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IFB191: 8 Common Beginner Mistakes with Braden Dennis

Welcome to the Investing for Beginners podcast. In today’s show we discuss:

  • The list of common mistakes that beginning investors can make
  • Avoiding these mistakes can go help us go a long way to our goals
  • All of the common mistakes are easily avoided, once we are familiar with them.

For more insight like this into investing and stock selection for beginners, visit stockmarketpdf.com

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Transcript

Announcer (00:02):

I love this podcast because it crushes your dreams and getting rich quickly. They actually got me into reading stats for anything you’re tuned in to the Investing for Beginners podcast led by Andrew, say there, and Dave, a step-by-step premium investing guide for beginners. Your path to financial freedom starts now.

Dave (00:32):

All right, folks, welcome to Investing for Beginners podcast. We have episode 191 tonight. We have our good friend, Braden Dennis, back from Stratosphere investing and the Canadian investor. One of my favorite podcasts. So we’re going to talk a little bit about beginner, mistakes Brayden as some great insights into some things that we can avoid as beginner investors. So I’m going to turn it over to Braden, and we’re going to go ahead and start having our little conversation; say hello, Braden,

Braden (01:01):

Dave, Andrew. Good to be back. I always enjoy this recording. So thanks for inviting me on.

Andrew (01:08):

Thanks for coming. All right. Let’s talk about some beginner mistakes. What are some of the more common ones that you’ve seen Braden? Tell us a little bit about that.

Braden (01:20):

Sure. Yeah. So there’s a lot of new investors these days, and I think it’s great. It’s an awesome thing that people get into the DIY investing space and make their money work for them. That’s a great thing. There are many really common beginner mistakes, and I see them so often, and most people made them themselves. So I think that this list is a good small list of ones that I see very frequently. And if you could just avoid them right out of the gate, you will not only save yourself headaches, but you’ll probably save yourself a little bit of money too, because they, they typically and poorly if you go down these, these holes. So the one I see common for beginners is chasing dividend yield. This is common. You start investing; you go on a stock screener, look for companies paying like 9% dividends. You think I have this new awesome income source.

Braden (02:22):

If I just buy these high-yielding dividend stocks now on paper, that sounds awesome. You know, like you’re getting that yield, but what’s happening is there’s typically a reason that the dividend yield is so high. A couple of things are happening. One, the price of the stock has fallen so aggressively that the yield is high. And then two, they might just be paying out too much the dividend, and you’ll see that in their payout ratio. And that’s typically not what you want to see for a long-term company. You want to see them in the business and grow it. And three, it’s just not necessarily the best place for capital if you’re a long-term investor. So if you think the company can reinvest at a very high return rate, you don’t necessarily need a huge dividend yield. And if you have a long runway for growth, if you’re not in that like maturation stage of your investing career, you need just to be thinking about businesses that will continue to grow and sustain growth rates and have a strong moat long-term. Companies with really high dividend yields typically can have something wrong with them and can be on the later side of their life cycle. So that’s, that’s, that’s the first one. If you guys have any comments on that, I’m sure you probably see tons of that.

Andrew (03:47):

Yeah. Let’s start there. So you mentioned wanting to find companies with good avenues for reinvesting back and giving us some ideas on the kind of signs you look for when you determine the difference. Cause you know, you could have one company versus another company; they could have similar yields have two completely different re-investment prospects. So how do you, how do you think of that on a high level?

Braden (04:13):

Yeah. Yeah. Good question. So I just want to clear up, like, I, I don’t hate dividends. I love, I love getting dividends just as much as the next guy. It’s just more so like really high yielders that are at risk of cutting the dividend. So what companies can do when they deploy capital is they can buy back stock. They can reinvest in the business; they can pay a dividend; they can make acquisitions. So depending on what type of business it is, if they have an MNA strategy, which is like acquisitions, or they have a fast-growing business that they can reinvest into marketing and the sales into the product, there’s a very good chance that they’ll have like a high return on that invested capital if it’s a business with a sustained moat. So we’ve seen that with lots of companies and even with, with acquisition type, CO’s typically you can get a high return that you’re giving. Like when you’re investing, you’re giving management your capital to deploy, and you’re hoping that they can effectively do that. So if they don’t have any good options, they’ll just pay it out to shareholders with a dividend. There’s nothing wrong with that. That’s, that’s fine. It’s just, do we want, you know, 80% of free cash flow going through the dividend, not my style, but there could be a place for it with certain businesses.

Andrew (05:44):

Is there a number, or does that number change where it makes you consider that maybe this yields a little too high, and it kind of is more of a red flag than not?

Braden (05:58):

Yeah, unless It’s a bank or a, or a utility. I don’t want to see anything over 4%. If it’s a bank or utility, that’s common, like 5% yields on utilities and banks, no issue there, like even like a real estate investment trust. That makes sense because of how stable cash flows are on a utility. That’s kind of how they’re structured to pay out a lot of it via the dividend. But if it’s a growth business software, I’d be concerned at anything over 4%, for sure.

Andrew (06:31):

Is that 4% today or is that 4%, you know, in any, any time of the market, does it not matter?

Braden (06:39):

Yeah, I guess if there was like 2008 happening and in the next like, or even like March of 2020, where stock prices dropped 25, 35% in a matter of weeks, you’re going to see that dividend yield rise up because it’s trailing 12 months. So I mean, the yields on the market, like the SMP yield, the venue will go up. That’d be shocked if it had anywhere near four. But yeah, I mean, since it’s also market-cap-weighted the S and P, I’d be shocked if it went even close to that, but that’s a good question. That’s a good question. It depends on the business, though.

Andrew (07:22):

Okay, 4% good rule of thumb and then kind of investigate further from there. So what about another mistake that’s commonly made by beginners that you have seen lately?

Braden (07:35):

Yeah, a really common one and one; I made myself buying low-price-earnings stocks almost exclusively once upon a time. It’s kind of like dividend yield, where low PE can sometimes be a value trap. It’s not a necessarily good indicator of value for every business. Now, if it’s a company whose main target is earnings per share, growth, and profitability, and they’re a little bit more mature, it’s a great metric on your toolkit, but it’s not a one-size-fits-all. And it’s certainly not a single metric to make investing decisions. So I think it’s one of your toolkit tools as an investor is a price-to-earnings ratio. It’s a great quick valuation ratio. A lot of people reference it. I talk about it all the time, but it does not necessarily indicate what a cheap stock is. If it has a low B,

Andrew (08:36):

Some different industries or sectors have different PE ratios that are more common for banks and utilities than tax.

Braden (08:51):

Yeah, for sure. It’s exactly like the last, the last point, right. Since it is the equation thereof of price over something, then the company is optimized for different metrics depending on where they are in their maturation. So, for instance, way back when everyone discounted Amazon in 2015, everyone thought, you know, something trading at like 180 times earnings was way too expensive. I mean, the thing traded at like 1.6 times sales, which is shocking in 2015, given Amazon’s like sustain 45% top-line revenue growth. So that’s an example of a company investing heavily back into the business and not optimized for profits. So since in the equation, earnings are the denominator price over earnings. That number is going to be massive because there are no earnings. Now, if you look at the business and you dig deeper, they’re investing through the income statement; that’s a perfect example of where you could have been missing something quite cheap, but on a price to earnings, multiple looks crazy expensive. And so people wouldn’t touch it. That’s a brilliant classic example of Amazon in like 2014, 2015 there. Still, ultimately it does matter if the business is optimized for profits, then P’s a good metric to use if they’re not, and they’re growing back into the business. They’re not showing earnings either for tax purposes or for, you know, growth purposes; then it’s just not a good metric to use.

Dave (10:38):

Yeah, that’s a good point. So thinking about, I guess, the numbers kind of like we did with the dividend yield, is there a number for a PE that is too low or is, as you mentioned, a value trap possibility or is there something on the reverse of that’s, that’s just too high or, or is it more of a business by the business decision that you kind of has to look at? Like you were mentioning with Amazon, more of the fundamentals of each business.

Braden (11:06):

It is case by case, but if I was to put a rule of thumb, anything under 10, I’m curious, like I’m instantly looking to investigate further, especially when the Shiller PE ratio is so high, which is just like the market average of the price to earnings. So it does matter case by case, but unless it’s like a bank stock trading at ten times earnings, I’d be concerned if it’s some high-tech growth stock trading at that price, I’d, I’d be investigating why the market is discounting it so much.

Dave (11:42):

That’s a good point. You know, I noticed on a screen or the other day that Allstate was trading at, I think by less than a seven PE I thought, wow, that’s crazy.

Braden (11:55):

Yeah. That’s, that’s quite low.

Andrew (11:57):

That’s great. I’ve, I’ve done some research in there. They haven’t; they’re not doing good from a market share perspective. And all I know, I know I just, it caught my eye that, wow, that’s low. So, but I think those are,

Braden (12:12):

It goes back to like, yeah, it goes back to like the old cigar, but investing is like, we’re deep value investors try to get one last path out of business. But if you’re a long-term investor, you don’t want to make a bunch of trades. You don’t want to have, you know, some sort of indicator giving you an exit strategy. You want to buy great companies hold them for a long time, which I think is the best way to go about this. If Allstate is at seven times earnings and looks very attractive but is ultimate, you know, losing revenue, losing market share year over year, the business fundamentals are not improving. So you’re not going to get value. You’re not going to get like a multiple expansion from a seven PE to like 15 and double the valuation anytime soon unless there’s some real turnaround in the business. So it’s really hard to have that kind of insight. But if you do have that kind of insight, then deep value investing works. I think it’s very hard, and I don’t personally do it, but you know there are many ways to go about this and find what makes sense for you. I believe this is the key.

Andrew (13:30):

It looks to me, you know, we have two things that are very much on the extreme and staying away from some of those things that look too good to be true. Both the dividend yield and the low PE could serve a lot of investors. Well, particularly when you’re first starting out

Braden (13:47):

That’s right. Cause they look, they look very attractive on the surface, right? Just from those numbers. Yeah.

Andrew (13:56):

Makes sense. All right, what else you got?

Braden (14:00):

I’m going to tie the next two in, which is the first part being not understanding the business fully is a mistake and then thinking volatility and risk of the same thing. And the reason I want to tie those two together because if there are volatility and stock, your own loses 25% of its value, which by the way, happens all the time. Great companies have volatility. They see downturns, they see multiple compression in the stock loses its value, but that and risk are not the same. And if you don’t understand the business, you won’t know how to react. If you should sell the stock, you won’t know enough about the business to know if there’s volatility or actual risk if you should buy more. So often, on like finance websites, you’ll see the risk profile characterized by, let’s call it, beta.

Braden (15:03):

And what beta is just a measure of how volatile the company is in terms of how much up and down the stock moves compared to the market average that’s beta. And they’ll say that it’s risky to own high beta stocks, which means it’s very uncorrelated and there’s lots of volatility, but that might not be true. Like volatility and risk are not the same thing. The real risk is the business losing market share revenues, declining management, turnover management, not being honest and potentially fraudulent that’s risky, bad acquisition strategies, just overall losing its greatness as a business. That’s risky because not every business survives. Over history, a lot of businesses do not survive, and that’s just normal capitalism. But those risks, you have to understand by understanding the business, do a little bit of research, figure out what they do, not as a stock investor, but as a business investor. And I think those things are important to recognize the volatility and risk of the same are not the same things. And a lot of price movement can drive a narrative that might not necessarily be true. When you find that those things are separated, that’s when you can find some pretty good opportunities.

Announcer (16:30):

What’s the best way to get started in the market—download Andrews ebook for free@stockmarketpdf.com.

Dave (16:40):

Something about the volatility aspect: so recently, I bought a PayPal slice, so I had some extra cash in my account, and I didn’t have anything. I wanted to buy a full share. So I thought, what the heck I’ll, I’ll try this slice thing out. And I bought a portion of PayPal, and this was about a month ago or so. And you want to talk about volatility? Oh my goodness. I have seen the stock go from 3% to 10% up or down in a day. So one day it will be up 3%. The next day it’ll be down five, and then the next day, it’ll be up to eight. And then the next day, it’ll be down ten, and it’s just gyrating all over the place. And if it were a great position in my portfolio, it would probably drive me nuts. But it it’s, it’s not risky. It’s volatility. It’s just because of everything that’s going on in the market right now. People move out of tech into other things, or, you know, the fears of inflation, whatever it may be. There’s just

Dave (17:50):

A lot of volatility in the company. But if you look at all the things that you just mentioned, revenues are doing great, their margins are great. The CEO is awesome, and he’s not going anywhere. They have plans, you know, things are going well with the company, but the stock price is trading all over the place. So there’s not a risk in me losing my investment. It’s just the volatility of the price changes is going up and down. So I think that’s a great, a great understanding of what you’re talking about. So I guess you tell me a little more about understanding the business, how do people avoid that trap, and how do they learn more about the business?

Braden (18:30):

Yeah, there’s a lot of great places to start. The internet is a wonderful thing for everyone to be able to get access to information quickly with free reports, with ways to look at their financials very easily, to be able to look at their company website, figure out what they do, how they make money, go on their investor relations page. There’ll be a PowerPoint deck that you can pull up right on their investor relations page, telling you what the business does. And you’ll be impressed. You’ll be surprised at how quickly 10 minutes can make in terms of actually understanding the business is the old Peter Lynch analogy about how people spend hours and weeks on finding the best deal when they’re buying a new dishwasher for their house. You know, they, they read reviews, they find the right discount. They figure out which distribution, like who’s the best retailer to buy it from.

Braden (19:33):

And then they get a whisper from stock and put their life savings in it. And it couldn’t even tell you what the business does. This happens a lot. I don’t know why there are lots of reasons why and behavior behavioral, like investing psychology that this happens, but it does happen. And you’d be surprised at how quickly you can figure out a little bit about the business. And it’s going to take a while. Maybe you find enough about the business that you’re confident in owning it and start a startup position. And then that might be just the beginning of your research and fully diving into the business. More and more the wallets in your portfolio. I have learned more and more about the companies I own after owning them. That’s very typical professional money managers do the same thing by starting a small position and having some skin in the game. I think it’s a great way to do it. And I know a lot of people do

Dave (20:28):

Kind of along those lines of, you know, say you buy a company. Are there any other mistakes on your list where it has to do with holding that company or selling the company, anything along those lines when it comes to portfolio strategy?

Braden (20:48):

Yeah, so I find it pretty common that people make a lot of trades. Am I answer your question right? Yeah. Yeah. Okay. I find new investors are in and out of businesses constantly. What’ll happen is they’ll make a ton of trades. People ask me, like, what am I doing with my investment portfolio? And I simply buy stocks once a month at the beginning of the month, pay myself first, and just kind of go that way. And what will happen is when people are making too many trades, they start to game-if it. And they forget what business is like; investing in real businesses is about as cheesy as it sounds. When you buy stocks, you are buying a sliver of the business. When you change your mindset to being a business owner, like the classic Warren buffet asks type approach, you will massively change your mindset on how you approach investing.

Braden (21:50):

Because if you’re in and out of businesses constantly, one, it’s not very profitable, and you’re going to rack up all these trades. And two, you’re not you’re, you’re going to act irrationally by basically selling on bad volatility when it could be a buying opportunity of great businesses. So I see people making way too many trades all the time. I make like 12 trades a year because that’s how many months are, are maybe 13 or 14 in total. If I sell something with a wrong thesis, or I was just wrong, that happens. But in the grand scheme of things, that is not a lot per year. And it takes patience. Like investing is the most patient game you can think of. You have decades to do this decade to make money. And if you can approach it like a business owner, trust me, you’ll only see he’ll not only sleep better at night, but you will perform much better and compound your wealth much quicker. If you take a deep breath, don’t make as many trades, and just act like a business owner, not a business trader. And that’s an important distinction

Andrew (23:00):

It kind of goes back to what you were saying earlier, too, about how you’re going to experience volatility. And it would help if you separated that from what the reality is. And if the reality is I’m still a part-owner of a good business, the volatility shouldn’t matter.

Braden (23:13):

Exactly. And if you focus on the business fundamentals, you will recognize when there is an opportunity in when the market is just acting a certain way. It becomes a lot easier if you have a like sell-off like a year ago today in March, you saw stocks like down, out of their 10% day after day when the coronavirus has made a pandemic, and these kinds of things are happening. That makes it super easy because everything’s down, and everything’s on sale, and you can get up good businesses on sale. But what happens is, is when these events happen is people are afraid to buy. And then every single market correction in hindsight always looks like a buying opportunity. But when you’re investing forward, events like that always look like market risk. So I find that a very funny thing that happens with investors with all investors is that in the past, every market during a turn will always look like a buying opportunity, and forward-thinking will always look like a risk. So if you can kind of change your mindset, be greedy when others are fearful, you’re you’ll do well.

Andrew (24:30):

Well, in defense of the average investor, it’s hard to put money in the market if you’re not sure if you’re going to have your job tomorrow. Fair enough. That’s a good point. That’s my, my one defense for investors. Okay. I am moving on. What is another mistake you see?

Braden (24:49):

I find new investors. They want to buy; they hear about value investing. They want to buy cheap stocks. They look low PE, or what they do is, confuse valuation and cheapness around actual low share prices. So what they’ll do is they’ll find some penny stock trading, some mining junior exploration company that you couldn’t even tell me what they do, but the shares traded for a dollar. And you can buy a hundred of them, and you feel good about it versus buying a stock that trades for $95, and you have one share. Now market capitalization is defined as what the business is worth on the stock market. The share price means absolutely nothing. And when Tesla and Apple split their shares last summer, they both saw tremendous returns after, and people are like, Hey, look, you just buy stocks after they split the prices lower and people will buy more shares.

Braden (25:52):

Now, just because that happens doesn’t mean it’s right now. I find that what’s happening many times when you buy a stock, and it goes up, you’re getting that confirmation bias that you right. B could have been right. For whatever reason, not necessarily the correct one. So buying low share prices does not mean that it’s trading cheaply. It does not correlate with the business’s value unless you have another key piece of information: the number of outstanding shares because you multiply the share price by the shares outstanding, and you get the market capitalization. That is the number that matters. And the one that you should focus on, like what goo share of Google trades like 2100 USD or something like that. So that’s, you know, that, but that company Does about $750 in revenue per share. So the share price quite irrelevant. And I see a lot of very new investors make that mistake.

Dave (26:55):

Yeah, that’s a great one. So I know that when I first got started, I fell into that trap too, but I quickly learned that that was not the right way to go. Let’s talk about; I guess, another one. So the something I know Andrew and I have butted heads, not butted heads, but we’ve encountered in some of our conversations and, and questions from, from listeners is thinking that trading and investing are the same thing. What do you, what are your thoughts on that?

Braden (27:21):

Oh God, you ready, Dave? You’re about to get me fired up, fire up, baby. Before I talk about that, I was trying to pull something up as we were talking about volatility because I think it’s a really good example that can give you a real example of how volatility is completely normal and stocks move up like a rollercoaster, but it does not indicate real risk. So Apple stock over its time as a public-public company, since it had its IPO has fallen 10%, 27 times 25%, 17 times over 50%, six times and over 75%, three times. So if you’ve held Apple through that IPO, you saw 75% of the value wiped out three times over half of its value, right? That’s six times like volatility is complete. It’s the only thing that’s normal. So I think that’s good.

Braden (28:24):

You like sleeping at night. Exactly. I think that’s a good way to highlight, you know, a business that was executing and now the largest public coal on the planet. But volatility is completely normal. All right, sidetracks. But yes. Trading and investing, Oh God, they are not the same thing. They couldn’t be further away from the same thing. One is trying to make many trades be in and out of businesses, timing the market. And the other one is, you know, dollar cost averaging into good businesses overtime trying to find good value and growth. Wherever that intersection may be. And one is owning businesses, and one is trading businesses. Now, unfortunately, what has happened, and this is, this is not the new investor’s fault. It’s a tough situation because what happens is, is Dave say, I, I start Googling how to get started investing.

Braden (29:31):

Now what will happen is, so I say, I watched highlights of the hockey game last night, you can, Tom Canadian, you watch it on YouTube, and you get hit an ad of some YouTube trading bro, telling you to sign up for his discord, like trading signals chart T talking about what’s called technical analysis. And they’ll talk about price movement. They’ll give you a whole pitch on stock and not even mention anything about the business. They talk about the share price moving one way or another. They’ll use the trade for a dollar 10, and now it’s $2 and 50 cents. Think about how much money you could have made. This is not investing. Most of these are scams, and it is a complete waste of time, a complete waste of time. If someone pitches stock to me and doesn’t even tell me what the business does, tell me about the price chart. Not only do I want to throw up, but I’m not listening. So differentiating, trading, and investing are, is very key for new investors. They’re not the same thing. One’s a waste of time. One is very worthwhile. And if you can learn that very quickly, you’ll do quite well.

Dave (30:44):

Do you think that Robin hood impacted this disparity between what people think about trading and investing?

Braden (30:54):

So, yeah, it’s a good question. I don’t, it’s easy to shift the blame on a brokerage like Robinhood, for instance, but it’s yes. They’ve, they are guilty of gamification of this, which is turning, you know, the stock market into a casino, which I think is bad for everyone, especially people who are just trying to learn about it and think that this act of trading and gamification is what they’re supposed to be doing. So there’s a whole ecosystem. That’s kind of bringing people into the wrong mindset right out of the gate. And so, so that is bad. That is bad, but all it is is, you know, competition and classic capitalism of costs going down and down. And now you have no-fee trading. You can go in and out of stuff as much as you want with no fees. And I just don’t know.

Braden (31:53):

So I have to think two thoughts on this one: fees are lower than ever, which makes it the best time to be an investor ever because low fees are the one thing that you can guarantee you can control. And if you can keep your fees low, that is going to help you long-term. On the contrary, what is happening is that no fee investing means people are constantly in and out of stock trading stuff. They’re not acting like investors are thinking like traders, and they’re gamified. And there’s an adage in Silicon Valley that says that if the product is free, you are the product. And we saw that play out with the GameStop saga where, you know, they’re getting payment for order flow. That’s how Robin hood makes money basically from volume. And it doesn’t; it doesn’t end.

Braden (32:47):

It doesn’t end great. All the retail trading it. I just don’t think it’s good. I don’t think it provides anything to society. You know, someone’s sitting at home and day trading, sorry if that’s what you do, but I just can’t picture that being productive to society to be quite Frank. There are many pros and cons to this low tray, low commission, or free commission trading. But at the end of the day, what you’re seeing is a complete game-ification of retail trading. And I just don’t think it ends well, and we’ve already seen examples of that.

Andrew (33:24):

So we have some things to kind of avoid. There’s a good path within there. If you can be an investor who sticks it out and, you know, doesn’t turn down the wrong path and tries to find good investments that they can hold for the longterm. So say, now you’re talking to an investor just starting is now conscious of these things and is now going to try to avoid running into them as much as they can. What should they focus on now? You know, what, what part of investing businesses, all, all the great things you’ve mentioned about the ways that we can compound our capital over time, what should be the focus, and maybe what’s a stepping stone from here.

Braden (34:08):

Yeah, I, it’s a great question. Because I’ve been telling you what not to do, but now, like what, what, what you should do is buy great companies, I’m going to take a Terry Smith quote. Who’s the CEO CIO of, of fund Smith of a very well-performing hedge fund. He writes a great book, and the quote is by great companies, don’t overpay and do nothing. That’s the quote. And that’s powerful because step ones, the really what you might think is the hard part of buying great companies. But the hard, the hardest part is number three, which is do nothing. You know, it’s, it’s the one profession that people go to work every day and work in finance. And so they feel like they should be doing something. So they make a bunch of trades. That’s what you should avoid because making a lot of trades for doing nothing is sometimes the most powerful and profitable thing you can do.

Braden (35:11):

Just by holding great companies, don’t overpay and do nothing. So what will happen is investors new investors especially get caught up in a price narrative. I mean that because the business stock price has risen so much that there’s some narrative tattoo. It’ll continue to go up because it’s a great business, but they don’t focus on the fundamentals. They don’t focus on the competitive landscape of the industry. They don’t focus on is revenue growth. They don’t focus on it. Suppose the company is generating free cash, or we’re on the verge of generating free cash, free cash. In that case, they don’t focus on management’s return on invested capital over the last ten years, which I think is a really important metric or return on equity could use for like banking stock. These are things that matter.

Braden (35:59):

The actual business fundamentals like revenue growth, free cash flow growth have a safe balance sheet. If the company has a strong moat, meaning very hard for competitors to disrupt them, what you’ll end up happening is companies with really strong. Most people start innovating on top of you, providing feedback and like a bottleneck and providing more growth. The business that they’re operating on top of, for instance, visa and MasterCard payments, are on top of everything being innovated is on top of these and MasterCard’s rails, but not disrupting, you know, the card and the merchant payment system. So that’s a perfect example of something to focus on. If that changes, the thesis changes on that example, then you need to think about it. And you need to think about if the moat is increasing or decreasing, the business is getting better or worse.

Braden (37:01):

We are trying to own companies that will become bigger, better, more profitable, have more market share in the future than currently right now. That’s a good place to start. Really. It is. If you think a company is great and they will be great in the future, then that’s a great, great start. Now, after that, you can dive into the numbers and get all nerdy. Like we like to do, look at their financial statements in there. Like how much free cash the business is generating, you know that that should be secondary to understanding the company you’re investing in. And if you buy great companies and pretty much do nothing, you will be shocked at how fast this stuff starts to compound. It’s incredible what the stock market has generated for investors over the last hundred years.

Andrew (37:56):

It is. And it can happen so fast to where the market can be very calm, and all the gains happen in one month or even one week. So you have to be invested in the long-term if you want to see the positive effects. And that can go for any stock too. So, you know, out of all those great things that you mentioned, you know, wanting to buy the right businesses, not overpay and do nothing, maybe take one of those, talk about your podcast, give us an example of how you guys will have deeper discussions about any of those things on your show and where people can go to listen to you and Simon.

Braden (38:36):

Yeah, sure. Yeah. Thanks for the handoff. Yeah, I, I, so I do, co-host a weekly episode called the Canadian investor. We do deep dives into specific companies all the time. Sometimes we talk about Canadian-specific stuff. If you’re into that, some of your listeners may be Canadian, some not, but I think the value comes to some of the deep dives we do last week. We did a deep dive into a company called Unity. Unity is the largest gaming engine company. So more than 50% of games like video games are built on Unity’s engine. The company did IPO fairly recently, but they’re not a new company by any stretch of the imagination. They have a huge market share. Very impressive business growth is incredible. And it’s a, basically a duopoly with the unreal engine, which is owned by 10 cent, which is also a public company. You can buy an ADR for it. But that is ticker you, Unity. Talk about companies like that all the time, the risks, the benefits, which’s typically what we do. And a lot of that content comes from Stratosphere. My company is a research platform where you can find financial statements, competitor analysis, and research like Unity. And it’s been really fun. It’s been fun.

Dave (39:58):

All right, folks, with that, we are going to wrap up our conversation for today. I wanted to thank Brayden for taking the time to come and talk to us today and dropping some great knowledge with us. Check out his podcast, the Canadian investor. There’s a lot of great information, and it’s very entertaining as well. So without any further ado, I’m going to go ahead and sign us off. You guys, go out there and invest with a margin of safety emphasis on safety. Have a great week. We’ll talk to you all next week.

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