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IFB101: Are Value Stocks the Right Investment For a 61-year-old?

Announcer:                        00:00                     Your tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew Sather and Dave Ahern too decode industry jargon, silence crippling confusion and help you overcome emotions by looking at the numbers, your path to financial freedom starts now.

Dave:                                    00:35                     All right folks, welcome to Investing for Beginners podcast. This is episode 101 tonight. Andrew and I are going to talk about a listener letter that we got, and it is a fantastic letter, and she has a great questions, and so Andrew and I wanted to just kind of read through her letter and then just answer those questions for her on the air. So I thought this would be a lot of fun. So Andrew, why don’t you go ahead and start talking about the letter and then we’ll just do our little back and forth thing.

Andrew:                              01:02                     Yeah, I love it. That’s a great letter. This is from Susan G so she starts off. Dear Andrew, I’m on episode 16 of the podcast and I’ve learned more about finance from your program than I did in my years. At B school in the late seventies, Wharton for two years, then decided to switch to a psych degree on the liberal arts side. Wow. That’s quite a compliment. Thank you. I got serious about investing when I returned full time to work in 2009, um, basically built up a four one k summarizing here, uh, until from 2009 to 2017. Okay. And then stopped building out the 401k.

Andrew:                              01:45                     She says I am 61 single and only about a third of the way to where I need to be to even have a modest retirement. I am currently on disability and I’m not sure what his next workwise. So 370 k 401k 62 K and Roth Ira, a hundred k and cash can value investing be part of my solution for current or future and come it appeals to me is consistent with the process part of my brain. Um, maybe, uh, maybe we address this part first. There’s a bunch of questions here.

Andrew:                              02:19                     I guess first thing I would say just before we even get started, uh, Dave and I’ll let you kind of answer this first question, what you think. Okay. Um, I don’t, so I read through the whole leather, I didn’t see any talk about like social security and where that comes in. So I think, you know, a lot of us get this idea that our retirement needs to fund everything. Uh, I know like when I first started out, I forgot about social security. So maybe you know, when you’re planning that out, include social security, like a rough estimate, what you think you’ll get a, maybe include the idea that your house is paid by then hopefully.

Dave:                                    03:00                     Right. So those two things could have a huge impact and then make how much you really need for retirement. A lot less than what people generally think. Um, so other than that, you know, uh, can value investing be part of my solution for current or future income, Dave? Or do you think, uh, I would agree with that. I mean considering you have to consider the impact that social security will have on your retirement because it is going to be income that you are getting now. Is it going to be a lot of money? Uh, generally? No. It’s not going to be like enough for you to live on for whatever your current needs are at the time that you retire. Because generally as you get closer to retirement, you’re going to be earning the most that you most likely will be able to during the course of your lifetime.

Dave:                                    03:45                     So once you go into that change of, you know, hey, I’m not going to go to work today at nine o’clock and I’m just going to go sit on the patio. There’s a change that happens with that. And part of that is, you know, the income is going to be different and depending on how you have your retirement set up, you do have to calculate to that part of it in there. And as Andrew has talked about, you know, a hundred gazillion times about dividends and the impact that they can have on your income. That is one of the ways that you can help yourself is by setting up income streams with your investments and whether it’s through your 401k, your Roth Ira or even just the cash that you have. If you have it in some sort of securities or even bonds or money market accounts or anything like that.

Dave:                                    04:36                     Those are all things that are going to throw off other cash. Now is it going to be tons of money? Maybe, maybe not depending on which ones you can, you can find, but it is still going to be part of the income and you can get, you can count on that part of it as what you’re going to be taking in just like you did if you had a regular job. And I think that’s really what you kind of want to look at. And I absolutely think that value investing could be any part of your solution for current or future income, especially for the future part of the income. Because as you’re finding deals on things, you are going to be able to allow those deals, quote unquote, to mature and they’re going to gain momentum. And gather more and more, not only from the dividends, but also from just the appreciation of the price of that particular stock, whatever it may be.

Dave:                                    05:29                     And you don’t have to have, you know, one big winner. Even if you’ll have 10 modest winners, that’s still going to get you where you want to go. It doesn’t have to be, you know, you buy Amazon when it first comes out because you know that those are hard to find. And I think sometimes people get caught up in the rat race of I have to hit the home runs. You don’t always have to hit the home runs. And if that’s not something that appeals to you or as part of the, as she put a process part of her brain, even if you can find five to 10 consistent winners, that’s gonna put you where you want to be too. You know, you don’t have to have the Mike Trout to win the world series. You can do it with a bunch of other Buster Poseys if you will.

Dave:                                    06:07                     So, I’m sorry, at the slip into baseball, but, uh, I think, yeah, I did. I had to throw that in there. But I really do think that value investing can be part of, of your solution. I mean the two guys that we talk about the most and you know, and look up to the most, you know, Munger’s going to be 95 now and Buffett’s 88, 89 somewhere in that range. So I think they’ve done okay with the value in investing and you know, they’re continuing down that path even though they’re obviously past retirement age, you know, it’s, it’s still something that I think you can use

Andrew:                              06:47                     Oh, 100%. And it doesn’t just apply to stocks too. If you’re the type of person who wants to be more conservative and you can still use a value investing process with bonds rather than stocks. I would say the stock market’s a lot easier to learn and it has a lot less involved because the bond market, um, doesn’t have all the tools, the, all the, all the attention goes to the stock market. There’s not much tension in the bond market. But with the bond market you can get that current income, future income. And as long as the company that you hold in those bonds doesn’t go bankrupt, you don’t, you’ll never lose that investment and you’ll get consistent income from that. And you can use a value investing approach, same as you would for stocks. So you look at the bond coupon, you’ll look at the balance sheet of the company that you’re going to buy a bond in.

Andrew:                              07:38                     And that can be one way. And you know, you can just, you can mix and match. It’s not, I, I liked what Dave was talking about with that analogy about you don’t have to find a home run. You can just do little base hits and it’s exactly the same. You can do a mix of stocks and bonds if you don’t think, you know, we, we’ve talked before and really there’s no guarantees with the stock market and especially the shorter your time frame and time period that you’re looking to invest in the stock market, the more risky it is and the, the higher chance that you’ll lose money. But we’ve talked before, you know, a five year horizons better than the one year and there’s data on this. I wish I remember which episode we, we shared this data exactly, but five year time periods better than one year, 10 years rather than five year.

Andrew:                              08:23                     If you get up to 10 years, your chances are pretty good that you’re going to make money no matter what. As long as you know you’re invest. I’m talking about the total stock market right now, the total average. And then you know, once you get to 20 year time period, there’s never been a 20 year time period of investing in stocks where you lost money. Even like the 2009, that was the one that was the greatest crashes we’ve seen, right? If you had bought 20 years prior, I’m not going to try to do that math right now. But even if you’d bought 20 years prior and you sold right at the worst time in 2009, you still would’ve made money in

Andrew:                              08:55                     the stock market. So there’s no one answer. Um, that’s going to be depend on what timeframe you want a plan for. How much risk you want to take, how comfortable you are with your stock picking skills, how, how that builds over time. But that value investing doesn’t need to be, you don’t have to do it the way I do it. Right. You don’t have to do it the way Dave does it. It’s a personal thing. But 100%, I can say this with full confidence, learning about value investing will be so worth your while.

Dave:                                    09:30                     Absolutely. I totally agree. Yeah. It is going to pay dividends, no pun intended. Over. Yeah. Over, over the long term. Then just about any other, you know, style of learning that you’re going to do. And um, you know, one of the questions she asked here was, you know, should I combine value investing with other strategies? Again, that’s going to come back to your own personal preference and your own personal risk tolerance. And really kind of like Andrew was saying about your time horizon. Everybody has a different clock. And what I think may be bold, you know, Andrew May not, you know, and I’ll give you a perfect example. You know, I took my daughter to a water park just recently and she and I went down there really big slides that, you know, mostly the older kids go down and she was loving it. You know, she is a daredevil. When I was her age, I would have never done that. I would’ve been terrified beyond belief. And so it’s just, you just never know what your tolerances for risk. And I think that has a large bearing on some of the team. You make value investing with other strategies. There are lots of different ways that you can look at value investing. There’s ways that you can look at it and we’re just strictly numbers and that’s all you look at and you just base everything on intrinsic value and that’s what you go with. Or you can look at value investing as I’m going to use, you know, the numbers to figure out a range of what I think a company is worth. And then I’m good.

Andrew:                              10:58                     Okay.

Dave:                                    10:58                     Try to, to in my experience and my intelligence,

Andrew:                              11:01                     okay.

Dave:                                    11:02                     Duct of it. And do I think it’s going to be something that’s going to grow. And those are all things that you can learn as you go along this process. And the thing I love about value investing is a, like Andrew was saying, everybody’s going to do it a little bit differently. Even though Andrew and I are really good friends and we love doing this podcast together, we don’t have the same, we come at it from different, a little bit different angles. We agree on a lot of things, but there are certain things that I like to do that he doesn’t and for a variety of reasons, and it doesn’t mean that I’m right, he’s wrong or vice versa. It just means that we’re up at different, and even if you take Charlie and Warren, they come at it from a different way. Monies per Brian is completely different from the both of them and Guy Spear and just, you can kind of go on and on and on.

Dave:                                    11:42                     They all take a, you know, that that book of the Bible for value investing from Ben Graham and they’ve all kind of branched off from it and they’ve taken a little bit from each of these other things and combined it with what works for their personality and what they’re comfortable with. Because as Charlie said, a book I was reading just recently, it’s really important to you sleep at night and if the, if the stock market is causing you not to be able to sleep at night, then you’re not doing something right. And so, you know, and his, he said, Ian Warren sleep great. So, you know, I think that that is something that you just Kinda have to, you know, she says also here, should I speculate? I personally would not. Um, especially, you know, when you’re closer to the finish line then the beginning of the younger like Andrew is, you know, if you make a mistake, you know, you can roll with it and move on. But you know, as we get closer to the finish line, unless you have a small part of your money you just want to play with then go for it.

Andrew:                              12:40                     But otherwise, no, it needs to, you know, I would, I would be serious about this and I would not take chances and go all in on Uber when it goes public. I mean I just, that’s, that’s a recipe for disaster. 100% of the, just to piggy back one last time on what you were talking about, risk tolerance. I also think that as you get better and you get more knowledgeable, as time goes on and you immerse yourself in the value investing world, you, you start to become more comfortable and you start to know what that risk looks like, what that entails. And, and, and maybe you either become more comfortable with, with risks or you become more confident in the fact that maybe when I first started, I didn’t know how much risk I wanted to take, but now that I’ve learned more and I’ve invested, you know, I’ve had some stocks for a couple months, then you know, now you have a better sense of what your risk tolerance is.

Andrew:                              13:36                     So there’s nothing wrong with investing part of your money instead of all of it. Um, when you’re just first starting out. And I know I certainly did. I started with why one stock, which I bought Microsoft, just one share. I was like $25 at the time. And then I moved on and I think I spent like a couple of hundred here or there. I remember buying Volkswagen, remember buying Corning? Uh, and you know, just, just had a couple of stocks and that was just learning the whole time and just building that confidence over time until I finally got to a point where I did what I do in the real money portfolio of the leather, which is investing $150 a month. Also did that for some time and then when I had a Roth Ira Rollover, then I felt comfortable having those pics follow my eli there, picks as well. So it was all a long process. It didn’t happen all at once. Um, Susan talks about being on episode 16, so I’m assuming she’s relatively newer to everything we have and then everything we teach. So I would really talk about, you know, don’t be too scared about missing out. Don’t, don’t feel that way. There’s no, there’s nothing wrong at all with taking your time and building that confidence over time. So I guess that’s the last thing I would say about that.

Dave:                                    14:52                     Yeah, that’s, that’s a very good point. I really like that. You know, just think of it as building blocks. Every time you learn something new, it goes on top of something else that you’ve already learned. And it helps you understand things better. And it also give you a lot more confidence that you’re doing the right thing and you’re making the right decisions because knowledge is power and the more that you know, the more confident you’re going to be in the decisions that you make. I just, I guess just one little analogy, you think about what it is you do for a living, and if you’ve been doing it for a while, you’re very comfortable with what it is you’re doing. You understand it and you know what you got going on. And when you make a decision by and large, 95% of the time, if not more, you’re confident that you’re making the right decision and it’s simply because you’ve been doing it.

Dave:                                    15:36                     You have the knowledge to, to help you base your decision and make the right decision. So it’s a, it’s the same. It’s the same aspect when you’re thinking about investing in the stock market, it’s just learning, learning and then using that knowledge to help you make your decisions, I guess. So kind of moving on to the next, uh, around of questions, if you will. Uh, she asked to do we buy aristocrats and kings at any price? If not, what is the best measure to use to get it at a discount price to book or some percentage from its 52 week high? What are your thoughts on that, Andrew?

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Andrew:                              16:22                     Okay, so you’ll probably know what I’m going to say. First thing I would say I do, there’s people in the audience to, or timing, they’re raising their hand silently, right? Somebody is in their car and they’re raising their hand as they’re driving on their commute. So we, we did, uh, we did a complete guide on dividend aristocrats, so that was episode four, the nine. We also touched on it, um, when we interviewed Ben Reynolds from Sure Dividend. Um, that was up seven, but dividend keens and dividend aristocrats, just to give you the 32nd pitch here, those are just stocks that have raised their dividends. They have a track record of raising their dividends consecutively for a certain amount of time. So dividend aristocrats, that’s 10 years. Any stock that’s risen, their dividend 10 years consecutively becomes called the Aristocrat. And I can’t remember what the keens are. I don’t know if that’s 25 or 50.

Andrew:                              17:17                     It doesn’t really matter. But you know, these are obviously the ones that we want to buy. These are the most ideal situation. Stocks when you buy, you know, think about spending 100 bucks to buy a stock. When you first bought it, it gave you $3 in dividends and let’s say 10 years later you’re getting like $50 in dividends because they’re just raising it every year. That’s super cool. And you only have to put the money in once and you’ve got this growing income stream. I hope that’s not hard to understand. The problem is, is one, you’re looking at past performance on the stock. So just because you know, there’s no rule in nature that says, well, you know, this stock and this business was able to raise their dividend for 15 years. So that means for the next five years you’re guaranteed an income that also goes up over time.

Andrew:                              18:03                     That’s not what we’re saying at all. And so when you want to look at dividend aristocrats, dividend keens, you have to realize that past performance doesn’t guarantee future results, but you know, it can be a good indicator. So we take that in mind when we’re looking at these stocks. The other thing we want to understand is that just because they have this title doesn’t give them any sort of exceptions. We want to look at them just like any other stock. And that’s what it is. It is a stock. So what happens to stocks that tend to be overvalued while they tend to eventually return to that intrinsic value and, and tend to trade somewhere around there. And I’m talking about, you know, over the very, very long term, I’m not talking about, and Netflix, which has been the overvalued for like six years. I’m talking about maybe Netflix in 20 years.

Andrew:                              18:52                     Right? So you have to understand that yeah, it’s nice to get that increasing dividend, but if you bought it when it was just so over valued, you’ll still lose money on the deal. Even if your income’s increasing over time. So 100%, there is no reason to buy and the rest of craft or a keen at any price, you want to make sure it’s still undervalued. You’re still looking at it the same way as you would with any other stock. And that means taking a value investing approach, investing with a margin of safety, emphasis on the safety, looking for those stocks that trade at a discount to their intrinsic value. Well, how they know what their intrinsic value is. Well, lucky for you, we have over a hundred episodes where we try to talk about that as much as we can. Um, she also asks, if not, what is the best measure to use to get a discount price to book or some percentage from its 52 week high.

Andrew:                              19:44                     And again, that’s not anyone answer. There’s no one special way. I definitely have my method, right? I have the value trap indicator and I use that on every single stock I buy, but it’s not a panacea. Um, I’m making sure that I’m not buying a bad stock, but that doesn’t mean it’s necessarily a good stock. So you want to look at other things and make sure you’re looking at all the metrics. You know, the value of treatment indicator looks at a ton of metrics. It’s not just the price of the book, it’s not just the growth, it’s price to book price to sales, price to earnings. I want to look at the balance sheet, how’s the debt, how’s the cash situation, all those things. So not one easy answer, but luckily kind of goes back to everything we’ve been saying so far today. Take your time, absorb as much as you can and build your skillset and that’s how you’ll give yourself the best chance to find the best stocks. Yeah, that was very well said and really the, I guess the only thing that I would throw out there for helping answer this question or give you an idea of kind of how to go about looking at those.

Dave:                                    20:47                     One of the things that I do with the Aristocrats and Kings is I want to buy them too just like everybody else, but I’m not going to overpay for them. So one of the things that I do is I set up a screener to screen for them every single month and I use it based on the metrics that I learned from Andrew A Long, long time ago and the free ebook that he offers that has a list of all the different metrics and what you can kind of look for with the PE and the price to book and the price to sales and the debt to equity and some of those things. To give you just a rough idea of whether you want to investigate in this company any more. And generally when you use that screener to look for companies, those are going to be companies. How you set, they’re going to be in in some way, shape or form at a discount. Now how much of a discount that that’s going to be, right?

Dave:                                    21:37                     More research that’s going to be involved. But it will give you kind of uh, uh, a playing field. And so if you run all the aristocrats through that screener and none of them come up, then that to me is like, okay, move on to the next month. Just wait, just wait, just wait and eat. That’s really kind of what you want to do because you know, Andrew was right on the money when he said, even if you buy it at any price, it will revert to the means. Statistically. That’s just the way it works is eventually it will revert to the mean and it will go back to what its intrinsic value is at some point. It may happen in six months, it may happen in 16 years, but it will happen. And when that does, you are going to lose money. Even if you are getting a great dividend.

Dave:                                    22:21                     And so it’s not really really where you want to get into. And I think that’s, you know, the simplest way that I could give you to at least give you an idea of whether these companies could be undervalued and would be possibly write for an investment right now with the stock market being as high as it is and with the, you know, the PE ratios for whether it’s a Shiller PE or just a regular sheet, regular PE, those are at all time highs for the history of the stock market. It’s going to be tough to find. The restaurants are kings that are going to be at a discount to their intrinsic value. It’s just, you know, I’m not trying to be Debbie Downer here, but it’s, you know, right now it’s going to be a challenge to find some of those that are at a discount. But it doesn’t mean you don’t try and it doesn’t mean you don’t look.

Andrew:                              23:09                     Yeah. Thank you for that practical example now is excellent. I like, I liked that answer a lot. Thanks. All right. So moving on to the next question, uh, for earnings growth. Uh, am I looking at eps over time? What are your thoughts, Andrew? Okay. So yes, kind of that’s the answer. Um, so I talk, I talk. So growth is something that’s a lot harder to talk about and quantify then value. So everything we’ve talked about so far is value, right? Overvalued to intrinsic value. When it comes to the growth, there’s a million different ways in the million different formulas you can use. And so everybody’s kind of, I guess you can say the same thing about valuation. Everybody’s going to have their own way to do it. So there’s no, there’s no sure fire away. When I do the value trap indicator, that formula looks at eps growth.

Andrew:                              24:09                     So the reason for eps growth and, well, I’m sorry. No, no, no. It looks at, um, net earnings growth. So let’s talk about the differences of that just for a quick second. We’ll get a little technical. Um, net earnings, net income, that’s like the total dollar value. And that’s how it grows over time. So if a company earns $100 billion in profit and you know, next year they do a 120, then they had 20% growth. Right? So the value chopping the cater would see that as a 20% growth on the, on one year. If you look at eps growth, um, what they do with the earnings as they just, they take the shares outstanding into consideration. So, uh, we talked about shares outstanding a lot in the back to the basic series. You can go back up. So 43 is where that starts, but basically, um, shares outstanding and go into the picture. So that can be a good or a bad thing. So the reason why I prefer net earnings is because a company can make their earnings per share look better than their actual net earnings growth simply by spending shareholder money.

Andrew:                              25:22                     So it’s kind of, it’s kind of a, it’s like a double negative in a way. Um, so we saw this recently, 2018 had a lot of it for sure. So we had stock buybacks. So these companies have a bunch of cash, they have a bunch of profits, and instead of reinvesting in the business or giving them back to shareholders and the dividends, they take that and they buy back shares. So that’s good for shareholders because you’re getting higher earnings per share. You’re essentially getting a higher percentage ownership of the company because now there’s less shares. So you, you own a bigger slice of the pie. But if they pay, if they pay, if the, if the company paid too much of a price for those shares, if the stock was already overvalued, well they’re kind of wasting that money. It could’ve been used more efficiently elsewhere, arguably. So, and to kind of add on to that, you can have a company where, well really the company didn’t do much as far as growth, but because they were so aggressive with share buybacks, um, their eps growth looks huge. So everybody thinks that the company has growth when really they’re just buying back shares. You can argue the other way too. And, and I get it, and I’m not saying net earnings is always better than eps. I’m just, these are the facts. Okay.

Andrew:                              26:45                     So that all said, um, so I use the, the value type indicator will, will calculate eps and that’s our, I’m sorry, net net income. And that’s what we’ll use for the formula. What I will do to make sure that, so, so the other thing, um, so if, if a company can make net earnings look bad by buying back shares, I can also make eps look bad by dilating shares.

Andrew:                              27:17                     So just on the one side is a buyback can make ups look better, a dilution can make ups look worse. And again, the same kind of situation where the business could be growing their net income. But you know, the situation is different based on what they’re doing with the shares. And you can also have other arguments for this and other one that go into those. So what I like to do when I’m looking at valley shopping together on stock, cause I like to look at the net, the net income. And then what I’ll do is I’ll look at the earnings per share, but I won’t. Okay. So, so what I’ll do is I’ll look at the, I’ll look at the shares outstanding, right?

Andrew:                              28:00                     So if I see the shares outstanding have gone up or down, then maybe I will take that into consideration along with what the value Chapman Decatur calculated for the net income. And so that’s something you want to do. And so the other thing that I like to look at is shareholder’s equity. And you can do the exact same things with all with that where, um, you can look at book value per share. You can just look at book value. Book value is the same as shareholders equity. So I like to factor that into, I like to look at different time periods. I like to look at one year, three year, five year, 10 year. So there’s not one answer. And I would say my approach is evolving over time. I’m prioritizing different things, but I think that’s the way I look at it is it’s almost splitting hairs in the way.

Andrew:                              28:49                     I think if you have what you perceive as a good business, it has a good business model and makes a great product, it has a good balance sheet and it trades at a reasonable valuation. I think all of those things are 80 to 90% of what you need in order to find a good stock investment. I think we can get as deep and granular or as general as you want with earnings growth, company growth. And again it goes back to what I was talking about earlier, past performance does not guarantee future results. So hopefully that answers the question that I hopefully it wasn’t discouraging. I like looking at that kind of stuff and those numbers and looking at the differences in the metrics. Maybe you don’t and that’s totally okay too. So however you want to go, hopefully I’ve added some color and giving you more to chew on and and give you kind of a push in the right direction there.

Dave:                                    29:42                     That was all great stuff and I think really the only thing that I want to take on that, excuse me is when, when I’m looking at earnings growth, I go about it a little bit differently. Again here, this is, you know, the differences between, uh, what Andrew and I look at is I look at the owner earnings as opposed to just the earning. So I go, uh, I guess a couple of extra steps farther. And again, my view on this has evolved as I’ve read more or is that more and more from Warren Buffet and Charlie monger and some of the guys that I really had got up to as they talk about these things. I’ve evolved some of my thoughts on this and one of the things that I try to take into consideration and just like Andrew was with the different aspects of shareholder equity and those kinds of things, I also try to look at it, where’s the company in its cycle of business?

Dave:                                    30:32                     For example, if I look at a company like Walmart, Walmart has been around for a while and they would be considered, I guess in my mind, more of a stable company that is growing but not growing tremendously fast. Whereas if I look at a younger company that maybe has just come out of the IPO and they’ve been, they’ve been in business or not business, but they’ve been public for like five or 10 years, then they’re still going to be in kind of their infancy and they’re going to be looking to grow as fast as they can. And so their mindset and what they’re trying to do with that company is completely different than what Walmart is trying to do. You know, Walmart has a much different outlook on life because they’ve been around longer. I guess. Think of us as people, you know, when you’re 12 1518 years old, do you think you know everything and you go out there and you try to do everything. When you’re 30 you realize you don’t know everything, but you still want to try to do everything. And when you get to be 50, you realize you don’t know a thing and you can’t do anything because you’re too tired all the time. And you know, so it’s not entirely true.

Dave:                                    31:40                     But you know, it’s the same thing with a company. So when you’re looking at the earnings growth you have to take, I think you have to take some of that into consideration. And I got that idea from uh, the professor Damodaran that I’ve talked about many, many times and he talks a lot about that is he looks at the evolution of the company and where they are in their business cycle, whether they’re a young growing company, whether they’re more of a stable, mature company or whether their company on the decline. And those are all things that you have to take into consideration when you’re looking at the earnings growth of the company. And I think that’s just kind of a, a smart way to do it. And so I, again, I do the same thing they, Andrew does. I’ve tried to look at a shorter time period one or two years.

Dave:                                    32:24                     Then maybe I’ll look to three to five and then I’ll look at 10 years. And other things that I like to try to do, it’s getting a little harder now cause we’re getting farther removed from it. But as go back and look at how the company did during the last big downturn in the market. So during the 2008 to 2010 period. So look at the company and see what they did during that time period. I was just recently looking at Hormel and Walmart and both of them did actually quite well during that time period and that was not surprising but a little bit. And so those are things that can give you a little bit of peace of mind as well as you’re looking at investing in a company because you know, if they do poorly and something that one of the worst downturns in the history of the stock market, then I can give you some confidence that they can kind of weather any other storms that might come their way.

Dave:                                    33:09                     So those are all things that, you know, again, as you learn more and get more experienced, these are different things that you can pick up as you’re going along. So I hope that helps answer that question. Oh yeah, I think it did. Um, can we, is there a chance we can get more clarity on what you mean about your owner’s earnings sometime in the future? Absolutely. Yes. I’m working on a blog post, a, I’ve been working on it for about 17 years. It just seems like that. I will, I will have, I will have that done very soon and then we will be able to talk about that on the podcast as well. All right, well, I speak for everybody who’s listening that we’re all looking forward to it.

Dave:                                    33:49                     All right folks, we’ll, that is going to wrap up our discussion for today. I hope you enjoyed our conversation and picked up a thing or two that you can help, help you learn in your investing. So remember, it’s all about building blocks and it’s all about knowledge. The more you learn, the better you’re going to be. So without any further ado, I’m going to sign us off. You guys go out there and invest with a margin of safety. Emphasis on safety. I have a great week and we’ll talk to y’all next week.

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