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Dave: 00:36 Welcome to the podcast, this is episode 89. Tonight Andrew and I are going to do a little more of a deep dive into the 10 K, and that’s one of our favorite things to talk about. I know I like to geek out about 10 ks and so does Andrew, so we’re going to talk a little bit more about them. So Andrew, why don’t you go ahead and start us off there. Big Guy.
Andrew: 00:56 Yeah, sounds good. So 10 k, another way of saying a company’s annual report, this is the document that every company, every public company is required to file. And this is where you will find all of the information about accompany. We’ve talked about some of the important ratios and some of the important metrics that you’ll find on there, some of the important numbers. So I think today maybe we talk a little bit more about some of the qualitative side. I’ve been reading a lot of 10 k’s lately and have seen some similarities, some, some things that have stuck out and you know, based on some of the previous discussions we’ve had the last couple episodes, you know, on the last episode with Braden.
Andrew: 01:42 Now we’re talking about, trying to find a qualitative factor and how that, how that helps you make a decision on whether you want to buy a stock a talked about kind of this whole idea of buying stocks with products that are either commodity products or a versus maybe one where a product is priced at a premium. Maybe it’s a value add and the differences there. So that’s maybe where I can start something I can shed some light on. Basically when you want to look at a stock and you want to determine, okay, how do I look at this outside of just what the numbers are telling me? What kind of common sense things or how what can I observe in my day to day life that can help me when I’m looking at stocks and making these tough decisions? You know, we talked about previously about that listener who had a question about, well, I got a list of stocks.
Andrew: 02:47 How do I choose between narrowing it down to just one and digging deeper into the 10K is another way you can do that. So when you look at the 10 k, one of the first sections, I think the first section actually, with the 10 K is lately, you can click on the link, they’ll have a link on each section, you click on the link and it will like to teleport you down to that section of this hundred page document. It helps you kind of keep track of where you’re at and gets you going and where you need to go real quick. So every 10 K is going to have at the very top, like a business overview. And when you look at it, maybe it kind of seems a little corporate, but it’s a great place to get a background on the business to understand if they’re good and good management, good team.
Andrew: 03:47 I’m good kind of shareholder-oriented, base management. They’re going to try to convey as much information to you as they can while also being concise and hopefully objective. So they’re not too biased one way or the other. So they’ll, they’ll try to give you a little bit of a background, will give you the standard, like, Oh, this company was incorporated at this time, but then you’ll start to see the progression. So like one of the stocks I was looking at today, this is a stock that is a supplier of rearview mirrors and them, they, they do dimmable rear view mirrors. And so they, in history, they were talking about how they acquired certain businesses and you know when it happened, and you can kind of see the growth and the morphing of this business. So for this stock that I own, a decent position in basically they started as like a fire safety company and then they moved on to rear view mirrors, and that exploded for them.
Andrew: 04:57 They’ve gone on to add other features that include garage doors and other parts of like home security and kind of wrap that all into a rear view mirror. And so you start to see a picture of before even getting into the numbers, you start to understand, okay, this is where they started, this is where they are now. This is how they’ve grown; this is their cash cow. And maybe this is their growth story, um, the part of their business where there’s more growth potential so you can start to get a feel for that. And so as an example, when I’m looking at a stock, maybe Dave, you can give an example after this, like let’s say just a common sense. I’m going to look at a business overview, and I’m going to take my observations from daily life. I’m going to apply it to thinking if the stock’s going to be around and say 20 years.
Andrew: 05:48 So I’m looking at this stock. They have a rear view mirror is their big cash cow. So I’m, I’m thinking in 20 years whether it’s some of the big things I see. Um, do I think cars are still going to be on the road? Yes. Is there a, a possible shift in the way cars are driven? Yes. We see autonomous driving, right? We’re seeing this possibility that people are talking about where everybody, it’s going to be like everybody’s Uber where nobody owns a car, and you just jumped. There’s going to be like a system of cars, and you jump in, and there’s going to be an autonomous driver, and it’s going to be like Uber on hyperdrive. That’s a possibility. Now kinda observing all of that in my day to day life and thinking about how does that affect this particular investment? Well, regardless of whether things stay the same or if they evolve into this sort of super steroid, hyper, uber environment with robot cars, either way, they’re still going to. Need these rear view mirrors, either way, there’s still 93 percent market share today on this in this industry, so I’m feeling pretty good about the chances that in let’s say 20 years they’re still going to be producing profits for shareholders. That’s one of those basic examples of how you can take something as simple as the first couple of paragraphs of a 10 K and try to get an overall picture before you even look into the numbers.
Dave: 07:23 That’s a great example. A company that I can use as an example of that is a trinity industry. A company that I bought a little while ago when I was reading the Ten k about them, so to answer the question, what do they make? They make train cars and do I think that trains are going to be around in 20 years? I do do. I think it’s going to change probably, but another thing that I noticed in there that was very helpful that I would have never thought about was the what they are made of? They’re made of steel, and that’s a commodity that is highly volatile and when I invest in that company, one of the things that I dug into was the price of steel and the fluidity of the price of steel in that industry and I learned that quite a bit of the steel that is produced in the world actually comes from China and they actually have been hoarding a lot of it and so that’s been something that has actually a risk for that company that I would have never thought about it in a million years if I hadn’t just read really quickly the overview of the company and it gave me some different insights into that company that I could investigate more before I pulled the trigger and bought the company.
Dave: 08:48 If I just thought about, hey, this is a train company. Yeah, trains to go to be around for a while. Sure, no problem. And just moved on there and not paid attention to the steel industry and that’s something that I check on a fairly regular basis just because of that investment. And I thought that that was something that was something that I would have not ever really just, you know, just looking at the numbers I would have never thought about. So that was something that I thought was an interesting take on what you’re talking about.
Andrew: 09:18 That’s a perfect little segue, a little train track to what I wanted to talk about next. So not made of steel is made out of an idea and another bad joke. So the next part like below the business overview is you’ll get risk factors, and this is the opportunity for a company to be frank and make some honest disclosures about some of the downsides of, of buying their stock. And so we’ll have a huge risk factors section where they’ll talk about, just like you mentioned Dave, and I’m sure this is in their 10 k fraternity where they’ll say something like, we are, we are dependent on the price of steel. Steel is a cost for our business. And if the price of steel goes up, our profits go down because we need steel to make our products. So you’ll see a pretty long list of those different types of risk factors.
Andrew: 10:18 Some of them are helpful and some of them are just kinds of stupid. So I hope we can save some time by giving you some examples of maybe once to look for and wants to ignore. So I think like obviously that one’s a great one. Anything where they talk about costs and their expenses, any commodity risk that they have, any exposure to commodity, stuff like that. When I see things like we are, we could be adversely affected by terrorist attacks. We could be adversely affected by nuclear war; we could be adversely affected by an economic slowdown. Or we’re a cyclical industry, and if the economy slows down or if the economy goes into recession, then there are risks there. To me, that’s not a big deal because I’m in for the very long term. Right. So those are some examples of stuff where you can just, you read the sentence that they do, and then there’s a big chunk of the paragraph below that, and you’re like, wow, I probably don’t need to read that because these are risks that you would have with any stock.
Andrew: 11:25 So some of its filler, and that’s kind of, that’s the way it goes is the name of the game. So hopefully by telling you these things you can be aware and you can be able to sift through a lot of these words, all this corporate speak and maybe be able to find useful things in there. Something that I found very, very useful. I have another stock that I own, and you know, like I’m mentioned at the top, we talk about this idea of commodity products versus non commodity products. And I think I heard on the podcast recently; I can’t remember which one it was. They were talking about Warren Buffet, and he said something like, find me a commodity product that I can sell at a premium. And that’s the type of business model I want to have. So like examples we’ve talked about in the past, like a Hershey’s, any the strong brands where people are paying above costs, and they’re happy to do it.
Andrew: 12:29 So going back to my example of the stock I own, they say right out front, uh, right in the risk factors portion, they say, hey, we, we, um, we sell a commodity product, so they’re upfront and frank with me, so I don’t have to figure out is this a commodity product or not? I think that when you can see that in there, it’s very helpful and it helps you, again get a picture of how predictable or unpredictable is this company and how do I see the future there. So I’ll contrast that now to my rear view mirror example to this example. Do their commodity and, and for this stock they do, they have two major segments. It’s vinyl, and I’m blanking on the first one. I just read it to all, all offense. So very scientific terms, things I’m far from an expert in and really things that I can’t tell you with any sort of honesty, whether in 20 years if these things will be profitable, uh, I know the applications, the applications for it to are so wide where it’s, it’s not like some of them, some of the stocks you can get where you’re betting on, on an industry without directly betting on it.
Andrew: 13:57 Right? So, if you, like, if you liked the way the computer industry is working, you can buy a stock that sells to these big computer companies and you’re essentially betting on the computer industry, uh, by buying a certain stock. So you could do that. I the stock, some stocks are just so big, and they’re a huge conglomerate and a huge mix of all these different things where you can reasonably do that. The stock that I’m talking about, then I own, I definitely can’t do that. So now you might be asking, okay, why do you own this stock? And this is an example where it goes more towards the numbers and the things that I see and where I steer away from the qualitative part of this. So, you know, I’ve talked about how I split my portfolio into two segments. I have the dividend fortress, and I have the regular portfolio with the regular portfolio. I have a lot more freedom; I guess you would call. I have a, a lot longer leash
Andrew: 14:59 Or I guess it’d be a shorter leash. I have a shorter leash on these things, and I can sell them short quickly because I’m not looking at like a 20 to 30 year time period. Like I would like a dividend fortress. Right? This one I’m looking at, okay, I like the discounted intrinsic value. I still have a good dividend yield, and this particular stock has a nice long dividend history of growing the dividend. They have a nice yield, they’re growing quite nicely, and I’m getting nice compound interest out of it. But because the quality of the part for me isn’t there, I’m going to be watching it more closely than I would like, let’s say, Disney, where I am so confident that that’s going to be around in 20 years. That’s a dividend fortress right there. Unfortunately too expensive to add on now.
Andrew: 15:53 But one of those where I’m, you know, I’m happy to own it, and I’m happy with the qualitative nature of it, and you know unless it gives me one of the huge red flags I’m going to hold on. Whereas with something like this where I bought it because I liked the numbers, I bought it because I liked the discount to intrinsic value. I was getting. I liked the dividend yield. I liked the way the dividend track records, looking at like the way the earnings are growing. I like the way the whole business is working from a number standpoint. So with something like that, you know, obviously with both, both kinds of methods, when things are going good, it’s really easy. You hold, and you reap the rewards when things are going poorly. That’s where you start to kind of tried to make.
Andrew: 16:45 That’s where like the shorter leash comes in. So with a Disney, I might give a little more leeway, you know, as long as it’s not a red flag, I might give a little bit of leeway. Like, let’s say if Disney continued to pay a dividend, but they didn’t grow it, right? They had to stall the dividends. Maybe they reduce the dividend, they’re still paying the dividends, so I’m still getting some income, but they fell in some tough times because I still feel so strongly as long as they didn’t. If as long as they didn’t lose money that year, as long as they didn’t rack up debt, I’d probably still be fine holding that. And that’s why it’s a dividend fortress. You contrast that to this company where that’s a more sciency company. If they. If they halted their dividends growth, they still pay the dividends.
Andrew: 17:34 Same situation. That’s somewhere where I would probably just kind of sell because I’m not, so I’m not as certain about the qualitative part of it. So I’m making these decisions based on the numbers. It’s also another one where know when you when you try to debate like taking a profit, or you know, selling. Because business is so much higher above its real intrinsic value, that’s another one where maybe you know, if-if I’ve got a better opportunity somewhere with much higher yield compared to the yield on cost. So I’ve got then that might be another thing that you consider. Does that sound crazy, Dave? Or does that sound like, I don’t know actually where your, where you fall on the whole, I guess commodity versus not like when I’m looking for dividend fortress, I’m definitely not wanting to invest in commodity product businesses, but when it comes to volume I’ve seen sometimes you go where the deals are, and so sometimes that does mean investing in these commodity type businesses even though it might not be your first kind of preferred thing. Uh, sometimes the margin of safety should dictate where your money goes. Do you agree? Do you think that’s crazy with you think?
Dave: 18:54 I think it’s crazy. No, I think it’s A. I think honestly, I think it depends on what you’re looking for. So if you’re looking for the dividend fortresses, aristocrats, kings, that kind of thing, I’m going to have a different set of criteria for choosing something like that than I am if I’m just out shopping, looking for a deal because of value investing. You, like you’re saying I’m looking for a company that I can understand that it can invest in, that’s going to have a margin of safety, and then everything else was going to fall in line. Whether it’s a commodity or not a commodity, I guess I’m not going to be quite so picky in that regard.
Andrew: 19:39 It’s going to depend on whether I can understand the company or not. And when, whenever I guess when you’re thinking about commodities, I think about, I guess kinda throwing out too areas that you think about. One is a company that drills directly in a commodity, something like a company that deals with oil for example, because oil is a commodity and it’s such a volatile thing, and the price of it fluctuates daily, hourly, weekly, monthly. It’s all over the place, and so your mindset is when you’re investing in a company like that is going to be completely different than if you’re buying a company like Corning who makes glass.
Dave: 20:24 Now the thing about Corning though is there still there still a commodity aspect to it because when they make glass, it says right here in their 10 k that their manufacturing processes and products require access to unearth uninterrupted power sources, which is a commodity, significant quantities of industrial water. Again, a commodity, certain precious metals, and various bash materials. It says right in that first line of the raw materials in there, so it’s talking right there about commodities, so they rely on a commodity. When I was talking about Trinity Industries a few minutes ago, they relied heavily on steel, which is a commodity industry, so there are aspects of these companies that build other things that are still going to have a commodity aspect to them. Anybody that’s building anything is going to have a little bit of that, of that to deal with. And one of the things that I really, you know, think about when I’m trying to invest in these companies is, you know, we’re kind of talking a little bit about the qualitative versus the quantitative and these are other things that you can pick out of the 10 K that will jump out at you.
Dave: 21:32 And one of the things that I wanted to kind of throw out there too is when as you get more experienced reading these 10 ks, you’re going beyond just the, beyond just the technical gobbly goop that will come from different companies depending on what it is they’re doing. Like you were. You were talking about a company that they were producing something that you are as you said, or far from an expert on. There are lots of companies that I invest in a far from an expert on. I’m not an expert on trains or train cars, but I know enough about them to be able to invest in a company like that. So I guess my point with this is that you’re going to find 10 ks that are much more clear and easier to understand and are going to put things out there for you to make it easy for you to understand the company and to read about them.
Dave: 22:22 And I’m going to give you an example here. So when we’re talking about. I was talking about Corning. As you’re reading through the business section of the company, they give you a right at the beginning. They give you an outline of the different segments of their company, and then they go down the line talking about each segment and what aspect of the company sales each segment represents. So right off the bat, reading this, if you’ve never invested in this company and know nothing about it, you’re going to have a pretty good overview right off the bat of what it is they do and where their sales come from, and that’s a big thing to understand, and it’s so clear and so understanding, and to me that’s an indication of management that wants to be clear and concise and open and honest about what they’re doing.
Dave: 23:14 The flip side of that, as you can read, you’re going to read other 10 ks. You’re going to come across. I was thumbing through Wells Fargo’s while Andrew was talking and it’s technical. It’s not clear. They don’t delineate things. It’s hard to get your arms around what it is they do. It’s a bank, but you don’t. They don’t list out the different segments of their business, and they don’t tell you where the revenues are coming from and this is a thing and it just. I’m not saying they’re shady, but it’s.
Dave: 23:47 It’s just not clear, and you have to work at it to pick it out, and that’s not really what you want, and so when you’re reading foods, 10 ks, you’re going to find you’re going to. Notice that there’s a commonality to the ones that are easy to read, clear, concise, everything’s out there. It’s easy to for you to decipher what it is they do and then there are other ones that are going to be just kind of a lot of legal gobbly goop as-as I read somebody says it’s a boilerplate like Andrew was talking to. There was a lot of weeklies, and there’s a lot of things in there that will make it difficult for you to understand what is the company is doing. And so kind of to go back to what Andrew was saying about the know the craziness of it. I, I don’t think he’s crazy at all. I think having a different mindset for each type of business that you’re looking at is, is the.
Andrew: 24:37 I think the wise way to go and to be clear, it’s not like I’m, I don’t want to insinuate that you should pick value or don’t and growth. I think we should try to find stocks that do all of that and I think it’s possible to find those that have degrees of that, and hopefully I’ve found a good mix of stocks that do encompass that, but as you said, I think there needs to be a mindset there, and you know, just as businesses are different from their financials, their skill sets and their place in the marketplace, they’re also, they can wildly differ in the way they present this data. How does that saying go? It’s like how someone does one thing is how they do everything, so maybe yeah, there’s one person or one committee who’s, who’s organizing this annual report, a reflection of maybe how they run their overall business.
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Andrew: 25:48 So as you go down. Yeah. As as you go, oh, okay. As you go down through the rest of the risk factors, one other one that comes to mind because this is something that buffet talks about and I feel like we should talk about that a little bit. And then maybe wrap up with any other aspects you think we should touch on, but this is something I noticed and something you can search for to find out quite quickly because you have different structures of the way that ownership is. You have three main types of ownership structures. Well, okay. So there’s two, and then I’ll mention the third one that buffet talks about. So the two different ownership structures are either somebody has a controlling interest in the business, or somebody doesn’t. And it’s not like a free for all, but there’s no one person controlling it.
Andrew: 26:47 So what that means is every, every sheriff stock generally, okay, every sheriff stock will have voting rights. And so let’s say you have a thousand shares. When big kind of things needs to be voted on in these big decisions for the business, something like being acquired, they might take a vote for all the shareholders to see if hey, here’s the price. Somebody wants to buy us out, should we do it? So that’s an example of what they call a proxy vote. So if there are a thousand shares and let’s say I own 501 of those shares, well it doesn’t matter what the rest of those people think because I have 50 points one percent of the voting rights and so my votes, the only one that counts. That would be a controlling shareholder situation. You also have the other situation where maybe there are more activists in it, right?
Andrew: 27:44 Or there’s maybe like Carl Icahn owns 10 percent of the stock, maybe I’m Bill Ackman, own seven percent of the stock, and then maybe there’s some hedge fund, a big hedge funds over at black rock who owns, let’s say eight percent of it. So there are these big players who, if you can sway their vote, convinced them to vote one way or the other, that can have a big impact on the direction of the business, but it’s not. It’s not the same as a controlling interest. And so why I think this is, I think this is something that you should maybe at least be aware of with some of the stocks, particularly stocks that are makeup bigger portions of your portfolio while it might not be something where this, this needs to be a decision maker to you. Maybe it just helps you understand the business more and helps you understand when the stock price can move, and maybe it can give you insight on if this is a stock that maybe you were already trying to get out of.
Andrew: 28:52 If you start to see some things happen within the ownership structure, then maybe it’s a good sign to get out, and it’s like that kind of information. You needed that, hey, okay, I already had a bad feeling about this company now. Now it looks really bad because I’m educated about the ownership structure and so I’m at now to understand that let’s, let’s break it down and make a third group. So you have the first group, and this is, I don’t want to say the majority, but it’s pretty common where you’ll see what, like what I said before, there’s no one controlling shareholder a. So basically there’s no controlling shareholder, and then they have like a regular manager. So that’s one example. The second one that buffet talks about this is this reflects on how he runs his corporation. Berkshire Hathaway. You have a controlling shareholder, and you also have a, a manager of the business, and that’s the same person.
Andrew: 29:55 So it’s like Warren Buffet, he’s the CEO, he’s also the majority shareholder, so it’s like it’s his way or the highway, right? Like if you don’t like what’s going on, then too bad. And then you have the third situation where you have somebody who is a majority shareholder but doesn’t run the business at all. They’re just on the owner out on the side. So buffet talked about he didn’t pick one over the over the other, he didn’t say one was better than the other, but I thought it was some good education. Somebody was asking like, Hey, what happens when, when you leave? And so in the long way of answering the question, he gave some good education. It gives us some good insight into what goes on at the top right. Because I don’t think this is really common knowledge to many investors are many not people in the general public, and even too many investors is not something talked about a lot, but what goes on at the top. So you have, you know, you have shareholders, these are the owners, but then you have the CEO, and he’s managing the day of the day. Then you have what’s called the board of directors, and they are the ones who make the decisions. They’re kind of like the Congress to the president. So like they could, the board of the directors could vote to replace the CEO and get a new one. So you have like a checks and balances type of system within the corporation, and so a Buffett said that you know,
Andrew: 31:22 So a negative to one of the common structures that you see, which, which is the one where there’s no majority shareholder and uh, just a random CEO is a lot of times they’ll get together and because of the politics, the politics behind it, they won’t want to actually talk about the CEO or, or say anything negatively about them or you know, vote down like a bad acquisition or one where, you know, basically where the shareholders rights aren’t being fully defended. It’s, it’s hard for a board of directors and that type of culture too, to affect change in that way and be the odd one out.
Andrew: 32:06 So I thought that was kind of interesting, but he didn’t say it was something that would be so detrimental. It’s just something he’s observed from being on a bunch of boards. And so it sounds like he doesn’t prefer that, that, um, that type of a structure. But it’s, it’s something that we can kind of look at and say, okay, well it’s pretty common. I think he was kind of warning about, uh, when you have a managing owner who is also a majority shareholder like he is. So I guess it’s like do, as I say, not as I do. He said that could be problematic for a board of directors because obviously, I’m, I can tie their hands. Right. So maybe the lesson here is if you see a board of directors where, you know, that’s the situation, the only thing that the bar directors can do, if they’re not happy or they don’t like them, what the managing owner is doing, all they can do is quit.
Andrew: 33:03 So if you see a lot of board of directors and you know that the situation is that they have a managing a majority shareholder, that might be a good sign that you know, shareholders interests really aren’t being possibly the manager isn’t doing a good job at protecting the shareholders and that might be a good reason to bail. And then the final one where he talked about where the manager and the majority shareholder or different, he actually said he really liked that structure because if a board of director didn’t like something, they could actually go directly to the owner and kind of pitch a case and then maybe change can be affected in that way. Whereas with the kind of traditional structure, you can’t do that because of the politics behind it. So those were, those are the three ownership structures, and that’s something that you can also find in the risk factors. So like if you do a search, like a control f where you’re searching for a word in the document, and you search for the majority than. I’ve seen at least a couple of times with a couple of the stocks I own when there is a majority shareholder, that’s where they will put it. They’ll put it in the risk factors, and they’ll say, hey, there’s a majority shareholder, and they own the voting rights. And so they might vote, and you want. You wouldn’t be able to kind of put your voice in there so you can.
Andrew: 34:36 You can use that to kind of, if you’re monitoring what’s going on with the bar directors, if you’re reading the news and you see them talking about the bar directors, um, or anything that has to do with big decisions with the business and shareholders and proxy votes and all those sorts of things. Hopefully, that gives you some context. Uh, straight out of the mouth of Warren Buffet himself, a man who’s a grand businessman has been on a ton of board of directors and him kind of. I’m sure you’ve seen plenty of businesses that have done great things for shareholders on ones who didn’t fulfill their fiduciary responsibilities. So another reason or another way you can kind of get behind the curtains, so to speak, of, of what’s going on with the business and get some context on some of the things you see to play out.
Dave: 35:30 And maybe if, if you see numbers that have been trending in the wrong way, you already had an uneasy about the stock and then you see something regarding the board. That could be a reason to get out completely. Those were Andrew came up with some great ideas. Those are fantastic things. I honestly had never thought of any of those three before, so I’m glad he shared that with us. Those were interesting and I wanted to kind of tag off a little bit about what he was saying with the CEO being the majority shareholder or there being a majority shareholder. I want to give you a couple of examples that kind of sprang to mind why Andrew was talking about that. The first one would be a Tesla are buddy Elon Musk. That is a perfect example of how this can be a problem because he is the majority shareholder who is also the CEO and the board of directors has really no choice but to rubber stamp everything he wants to do and as we’ve seen through the past few years, that has caused some problems because there was no check and balance against his power and as the saying goes, power corrupts absolute power corrupts absolutely, and that’s a perfect example of it.
Dave: 36:46 Another example that I think would bear some fruit to look into would be Amazon with some of the troubles that they’ve experienced recently. Jeff Bezos is the majority shareholder, is also the CEO. Therefore the board of directors is going to have no choice but to rubber-stamp anything that he wants to do. Now I’m sure there are lots of other companies out there that have this situation that I’m just not thinking of at the moment, but those are two that spring to mind just recently because they’ve had some issues and those are some things that can cause problems and so those are things that as you’re reading through the risks is thinking about the management and the structure of the management can definitely have a bearing on your investment in the company at any problems that may arise in the future would be bear some looking into as a way of keeping track of what’s going on with your investments.
Dave: 37:43 It’s not always just about the money and the numbers. There are qualitative things that you have to think about as well, and this is one of them, and that’s something that is not talked a lot about, if at all. I feel, as I mentioned earlier, this is not something that I had thought about and that way in that Warren Buffet so eloquently described an Andrew, uh, helped us understand, so I think those are great things to think about as well.
Andrew: 38:10 Yeah, I kind of see as like part of a checklist you now, I don’t think you’ll ever find a stock that kind of checks all your boxes, but you know, as an example, maybe growth isn’t as good, like from a numbers perspective, maybe I love all the evaluations, but the growth isn’t as great as this other stock over here. And then maybe from a qualitative side maybe. I like the way the business is structured. I don’t. The business ownership you have figure out what tells you on the die on and which ones you’re okay with that. And I think just being aware is better than being blind.
Dave: 38:48 Absolutely. That’s very well said. All right folks. Well, that’s going to wrap up our discussion for this evening. I hope you enjoyed our conversation and a deeper dive into the 10 K’s. Andrew had some great points, and I do enjoy discussing risks and the business overview of. There are some great nuggets you can find in there if you look a little bit harder and they can help you with your investing. Also wanted to mention that Andrew and I have our masterclass that is still open. It will be open until some time in February if you’re looking to find a great resource to help you learn more about all the great things that we talk about on a podcast. This is it for you, so if you are interested in@check out the website einvestingforbeginners.com and you’ll find links there for the masterclass. So without any further ado, I’m going to go ahead and sign us off. You guys have a great week. Go out there and invest with a margin of safety. Emphasis on the safety and we’ll talk to y’all next week.
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