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HEY! DID YOU KNOW…


  • The median age in the U.S. is 36.8
  • The median income in the U.S. is $51,939
  • The average 401k match is $1 for $1 up to 6%

A 36.8 year old investing 10% of their $51,939 income with a $3,116.34 match:
With just average stock market returns of 10% would have $1,114,479.31 by retirement.

Join 10,300+ other readers who have learned how anyone, even beginners, can easily make this desire a reality. Download the free ebook: 7 Steps to Understanding the Stock Market.




IFB56: New 2018 GAAP for Marketable Securities Will Inflate Earnings


marketable securities

 

Welcome to episode 56 of the Investing for Beginners podcast. In this week’s episode we’re going to talk about something that Warren Buffett dropped in his latest shareholders letter and he was also mentioned on a video on CNBC that was released recently and this is relating to new GAAP figures that are going to potentially inflate earnings figures and we’re going to dive into that.

Andrew is going to start us off and talk a little bit about some of the background and then we’re just kind of go back and forth, so Andrew one should go ahead and start us off there big guy.

  • New GAAP accounting rule will affect financial institutions, like banks, insurance companies.
  • This new rule could inflate earnings for said companies.
  • Isn’t the first times accounting rules have changed
  • If you invest in these types of companies you need to be aware as the rule takes effect.

Andrew: yeah sounds good and like my M.O. for this podcast has been kind of to hate on CNBC. I just have to say like they put up a new video series and it’s probably the best thing on YouTube other than my own stuff obviously.

Okay great there they did like three hours with Warren Buffett on Squawk Box and edit it down and I think it’s about an hour to an hour half of the content on their YouTube channel right now and this was back in I think early February’s when they interview him mid-February is when it was released so he’s that’s straight from the Oracle himself talking about some of the stuff we saw with Bitcoin a lot of the market volatility we saw at the beginning the year and most importantly.

[click to continue…]

IFB55: The Worst Money Advice that Beginners Always Hear

 

money advice

Welcome to episode 55 of the Investing for Beginners podcast.  Tonight Andrew and I are going to discuss some of the worst money advice you can get.

  • Invest 10% of your income
  • Investing in a quick fad to make money quickly
  • Try to get to cute and taking on more complexity just for the sake of it.
  • Buy a ETF index fund and be done with it.
  • Don’t get caught up in all the hype of the market.
  • Budget till it hurts

Andrew: yeah so I kind of I kind of made a list here. It’s kind of long try that keep it I’ll try to be concise but you we always know how that goes right so.

You see all the time and the more that time goes on the more and more people go to the internet looking for advice on how to handle their money a lot of times you’ll have people talk about hey I got $20,000 I got $40,000 maybe I have an inheritance what should I do what should I do what should I do? [click to continue…]

How a Stock’s Total Assets Can Be Evaluated for Higher Potential Returns

Total assets are a very important component of a company’s balance sheet. Without assets, a stock can’t create earnings, which are fundamental for growing the stock price over the long term.

While the concept of earnings and P/E ratio seems like a relatively easy concept to grasp for most investors, the idea of investigating where those profits come from tends to get lost. The balance sheet and breakdown of total assets is a little bit more involved than a breakdown of a company’s revenue, expenses, and profit—and involves more financial jargon-type terms.

This blog post will fix that today and hopefully give investors, who wish to do fundamental analysis themselves, a broader understanding of exactly what is comprising of a company’s total assets and if these numbers indicate a strong financial position or not.

total assets

An asset, in basic terms, is a store of value. That $100 bill is an asset. Your house is an asset. Yes, your car is an (depreciating) asset.

Ok, well we all know that, right? What about the assets of the stock you’re about to buy?  [click to continue…]

IFB54: Company and Industry Maturation in the Stock Market

 

industry maturation

Welcome to Investing for Beginners podcast this is episode 54. Andrew and I are going to talk about the maturation of different industries. We’re going to discuss how when you’re looking at companies to invest one of the things you want to look at is
how the industry that it’s in is maturing and what stage of growth they might be in along that path.  Without any further ado, I’m going to turn over to Andrew and he’s going to get us started.

Andrew: thanks Dave, this is something that actually really haven’t read anything about when it comes to investing and everything it’s just one of those things I kind of noticed as I was looking through financial statements, kind of trying to observe like how different stocks kind of move throughout the years.

I’ve done a ton of research and a post on my blog about companies that have failed also companies that have really succeeded and looking at the financials and trying to piece together what happened in the very beginning and then how did it play out as the years went on and I’m sure this is probably like common sense stuff for I don’t know business majors econ majors whatever.

But we’re DIY investors and we’re just trying to soak in as much information as we can and  it’s good to keep our eyes open try to be observant in a similar fashion to one of the previous episodes where I talked about unconventional investing rule to have for your portfolio I figured this would be kind of another cool thing to discuss and talk about. [click to continue…]

IFB53: Dave and Andrew Debate Negative Net Income (Earnings)

 

negative net income

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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Inconsistency with Shares Outstanding in Company 10-K Annual Reports

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.

shares outstanding

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…]

IFB52: The Art of Finding Undervalued Stocks

undervalued stocks

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…]

IFB51: Investment Banker Turned Entrepreneur Talks Financial Freedom

 

investment banker

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…]

IFB50: Discussing the Popular FANG Stocks Interview with Braden Dennis

 

fang stocks

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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IFB49: The Massive Potential of Undervalued Dividend Aristocrats

dividend aristocrats

Welcome to episode 49 of the Investing for Beginners podcast. In today’s show, Andrew speaks to Nick McCallum from Sure Dividend.

You might remember Ben Reynolds from episode 7; Ben’s the founder of suredividend.com.  Nick writes for him, and together they are starting a new podcast called the sure investing podcast. And so you know I’m kind of friends with Ben, and we’ve been going back and forth so I thought it’d be a good time to release this episode.

This interview that I’m going to do here with Nick around the same time that Ben and Nick are releasing their podcasts out into the world. It would be a great opportunity for you guys to check them out and if you’re at all interested in dividends you can listen to Ben’s interview, we did in episode 7.

Listen to today’s interview and get a lot of insights on the power of basically combining value stocks and dividend stocks and creating the best types of compounding interest and wealth that you can.

Andrew: To start off first off thank you, Nick, for coming on.

Nick: my pleasure I’m excited to be here.

Andrew: and one of my favorite articles you wrote it is called the better investment dividend stocks or growth stocks. I love that idea because especially in today’s environment everybody, and it doesn’t matter what asset class we’re talking about. Everybody wants to gravitate towards capital appreciation everybody wants to talk about what has doubled what’s tripled what’s could triple. [click to continue…]