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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.

Andrew (00:35):

All right folks, so welcome to Investing for Beginners podcast. This is episode 143 tonight. Andrew and I are going to talk about why investing in a bear market is really hard in case you’ve lived under a rock recently. The stock market has been up and down, mostly down a lot over the last week to two. And so we thought we would kind of talk a little bit about a bear market because we’ve officially entered a bear market territory. As of today, I believe we were down around 23% so far for the year. So that is officially a bear market when we get below 20%. So Andrew thought this would be appropriate for us to discuss this. So, Andrew, I’m going to turn it over to you and let you get us started and then we’ll just kind of go down a rabbit hole.

Andrew (01:21):

Yeah, I love it. Watch our timing be that this bear market recovered by the time this goes live. Yeah. I guess last time we talked about Coronavirus, it just happened to be still relevant a week later. Podcasts see you gotta you got a little tape delay, not a little bit longer than what they do with live TV these days. A little bit longer than five seconds. Yeah, exactly.

Andrew (01:55):

I think there’s a lot of emotions that go on and certainly regardless of how experienced you are, how knowledgeable you are and how rational you believe you are when it comes to stocks when it comes to investing when it comes to the market how disconnected you think you are versus how ingress you are with everything that goes in the stock market. I think it’s safe to say that a lot of different thoughts go in your head that you don’t usually think when stocks are excellent and you know, their stocks are slowly climbing up, and you don’t see much volatility. Looking at a situation like this with the bear market and you know, a lot of macro trends that are very concerning. We have the Coronavirus which

Andrew (02:48):

As of late as of today, we had the NCAA championship close. The NBA season’s been suspended. Like you know, you name it right on top of that we have interest rates, baseball based. Sorry, Dave. I know, I know. Out of everything, that was the one thing that you lamented today. I texted you earlier, I think it was like, Oh, by the way, you know the stocks down 20%, whatever, 30%, and you’re like put baseball, and it’s only two weeks, two-week delay. I think you can hold off two more weeks. I don’t know. It’s going to be tough. Well, while the rest of the world burns and you worry about your little game over there, we have other things to worry about. We have rec, so we had the interest rates go so low that there was a record low 30 year fixed rates.

Andrew (03:54):

So it seems that the fat is trying to do all they can to pump us out of this slowdown. That seems to be inevitable. And so we, we just, there’s a lot of fear and uncertainty that goes along with that and then all baked into it. You have this developing situation in the Middle East where crude oil dropped something like 30% overnight, and it seems like world war three could be upon us between Russia and Saudi Arabia. And so they’re fighting over oil and kind of politicking there, and it’s affecting the whole stock market as a whole. I think a lot of people would argue who are knowledgeable in the situation with what’s going on with crude that that could be having a much more significant impact on what you see with the market rather than just the current virus on its own. And then obviously when you combine the two, you get this insane concoction that is just tough to observe and be a part of as an investor.

Andrew (05:01):

So with all that backdrop and kind of trying to get the context in this situation we’re in, there’s a lot of different thoughts that go through your head. So the very first one, I think we got a good listener question too. I want to get to that eventually. But the very first one that I think it crossed my mind, but at the same time, it’s something that I kind of know the answer to. So I’ll say it, but I’m sure a lot of people are thinking about it. So when it, when you look at the bear market like this, it’s easy to pull up your broker to say, man, look at your different positions and see it’s possible. You might see all the losses on your portfolio. And so you might, and it depends on when you started. It depends on what moves you’ve made to get up to this point. And so looking at a screen like that, you could begin to think, well, I would’ve been better off, never invested in it at all. And you could start to figure while all this

Dave (05:58):

Time, you know, you see headlines in or in the media, people will say, here’s a year, are two years of gains, wiped out, you know, things of that nature. And so it can be straightforward to be pessimistic about that part of the investment performance. So I thought maybe we talk about that first and why, what are some ways we can kind of flip the narrative, so you don’t feel like you’ve wasted all of your time, all your energy and all your money on these stocks that are now crashing? They’ve, yeah, that’s a high point. And I think the first thing that you have to realize when you were looking at your portfolio when I looked at mine today everything was down for the year. Everything was down. I cannot brag and say that, Hey, I got the, I don’t know, mine’s all down.

Dave (06:50):

And you know, I invest a lot in banks. I think we, everybody knows that I’m a vegan financials and they have been blistered over the last couple of weeks. And they’re all down ally, Wells Fargo, JP Morgan Prudential first group. I mean, just, you name it, just wham, wham, wham, wham Prudential was down 20% today to what the percent is like. Still, you know, it’s, it’s easy to look at that I was mentioning Dandrew for me, maybe I’m a little bit weird, I just kind of seem to kind of, I can kind of disassociate myself with it and just remember that it’s a, it’s a number, and I don’t think about it in the way of like, Oh my God, I lost this much money kind of thing. Today. The way I generally tend to look at it is that it’s down, but it’ll go back up. I know it will and I, I just have this confidence and faith that it will go back the other direction at some point will happen tomorrow, probably not, but in six months, a year or two years, it will be higher than it is today and will be where I bought it at some point.

Dave (08:08):

Yes, it will. And I know that the water will, will rise again at some point. And if those companies are good companies, which I believe that they are, then I think that they will survive this and that they will come out better in the long run. And you know, I think you have to remember that until you sell the stock, it’s not a loss. So you keep that, try to keep that in your head. You know, when you see that it’s negative, you know that it’s down and it’s scary, and it’s nerve-wracking, and it’s freaking you out. You always have to remember, it’s not a loss until you sell it, until you, you know, paid $100 for it yesterday, and now you’re selling it for $50. Yeah. You also 50 bucks, it’s never coming back. But if you believe that the company is good and it will continue to do well you know, I told everybody that I was looking at Disney, I bought Disney twice in the last two weeks, the previous week and a half, and it’s still down for when I bought it.

Dave (09:09):

But I think Disney is a great company. Is it going to go through a little bump in the road here? Yep, it is. But I believe that it’s a good company and it will go back and it will recover. And I just have to remember that. And that’s where I think a lot of the attitudes and the fundamentals that Andrew and I have talked about over the last, you know, two and a half, three years that we’ve been doing this are so critical and so important, especially in times like this because those are the things that help you find a good company that will rebound. And I think the other thing you have to remember is we’re all human. Even Warren Buffet, you know, as, as great as an investor as he, he is, he didn’t see this coming with the oil. Yeah. He got out of Phillips 66 at a good time, but he also is getting zinged by, you know Oxy right now. They’re down half, and they just cut their dividend. So, you know, he’s not looking so great in that investment, but you know, he’s Warren buffet. It’s, I’m sure it’s going to do great, but everybody’s getting burned by this. So if you’re down, don’t feel bad, and remember it’s not a loss to sell it.

Andrew (10:22):

Yeah, that’s super key. I think something I noticed and I don’t think it comes very intuitively or it’s not very obvious if you’re doing what we preach on the podcast for one investing with money that you can afford to lose for two money that you don’t need in the short term. We have all the time in the world to wait for that stock to rebound. So just like we say that Warren Buffett says he likes to wait for the fat pitch and he’ll just keep waiting, and there’s no penalty for waiting. You can remain on investment as long as you want for it to recover until either the company goes bankrupt or you lose patients. So that’s another asset that you can kind of put in your back pocket. And if you can disassociate from the loss as Dave can, I think that’s very, very helpful as well.

Andrew (11:16):

The other thing is if you are practicing what we preach buying low, sometimes taking profits and selling high, if stock becomes too overvalued or if the thesis for why you buy a stock is not there anymore, it’s not one of your dividend fortress forever positions. And this is just something that you’re going to buy low, sell high. Well, over the years, as you’ve been doing this, you’ve been taking profits off the table hopefully. And so when you look at your brokerage statement, and you pull that up on the home screen, you’re not going to see the gains that you’ve had as an example right now with the market down 20 plus percent over the past couple of weeks. If they’re all positions that you’ve recently entered in, they’re all going to be negative. And so all your previous gains aren’t going to show up there.

Andrew (12:09):

So in the final kind of profit loss plus-minus, the situation’s going to look a lot worse than where you were. And so I think that’s another mental, I don’t know, like a, a mental deception that you could fall into if you’re not aware that, that that’s, you know, what you see on your homepage for your brokerage account is not reality. You know, you’ve had other trades before that, and it doesn’t tell the whole picture of your investments in general. The other part of that, and I think this is super, super key, and hopefully one of the more significant takeaways from this episode, this is something I do pretty regularly. I guess I don’t talk about that much. But I like to track the dividends I’ve received over time. And so when you are doing a drip, when you are receiving dividends, reinvesting those dividends and as you’re accumulating shares, and especially at a time like this when stocks are beaten up, you’re able to buy more and more shares, you’re going to see those total dividend payments to your account grow. They’ll start to mushroom over time.

Andrew (13:26):

And so if you look at your portfolio rather than looking at a profit or a loss perspective, but you look at these are the dividends I got three years ago for the entire year, this was last year. And then you kind of look at that year over year growth and then now you’re in whatever you got this year. That’s an excellent way to see where your progress has been regardless of where your stocks are currently trading. And so that’s something you can have a lot more control over rather than what Mr market is feeling on a particular day. And especially at a time like now whereas we record this on March 12th, there’s been moves like I’ve never seen. I mean, the stocks are moving as if their options, like multiple percentage points in seconds jumping up and down. And these are for, you know, generally conservative.

Andrew (14:25):

Unique events invested considered safe stocks that because of the coronavirus are just unpredictable and kind of rightly so because there are going to be huge implications here. But things like airlines, you know, cruise ships, even like the banks, right, that they have to talk about, these are all getting there. They’re trading like as if they were a Tesla or some high flying bubble stock. And so with these types of moves, you have to realize, well, I’ve been in the market for a little while, and I know this is not, this is not the daily reality, right? This is something different. So maybe looking at where those results are will show me that this isn’t an honest kind of longterm situation. It’s not reflective of my overall results. And so instead of taking that at face value and saying, man, my portfolio is down.

Andrew (15:30):

I’m a terrible investor, I’ve just lost money, and I’ve lost time and a waste of my time. And all this time has been for nothing. That’s not the case whatsoever. When you consider what you’ve been investing for, hopefully from the very beginning. And we talk about this, we, we, we tried to gel this in our back to the basic series, which starts on episode 43 but really at, at the most fundamental part of an investment is an income stream that you are receiving for your investments. So yes, the stock can move up and down jump 20% drop 50%, but at the end of the day, if you’re still receiving that income stream, that that investment is doing a lot of what you wanted it to do anyway. And so it’s not so much over the very, very long term. It’s not so much that you’re going to get every stock pick correct with every single one having crazy performance.

Andrew (16:28):

It’s a building that compound interest over time. And that’s really what’s, what’s the key here? So your compound interest is still working, and if you stick to the plan, this is where you’ll see considerable jumps in that compound interest. Cause right now you can get fantastic yields, you can buy a lot more shares. And as long as you don’t sell and panic sell, yes. If you sell, then yeah, now you’ve, you’ve erased all of your progress because you’ve, as Dave said, you’ve locked in that loss. And so regardless of how many dividends you’ve received, if that investment is at a loss, you know, you take the net of how many you’ve received in dividends and likely the loss will probably be more depending on how long you’ve held the investment. But if you continue the whole, do you believe that humanity is strong that we can survive and a pandemic, right? If the economy can get itself churning again eventually, if we can, if, if the fed can figure out and make a balance with the economy if oil will finally settle though a more reasonable place rather than a price that will bankrupt a lot of the major oil companies, all of these things, as they start to subside and things start to get back to normal, then all the people who haven’t panicked, we’ll see not only continued progress

Dave (17:50):

Through how their investments have gone, but likely see a considerable acceleration period in this compound. Interest stage because this is, you know, we try not to get too excited about it because there’s a lot of pain out there, but this is one of the highest potentials as far as where your investments will, we’ll see significant jumps and your results over the long term. And a lot of that has to do with the compounding. I agree with that as a fantastic point about the dividends. And I’m happy you brought that up. I, I’ve been reading a lot on Twitter and seeking alpha and different websites trying to just kind of find, you know, guidance and reassurance and just kind of help, you know, make me feel like I’m in control of what I’m thinking. And a couple of thoughts that kind of popped into my head while you were talking about the dividend part of it.

Dave (18:51):

So last week, we had a gentleman that was asking about creating a dividend portfolio. And we were talking a little bit about dividend aristocrats. By and large, most of those previous were kind, kind of out of the price range. They were expensive across the board. Just as a generality, a lot of them were overvalued and were overpriced, and now they’re going to start moving into an opportunity where you may able to buy some of these companies. A, for example, target today was down 12%. Walmart was down 9%. Walgreens was down 11%. Coke was down 10%. Contour brands who make a Wrangler and [inaudible] jeans were down 10%. Today. These are all companies that have been paying a dividend for 25 years plus and had been growing their dividend during that period. And by and large, most of these companies did well during the last great recession that we had in Oh seven through Oh nine.

Dave (19:48):

So these are buying large, reliable, stable, well-run companies that have great balance sheets are in a good position with a lot of assets, low debt, and are in good places to weather storms like this. And so those would be opportunities to buy. And there’s a; there’s a gentleman who used to ride for a blog called base hit investing. His name is John Huber. And if you’re not familiar with him, he’s somebody you should check out. He runs a saber capital, his investment firm. And now all of his letters come through there. But his name is John Huber, hub E. R. and he wrote this fantastic article a couple of weeks ago about the history of stock market crashes and how you can react to them. And one of the things that he brought up multiple times in the article, which I thought was appropriate was we as investors generally have, especially value investors, we have one, two times, maybe three times in an investing lifetime where we’re going to have an opportunity to find potential companies to buy that will create a lot of wealth for us over the long term.

Dave (21:01):

And if you have, as Andrew was talking about, if your horizon is farther than a year, then you are going to be in a good place. And I again, I don’t want to be super gleeful and talk about, you know, back up the truck and that kind of thing. And that’s not what I’m talking about. What I’m talking about is as a value investor, we try to find companies that are on a discount that is on sale. Everything’s going on on sale now. So this is an opportunity for us to find a great company’s value as a style of investing has struggled over the last ten years or so. And it’s a lot because there just hasn’t been a lot of great things to buy. And Warren buffet has gotten a tremendous amount of flack for sitting on tons and tons and tons of cash and not buying anything and him kind of just ignores it and just kind of keeps doing his thing because that’s, that’s what he does, and I’m going to guess if we look at his 13F filings over the next couple of quarters, you’re going to see a lot more purchases because of the opportunities that are presenting themselves.

Dave (22:11):

And this is when value investors can make their bank is when things like this happen because every bit there’s so much fear in the market and we are looking at a great company like a target or a Walmart or a Disney or a Hormel or whoever it may be that our great strong companies and have lots of dividends and growing dividends, and they’re going to continue to pay the dividend through this period. And that is pretty much a fact. And if you can buy those companies cheaper, you get more dividends, you get more reinvestment and over the long term, five, ten years from now, you’re going to thank me for listening to what we were talking about because this is where you’re going to make some money. Even though when you look at everything right now, it’s all negative, and it’s scary. But this is when we need to think about our principles and think about what it is we’re trying to do or what our goals are, and panicking and selling quickly is not what we’re all about and what Andrew was talking about with the dividends and the reinvestment.

Dave (23:15):

That is so key, and that is so vital to creating wealth for yourself. And this is the time that you can take advantage of it. And so that is something that I would encourage you to remember and try to take a lap. You know, Steve jobs talks used to talk about what people would get frustrated when they’re working on a big project. You would tell them to take a leap and try to cool the cooldown and calm down. And that’s something that I think we just need do during this period is you know, remember what you’re trying to do and remember your goals and think about what Andrew was talking about with the dividends. That is going to be your ACE in a hole as we go forward. Because even if the company is the price is down, it’s still going to be a band that dividend, you’re still getting money for that and it’s creating more shares. So when the stock starts to rebound and it will, then things will be, you’ll be in much better shape, and you’ll be like, so anyway, that’s, that’s my thought.

Announcer (24:16):

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Andrew (24:27):

I think it’s something that we need to pound into the head and I’m tried to remove all doubt because I remember sitting at the top of a bull market, it’s straightforward to say, you know, Oh, I wish I had a bunch of money in 2008 2009 because I would’ve backed up the truck. And I think it’s; it’s straightforward to get and get kind of stuck in that without understanding the context of a situation like that. So back then, people thought the whole financial system was going to collapse. And you had this massive kind of former blue-chip stocks collapse and now obviously sent a lot of fear through people and, and they, they just saw kind of like a different world. And so I think when you’re dealing with any bull Mark, or I’m sorry to bear market, there are going to be certain developments that come by that make it hard to buy into these stocks that are beaten up.

Andrew (25:34):

So let’s, let’s give an example. You have the airline stocks, right? This so something that triggered a lot of the selling yesterday. The player in the NBA was finding out he had coronavirus, and then also Trump banning traveled to Europe for a time. So this is an unprecedented thing of action that we’ve never seen before. And so rightfully so to a degree, right? So I have to be careful with my words here, but rightfully so. The market sold off on a lot of the airline stocks because logically, you can just kind of put two and two together, right? Well, there’s a travel ban on flying to Europe. Different airlines have a percentage of their revenues on flights to Europe. So now these different airlines are not going to be able to earn as much this year in profits because of this travel ban. So let’s say I have an airline that flies and it gets 20% of its profit from its flights to Europe.

Andrew (26:43):

So let’s say let’s take a worst-case scenario, and there are no flights to Europe through the end of the year. So to me, if I’m valuing that stock, I’m seeing, Hey, I’m seeing 20% less profit for this year, so I’m going to take 20% off my evaluation. And so that’s where a lot of the selling comes from. Right? And so that does make sense. Like we just kind of walk that through and it’s like, yeah, I think, I think I would agree that 20% less profit this year is, is, is the right target. And so that’s why you’ll see these, this massive sell-off. But what you have to, again, you have to put that ACE in your pocket is the only way that we’re able to, not even like getting advantage of over wall street, but just have like a fighting chance is the fact that we are average investors and if time is our biggest asset and the fact that we don’t have to pick a specific timeline to have a particular performance, well then yes I could be buying into a stock that is going to earn 20% less this year but still be okay purchase it.

Andrew (27:56):

Because I think like Dave has been saying eventually over the longterm, this is good business. And so maybe cash flows and earnings will be kind of tightened, and it’s not going to be as good as previously thought. But once it all falls out, this company should eventually recover. They should finally get to a place like they were at the end of 2019 with lots of profits, and they were buying back all these shares because they just didn’t know what to do with all the cash. Right. So, yeah, we’re not going to be at that place now because real developments are happening, and they are affecting the business negatively, and you will see that with-profits this year. But does that mean over a five 10 15 year time period that that same airline stock is worth 20% less? See, that’s where I would question that part.

Andrew (28:47):

And so what your most significant advantage can be as an investor who is going to compound and build this wealth over time through dividends, who’s not going to panic because you need to hit a certain number this year, right? Or you got to hit a specific performance in two years, or you’re, you’re coming up on an annual bonus on wall street, and you wanted to take that vacation next year. You don’t have to worry about any of that, right? You’re on your timeline. You get to choose, pick and choose where you’re going to buy, where you’re going to sell. And so rather than looking at the negatives of this, if you kind of look at the positives that there’s probably a lot of businesses where yes, they’re going to, they are trading lower for a reason, but at the same time the very longterm it’s okay, there’s a good chance that over the very longterm they can come out from the other side.

Andrew (29:41):

Then that’s where you have to make, that’s I guess the crucial part. You have to make that distinction, and so This is where com having a good understanding of balance sheets and income statements comes in because now if you can pick and choose and you can see, maybe there is one company that did re, let’s say they did well last year with profits and they had a ton of cash, but now, but you know they did it by having so much debt at the same time. Now, if they have a 20% bump in their earnings, they won’t be able to service their debt, and so there’s a chance they could go bankrupt. Now that’s a situation where this 20% loss in earnings could be detrimental, and you and you could lose everything when it comes to that investment. So that’s where knowing the balance sheet to see that I’m buying these stocks that not only have proper brand names, but they also have strong balance sheets, and so they’re not going to be pressed if they don’t earn as much this year.

Andrew (30:49):

That’s a huge, huge, huge, huge important part of this too is you want to make sure you’re buying strong companies and not strong companies because I see them down the street from me and that and I like them but strong because they have the financials to back them up and you have the knowledge to understand those. And so that’s really what’s going to separate like a Lehman Brothers, which was a big name or an Enron, which was another big name versus all the rest that stay. And a lot of times it just comes down to those financials. I agree, and I think

Dave (31:26):

Thinking about the balance sheet and thinking, that’s why Andrew and I talk a lot about these different subjects is because they are essential and they’re crucial to know and to understand how they interconnect and how important they are. And if a company is losing money, and when I’m talking about losing money, let’s say that their revenues are not covering their expenses and so their earnings are negative

Dave (31:55):

It starts to become a problem. It’s, you know, fine and dandy. When everything is going up, and there’s a lot of liquidity out in the market, and they’re able to borrow money and continue their operations, it’s a lot harder when a situation like this occurs, and the market is in such flux and liquidity starts to dry up because there’s no way there’s no bank in the world going to give you money if the company is struggling because they’re not 100% sure that they’ll, you’ll be able to make your payments. And so it’s very, it’s just a straight economic, you know, a transaction. I’m not going to give you the money because I’m not sure you’re going to pay me back. And so some of these companies that have been on the struggle bus as far as their earnings go, somebody like a, you know, a Tesla, for example, they’re not making money.

Dave (32:45):

And so in a situation like this, this is when it becomes hard for a business like that. Snapchat Uber any of those companies that have come out of IPOs recently that have been on the bagel struggle bus as far as trying to make money, they are not making enough money to pay their interest payments on their debts because they’re not making money from their income statement. And so that’s where kind of understanding a little bit about how some of those factors work on the income statement and a balance sheet will come into play when you’re starting to try to find good company bunnies if that’s something that you want to do during this period. And that’s why studying these aspects of the financials of businesses can be a valuable tool in a situation like this. It’s not only trying to find a company that’s undervalued, but it’s also trying to find a company that could be in trouble in a situation like this.

Dave (33:45):

And Andrew mentioned, and he and Ron also said Lehman brothers sometimes when, you know, when we go through a time like this, it can be, I know, again, I don’t want this to sound bad, I don’t mean it to look bad, but sometimes a situation like this can be beneficial because it can wipe away the rot. It can get rid of companies that really shouldn’t be doing what they’re doing. And Wayman brothers were in a horrible spot as was Enron, and they were being run by people that were not doing ethical things, and they were taking advantage of the situation. And we’re running unprofitable companies that were manipulating things such that they were trying to do it for their gain. And when something like this happens, it exposes them like a Buffalo likes to say, you can always tell who’s swimming naked when the tide goes out.

Dave (34:42):

And that’s what happened to those companies. And I’m sure with what’s going on now and if we do slide into a recession, that there will be some companies that you’re going to see you were swimming naked and this will help eliminate them in the long run. And I, you know, it’s, I don’t want that to sound flippant or like a dismissal because people work there and losing a job as a horrible, crappy thing to go through. And all the ramifications of that is it’s never good. But sometimes there are times work; those companies just need to go away. And these are times that some of that stuff can and will happen. But again, going back to the fundamentals, understanding what it is you’re buying, and having a plan are things that can help you save you from getting stuck in some of those situations. Can I make a somewhat possibly controversial

Andrew (35:38):

A statement, which by the way, like the way you broke down, I think people should go back and listen to it again. Like you so simply broke down what everybody on CNBC when they bring in an expert, and they say, Hey, is this company going to make it? And then they get down into all the jargon and stuff. And really at the end of the day, it comes down to what you were saying, you know, are you going to be able to pay me? That’s, that’s the bottom line. So that can kind of boil down where a lot of these companies that are in distress which ones some sort of have an excellent chance to make it through. We want to try to avoid that as much as we can from the onset. But to give an example possibly here, like Robin hood, right? Yeah. So they came in, and they revolutionize the industry, and they kind of changed it for the better for the consumer where they did a lot of things.

Andrew (36:35):

You know, now we have free zero commission trading. That’s awesome. And a lot of the big players followed suit. What that’s done, the ramifications of that is it’s her, a lot of them, so if you own any of the significant brokerages, you had a lot of money taken from you because now those companies aren’t able to be as profitable. So that’s not necessarily a bad thing. That’s just kind of capitalism, right? But when you start to, if we begin to look at their financials, and I don’t know the answer to this, but if it comes down to that, they were able to, you know, how are they able to do zero commissions? And there’s if it’s because they’re just irresponsibly piling on debt to, to make that happen, that’s not sustainable. And that arguably shouldn’t continue to happen because now we’re just penalizing all the other companies who are doing it the right way.

Andrew (37:33):

And you’re penalizing all of those investors, right? So that’s kind of, I think, one way to think of clearing the rot and thinking of the right side of that. And then secondly, which makes me question their financials is the fact that their platform has been notoriously bad. And especially in the past six months, you don’t have to go; you don’t have to look very far on Google to see people who have screenshotted all of these different times, that Robinhood has just stopped working. You know, like while the market’s open and people have thousands, tens of thousands, hundreds of thousands of dollars of trades open and they’re trying to exit them or whatever they’re trying to do, and they’re just not able to do anything cause the app’s broken. The fact that they’ve allowed this crazy kind of margin situations that any decent financial company would not allow. So really, you know, the, it just seems like they’re kind of out of their league a little bit and maybe a little bit too ambitious, kind of like the guy who got too close to the sun.

Andrew (38:43):

So it’s good for those things to flush themselves out of the system because a, if they’re hurting a lot of people in the process, then I don’t think that’s good business, and it’s good again, to get that silver lining behind what, what would go on in this situation like this. I think that could be an excellent example of it being better for everybody. I agree. That’s a fantastic example. Yeah. Robin hood has undoubtedly been in the news for the last couple of weeks and not for good reasons. That’s a, they’ve been on the struggle bus lately with the app not working, and I believe they maxed out to their credit limit as well recently, so that caused some problems. Yeah. So that caused some issues as well. So yeah, it’s been a, has it been a great couple of weeks for them? That’s for sure. Yeah. Before we sign off, I liked this question.

Andrew (39:43):

I thought we could tackle it quickly. Absolutely. So excuse me, I’m on Twitter. Somebody reached out to me and said, I’m new to investing in a single stock, but in mutual funds with an advisor for years, dollar-cost averaging, I’m only using my Roth options. So $6,000 a year. Is it crazy for me to invest 100% of my 20, 20 Roth funds right now with the state of the market, Dave, whether you think no, I don’t think it’s crazy? This would be a time that I would be looking at trying to buy stocks trying to be in mutual funds or ETFs. Right now, it’d be a little bit scary because there’s, you know, a massive outflow from all of those with the market know, crashing, you know, the Fang stocks had been hammered just like everybody else and those are a huge aspect of mutual funds and ETFs.

Andrew (40:39):

So I, yeah, I would be, this would be a time for me that I would definitely be looking at buying individual stocks. I think we’ve been talking about that for the last half an hour or so. So I’m going to play devil’s advocate. I’m not going to do it just for the sake of it because I have a similar, I have a similar situation in my personal life. So I will be taking a lump sum and spreading it out for several months and several reasons. So the first couple of times the market has crashed. I’ve definitely been active and picking up positions, and I’ve done it again, and I did it again today. And each time I’ve done it, the market has continued to fall. And so to kind, I don’t know how to say this in like a PG way, but like to like not to shoot your load all at once and have nothing left.

Andrew (41:42):

I think it could be unfortunate for you from a psychological perspective if you’re hoping to maximize on the bottom, so to say. So I don’t know. Like I don’t think you’re crazy to invest 100% right now. I don’t think you’re insane not to invest 100% and kind of go in overtime like I’m going to be doing. It’s just; it’s hard to say, and to time, it is impossible. And so you just have to be prepared for the fact that it could drop and just continue the job and they could drop for a long time. When you look back at other bear markets, we’re not talking about like a couple of weeks. We’re talking about usually a couple of months, sometimes more. And when, where it stands right now with the Coronavirus, the domestic point of view is that it’s slowed down in China. So that’s great.

Andrew (42:43):

So I think that bodes well for the overall situation. However, it’s just kind of unraveling right now, and we haven’t had any sort of I think a lot more things can close down, and that can help co, and the ramifications are just starting to be felt economically. And so I think that could make this depressing time in the market continue for quite a while. And so that, that part makes me cautious and the fact that I just, as I kind of look over time, it’s, it’s never really been any one stock pick for me. That’s, that’s done the best. It’s always like I spread that as, as I’ve, as I’ve done less concentration and Mara just kind of spreading out my stock picks and diversifying more, I’ve found that those stock picks do well. And so expanding from a stock perspective in the time perspective I, I just, for whatever reason, I’m awful at guessing which stock will be celebrated in the next six months.

Andrew (43:48):

But it’s, the system itself is doing pretty well. So I think from my standpoint, that’s how I look at it. I don’t; I don’t think I have any special timing abilities. And so as somebody who’s trying to buy and take advantage of it at the same time, you have to be okay with understanding. You’re not going to maximize this downturn ultimately. I think it’s impossible to. So try not to freak out if you, if you buy and continue dropping another 20% at the same time. Don’t be surprised if, if this prolongs for quite awhile.

Andrew (44:25):

All right, folks, we’ll, that is going to wrap up our discussion for this evening. I hope you enjoyed our conversation, and I hope you were a thing or two, and I hope You go away with it with a little bit more confidence that you feel like you are under control, and you know what you’re doing. If you guys enjoy the show, please take a moment to subscribe. And if you’re enjoying the show, take a few minutes to give us a review. A five-star review would be fantastic. It helps us go up in the ratings that we can help more people. So without any further ado, I’m going to go ahead and sign this 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 you all next week.

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