Announcer: 00:00 You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew Sather and Dave Ahern to decode industry jargon, silence crippling confusion and help you overcome emotions by looking at the numbers, your path to financial freedom starts now.
Dave: 00:36 All right, folks are welcome to investing for beginners podcast. This is episode 108 and I got some great listener questions, and we’re going to take a few moments answer those. Who are we kidding? It’s going to be more than a few moments. But we’re going to go ahead and answer these questions for you guys on air and we’ll just kind of go from there. So I’m going to go ahead and read it.
Dave: 00:54 The first question, so it says, Hi Andrew. First off, I want to sincerely thank you for all that you’ve taught me in regards to the stock market. I’ve always been interested slash intimidated, but once I caught onto your podcast, I couldn’t stop. They are just digesting more and more information on the market. So again, a huge thank you. Quick question, quick question. When it comes to dollar cost averaging, I am looking to invest $150 a month. With that being said, I am ready to purchase my first share, which happens to be this month stock pick, ticker blah blah, blah. It is trading at $91, so I’m only going to purchase one share, but I’m curious now if I should save the remaining $60 for next month that purchased two shares are used, the remaining $60 I have to purchase another share of a cheaper sock. Any feedback would be helpful. Thank you, Eric.
Andrew: 01:44 Okay, so to be clear, for people who don’t follow everything I do, I have a newsletter. It’s a paid newsletter called the say their research Eli there. In that newsletter, I’m giving monthly stock recommendations, and it’s following along a real money portfolio. So as Eric said in this example, the stock pick for this month is $91, so in the real money portfolio, we are buying $91 worth. So, and again in the real money portfolio, it’s $150 a month. The goal is to hit $1 million, which sounds crazy with such a small amount, but that’s kind of the point. I started this portfolio when I was 25, and I launched a newsletter miles 25, and so I wanted to show just how powerful compound interest is. So the goal of that is to invest $150 a month for 40 years, and hopefully, we’ll hit that $1 million mark, and we don’t need crazy returns.
Andrew: 02:45 We need a 1% outperformance. Compare it to the stock market, which includes inflation by the way, but it’s still going to be $1 million. So in the money portfolio, if you’re doing the math, so in the Eli there, um, we ended up buying more than one share because there was also a cell, um, a sell recommendation. So I was able to pick up more shares. But like, let’s say we’re in Eric’s situation where, you know, we might be starting brand new, we don’t have any old positions that were selling off. So all we have is $150. There’s a recommendation to buy a stock that’s trading at 91, so we can only buy one share. So now he’s got $60 left. He’s asking because, in the Isla there, there are multiple recommendations that the investors can do. I kind of list those out because you know, stocks could be a great deal for a long time. They don’t necessarily go up just because Andrew recommended them. So some investors do like to add more positions, like instead of adding just one position like I’m doing in the, in the real money portfolio, maybe they’re adding two or three.
Andrew: 04:00 Not that I necessarily recommend that I’ve talked about that several times, but that’s a topic for another day. So what does he do with their meetings or the remaining 60? Uh, you’re going to want to roll it and use it in the next month. And here’s the big reason why, if you think about using that $60 to buy another share of a different stock, um, considering that you have to pay a transaction fee of four 95. So I’m not going to do the math right now, but that’s going to be close to 10% of your capital going towards a transaction fee because you’re only investing $60, so that’s why I say roll it then. That’s what I do every month. And I do this with a real money portfolio too. If there’s money leftover, even if it’s a significant amount, you roll it and that way you have more money to spend or to invest in the next one. So next month instead of having $150 he’s going to have $210 and now he can buy more shares of whatever that recommendation is. And that’s going to be probably the most efficient way to use your money. Agree, disagree.
Dave: 05:08, I would agree. I think that’s probably the most efficient way to use your money. I mean, I know you’ve explained this to us several times, and I liked the kind of, the way you lay it out. So I think that’s probably the best way to use it.
Andrew: 05:22, Sweet. So we did keep one relatively short one answer, so let’s move on. We didn’t know — no promises are going forward. No problem. That’s right. Now we can go extra long for the next ones. Hey, there you go. Buckle and folks. All right, so question number two. Hello. I’ve been listening to your podcast since I started investing actively about nine months ago. I love it. The approach you guys discussed seems like a solid way to find good companies to invest in rather than just following hunches or trying to guess what the market will do. My question is, what happens when following that approach and nothing looks good? I’m trying to build a portfolio of 20 positions. Good and I use finned is to screen for good companies or the margin of safety. The problem is that once I screened for all of the parameters I choose to look at, there isn’t much left that looks good. Sometimes I have money to invest, but I end up parking it in the bond ETF because it seems like a sure bet to hold its value and pay some return. Do you have any suggestions for building my initial portfolio? Should they try something different or be patient? Thanks. Jesse.
Dave: 06:33 That’s a that is a very interesting question. So, oh, boy. Um, there are several ways you could go with this. I think the first thing that pops into my head, and the way that I would look at this is to be patient. Uh, there is no reason to rush into buying something just for the sake of buying it. I’m having principals and standing by them is one of the things that can help you avoid losing money, which is the prime directive, if you will, of all investing is not to lose money and remembering that rule at all times — so rushing in to buy something just because you want to buy something that is not necessarily always the best thing to do. Uh, you know, I guess right now there are a lot of things to look into to try to determine what it is you want to buy. And I guess as I’m talking about this, I also think about the parameters that you mentioned, maybe expanding those slightly one way or the other to see a few get more opportunities that could present themselves. That’s one thing that Andrew I know has talked about in the past is instead of sticking strictly to a p of 15, for example, maybe branching out, going up into the 15 or 30 range, to see what’s out there and see what’s available.
Dave: 07:57 Doesn’t mean you have to park all of your money into something like that, but it may give you an opportunity for something that could be an opportunity. I know that when I have looked at my weekly Finviz screens for companies, yes, it’s not a lot to choose from and it seems like the majority of them right now are in the unloved, I guess, category of financials. And Andrew and I have talked about that numerous times about our views or opinions on those. I’m more open to looking at companies like that than Andrew is, uh, for a variety of reasons. And I think that is one of the ways that you can look at it. If that’s something that falls outside of your comfort zone, then I guess my recommendation would be to wait. Um, you’re going to have opportunities at some point that there is always going to be a downturn in the market at some point where you’ll have more opportunities than you will now. But I think saving that money in parking it in a safe place like a bond ETF is not a horrible idea. I guess that’s the conservative side of me. And I think that’s my thought. I’d be really curious to hear what Andrew has to say.
Andrew: 09:08 Oh, boy. Where do I start? Um, first off. Yeah, excellent question. I really like what you mentioned, Dave, about staying patient and 100% like don’t, especially if you’re not sure, um, don’t start putting your life savings and buying up all these stocks just because you’re in a rush to build a portfolio of 20 positions or, you know, for one reason or the other. You want to kind of go full Rambo. Um, I would say for me, right. So what, going back to the Eli there, cause I think it’s a great example with the real money portfolio it took because we’re only buying one stock a month, it took 20 stock recommendations to have a fully diversified portfolio finally.
Andrew: 09:57 So if you’re following along at home, that means 20 months. So almost two years to get from zero positions to 20 positions. That does require a lot of the patients and patients is key. On the flip side, to play devil’s advocate and to talk about once you are comfortable buying stocks and, and getting yourself into the market, uh, I’ve written, I’ve covered this a lot, but I remember recently writing an email about this. It, it can get to a point where you start to get kind of tube perfectionism like you, you want to find the absolute best stock with the best financials trading at the best price, and you know, with the best growth picture and it’s as popular as Google. It’s not at that, at that time when you’re at that point, now we’re where you’re just trying to be a perfectionist.
Andrew: 10:56 That’s not going to be conducive to, uh, having good results in the long term. Eventually, as we talk about you, you’re going to want to lean on the principles of investing. And when I say the principles, I really mean dollar cost averaging, which means setting a consistent small amount, not maybe small is not the right word, a reasonable amount of money that you can consistently invest every month and doing that every single month unless you get to a point where you know there’s absolutely nothing to buy. I will tell you personally because I use the value trap indicator, that’s my formula for picking stocks. Um, I, that’s, that’s one of my principals and my systems. I’m not going to betray that, but I’m still finding a lot of stocks even as we record this middle of 2019 and the Shiller PE of the market, it keeps inching up higher, but there’s still pockets in there where that where there’s going to be a strong buy.
Andrew: 11:56 So I say, you don’t want to go there. I need to extremes where it’s like, well, I’m going to throw valuation to the wind because I’m going to dollar cost average, right? At the same token, um, you don’t want to play this game of perfectionism where it’s like, well the stock doesn’t have a price to book below one and the Pes at 20 I’m not going to buy it. That’s not reasonable either. So I think the one that plays like armchair psychologist here, but it seems like this question, the way I envision a where Jesse is in this process is he seems to have a very good grasp of it and, and he really understands a lot, like most of what he needs to understand that I think the next step is taking action and getting some experience and not necessarily because now you know, if he’s unfit is, and he’s screening for good companies, he’s talking about margin of safety.
Andrew: 12:54 He knows a lot now hopefully because of what we’ve taught and now he’s talking about, you know, parking. So this is why I say this is the word choice here is interesting. Sometimes I have money to invest, but I end up parking in the bond ETF because it seems like a sure bet to hold its value in paste some sort of return that that kind of concerns me because nothing in investing as a sure bet a bond ETF could, you know? Yeah. I mean the chances of a bond ETF going to zero are pretty slim, but there are always risks, even with ETFs. Etfs are relatively new in the stock market game, so we don’t know really, we don’t haven’t seen what, what kind of risks can come out of that, not to get too off track. The other thing is, you know, there’s a risk of inflation outpacing your returns.
Andrew: 13:49 There are always risks and so there’s no such thing as a sure bet, and you’re not going to find any stock that’s going to hold its value in the sense that you can check it every month and see it not go down. So you need to understand if you’re going to get into the stock market and there’s going to be volatility, there’s going to be stock prices going up and down and you kind of need to stomach that. So I would in that situation, instead of maybe thinking of it as a sure bet, I would recommend reading up on your mister market, which is, uh, one of the best chapters in that book by Benjamin Graham, the intelligent investor. So hopefully, you know that, that part of having the right mindset of what is investing and what’s really what comes along with it, which you’ll get some of that with experience because you’ll see, you’ll see stocks in your portfolio that will frustrate you, and you’ll feel like you’re an idiot for buying it.
Andrew: 14:45 I’ve had that. You’ll have stocks where they’ll shoot up as soon as you buy it, and it’s like, Whoa, I’m a supply. You know, and everybody should listen to me. And you’ll have stocks that have those characteristics at different times. So I’ve had a stock that I remember in 2017 this was one of the dividend fortresses. Um, it did poorly, and it did for a long time. I just kept collecting dividends along the way. Finally, in 2019, it seems like the market’s seeing the same type of value thesis I saw. And so it’s starting to make a comeback, and I see those losses turned into gains, right? Or I don’t think there are gains yet, but they’re less, much less severe losses than they were. Um, and, and, and it can go all the way up that up and down that scale.
Andrew: 15:35 So I think building a portfolio of 20 positions, that’s something we’ve covered in the past. Obviously, if you’re talking about investing a huge sum of money or a huge part of your life savings, the strategy’s going to be a bit different than if you are starting from scratch and trying to, let’s say invest $150 a month in the, in the solid dollar cost averaging plan. So a lot of things to think about. I will say one more thing about this, and I could probably talk about this question all day. It’s, it’s a good one. But, um, going back to that first question and the stock pick that we did for June 2019, this is one that would not show up and fences at all. So I guess, so rewind and go back for people who aren’t aware of him is that’s something we covered in the archives, but it’s a stock screener that helps you filter stocks based on their different valuations, like PE, PB, etc. So if I look at the company, and this is like the third time of all said its name, I have to be careful.
Andrew: 16:45 It’s not one that would pop up on the screen because likely because the price to book on this is 3.59. That’s not; it’s, it’s like really I would, I would prefer the pay like maybe two and a half or two, uh, two for the price to book. But here we have one that’s 3.59, but then the PE is a 19. The price to cash as a 14. So again, if I was screening for price-earnings on their 15, this will also not show up. But you know, if it was a famous green, I don’t think this would show up because of the price to book looking down to see what the price of sales is. I’m assuming that’s going to be reasonable also at 2.5. So yeah, not something that would probably show up on my radar. But this is a company that I’ve been watching for a long time.
Andrew: 17:39 I’m talking about years here, and I owned it. I think in 2015 maybe 2016, but that has a really strong brand. Um, I’m talking about the brand of over a hundred years, one that’s in the daily vernacular. Everybody, if I said the name, you would know what stock, you know, what company I’m talking about. And it’s a dividend increaser and what’s nice about it is a, it goes back to an idea I’ve talked about before were not to get too far in the weeds too late, but not to get too far in the weeds. Um, the brand, the power of the brand, and the value of the brand are not put in the balance sheet at all. So that’s one reason why the price to book is higher. You know, I’m not going to pay the price to book of 10 just because there’s a strong brand, but the price of the book is still reasonable, and that would be lower if their brand were valued.
Andrew: 18:32 To give you a sense of how valuable the brand is, uh, in 2018 there was ranked 83 in the world by Interbrand, which is a website that ranks some of the top brands in the world. So that’s a huge thing. But again, I wouldn’t have found the infant is most likely because to do a screen like that, I would need a price of the book under four. I would need a price to sales under three, and the list of stocks that would come up under that would probably be way, way, way too overwhelming to be able to search through all this. So I think there’s value and also have a watch list in addition to having these screens because you can get other ideas other than just using the screener. So I like, I like to have, I talked about this a maybe a month or so ago.
Andrew: 19:28 I like to have, uh, the value type indicator spreadsheets. I like to have them hooked up to each other so that they’re constantly updating those VTI I can kind of glance at those. You might not be as, as you know, crazy as I am, let’s say, but maybe for you, that means having a watch list of say 10 to 15 stocks that are in addition to yours, to your screening efforts. And then if you notice that one of those stocks really dropped for one reason or the other, then maybe that’s a, an opportunity to, to rerun your margin of safety qualifications and see if while now maybe it’s a good value because, uh, there’s been a huge job for this reason or the other. So those are kind of my long-winded thoughts on that I think. I think, um, Jesse is like right there, I think he understands the margin of safety, understands these valuations. And it sounds to me like paralysis analysis and being so scared of taking a risk that you’re making the greatest mistake of all, which is not investing anything.
Dave: 20:53 That’s an excellent answer. Way better than mine. It is not. I think if you know, it is not moving on. Okay. All right. Okay, I am so moving onto the next question. All right, so we have a good afternoon. Andrew. First, thank you to you and Dave for the work you’ve done on the podcast or the last several months. I have nearly caught up on all the episodes in the archive. It’s been extremely insightful and sparked my interest in value investing at your recommendation. I’ve also read the intelligent investor and rich dad poor dad and have my copies of Greenblatt’s books as well as to have Peter witches. I also have my MBA and have a solid grasp of financial statements and value cap or valuation calculations. I’m 34 years old and have a healthy 401k making the maximum contribution annually. I make too much to open an IRA so I’ve opened a taxable brokerage account and if dollar cost averaging buying shares for the last three months.
Dave: 21:49 Now, my question is in regards to signs, I might be trying to catch a falling knife. I know you can’t give personalized advice, but I am hoping you might be able to point out some generalities to look for. I am currently holding a stock SWKS that is part of a struggling semiconductor market. I believe it is being punished unfairly due to the China trade war and I’ve actually continued at shares as the price falls because I calculated as a discount to its intrinsic value about SWKS the current price is $67 21 cents the Pe is 1123 the PB, the price to book is 3.8 the price to cash is 10.2 it has zero debt and large caps and the 5.8 for the current ratio. The balance sheet is very strong with growing short shareholder’s equity over the last five years and no red flags that I see.
Dave: 22:42 And the income statement shows steady profits, although not necessarily growing dividends. Have a nice yield. I’ve been growing over the last four years with a healthy payout ratio using the dividend growth model; I calculate the intrinsic value to be 81 85 a 22% margin of safety. All right, so he’s got the calculations, right. Excellent. A long background. So here’s the question, is Mr market really that crazy and have I found gold in my early investing career or their details I’m missing though it indicates stocks like SWKS might be a falling knife. I’m confident in my background analysis, but the stock keeps getting beat down. Hoping you could share some light on the subject. And thanks again for all you and Dave Do. Thanks, Clark. Andrew, what are your thoughts?
Andrew: 23:29 Oh yeah, lots of thoughts. So let’s get disclaimers out of the way. I have not looked at um, SWKS so this is not any recommendation to buy or sell. And I’m not going to the question, do I think it’s a falling knife or not because I haven’t done deep analysis or due diligence. I don’t know what they do from a business perspective. But these bring up all good questions on, you know, we’re going to, you’re going to, you’re going to see this story over and over again with different stocks where you’ll see these types of valuations, these type of characteristics. And again, this fact that the stock price is dropping and it’s like, Whoa, what am I missing? Right? Because there’s always going to be, there’s always going to be a reason for a dropping stock price. I think I like the idea and the thought process is like, what am I missing? Because there’s always going to be something that you’re not considering. And just because you have a full analysis doesn’t mean that’s the whole picture. So it’s always good when the stock is dropping was like, all right, let’s try that.
Andrew: 24:38 Uncover why. I think he’s; he’s close. Like he got warm. Uh, when he said that due to the China trade war, um, a lot of stocks have been unfairly punished. I 100% agree with that. And I think it’s a big reason why I’ve seen a lot of my opportunities. I know the June pick, which is one I just talked about, right? That one is usually trading that higher evaluation. And I think a lot of it does have to do with China. And you can just one, one good way to get some of the people’s ideas on why stocks are dropping. We’ve talked about this before, but seeking alpha a free website has a lot of the great analysis on there, both from the numbers perspective and from the kind of narrative or macro perspective. And so if you go through the news summaries on, on certain tickers, they will tell you, you know, stocks dropped because of China wars.
Andrew: 25:36 Some of it will be kind of sensationalized, but if you can trust, you can start to weed out when something’s sensationalized versus if it’s legit. So usually there’ll be something more in-depth than some clickbait title that says the Dow dropped half a percent because of China. Right. Um, but something like this, he’s talking about the struggling semiconductor market, which I know has had its struggles recently in addition to what’s going on in China. So that’s another factor. Like, um, the memory market’s been having some issues, and when I say issues, it’s not that it’s going to go away or anything, but you know, the growth that it’s had in the past seems to be slowing. So lots of things to consider on that. And from a strictly a numbers perspective and going to the question of, is mister market this crazy? And I have, I found gold in my early investing career.
Andrew: 26:36 So yeah, it’s a good example of mister market going crazy. I think, uh, just that at least from the initial observation, when you have different fears and everything like that, then it gives you a reason to think. And if, okay, I’m not saying this is the hundred percent reason, but if a major reason is the China trade war, it makes a good question because it’s like, well, is this something that longterm, like for example, in 10 years, 15 years, 20 years, are we still going to be in a trade war with China? Huh? Good question. Right? Whether you think, I don’t think any war would last, well not anywhere, any trade war would last that long. Nobody knows obviously in the, and we never know what the future holds, but I think it’s fair to say a lot of these political things tend to hit the markets and then you tend to see the markets, um, revert and forget about all these worries.
Andrew: 27:39 And so the same people who are selling like a frenzy will also buy like a frenzy at the first sign of the trade war being over. So obviously you can never time that anybody who says they can is a fool, but you can buy when it’s dropping like this, and they could drop another 25 50% from here. But you have to be okay with that. You have to be able to stomach volatility, be able to stomach the fact that there is a risk with buying stocks and those stocks going to go up perfectly forever. And you consider that and maybe even write down the reasons why you’re buying a stock like this. So maybe some stocks make you more nervous than others. Those could even be the best opportunities. So in, in this case with SWKS like, well, you know the price to book at the price of sales on the onset, maybe it doesn’t sound super low price to book of almost three and then the price of sales of three and a core there.
Andrew: 28:40 But I mean when you can see where it is in the semiconductor, there’s, in the tech industry, valuations like this are kind of rare and the PE of 11 according to Finviz, I’m below 15 that sounds fantastic and I, and the great dividend to 2% yield. So these are all things and me, and I like the fact that there’s no debt. That, that’s a huge factor for me when I’m looking at the stock. So if you can remember that k two things, if you can remember that you’re going to be holding for the long term that any volatility is, is uh, going to be accepted. And if you’re understanding that when you say I’m the hold for the long term, that doesn’t meanwhile, I’m in the hole for ten years and it’s a guarantee that I’m going to make gains. That’s not what we’re talking about here.
Andrew: 29:31 What we’re talking about is, um, the whole for the long term and the business will continue to run and grow and I’m going to get my dividend payments from that, and eventually we don’t know what the timeline is, but eventually mister market will realize it was crazy and the price will settle. We don’t know what the timing is. Again, I have to stress out over and over and over again. The second thing to consider is that when you say, is this going to be a falling knife? I think it’s important to distinguish a falling knife as in a share price that collapses until the pes under a nine and the stock price is from a 72 let’s say like a 40. That’s one type of falling knife. I might be okay catching that because I’m holding for the very long term. As long as the business is doing fine versus a falling knife where we’re in a bankruptcy situation, like we talked about recently, I think even last week we talked about that a bankruptcy situation where the company is a falling knife because it’s crumbling and you’re buying into a business, and the business is crumbling, and there’s no growth.
Andrew: 30:41 The businesses imploding and now we’re talking about a share price that’s collapsing that likely won’t recover because of the business characteristics. So that’s everything I would say about it. Um, it’s great he’s doing his due diligence, I think. I love to hear the fact that he’s taking the initiative and reading. Ben Graham, Joel Greenblatt, Peter Lynch, guys are way smarter than me with way more experience and guys I’ve learned from and the only makes sense to go to the source and try to learn from as many as a, as many of those legends as you can. And I see Clark doing that and um, I think he’s on the great path. I agree. This is an amazing question, and I love the way he lays out all of his, his points, and he’s done his due diligence. That is for sure. So, you know, Major Kudos to you Clark for, for all that.
Dave: 31:39 A couple of things that I wanted to kind of throw out there and Andrew gave a very detailed, very excellent explanation, but a couple of things that I guess I would observations that I would like to throw out there. So the first thing I wanted to chat a little bit about was your, uh, intrinsic value calculation or kind of your estimate of where you think the company can go as far as the price goes, you know, the numbers, you came up with our work. Great. Because if you look back at the history of the price of the company over the last five or six years, it is easily hit that number if not more, multiple times. And so the number that you’re looking at is not out of the realm of possibilities for, I mean for, you know, for just for giggles. Even back in April, uh, April 12th, it was at $90. So, you know, it’s fallen quite a bit since then. But I think, you know, just based on everything that we’ve talked about, I think it’s more based on sensational news IEE, what’s going on with the trade war with China is scaring people away from this area of the stock market is making them feel like this is could be a disastrous investment.
Dave: 32:48 And I think the other thing to think about too is, and I don’t know the answer to this, but I guess a question I would ask when you’re looking at a stock that’s getting beaten up that you feel like is getting beaten up because based on just the initial numbers that you’re weighed out in your, in your question, it sounds like the company is doing well regardless of what’s happening in the stock market. So I think one of the things I like about this question is it shows that the stock market does not equal the success or failure of the company. Uh, it is based more on public opinion. Then a lot of times the actual numbers because of the companies increasing its sales, it’s bottom line is increasing, it’s paying a healthy dividend and it’s got room to grow that dividend and all the other metrics that you’re looking at indicate a very healthy company, a grower, growing, shareholders’ equity.
Dave: 33:35 Those are all great signs to look for in a company, and it doesn’t always equate to success and the stock market for a variety of reasons. And yes, Mister market can be that crazy. It happens all the time. But the thing that, I guess the question that I asked myself, and I don’t know anything about the semiconductor market is just looking at this, the volatility of the stock price over the last five years, it’s, you know, it seems some pretty high highs of you know, up to an almost over $105 to down to a low of about, you know, $66. So that’s a pretty well swing, and there seems to be peaks and valleys of it. And I guess the question I asked would want to ask about the semiconductor market, and I don’t know, the answer to this question is, is that normal volatility, is it a cyclical business?
Dave: 34:24 In other words, are there periods of highs and periods of lows, and is it just humming along at that or is that not normal? Is that normal? And I guess I don’t know the answer to that question. And I guess that would be one thing that I would want to investigate when I’m looking at why is this, why is this company getting beaten up? Is it because of the cyclicality of the nature of the business that it’s in? It’s not necessarily a commodity business. So obviously that’s not the issue. But you know, with technology and the ebbs and flows of technology, I don’t know enough about, again, you know, the ups and downs of that kind of market. Uh, Andrew, do you know the ups and downs of that kind of market? Does that sound like a feasible idea? Yeah. Um, for now, right. Uh, in recent history has been, and tech in general kind of fluctuates a lot more in general. Okay. All right. So I guess, you know, when you’re asking about the falling knife question again, I can’t say specifically about this stock, but the numbers all look fantastic. Uh, just based on what you’re telling me and I think that would be.
Dave: 35:39 The thing that I would want to investigate. Is this something that’s cyclical or is there something out there on the horizon that you haven’t discovered yet that is causing the stock to be beaten down? Is it beyond just the stock market? Have you looked at the company’s website to see if there’s any news out there that may have been discussed that you might’ve missed in your research? A seeking alpha is a fantastic resource to look at this company because there are going to be people that are going to write about it and we’ll have more up to date news on it then I’m going to have and we’ll have a better idea of maybe all the goings on are the potential black cloud to Cape may be looming in the future in regards to the company. So those are the things that you could look into it as you’re trying to decide whether this is a falling knife or not.
Dave: 36:26 There is no perfect way to answer this. And this is again, part of the risk of investing in companies in the stock market as you’re just never really good to know. But the one great thing is the fact that they have no debt and that’s going to help them sustain them for a very long time. So even if it doesn’t ever get back to the highs of $105 a share, it could still do well for you over the long term. So that would be something I would want to keep in mind as well. So I hope that helped answer your question a little bit Clark.
Andrew: 36:56 And I agree with all that. The only other thing I think I can add his ideas on how else to kind of find reasons why the stocks dropped. Another one thing you can do is listen to conference calls, listen to the quarterly earnings, pay attention to what happened in the quarterly earnings, and even look at a quarterly statement. Um, don’t make an investment decision based on a quarterly statement as those numbers are not, um, regulated like the annual reports are. But you know, maybe you might be able to sniff out another reason why other than that, yeah, I, I agree with what you said, Dave, and I think Clark, regardless of how the stock works out. I think it sounds like you have a good enough understanding where you should be able to have great results based on your knowledge and your skills and, and the fact that it seems like you’re willing to continue to learn and grow what you learn and gain experience by getting your hands dirty.
Dave: 38:02 Yeah, exactly. And I guess the thing that I’m jealous of is the fact that you have an MBA, you have a background in finance and understand how financial statements work in, can dig into those much easier than it was for me. You know, it was a complete learning process for me, and I love it. Don’t get me wrong, but sometimes I wish I would have learned a little bit more in school, are paying attention to my accounting classes instead of staring at the pretty girls in the class. So, um, but you know, it’s all water under the bridge now, but, uh, anyway, so yeah, those, those are a great question, Clark. Thank you.
Andrew: 38:34 We agree with you on that
Dave: 38:36 too, Dave. Yeah, I’m glad to hear it.
Dave: 38:41 All right folks, well, that is going to wrap up our conversation for this evening. I hope you enjoyed our answers to the great listener questions we got today. It was a lot of fun for me, and I think Andrew enjoyed it as well. So without any further ado, we’re going to go ahead and sign us off. You guys go out there and invest with a margin of safety emphasis on the safety. Have a great week, and we’ll talk to y’all next week.
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