Models discussed in this podcast: <ul> <li>Concentration vs Diversification</li> <li>Expected Value</li> <li>Probabilistic Thinking</li> </ul> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: <a href="https://twitter.com/TreyHenninger" rel="noopener nofollow" target="_blank">@TreyHenninger</a> YouTube Channel: <a href="https://www.youtube.com/channel/UCD0lzw3BdPwhx6jwrIofI0g" rel="noopener nofollow" target="_blank">DIY Investing</a> Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at <a href="https://www.diyinvesting.org/patron" rel="noopener nofollow" target="_blank">DIYInvesting.org/Patron</a>. You can find out more information by listening to <a href="https://www.diyinvesting.org/episode11" rel="nofollow" target="_blank">episode 11</a> of this podcast. Show Outline The full show notes for this episode are available at <a href="https://www.diyinvesting.org/Episode63" rel="noopener nofollow" target="_blank">https://www.diyinvesting.org/Episode63</a> Not every stock is right for every Value Investor <ul> <li>Just because a company is cheap doesn't mean you should own it</li> <li>You need to learn to recognize the types of stocks that appeal to you and your strategy, while at the same time ignoring those stocks which don't work for your strategy. </li> </ul> Focus Areas to Discuss: <ul> <li>Deep Value Stocks</li> <li>Quality Stocks</li> <li>Momentum Stocks</li> <li>Growth Stocks</li> <li>Concentrated vs Diversified Portfolios</li> </ul> Summary: Portfolio management is a critical means by which an investor implements their investing strategy. Everything flows from your portfolio decisions: including returns, risk, and your general feeling and emotions of investing. Therefore, it is critical to align your portfolio and stock selection with your chosen strategy. Concentrated investors should not be buying deep value stocks. By the same token, diversified portfolios are better able to incorporate coin flip stocks with binary potential and high expected value. Don't make the mistake of building a diversified portfolio with stocks that fit a concentrated portfolio and vice versa.

63 - Your Portfolio should reflect your Investing Strategy

Mental Models discussed in this podcast:  Margin of Safety  Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode54 What is a quality business? (Classification Guide)  What is a quality business?   One thing above all else determines whether a business is "high quality." That is predictability. A high-quality business is predictable in terms of future cash flows available to owners. This definition may differ from others you have heard that focus purely on return on invested capital or other quantitative metrics. The reason is simple: The hardest part of investing is predicting the future. Therefore, you should prioritize investing in companies that are easiest for you to predict their future.    A quality pyramid of 7 tiers. Each progressively smaller than the tier before it Tier 0 - Too Hard Pile Tier 1 - Speculations Tier 2 - Bad Businesses Tier 3 - Average Businesses The above tiers are the bulk of companies. If you are rating companies and most of your ratings fall outside of those tiers, then you are either rating companies wrong or you are already narrowed down into a select group of companies. [Buy Line] Tier 4 - High-Quality Businesses  Tier 5 - Excellent Quality Businesses  Tier 6 - Generational Businesses  Business Quality Reports: Patrons (or Premium Members of DIY Investing) receive free access to my personal investing research and all of the business quality reports that I create. If you're interested in learning more, you can read all about the premium membership here.  Every listener of this podcast can read this free sample report on Disney. Summary: Your goal as an investor it to earn an acceptable return on your investment capital over your investing lifetime. One way to improve the odds of achieving this goal is to classify the companies you research into quality tiers. By always beginning your research with a quality classification, you can limit investing mistakes and maximize your margin of safety during the quantitative part of the investing process

Mental Models discussed in this podcast: <ul> <li>Margin of Safety</li> </ul> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: <a href="https://twitter.com/TreyHenninger" rel="noopener nofollow" target="_blank">@TreyHenninger</a> YouTube Channel: <a href="https://www.youtube.com/channel/UCD0lzw3BdPwhx6jwrIofI0g" rel="noopener nofollow" target="_blank">DIY Investing</a> Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at <a href="https://www.diyinvesting.org/patron" rel="noopener nofollow" target="_blank">DIYInvesting.org/Patron</a>. You can find out more information by listening to episode 11 of this podcast. Show Outline The full show notes for this episode are available at <a href="https://www.diyinvesting.org/Episode54" rel="noopener nofollow" target="_blank">https://www.diyinvesting.org/Episode54</a> What is a quality business? (Classification Guide) <ul> <li>What is a quality business?  <ul> <li>One thing above all else determines whether a business is "high quality." That is predictability. A high-quality business is predictable in terms of future cash flows available to owners.</li> <li>This definition may differ from others you have heard that focus purely on return on invested capital or other quantitative metrics.</li> <li>The reason is simple: The hardest part of investing is predicting the future. Therefore, you should prioritize investing in companies that are easiest for you to predict their future. </li> </ul> </li> <li>A quality pyramid of 7 tiers. Each progressively smaller than the tier before it</li> <li>Tier 0 - Too Hard Pile</li> <li>Tier 1 - Speculations</li> <li>Tier 2 - Bad Businesses</li> <li>Tier 3 - Average Businesses</li> <li>The above tiers are the bulk of companies. If you are rating companies and most of your ratings fall outside of those tiers, then you are either rating companies wrong or you are already narrowed down into a select group of companies. [Buy Line]</li> <li>Tier 4 - High-Quality Businesses </li> <li>Tier 5 - Excellent Quality Businesses </li> <li>Tier 6 - Generational Businesses</li> </ul> Business Quality Reports: Patrons (or Premium Members of DIY Investing) receive free access to my personal investing research and all of the business quality reports that I create. If you're interested in learning more, you can <a href="https://www.patreon.com/DIYInvesting" rel="noopener nofollow" target="_blank">read all about the premium membership here</a>.  Every listener of this podcast can read this <a href="https://www.diyinvesting.org/disney-business-quality-report/" rel="noopener nofollow" target="_blank">free sample report on Disney</a>. Summary: Your goal as an investor it to earn an acceptable return on your investment capital over your investing lifetime. One way to improve the odds of achieving this goal is to classify the companies you research into quality tiers. By always beginning your research with a quality classification, you can limit investing mistakes and maximize your margin of safety during the quantitative part of the investing process

54 - How to Classify Companies by Business Quality: An Investing System

Mental Models discussed in this podcast:  Dividend Aristocrats Dividend Growth Investing Discount Rates  Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode70 Current Clearance Sale on Oil Major Stocks  As of recording on March 20th, the oil majors trade with the following dividend yields:  ExxonMobil $33 per share, $3.48 dividend, 10.5% yield  Dividend Aristocrat = 37 consecutive years of dividend increases  Uninterrupted dividends since 1882   Chevron $58 per share, $5.16 dividend, 8.9% yield  Dividend Aristocrat = 32 consecutive years of dividend increases  Uninterrupted dividends since 1912   Royal Dutch Shell $24 per share, $3.76 dividend, 15.6% yield BP $18 per share, $2.52 dividend, 14% yield TOTAL $27 per share, $2.93 dividend, 10.8% yield    Summary: During stock market crashes correlations tend to go to 1 and many stocks trade together, both the good and the bad. Market dislocations like this, therefore, offer many opportunities to buy individual stocks at great prices. Today offers that opportunity in the oil supermajors. You have the ability to buy companies at double-digit dividend yields that have raised their dividend every year for over 30 years. This is a once in a 50-year occurrence in the oil industry. Other References:  Episode 12 of the DIY Investing Podcast on Oil Majors  2015 Oil Stock Clearance Article  Joshua Kennon's review of investing in oil majors 

Mental Models discussed in this podcast: <ul> <li>Dividend Aristocrats</li> <li>Dividend Growth Investing</li> <li>Discount Rates</li> </ul> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: <a href="https://twitter.com/TreyHenninger" rel="noopener nofollow" target="_blank">@TreyHenninger</a> YouTube Channel: <a href="https://www.youtube.com/channel/UCD0lzw3BdPwhx6jwrIofI0g" rel="noopener nofollow" target="_blank">DIY Investing</a> Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at <a href="https://www.diyinvesting.org/patron" rel="noopener nofollow" target="_blank">DIYInvesting.org/Patron</a>. You can find out more information by listening to <a href="https://www.diyinvesting.org/episode11" rel="nofollow" target="_blank">episode 11</a> of this podcast. Show Outline The full show notes for this episode are available at <a href="https://www.diyinvesting.org/Episode70" rel="noopener nofollow" target="_blank">https://www.diyinvesting.org/Episode70</a> Current Clearance Sale on Oil Major Stocks <ul> <li>As of recording on March 20th, the oil majors trade with the following dividend yields: <ul> <li>ExxonMobil $33 per share, $3.48 dividend, 10.5% yield <ul> <li>Dividend Aristocrat = 37 consecutive years of dividend increases</li> <li><a href="https://www.simplysafedividends.com/intelligent-income/posts/95-exxon-mobil-a-dividend-aristocrat-with-100-years-of-uninterrupted-payouts" rel="nofollow" target="_blank"> Uninterrupted dividends since 1882</a></li> </ul> </li> <li>Chevron $58 per share, $5.16 dividend, 8.9% yield <ul> <li>Dividend Aristocrat = 32 consecutive years of dividend increases</li> <li><a href="https://www.simplysafedividends.com/intelligent-income/posts/72-chevron-a-quality-dividend-aristocrat-in-the-energy-sector" rel="nofollow" target="_blank"> Uninterrupted dividends since 1912</a></li> </ul> </li> <li>Royal Dutch Shell $24 per share, $3.76 dividend, 15.6% yield</li> <li>BP $18 per share, $2.52 dividend, 14% yield</li> <li>TOTAL $27 per share, $2.93 dividend, 10.8% yield</li> </ul> </li> </ul> Summary: During stock market crashes correlations tend to go to 1 and many stocks trade together, both the good and the bad. Market dislocations like this, therefore, offer many opportunities to buy individual stocks at great prices. Today offers that opportunity in the oil supermajors. You have the ability to buy companies at double-digit dividend yields that have raised their dividend every year for over 30 years. This is a once in a 50-year occurrence in the oil industry. Other References: <ul> <li><a href="https://www.diyinvesting.org/oil-majors-investing-podcast/" rel="nofollow" target="_blank">Episode 12</a> of the DIY Investing Podcast on Oil Majors</li> <li><a href="https://www.diyinvesting.org/stock-clearance-sale-big-oil-supermajors/" rel="nofollow" target="_blank"> 2015 Oil Stock Clearance Article</a></li> <li><a href="https://www.joshuakennon.com/lets-talk-about-investing-in-oil-stocks-and-the-oil-majors/" rel="nofollow" target="_blank"> Joshua Kennon's review of investing in oil majors</a></li> </ul>

70 - Oil Majors Clearance Sale 2020

Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience.  Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast.  Owner's Earnings - Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode26 What is Net Income?  The total after-tax profits that a company earns in a year  What is EPS or Earnings per Share?  The After-Tax profits of a company divided by the total number of shares outstanding.  The problems with Net Income and EPS as a metric for investment  They are not comparable across different companies and industries.  Some companies are more capital intensive than others.  Net Income and EPS will overstate the economic "cash earnings" for capital intensive businesses that require large capital outlays on a regular basis.  Implications for the usefulness of P/E Ratios  Since P/E ratios are based on Net Income or Earnings per Share for the "E" component, they share the same problems. P/E ratios are not comparable across industries or even companies within the same industry  Owner's Earnings - A better metric  Definition: Owner's Earnings - Earnings that can be paid out in cash to shareholders without impacting the earning power of the business  How to calculate Owner's Earnings  Take Net Income and make some adjustments Joshua Kennon's formula is the best that I have found. See link below in the references.   References:  Joshua Kennon's Owner's Earnings Formula Examples of how to calculate Owner's Earnings and Intrinsic Value [Intrinsic Value Reports - Exclusive to Patrons of $10+/month] 

Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience.  Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at <a href="https://www.diyinvesting.org/patron" rel="noopener nofollow" target="_blank">DIYInvesting.org/Patron</a>. You can find out more information by listening to episode 11 of this podcast.  Owner's Earnings - Show Outline The full show notes for this episode are available at <a href="https://www.diyinvesting.org/Episode26" rel="noopener nofollow" target="_blank">https://www.diyinvesting.org/Episode26</a> What is Net Income? <ul> <li>The total after-tax profits that a company earns in a year</li> </ul> What is EPS or Earnings per Share? <ul> <li>The After-Tax profits of a company divided by the total number of shares outstanding.</li> </ul> The problems with Net Income and EPS as a metric for investment <ul> <li>They are not comparable across different companies and industries. </li> <li>Some companies are more capital intensive than others. </li> <li>Net Income and EPS will overstate the economic "cash earnings" for capital intensive businesses that require large capital outlays on a regular basis.</li> </ul> Implications for the usefulness of P/E Ratios <ul> <li>Since P/E ratios are based on Net Income or Earnings per Share for the "E" component, they share the same problems.</li> <li>P/E ratios are not comparable across industries or even companies within the same industry</li> </ul> Owner's Earnings - A better metric <ul> <li>Definition:</li> <li>Owner's Earnings - Earnings that can be paid out in cash to shareholders without impacting the earning power of the business</li> </ul> How to calculate Owner's Earnings <ul> <li>Take Net Income and make some adjustments</li> <li>Joshua Kennon's formula is the best that I have found. See link below in the references. </li> </ul> References: <ul> <li><a href="https://www.joshuakennon.com/mail-bag-cash-flow-versus-eps-for-intrinsic-value-calculations/" rel="noopener nofollow" target="_blank">Joshua Kennon's Owner's Earnings Formula</a></li> <li><a href="https://www.diyinvesting.org/my-portfolio/value/" rel="noopener nofollow" target="_blank">Examples of how to calculate Owner's Earnings and Intrinsic Value</a> [Intrinsic Value Reports - <a href="https://www.patreon.com/join/DIYInvesting" rel="noopener nofollow" target="_blank">Exclusive to Patrons</a> of $10+/month]</li> </ul>

26 - Owner's Earnings: Why Net Income or EPS can be deceiving

Thank you for your support! In this podcast episode, I mentioned one of the exclusive member benefits for those who choose to financially support this podcast as a Patron. Patron's of The DIY Investing Podcast, receive exclusive access to my business quality reports. Check out the Business Quality Report on Disney. (Exclusive to Patrons of the Show) Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode22 Disney+  $6.99 per month or $69.99 per year ($5.83 per month if paid in advance - basically 2 months free) Launch Date: November 12th, 2019 Access to Disney's incredible library of old TV shows and movies, including:  The entire Pixar lineup of movies by the end of the first year All of the Marvel Cinematic Universe (eventually), but Captain Marvel will be available on Day 1 National Geographic All 9 main Star Wars movies, with Rogue One and Solo on top of that Historic Disney Channel movies and TV Shows The Signature collection of Disney classics including Cinderella and Lion King    Disney's Business Model  “Content is King” Well Disney is the “King of Content” Entertainment giant that has a flywheel effect allowing shareholders to profit off of branded content in numerous ways  Disney+ combines the best parts of the TV Channels, Movie Rentals, and Theatre Releases Creates lasting fans     Movie Releases in Theatres DVD and Movie Rentals and Purchases Theme Parks (Disney World and Disney Land) TV Channels like Disney Channel Cruise Lines Toy Sales and Licensing New Addition: Direct to Consumer Streaming Service (Disney+)    Streaming is Sticky  Disney + is going to be a Brand Ambassador for Disney. They will “lock-in” families when they have young children, building life long fans.  Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience. 

Thank you for your support! In this podcast episode, I mentioned one of the exclusive member benefits for those who choose to financially support this podcast as a Patron. Patron's of The DIY Investing Podcast, receive exclusive access to my business quality reports. <a href="https://www.diyinvesting.org/disney-business-quality-report/" rel="noopener nofollow" target="_blank">Check out the Business Quality Report on Disney</a>. (Exclusive to Patrons of the Show) Show Outline The full show notes for this episode are available at <a href="https://www.diyinvesting.org/Episode22" rel="noopener nofollow" target="_blank">https://www.diyinvesting.org/Episode22</a> Disney+ <ul> <li>$6.99 per month or $69.99 per year ($5.83 per month if paid in advance - basically 2 months free)</li> <li>Launch Date: November 12th, 2019</li> <li>Access to Disney's incredible library of old TV shows and movies, including: <ul> <li>The entire Pixar lineup of movies by the end of the first year</li> <li>All of the Marvel Cinematic Universe (eventually), but Captain Marvel will be available on Day 1</li> <li>National Geographic</li> <li>All 9 main Star Wars movies, with Rogue One and Solo on top of that</li> <li>Historic Disney Channel movies and TV Shows</li> <li>The Signature collection of Disney classics including Cinderella and Lion King</li> </ul> </li> </ul> Disney's Business Model <ul> <li>“Content is King”</li> <li>Well Disney is the “King of Content”</li> <li>Entertainment giant that has a flywheel effect allowing shareholders to profit off of branded content in numerous ways <ul> <li>Disney+ combines the best parts of the TV Channels, Movie Rentals, and Theatre Releases</li> <li>Creates lasting fans</li> </ul> </li> <li> <ul> <li>Movie Releases in Theatres</li> <li>DVD and Movie Rentals and Purchases</li> <li>Theme Parks (Disney World and Disney Land)</li> <li>TV Channels like Disney Channel</li> <li>Cruise Lines</li> <li>Toy Sales and Licensing</li> <li>New Addition: Direct to Consumer Streaming Service (Disney+)</li> </ul> </li> </ul> Streaming is Sticky <ul> <li>Disney + is going to be a Brand Ambassador for Disney.</li> <li>They will “lock-in” families when they have young children, building life long fans.</li> </ul> Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at <a href="https://www.diyinvesting.org/patron" rel="noopener nofollow" target="_blank">DIYInvesting.org/Patron</a>. You can find out more information by listening to episode 11 of this podcast. Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience.

22 - How Disney+ improves the quality of Disney's business model

Tobias Carlisle

Book: The Acquirer's Multiple by Tobias Carlisle If you enjoyed this podcast episode and would like to learn more about Deep Value Investing, consider purchasing the book through one of the following affiliate links.  Available at Amazon for Kindle Available at Audible as an Audiobook Available at Amazon as a Paperback  Thank you for your support. How to connect with Tobias Carlisle  Follow his work on Twitter: @Greenbackd  Tobias Carlisle's Website:  AcquirersMultiple.com His website includes a Free Deep Value Stock Screener   Tobias Carlisle's ETF:  https://acquirersfund.com/ Ticker: ZIG    Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Show Outline: Interview with Tobias Carlisle The full show notes for this episode are available at https://www.diyinvesting.org/Episode52 Book: The Acquirer's Multiple (Interactive Review with Author)   Deep Value Investing     Is Deep Value only a good strategy when control situations are viable?     Activists benefit deep value investors beyond themselves     Mid-Cap Stocks are a prime market because of so many activists     Negative Enterprise Value Stocks – Great portfolio for investors without liquidity restrictions     The Acquirer’s Multiple: EV / Operating Earnings     A multiple of 10 or less or a 10% earnings yield is a good target     How could Mean Reversion fail or stop working? (Key Deep Value Assumption)     Can Business Analysis be learned? (And is it even worth it?)     What value does a portfolio manager provide over a computer in the deep value space?     Tobias’s ETF: ZIG (‘ZIG when the market zags’)  

Book: The Acquirer's Multiple by Tobias Carlisle If you enjoyed this podcast episode and would like to learn more about Deep Value Investing, consider purchasing the book through one of the following affiliate links. <ul> <li><a href="https://amzn.to/2Ooq0Wr" rel="noopener nofollow" target="_blank">Available at Amazon for Kindle</a></li> <li><a href="https://amzn.to/2DifARF" rel="noopener nofollow" target="_blank">Available at Audible as an Audiobook</a></li> <li><a href="https://amzn.to/2QUMobA" rel="noopener nofollow" target="_blank">Available at Amazon as a Paperback</a></li> </ul> Thank you for your support. How to connect with Tobias Carlisle <ul> <li>Follow his work on Twitter: <a href="https://twitter.com/Greenbackd" rel="noopener nofollow" target="_blank">@Greenbackd</a> </li> <li>Tobias Carlisle's Website: <ul> <li><a href="https://acquirersmultiple.com/" rel="noopener nofollow" target="_blank">AcquirersMultiple.com</a></li> <li>His website includes a Free Deep Value Stock Screener</li> </ul> </li> <li>Tobias Carlisle's ETF: <ul> <li><a href="https://acquirersfund.com/" rel="nofollow" target="_blank">https://acquirersfund.com/</a></li> <li>Ticker: ZIG</li> </ul> </li> </ul> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: <a href="https://twitter.com/TreyHenninger" rel="noopener nofollow" target="_blank">@TreyHenninger</a> YouTube Channel: <a href="https://www.youtube.com/channel/UCD0lzw3BdPwhx6jwrIofI0g" rel="noopener nofollow" target="_blank">DIY Investing</a> Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at <a href="https://www.diyinvesting.org/patron" rel="noopener nofollow" target="_blank">DIYInvesting.org/Patron</a>. You can find out more information by listening to episode 11 of this podcast. Show Outline: Interview with Tobias Carlisle The full show notes for this episode are available at <a href="https://www.diyinvesting.org/Episode52" rel="noopener nofollow" target="_blank">https://www.diyinvesting.org/Episode52</a> Book: <a href="https://amzn.to/35zGMrd" rel="noopener nofollow" target="_blank">The Acquirer's Multiple</a> (Interactive Review with Author) <ul> <li> Deep Value Investing </li> <li>   Is Deep Value only a good strategy when control situations are viable? </li> <li>   Activists benefit deep value investors beyond themselves </li> <li>   Mid-Cap Stocks are a prime market because of so many activists </li> <li>   Negative Enterprise Value Stocks – Great portfolio for investors without liquidity restrictions </li> <li>   The Acquirer’s Multiple: EV / Operating Earnings <ul> <li>   A multiple of 10 or less or a 10% earnings yield is a good target </li> </ul> </li> <li> How could Mean Reversion fail or stop working? (Key Deep Value Assumption) </li> <li>   Can Business Analysis be learned? (And is it even worth it?) </li> <li>   What value does a portfolio manager provide over a computer in the deep value space? </li> <li>   Tobias’s ETF: ZIG (‘ZIG when the market zags’) </li> </ul>

52 - The Acquirer's Multiple with author Tobias Carlisle (Interactive Book Review)

How to connect with The Science of Hitting:  Follow him Twitter: https://twitter.com/TSOH_Investing Read his articles on GuruFocus:  GuruFocus - Author: The Science of Hitting RSS Feed    Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Show Outline: Interview with The Science of Hitting The full show notes for this episode are available at https://www.diyinvesting.org/Episode41 Part 1: Background and Investing Process  Investing Background Science of Hitting's Investing Process Portfolio Management and Position Sizing Evaluating Corporate Management Capital Allocation Advantages and Disadvantages of being a DIY Investor Investing Mistakes and how to avoid them How to judge your investment success  Part 2: Example Investment - Microsoft (MSFT)   Self-written Bio:   "I'm a value investor with a long-term focus. My goal is to make a small number of meaningful decisions a year. In the words of Charlie Munger, my preferred approach is "patience followed by pretty aggressive conduct." I run a concentrated portfolio - a handful of equities account for the majority of its value. In the eyes of a businessman, I believe this is sufficient diversification." - Science of Hitting (GuruFocus)

How to connect with The Science of Hitting: <ul> <li>Follow him Twitter: <a href="https://twitter.com/TSOH_Investing" rel="noopener nofollow" target="_blank">https://twitter.com/TSOH_Investing</a></li> <li>Read his articles on GuruFocus: <ul> <li><a href="https://www.gurufocus.com/ic/space.php?do=article&amp;uid=110170&amp;author=The+Science+of+Hitting" rel="noopener nofollow" target="_blank">GuruFocus - Author: The Science of Hitting</a></li> <li><a href="https://www.gurufocus.com/rss_2.php?author=The%20Science%20of%20Hitting&amp;u=110170" rel="noopener nofollow" target="_blank">RSS Feed</a></li> </ul> </li> </ul> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at <a href="https://www.diyinvesting.org/patron" rel="noopener nofollow" target="_blank">DIYInvesting.org/Patron</a>. You can find out more information by listening to episode 11 of this podcast. Show Outline: Interview with The Science of Hitting The full show notes for this episode are available at <a href="https://www.diyinvesting.org/Episode41" rel="noopener nofollow" target="_blank">https://www.diyinvesting.org/Episode41</a> Part 1: Background and Investing Process <ul> <li>Investing Background</li> <li>Science of Hitting's Investing Process</li> <li>Portfolio Management and Position Sizing</li> <li>Evaluating Corporate Management</li> <li>Capital Allocation</li> <li>Advantages and Disadvantages of being a DIY Investor</li> <li>Investing Mistakes and how to avoid them</li> <li>How to judge your investment success</li> </ul> Part 2: Example Investment - Microsoft (MSFT)   Self-written Bio: "I'm a value investor with a long-term focus. My goal is to make a small number of meaningful decisions a year. In the words of Charlie Munger, my preferred approach is "patience followed by pretty aggressive conduct." I run a concentrated portfolio - a handful of equities account for the majority of its value. In the eyes of a businessman, I believe this is sufficient diversification." - Science of Hitting (GuruFocus)

41 - Science of Hitting Interview: How quality limits investing mistakes, portfolio management, and Microsoft ($MSFT)

Call to Action:  For You: Check your current stocks for the presence of net operating losses that can offset future taxes and read about Myrexis and Affymax to gain a better understanding of some of the extremes you may find in the market.  Support the Podcast: The best support you can give me right now is to follow me on Twitter: @TreyHenninger  Mental Models discussed in this podcast:  Tax Avoidance  Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode66 Net Operating Losses are a form of Hidden Asset  NOLs are past losses by the company that offset future taxes They are only valuable if you have the ability to earn a profit in the future Elementary Value recently highlighted two companies that are an interesting avenue for future research.  Myrexis (MYRX)   https://www.elementaryvalue.com/blog/myrexis-inc-myrx-another-couchman-nol-stub   Affymax (AFFY)   https://www.elementaryvalue.com/blog/affymax-affy-a-couchman-controlled-nol-stub      Summary: When researching a company be on the lookout for hidden assets. Net Operating Losses are one form of hidden asset that can either be found on the balance sheet or in the notes to the financial statements about a company. The ability of a company to not pay any taxes for 10-15 years into the future can be extremely valuable in the right situation. 

Call to Action: <ul> <li>For You: Check your current stocks for the presence of net operating losses that can offset future taxes and read about Myrexis and Affymax to gain a better understanding of some of the extremes you may find in the market. </li> <li>Support the Podcast: The best support you can give me right now is to follow me on Twitter: <a href="https://twitter.com/TreyHenninger" rel="noopener nofollow" target="_blank">@TreyHenninger</a></li> </ul> Mental Models discussed in this podcast: <ul> <li>Tax Avoidance</li> </ul> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: <a href="https://twitter.com/TreyHenninger" rel="noopener nofollow" target="_blank">@TreyHenninger</a> YouTube Channel: <a href="https://www.youtube.com/channel/UCD0lzw3BdPwhx6jwrIofI0g" rel="noopener nofollow" target="_blank">DIY Investing</a> Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at <a href="https://www.diyinvesting.org/patron" rel="noopener nofollow" target="_blank">DIYInvesting.org/Patron</a>. You can find out more information by listening to <a href="https://www.diyinvesting.org/episode11" rel="nofollow" target="_blank">episode 11</a> of this podcast. Show Outline The full show notes for this episode are available at <a href="https://www.diyinvesting.org/Episode66" rel="noopener nofollow" target="_blank">https://www.diyinvesting.org/Episode66</a> Net Operating Losses are a form of Hidden Asset <ul> <li>NOLs are past losses by the company that offset future taxes</li> <li>They are only valuable if you have the ability to earn a profit in the future</li> <li>Elementary Value recently highlighted two companies that are an interesting avenue for future research. <ul> <li>Myrexis (MYRX) <ul> <li><a href="https://www.elementaryvalue.com/blog/myrexis-inc-myrx-another-couchman-nol-stub" rel="nofollow" target="_blank"> https://www.elementaryvalue.com/blog/myrexis-inc-myrx-another-couchman-nol-stub</a></li> </ul> </li> <li>Affymax (AFFY) <ul> <li><a href="https://www.elementaryvalue.com/blog/affymax-affy-a-couchman-controlled-nol-stub" rel="nofollow" target="_blank"> https://www.elementaryvalue.com/blog/affymax-affy-a-couchman-controlled-nol-stub</a></li> </ul> </li> </ul> </li> </ul> Summary: When researching a company be on the lookout for hidden assets. Net Operating Losses are one form of hidden asset that can either be found on the balance sheet or in the notes to the financial statements about a company. The ability of a company to not pay any taxes for 10-15 years into the future can be extremely valuable in the right situation.

66 - Net Operating Losses are a form of Hidden Asset

In today’s episode, I will be sharing ten of the most important lessons I’ve learned from Joshua Sheats.  These are lessons that apply to personal finance, investing, and beyond. The Top 10 Personal Finance Lessons I have learned from Joshua Sheats  Conventional advice should not be accepted simply because it’s conventional advice Conventional advice should also not be rejected simply because it’s conventional advice. A strategy is more important than tactics. Tactics change over time, but a strategy is enduring. Action leads to life change. Ideas, learnings, and study are all meaningless if you don’t take action to improve your life. There is more than one way to become financially successful. There is more than one definition of success. Don’t simply accept the definition given to you by society. Don’t compare yourself to others, only your past self. Personal finance is behavioral, not mathematical. The mathematics is simple and straightforward. Mastering your behavior takes a lot more effort. You are capable of controlling and curating your desires by what you expose yourself to. Don’t be afraid of helping others. Sharing of ideas, knowledge, and skills do not less your own worth. It only improves yourself, others, and the world. (Could be a business idea, how to get ahead, etc. ties into action.)  Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast Show Notes available at DIYInvesting.org The full show notes for this episode, including my outline for today's podcast, are available at https://www.diyinvesting.org/Episode17 Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. On an iOS platform such as an iPhone or iPad, you can do so by following these steps:  In your podcast app, click the search icon that looks like a magnifying glass in the bottom right-hand corner. Type “The DIY Investing” into the search bar. This podcast should be one of the first shows that display. Select the podcast show icon. Scroll down to the “Ratings &amp; Reviews Section” and click on the button that says “Write a Review”. Write a short one or two sentence review and give me a rating that matches how you feel about the podcast. 

In today’s episode, I will be sharing ten of the most important lessons I’ve learned from Joshua Sheats.  These are lessons that apply to personal finance, investing, and beyond. The Top 10 Personal Finance Lessons I have learned from Joshua Sheats <ol> <li>Conventional advice should not be accepted simply because it’s conventional advice</li> <li>Conventional advice should also not be rejected simply because it’s conventional advice.</li> <li>A strategy is more important than tactics. Tactics change over time, but a strategy is enduring.</li> <li>Action leads to life change. Ideas, learnings, and study are all meaningless if you don’t take action to improve your life.</li> <li>There is more than one way to become financially successful.</li> <li>There is more than one definition of success. Don’t simply accept the definition given to you by society.</li> <li>Don’t compare yourself to others, only your past self.</li> <li>Personal finance is behavioral, not mathematical. The mathematics is simple and straightforward. Mastering your behavior takes a lot more effort.</li> <li>You are capable of controlling and curating your desires by what you expose yourself to.</li> <li>Don’t be afraid of helping others. Sharing of ideas, knowledge, and skills do not less your own worth. It only improves yourself, others, and the world. (Could be a business idea, how to get ahead, etc. ties into action.)</li> </ol> Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at <a href="https://www.diyinvesting.org/patron" rel="nofollow" target="_blank">DIYInvesting.org/Patron</a>. You can find out more information by listening to episode 11 of this podcast Show Notes available at <a href="http://DIYInvesting.org" rel="nofollow" target="_blank">DIYInvesting.org</a> The full show notes for this episode, including my outline for today's podcast, are available at <a href="https://www.diyinvesting.org/Episode17" rel="nofollow" target="_blank">https://www.diyinvesting.org/Episode17</a> Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. On an iOS platform such as an iPhone or iPad, you can do so by following these steps: <ol> <li>In your podcast app, click the search icon that looks like a magnifying glass in the bottom right-hand corner.</li> <li>Type “The DIY Investing” into the search bar. This podcast should be one of the first shows that display.</li> <li>Select the podcast show icon.</li> <li>Scroll down to the “Ratings &amp; Reviews Section” and click on the button that says “Write a Review”.</li> <li>Write a short one or two sentence review and give me a rating that matches how you feel about the podcast.</li> </ol>

Top Ten Personal Finance Lessons from Joshua Sheats (Episode017)

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