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Welcome to Investing for Beginners podcast this is episode 53, Andrew and I are going to take a stab at talking about negative earnings. We had some interesting event happened this week in Andrew and I were having a conversation prior to coming on here today and we wanted to talk a little bit about negative earnings.
Just to kind of give you a little of a bit of a backstory, so last week Andrew sent me a text message telling me that one of the companies that he and I both own had negative earnings on their 10k and this caught me completely by surprise. That was shocking and I had no idea that if that happened and I was a little bit like wow Oh crazy and I was it kind of caught me because it I felt like it came from out of out of the blue.
And I had no idea that that this company had happened and you know I wasn’t paying that close of attention honestly and so something that really caught me off guard and as Andrew and I were talking about it it’s you know Andrew and I see eye to eye on almost everything but in this particular case we differed a little bit on our viewpoints of how we handled it and so it was kind of an interesting snapshot into how value investors think about things and it’s not always exactly the same.
And so I had a different viewpoint and Andrew had a different viewpoint I thought it would be interesting for us to talk a little bit about that tonight so Andrew why don’t you go ahead and tell your side of the story if you will and then I can tell mine.
Andrew: well what is this a divorce are we fighting hardly well let me get my lawyer and we’ll have somebody in between and they can relay this message and then you can calm down think it over maybe take a walk cool off.
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There are a few obstacles that can come up when using fundamental analysis to find stocks with both a solid business model and an adequate margin of safety. One that I noticed when I first started, and that I’ve been receiving numerous emails about from new Value Trap Indicator spreadsheet clients, stem from the inconsistencies of shares outstanding reporting in the annual reports.
Before I explain that further, I want to emphasize the importance of doing the type of analysis that will be presented in this post. A prudent fundamental analysis approach starts with a stock idea (preferably from a stock screener), then involves inputting data from a 10-k annual report into a spreadsheet. From there, use the spreadsheet to calculate important metrics and ratios to help make a decision on a buy or sell.
The “inputting data into a spreadsheet” part is VERY crucial. Though there are plenty of tools that can do this for you, it’s imperative you do this work yourself.
Plugging in the numbers manually is a process that forces your brain to think about what’s going on in the financials. It helps you notice trends as you type them in, and make observations that you might not otherwise make from just a glance.
As you manually input data into a spreadsheet, your brain processes the numbers. It starts to form a picture in your head of the company’s health from its numbers. This is exactly what the financial data from a company does. It’s explicitly telling you what’s going on in the short term and long term of the company. It’s telling you the big picture of a company’s performance as well, but you have to look for it.
This isn’t just some idea in my head either. A famous academic model showed that the human brain learns best in the following ways (from best to worst): teaching –> doing –> hearing –> seeing/ reading. Doing is much more useful than seeing.
I’m also not alone in the idea of applying this to fundamental analysis. Martin Shrekli (yes the famous fraudster now in prison who you have to admit was/ is a master with company financials) posted an instructional video where he mentioned the importance of inputting data manually to “get a feel” for the numbers.
Now we know why we should care about this shares outstanding inconsistency. Let’s examine how it trips up investors. [click to continue…]
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Alright, folks well welcome to Investing for Beginners podcast. This is episode 52 Andrew and I are going to talk about balancing the art and science of intrinsic value.
Today we’re going to talk a little bit about intrinsic value, one of my favorite subjects and Andrew’s as well and this should be a little bit of fun so Andrew why don’t you go ahead and start us off.
Andrew: yeah sure so basically you know we’ve been doing that back to the basic series this one’s going to be admittedly pretty technical so if you’re not as far along maybe skip this one save it for later go back to the back to the basic series. But this is going to be for those of you who are following along starting to look at the intrinsic value of companies trying to figure that out for ourselves and figure out how can we determine when the stocks undervalued when it’s overvalued and really just try to take that process to the next step.
Because on one side it sounds really easy to say just buy low sell high it’s really easy to say buy with a low p/e only to say it’s easy to say a lot of those things but when you really get down to it there’s a just a myriad of different ways you can evaluate intrinsic value. [click to continue…]
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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.
Welcome to Investing for Beginners for podcasts. Today we have another great interview for you today our guest is Alex from Wall Street Oasis.
Andrew: Wall Street Oasis is a website that’s been around for a very long time it’s one of the top websites out there. Resources for people who are looking to get into the financial world particularly when it comes to investment banking, venture capital, kind of that whole space.
That website has a ton of resources about you know whether you want to get in as for your career and like interview tips and all these sorts of things and they really cover just a ton of topics related to investing finance Wall Street and so I’m really happy to bring Alex on the show today. Alex thanks for coming on
Alex: yeah thanks for having me Andrew happy to be here. [click to continue…]
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Welcome to Investing for Beginners podcast, Andrew and I are going to do a little blast from the past today. We’re going to talk to our second guest actually when we started the podcast. We’re going to have Braden from Stratosphere Investing talk to us tonight, this is going to be a lot of fun Braden is going to catch us upon what he’s been up to and see all the crazy things that he’s doing so without any further ado. Andrew and Braden why don’t you guys started us off.
Andrew: yeah Braden welcome to the show I think it’ll be very interesting for everybody because last time we talked to you were still beginner kind of. With a lot of different questions and seem like you’re forming an approach and a lot of intelligent questions.
You could tell that a lot of the basics were digested and it was just about finding exactly where you were comfortable and then actually getting that experience in the market.
Take us through how you got started and how you’re able to evolve your approach to now. We talked before the show about how you’ve had some fantastic returns with your stocks lately so kind of walk us through that.
Braden: yeah that’s right well thanks for having me on guys. I’m Braden Dennis and wow what a journey it’s been I guess since even before even before this show to now and kind of I guess midpoint where I came on the show for the second episode I had already kind of digested like you said that we get the basics my questions won’t come and just you know where do I start?
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