In this episode of the Investing for Beginners podcast, Dave welcomes Thomas Chua, the founder of Steady Compounding, to discuss the principles of long-term investing. Thomas shares his journey from discovering investing through books to building a successful investment philosophy centered on steady compounding. Tune in to learn why focusing on the fundamentals, understanding economic moats, and valuing businesses conservatively are key to achieving sustained financial success.
[00:00:00] – Introduction
- Dave introduces Thomas Chua, founder of Steady Compounding, and shares his excitement about having Thomas on the show.
[00:00:46] – Why Invest in Stocks?
- Thomas explains why he chose to invest in stocks over other assets like real estate or Bitcoin, influenced by his reading of “Rich Dad Poor Dad.”
[00:02:40] – Influential Investing Books
- Thomas discusses key books that shaped his investment philosophy, including Warren Buffett’s letters, “One Up on Wall Street” by Peter Lynch, and “The Joys of Compounding” by Gautam Baid.
[00:05:08] – Why Steady Compounding?
- Thomas explains the concept of steady compounding and why he prefers this approach to get-rich-quick schemes.
[00:08:38] – Thomas’s Background and Motivation
- Thomas shares his personal background, including growing up in poverty, and how it motivated him to pursue financial independence through investing.
[00:11:40] – Pitfalls for New Investors
- Discussion on common mistakes new investors make, such as checking stock prices too frequently and getting swayed by market narratives.
[00:17:05] – Investing in Resilient Businesses
- Thomas emphasizes the importance of investing in businesses with strong fundamentals and the ability to recover from temporary setbacks.
[00:22:19] – Analyzing Companies
- Thomas outlines his process for analyzing companies, including the importance of understanding a company’s total addressable market (TAM) and economic moat.
[00:27:01] – The Importance of Being a Generalist
- Thomas argues that being a generalist in investing allows for a broader understanding of multiple factors that contribute to a company’s success.
[00:31:02] – Evaluating Brands
- Discussion on the current state of brands like Nike and Starbucks, and the challenges they face in maintaining brand strength.
[00:34:55] – The Role of Valuation
- Thomas shares his approach to valuation, stressing the importance of keeping it simple and being conservative with growth projections.
[00:43:43] – Constructing a Portfolio
- Insights into how Thomas builds his portfolio, including his strategy of buying in tranches and diversifying across 15-20 stocks.
[00:50:33] – Exciting Investment Opportunities
- Thomas talks about his current interest in finding opportunities outside the “Magnificent Seven” and his analysis of companies like PayPal.
[00:52:12] – Writing and Communication Skills
- Thomas shares tips on how he developed his writing skills to effectively communicate complex investment concepts.
[00:54:38] – Where to Find Thomas Chua Online
- Thomas shares how listeners can connect with him through his website, SteadyCompounding.com, and social media platforms.
Get more from Thomas:
Blog: Steady Compounding
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You can find the transcript of today’s show below:
