{"id":10407,"date":"2020-04-30T00:30:00","date_gmt":"2020-04-30T04:30:00","guid":{"rendered":"https:\/\/einvestingforbeginners.com\/?p=10407"},"modified":"2022-06-01T15:46:49","modified_gmt":"2022-06-01T19:46:49","slug":"economy-basics-pt1-what-will-covid-affect-podc","status":"publish","type":"post","link":"https:\/\/einvestingforbeginners.com\/economy-basics-pt1-what-will-covid-affect-podc\/","title":{"rendered":"IFB149: Economy Basics Pt1 &#8211; What Will Covid Affect"},"content":{"rendered":"<div class=\"powerpress_player\" id=\"powerpress_player_8377\"><!--[if lt IE 9]><script>document.createElement('audio');<\/script><![endif]-->\n<audio class=\"wp-audio-shortcode\" id=\"audio-10407-1\" preload=\"none\" style=\"width: 100%;\" controls=\"controls\"><source type=\"audio\/mpeg\" src=\"http:\/\/traffic.libsyn.com\/investingforbeginnerspodcast\/IFB149pt2.mp3?_=1\" \/><a href=\"http:\/\/traffic.libsyn.com\/investingforbeginnerspodcast\/IFB149pt2.mp3\">http:\/\/traffic.libsyn.com\/investingforbeginnerspodcast\/IFB149pt2.mp3<\/a><\/audio><\/div><p class=\"powerpress_links powerpress_links_mp3\" style=\"margin-bottom: 1px !important;\">Podcast: <a href=\"http:\/\/traffic.libsyn.com\/investingforbeginnerspodcast\/IFB149pt2.mp3\" class=\"powerpress_link_pinw\" target=\"_blank\" title=\"Play in new window\" onclick=\"return powerpress_pinw('https:\/\/einvestingforbeginners.com\/?powerpress_pinw=10407-podcast');\" rel=\"nofollow\">Play in new window<\/a> | <a href=\"http:\/\/traffic.libsyn.com\/investingforbeginnerspodcast\/IFB149pt2.mp3\" class=\"powerpress_link_d\" title=\"Download\" rel=\"nofollow\" download=\"IFB149pt2.mp3\">Download<\/a><\/p><p class=\"powerpress_links powerpress_subscribe_links\">Subscribe: <a href=\"https:\/\/itunes.apple.com\/us\/podcast\/investing-for-beginners-podcast-your-path-to-financial\/id1210741497?mt=2&amp;ls=1#episodeGuid=https%3A%2F%2Feinvestingforbeginners.com%2F%3Fp%3D10407\" class=\"powerpress_link_subscribe powerpress_link_subscribe_itunes\" target=\"_blank\" title=\"Subscribe on Apple Podcasts\" rel=\"nofollow\">Apple Podcasts<\/a> | <a href=\"https:\/\/einvestingforbeginners.com\/feed\/podcast\/\" class=\"powerpress_link_subscribe powerpress_link_subscribe_rss\" target=\"_blank\" title=\"Subscribe via RSS\" rel=\"nofollow\">RSS<\/a><\/p>\n<p>Announcer (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=0.3\">00:00<\/a>):<\/p>\n\n\n\n<p>You&#8217;re tuned in to the Investing for Beginners podcast.\nFinally, step by step premium investment guidance for beginners led by Andrew\nSather and Dave Ahern. To decode industry jargon, silence crippling confusion\nand help you overcome emotions by looking at the numbers. Your path to\nfinancial freedom starts now.<\/p>\n\n\n\n<p>Dave (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=41.46\">00:41<\/a>):<\/p>\n\n\n\n<p>All right folks, welcome to Investing for Beginners\npodcast. Tonight Andrew and I have been talking, and he thought we would do it\nall basics of the economy. So we haven&#8217;t taught, we&#8217;ve touched a little bit on\neconomics in the past, and we thought maybe this would be a good time\nconsidering everything that&#8217;s going on with the economy in the world that\nthere&#8217;s going to be some dues of different things happening over the next six\nmonths to a year plus that the talking heads on the news, we&#8217;ll talk about\nthings and it might upset people a bit. And so we thought maybe we could spend\na little bit of time and talk about some of those issues and some of the things\nthat are going on and help clear things up a little bit so that when you come\nacross things you, it helps ease your mind a little bit. So Andrew, why don&#8217;t\nyou go ahead and kind of start us off, and we can chat a little bit about this.<\/p>\n\n\n\n<p>Andrew (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=89.58\">01:29<\/a>):<\/p>\n\n\n\n<p>Yeah, sure. I think it&#8217;s very important to kind of\nunderstand the economy and the right context. Obviously, as investors, we are a\nbig part of the economy and what the comment, what the economy does is going to\naffect the businesses we own, the businesses in our portfolios, and how they\nperform.<\/p>\n\n\n\n<p>Andrew (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=109.12\">01:49<\/a>):<\/p>\n\n\n\n<p>And so I think it&#8217;s very easy as an investor to get caught\nin our little sliver of, well I have this business, I have that business. And\nthen you kind of take what you hear on the news, take what you hear, what you\nsee from the different publications, and you get little snippets from it, and\nthat&#8217;s great. But if you don&#8217;t understand the big picture and you don&#8217;t zoom\nout and try to get a grasp of that, I think sometimes looking at that can be\nmore harmful than helpful. So as an example, it&#8217;s very easy for us to look. So\nif you&#8217;ve listened to our podcast at all, you know that I am very, very big on\nlearning from the past and trying to understand that things move in cycles and\nthings that happened in the past tend to happen again, sometimes in a different\nform.<\/p>\n\n\n\n<p>Andrew (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=171.28\">02:51<\/a>):<\/p>\n\n\n\n<p>So history doesn&#8217;t necessarily repeat, but it tends to\nrhyme. And so it&#8217;s very easy for investors to make simplified ideas and make\nbig investment decisions out of those. And those don&#8217;t always turn out in the\nbest way. So as an example, let&#8217;s take the housing boom and bust as an example.\nSo back in the mid two thousand, the context up to that point was that housing\nalways goes up because that was what every investor and person who was a\nhomeowner knew at the time. That was reality. As we found out later, that&#8217;s not\nthe case, and the housing market can crash. And so what I see with investors\ndoing now with the whole coven situation, the economic uncertainties all\nbrewing there around that is they&#8217;re taking lessons from that boss and trying\nto apply it to today directly. And some making decisions or predictions or\nprojections based on what happened then all that&#8217;s got to happen now.<\/p>\n\n\n\n<!--more-->\n\n\n\n<p>Andrew (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=247.29\">04:07<\/a>):<\/p>\n\n\n\n<p>And that&#8217;s just not the case. And I&#8217;m hoping that our\nepisode today will, will give some context into why it&#8217;s not, it&#8217;s not that\nsimple. I mean, maybe at first it might sound kind of discouraging because it&#8217;s\nnice to have a general simple idea that you can apply and then it&#8217;s like, okay,\nwell I&#8217;ll have to think about that anymore. That&#8217;s nice. But that&#8217;s not always\nthe case where we live in a changing world. I think seeing what&#8217;s, what&#8217;s\nhappened with the current virus and how that&#8217;s completely changed the way that\neverybody behaves. All of our daily habits, our daily routines, it&#8217;s just been\nlife-changing, and we&#8217;re starting to see it now with some of the economic data.\nThe unemployment claims were the first to explode. Now, as of today, when we&#8217;re\nrecording this, we had some bad manufacturing data, and so that&#8217;s just going to\ncontinue. We need to, as investors understand that this is a completely\ndifferent reality right now.<\/p>\n\n\n\n<p>Andrew (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=320.34\">05:20<\/a>):<\/p>\n\n\n\n<p>All we know as we record this, we&#8217;re still in the\nmandatory lockdown. And you know a lot of businesses are struggling from that,\nand we just don&#8217;t know when that&#8217;s going to end that we don&#8217;t know how long\nthat&#8217;s going to take if it&#8217;s going to be an instant rebound or if it&#8217;s going to\nbe slow and drawn out over time. And so there are a lot of implications behind\nthat. And my big fear is for an investor who&#8217;s starting to out to maybe not\nrecognize the perils behind that because this is true, I mean, I&#8217;ve been in the\nmarket since 2012, and I haven&#8217;t seen anything like this. Still, you have\ninvestors like Warren Buffet, who&#8217;s been in the market since 1965, and he&#8217;s\nsaying he&#8217;s never seen anything like this. And so what we need to understand,\nwhether you&#8217;re beginner, somebody who&#8217;s had some success, is that you can&#8217;t\njust take at this point because the environment has changed so much.<\/p>\n\n\n\n<p>Andrew (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=382.57\">06:22<\/a>):<\/p>\n\n\n\n<p>You can&#8217;t just take financial data that happened in the\npast, extrapolate that into the future, and feel good about your investments. I\nwould say, you know, Dave; we were talking about this off the air a little bit.\nI would say in like 95 to 99% of the time of an investment, typical investment\nenvironment; you&#8217;re generally okay to look at last year&#8217;s data. And you know,\nnot just last year was maybe the past three years, five years, different periods\nin the past, depending on which metrics you&#8217;re looking at. But in general, you\nknow, taking some group of those numbers and, and it&#8217;s reasonable to say that\nnext year, you know, we should see something similar. Maybe, there&#8217;s going to\nbe a dip. You know, maybe there&#8217;s, there are some headwinds as they call it in\nthe industry. Maybe there are some difficulties ahead for the business, and\nthat&#8217;s maybe why it&#8217;s trading so cheaply.<\/p>\n\n\n\n<p>Andrew (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=443.17\">07:23<\/a>):<\/p>\n\n\n\n<p>But in general, you know, it&#8217;s, it&#8217;s not like what we see\ntoday where you have businesses that are losing 25 50% 75% 90% of their demand\njust instantly vanished. And that&#8217;s going to have huge, huge implications. And\nso not only does it, you know, I think it&#8217;s easy for investors to think about the\nobvious ones, travel, hospitality, restaurants, food service you know, there&#8217;s\na, there&#8217;s a ton of others that I&#8217;m missing that are directly affected, but we\nalso need to understand that this trickles down. It turns into this butterfly\neffect, and that spreads out and touches everything all around us in one way or\nthe other. And so, you know, I don&#8217;t think it&#8217;s necessarily the most critical\nthing to do. Still, I think, I think it&#8217;s very beneficial as an investor if you\nhave an understanding and a basic grasp on how all of the different crazy\nevents that are happening around this could potentially affect the economy and\nat least understand why certain things happen as a result of other things. Once\nyou start to understand that flow through and the fact that some of these\nthings do happen in a logical sequence, I think that brings a lot of comforts.\nI think it makes it easier to invest and provides an of windows<\/p>\n\n\n\n<p>Dave (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=536.01\">08:56<\/a>):<\/p>\n\n\n\n<p>Of opportunity for great investment ideas. I think this is\nthe very best time, Dave; we&#8217;ve talked about this is the time to value\ninvestors will make their money. But it&#8217;s not going to be, in my opinion,\nthat&#8217;s not going to be the investors who are blindly following formulas right\nnow. It&#8217;s going to be the ones who can intelligently make the right judgment\ncalls, still look for stocks that are undervalued, but look for them that have\nthe greatest potential based on what&#8217;s going on in the economy. I would agree.\nI think that that&#8217;s a great point, and I enjoyed, you know, you and I have\ntalked about this over the last few days about some of the continuity of how\ndifferent things are interconnected and the impact that they can have. And it&#8217;s\nnot just about looking at the numbers and seeing that a company has a three PE\nright now when they normally run a 22 PE and thinking, you know, that&#8217;s how\nincredibly undervalued that isn&#8217;t.<\/p>\n\n\n\n<p>Dave (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=599.34\">09:59<\/a>):<\/p>\n\n\n\n<p>Yeah, it may be. But then it&#8217;s also on the same token with\nthat; there is the fact that it&#8217;s also because it&#8217;s a three PE because they\nhaven&#8217;t been able to sell anything to anybody for the last five, six, seven\nweeks. And you know, depending on where you are in the country, that could go\nlonger, and that has a direct impact. And we have seen some of that just with\nthe early signs of the earnings releases that have been done recently. And as\nwe get farther into the earning season for the first quarter, that will be\nsomewhat telling, but the second quarter of the earnings is going to be the\ncomplete unveiling of how impactful a lot of this has been. And remarkably the\nmarket has still gone up a little bit over the last, not this week, but the\nweeks before on a lot of bad news.<\/p>\n\n\n\n<p>Dave (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=659.49\">10:59<\/a>):<\/p>\n\n\n\n<p>And I think there is, I saw a, a feed on Twitter just\nrecently where they&#8217;re talking about whether this is the bottom or not. And I\nkind of in, I think I&#8217;m in the camp of a lot of those guys. I don&#8217;t think that\nwas the bottom. And I think we&#8217;re going to see more and I think it&#8217;s going to\ngo lower. And I think that there&#8217;s going to be more impact because eventually\nsome of these things that we&#8217;re talking about, they just can&#8217;t be ignored. And\nDisney is shutting down its parks for months at a time that is going to have an\nimpact on other lines of the business and other parts of the business that are\ninterrelated with that. And it&#8217;s not just about the employees that are being\nlet go, which is a horrible thing. And those poor people having to worry about\nall things that everybody else is going through.<\/p>\n\n\n\n<p>Dave (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=715.58\">11:55<\/a>):<\/p>\n\n\n\n<p>And then you also have the suppliers that are supplying\nDisneyland with all their belongings, whether it&#8217;s clothing wear, whether it&#8217;s\nthe toys that they play with, whether it&#8217;s the work, the maintenance of the\nequipment, whether it&#8217;s the food that is sold there, the hotels that are on the\nproperties. I mean, there&#8217;s just so many other aspects of this. And I think\nthat&#8217;s probably where you, and I should probably start talking a little bit\nabout some of this. So I know you had some great ideas about some things we\nwere talking about. So why don&#8217;t you kind of take it from there.<\/p>\n\n\n\n<p>Andrew (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=749.621\">12:29<\/a>):<\/p>\n\n\n\n<p>I don&#8217;t know about great ideas, but I think to continue\nwhat you were talking about, you know, you mentioned Disney, and I mentioned a\ncouple of weeks ago about the documentary I&#8217;ve been watching. I want to mention\nthat again. I mean, maybe for selfish interests too, since I&#8217;m a Disney\nshareholder, you can watch it on the Disney plus app. It&#8217;s under that geo\nversion. Will Smith narrates it. I think it&#8217;s fascinating. They call it one\nstrange rock. And in it, they&#8217;re describing how everything on the earth is so\ninterconnected. And what happens in one place can affect something completely\nacross the globe. So you&#8217;ll have sand storms in the Middle East, and those will\nget those sand particles will get shot up into the atmosphere, move through the\nclouds, drop down into the Amazon river and South America, and be used as\nfertilizer.<\/p>\n\n\n\n<p>Andrew (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=809.29\">13:29<\/a>):<\/p>\n\n\n\n<p>And then from there, you have precipitation that comes up,\nit gets shot up through the Amazon river. That&#8217;s not the river on the ground,\nbut the river in the clouds, then it goes through hits. I think it&#8217;s the Andes\nmountains. And then as that water breaks through the rock, it releases minerals\ninto the stream and then that goes out. And that&#8217;s just so fascinating to see\nhow everything feeds on each other. And so I think when we look at the economy,\nwe need to understand that it happens in a very similar, if almost exact, a\nsimilar way. There are these things that directly affect other things. And so,\nsometimes you might have as an example, the interest rates that went down to\nzero. We&#8217;ve had super-low interest rates in the past, and I think a lot of\npeople think about again going back to what I was talking about with the\nmortgage crisis, the housing crisis, there was this idea in the past that we\nhad low-interest rates and then declining interest rates.<\/p>\n\n\n\n<p>Andrew (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=883.72\">14:43<\/a>):<\/p>\n\n\n\n<p>Then people look at the environment now, and they say\nthat, well, you know, housing demand&#8217;s going to dry out just like it did then.\nAnd you know, I don&#8217;t necessarily think that&#8217;s 100% true. I think it&#8217;s all, you\nknow, it&#8217;s, it&#8217;s possible. I think it has a direct impact on housing demand,\nbut to look at the interest rate environment and just say in this silo low-interest\nrates are falling interest rates mean that we are going to have a housing\ncollapse because it happened ten years ago. It&#8217;s going to happen today. I just,\nI don&#8217;t think that&#8217;s the case. You know, you could have a hurricane on one side\nof the globe, and it causes a tsunami on the other side, but then the next time\nthere&#8217;s a hurricane, there could be no tsunami. And so while everything&#8217;s\ninterconnected and the economy, everything&#8217;s also ever-evolving.<\/p>\n\n\n\n<p>Andrew (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=937.53\">15:37<\/a>):<\/p>\n\n\n\n<p>And so I guess to hammer my point from earlier, just\nbecause something happened a certain way in the past, it doesn&#8217;t mean it&#8217;s\ngoing to happen exactly that way in the future. So if we can get ahead of the\ncurve by understanding what&#8217;s changed, that&#8217;s the key I think, is that it&#8217;s\nconstantly evolving, constantly changing, just like the earth is. So if we can\ndo some logical, critical thinking on what&#8217;s different in the environment today\nthat can help understand where the money is flowing and what parts of the\neconomy might boom versus others compared to where it&#8217;s been in the past. So\nthe example that I found fascinating today is that we have different\ncommodities and commodities are for somebody who&#8217;s completely unaware of the\ncommodity market. You have the things that are just EV; they&#8217;re used for\neveryday things, corn, soybeans, wheat.<\/p>\n\n\n\n<p>Andrew (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=1000.59\">16:40<\/a>):<\/p>\n\n\n\n<p>Oil has been a super hot topic lately. All of these things,\nI think we presented a good intro in the archives we talked about entering the\ncommodities. All of these things have a huge impact on the economy, and we\ndon&#8217;t necessarily realize it all of the time. One thing that&#8217;s been interesting\nlately, which I&#8217;m going to be looking deeper into in the days that follow is,\nyou know, tell me if you think this is a coincidence. Okay. We have, India\nsuddenly has a liquidity crisis and one of the stocks I own, they have their\nfunds which were invested in corporate bonds in India, and they&#8217;ve had the, my,\nmy stock that owns these funds, how to close five of their funds that have a\nlot of capital in India because of this lack of liquidity. Now at the same time,\nyou have rice, the rice, the commodity of rice has shot up.<\/p>\n\n\n\n<p>Andrew (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=1067.1\">17:47<\/a>):<\/p>\n\n\n\n<p>It&#8217;s been the hottest commodity. I don&#8217;t know, compared to\ngold, but compared to all the other commodities, it&#8217;s had the hot, hottest rise\nin the past six months, if not more. So, you know, how much has that people\npanic buying the rise of the grocery stores, but at the same time, the biggest\nexporter of rice in India. Now, if we can take that one step further, and what\nI find most interesting is that India is also, their second-biggest export is\nsugar. So if they&#8217;re having problems, and I don&#8217;t know if this is true or not,\nlike I said, this is just one example of something that&#8217;s happening around us\nthat could make for an interesting investment opportunity in one place or the\nother. If India is having problems exporting their rice, then are they going to\nhave a problem exporting their sugar? And what&#8217;s that going to do to the price\nof sugar? Hard to say. But I think if you start digging, you&#8217;ll find more and\nmore answers and it could lead to some interesting developments that can help\nyou kind of think about where some other opportunity,<\/p>\n\n\n\n<p>Announcer (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=1142.89\">19:02<\/a>):<\/p>\n\n\n\n<p>Hey you, what&#8217;s the best way to get started in the market?\nDownload Andrew&#8217;s free ebook at <a href=\"http:\/\/get.einvestingforbeginners.com\/podcast-pdf\/\">stockmarketpdf.com<\/a>;\nyou won&#8217;t regret it.<\/p>\n\n\n\n<p>Andrew (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=1155.39\">19:15<\/a>):<\/p>\n\n\n\n<p>I think it is fascinating. So Would the sugar then affect\nsomebody like Coca Cola or Pepsi? You know, anybody who uses sugar, so then you\nstart to think, does that start to erode their competitive advantage compared\nto other non-sugar alternatives? Right. Because now if it&#8217;s a lot more\nexpensive for them to manufacture, either their margins have to compress, or\nthey&#8217;re going to have to raise prices. They raise prices. How many people are\ngoing to switch because they&#8217;re like, I don&#8217;t want to pay that much for a soda?\nRight. Yeah, exactly. I think that&#8217;s, to me, that&#8217;s what&#8217;s fascinating about\nthis and you, you have to think beyond just the normal functions of the\nbusiness and what&#8217;s going on with the company. You kind of have to think along\nthe, I guess, supply chain of what it is that they buy. I guess it showcases\nreading the risk section of the 10 Ks can be beneficial during this period\nbecause it can give you an insight into what different aspects of the business\nare affected by other aspects of the economy around you. Have you seen what&#8217;s\nhappened with the prices of exit? I don&#8217;t know if that&#8217;s a local thing to me,\nbut at prices around here have shot through the roof. Just like at the grocery\nstore. Yeah, I did. I did notice that. Yeah. I did notice that the last time I\nbought eggs a couple of weeks ago, I thought, wow, they&#8217;re really expensive.\nWhy are they still expensive? That was odd.<\/p>\n\n\n\n<p>Dave (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=1248.25\">20:48<\/a>):<\/p>\n\n\n\n<p>It caught me off guard. We were talking about beef\nearlier. I think that&#8217;s something that a lot of people don&#8217;t think about. The\nimpact that it&#8217;s having on the beef industry with all the restaurants being\nclosed. I mean you think about like, you know, my comment was hamburger. I\nthink people are still going to buy hamburgers cause they use it for so many\nother things besides just a hamburger. But something like chicken wings, those\nare more restaurant-specific. I don&#8217;t know a lot of people that cook chicken\nwings at home. Maybe they do. I don&#8217;t. But there are probably a lot of people\nthat do, but I&#8217;m sure the vast majority of them are purchased through a\nrestaurant, and now that&#8217;s dried up. And think about the stakes. You know, the\nhigh-end steaks, I mean the restaurant that I work used to work at, the people\nthat we bought steak from was a supplier for people like Ruth, Chris and\nMorton&#8217;s. And those are huge steakhouses that, you know, used a lot of steak\nthrough the come through. So with those restaurants being closed now, that\nbacks into the beef industry and how that affects the farmers that produce beef\ncows and everything that goes along with that. And that backs into the grain\nand the feed that they give the cattle, you know, there&#8217;s just, there&#8217;s so many\ndifferent chains you have to kind of think about with, with what&#8217;s going on\nright now.<\/p>\n\n\n\n<p>Andrew (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=1333.51\">22:13<\/a>):<\/p>\n\n\n\n<p>I don&#8217;t want to overwhelm people and start to act like you\nhave to have some crazy knowledge about every little aspect of the economy. But\nI think it&#8217;s just, it&#8217;s helpful to think about some of these things, and you\njust think about supply and demand. And really when you think about economics,\nI think at the end of the day it comes to that. So if we look at some of Warren\nBuffett&#8217;s investments Coca-Cola, Gillette, you know, what was, what, what are\nsome of the commonalities between both of those companies? Well, those were\nabout the very high in-demand brands. And so when you&#8217;re, when you&#8217;re a brand\nthat has that kind of demand power, you can raise your price and demand will\nstill be there because you&#8217;re not subject to being the lowest cost. People\naren&#8217;t buying Coca-Cola because it&#8217;s the cheapest.<\/p>\n\n\n\n<p>Andrew (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=1391.98\">23:11<\/a>):<\/p>\n\n\n\n<p>So they were buying it because they were huge fans of it.\nAnd so that&#8217;s a huge reason why they&#8217;ve had success. When you start to get into\ncommodity type investments, then you need to think about those types of things.\nSo really supply the supply of what&#8217;s in the market and then supply within an\nindividual company itself. And then the demand, I think. I think in a lot of\ncases the demand thinking about demand is more important than thinking about\nsupply for a large majority of like, let&#8217;s say the companies in the S and P 500\nrestaurants. I would stay away from restaurants with every, every, every inch\nof me would just stay away as far as I could. It&#8217;s, I mean, you were saying how\nyou know, the social distancing is likely to continue whether that&#8217;s on an\nairplane in the restaurant, you know, six feet, six feet, six feet, and I can&#8217;t\neven imagine, you know, what the ramifications of all of this are going to be\nif we do have a second way of like some experts are, are predicting you know,\nwhat does that look like?<\/p>\n\n\n\n<p>Andrew (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=1469.57\">24:29<\/a>):<\/p>\n\n\n\n<p>And then how much more are people just going to. It&#8217;s\nalmost like do you give up, and you just accept it at some point and be like,\nyou know, we&#8217;re never going back to the good old days. But you know, that could\nbe a real economic reality for a large majority of the country. Yeah, it could\nbe. And that&#8217;s, that&#8217;s, I think the thing that a can be scary, but E B also has\nto be discussed to, so people are aware of it and how it could impact not only\ntheir investments but also what they do for a living and how that affects the\ninterconnecting of everything. Like you&#8217;re talking about the airlines, the\nrestaurants, movie theaters, cruise ships, going grocery shopping, and there&#8217;s\njust so many different aspects of this that kind of have to be thought through.\nI think it&#8217;s a; it makes another sales pitch for the eight K to where these,\nthe people who generally should know these companies the best or the management\nwho are running them.<\/p>\n\n\n\n<p>Andrew (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=1533.23\">25:33<\/a>):<\/p>\n\n\n\n<p>And so a lot of times they will be able to tell you, and\nthey share. If they&#8217;re good managers, they will tell you, Hey, this is kind of\nwhat we see of the effects of this and how it&#8217;s been affecting our business so\nfar. And they&#8217;re usually able to lay it out and you could, you should be able\nto get a good, a good vibe on, on whether a company is doing is performing well\nor not in this environment. I think, I know, you know, we can talk about the\nobvious fallouts from coronavirus. I think some things that also need to be\nconsidered that could be problematic or also provide opportunity. There is a\nchance that you know, people are talking about it now, how supply chains have\nbeen so disrupted that you know, in the future, companies need to learn from\nthis and they really need to either diversify a supply chain or bringing it\nhome.<\/p>\n\n\n\n<p>Andrew (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=1589.87\">26:29<\/a>):<\/p>\n\n\n\n<p>Right? And so with that and kind of the other tensions\nthat have been going on, look at oil and, and the, the literal kind of price\nWars that are being fought around it right now. And then you look just the\ngeneral ideas behind that; I wouldn&#8217;t be surprised to see less global trading\nnow. It seems like if one thing is kind of falling out from these countries to seem\nto be kind of, you know, people are hunkering down in there, in their homes\nand, and you know, there&#8217;s a possibility country do that too. I saw a story on\nBloomberg. They were talking about how migrant workers couldn&#8217;t get to a\nEuropean field, and it was causing like a bunch of different grains to go the\nwaste because these migrant workers can get over to tend to the fields. So, you\nknow, you could see that.<\/p>\n\n\n\n<p>Andrew (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=1646.81\">27:26<\/a>):<\/p>\n\n\n\n<p>And I think it&#8217;s something to think about too. So when you\nthink about an economy, and you think about, you know, taking some common sense\nkind of, you know, how has the demand side changed? And then from there, you\nknow, what are there going to be changes based off of what&#8217;s going on\ninternationally too and understand how everything moves together. And you also\nhave the different things that are happening in different countries and the\ntrade that&#8217;s going on. And you know, whether you have tariffs, whether you have\nfree trade, whether you have deficits or surpluses these are all factors, and\nnobody can predict them. You know, a lot of people want to talk like they can\nor want to feel better and act as they can. We don&#8217;t know what&#8217;s going to\nhappen, but these are factors to keep in mind. And so really studying your\ncompanies at a time like this and the companies you&#8217;re going to buy, I think,\nyou know, people talk about, they have all this time in the world now that\nthey&#8217;re quarantined.<\/p>\n\n\n\n<p>Andrew (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=1713.5\">28:33<\/a>):<\/p>\n\n\n\n<p>What better time to go through and do an honest gut check\non every company you own and understand where they were before this situation.\nUnderstand where they sit now with, with how things have changed, and how they\ncould look moving forward. Whether we have a recovery, that&#8217;s an instance\nsnapback, or we have one that takes a very long time. Those are all factors\ntoo. And you know, I&#8217;m excited for the next part of our econ series here, Dave.\nCause we&#8217;re going to get into that a little bit. What, when you talk about the\ninterconnection between countries and trade currency becomes a huge thing to\nwe&#8217;ll, we&#8217;ll save that, for next week when we talk about inflation and\ndeflation. But, you know, these are the things that I think just getting like an\nelementary understanding of it can help you not freak out when you hear things\nlike you know, Russia and Saudi have intention over, over oil prices.<\/p>\n\n\n\n<p>Andrew (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=1786.01\">29:46<\/a>):<\/p>\n\n\n\n<p>You know for the longest time they couldn&#8217;t make a deal.\nThey made the deal. But now, you know, oil has continued to crash. We&#8217;re, we&#8217;re\ngoing to hear more stories around the oil, and you know, if you understand some\nof the basics behind commodities, you know, why did the oil go negative? A lot\nof the people don&#8217;t understand even how commodity futures work. And so\nsomething like that&#8217;s completely foreign and scary, right? Why, you know, why,\nwhat is the fed doing? And all I hear are trillions of dollars. And does that\nmean that you know, inflation is going to go into hyperinflation. Like I&#8217;ve\nheard horror stories of Nazi Germany back in the twenties and thirties. You\nknow, if you don&#8217;t have context on inflation and deflation and the interrelationships\nbetween the big global powers in the world, you might get kind of worried about\nthat.<\/p>\n\n\n\n<p>Andrew (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=1842.47\">30:42<\/a>):<\/p>\n\n\n\n<p>And so, you know, if, if, if an economic change is\nanything, it is the absolute last time to be I think timid or to turn your back\nto the markets completely. This is the time that is going to test your metal.\nAnd so if you need that shot, that confidence, then I think more knowledge is\nbetter. And understanding these basics. Kind of like when we talk about when\nyou go back to the basics, right? We have, if you&#8217;re interested in the stock\nmarket basics, we have a back to the basic series you can listen to in the\narchives. If you don&#8217;t know a thing about personal finances and IRAs and 401ks,\nthen you can go to our personal finance basics series. We did, I think we did\nlike five episodes of that too. So all of these basics are super, super key and\nI think this last one that we&#8217;re going to do next is not touched on at all unless\nyou take a class at a college and then they bore you to tears with stories\nabout guys who were alive 300 400 years ago.<\/p>\n\n\n\n<p>Andrew (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=1908.83\">31:48<\/a>):<\/p>\n\n\n\n<p>You know when the economic conditions have changed so much\nnow. So I know Dave, I&#8217;m excited about this little mini-series we&#8217;re doing.\nHopefully, we can shed some insight, and hopefully, you guys can learn\nsomething from it. All right, folks, we&#8217;ll, that is going to wrap up our\ndiscussion for this evening. I hope you enjoyed our conversation about the basics\nof economics, and we&#8217;ll touch on some inflation-deflation and some of those fun\nthings next week, and I&#8217;ve got some other ideas for some other great things. So\nyou guys go out there and enjoy your week. Have a great week, invest with a\nmargin of safety, emphasis on the safety. Have a great week, and we&#8217;ll talk to\nyou all next week.<\/p>\n\n\n\n<p>Announcer (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=1947.79\">32:27<\/a>):<\/p>\n\n\n\n<p>We hope you enjoyed this content. Seven steps to\nunderstanding the stock market show you precisely how to break down the numbers\nin an engaging and readable way. With real example, get access today at the <a href=\"http:\/\/get.einvestingforbeginners.com\/podcast-pdf\/\">stockmarketpdf.com<\/a>\nuntil next time, have a prosperous day.<\/p>\n\n\n\n<p>Announcer (<a href=\"https:\/\/www.temi.com\/editor\/t\/Aq6sQ5wvGZRzX67wpmJ-N1Ue-xuIzwjZM3nA21y7lrbJH9eA5nmwTM4Wl0jPxWrW2borxdyP1ye_9eV5rdvIybFCzYU?loadFrom=DocumentDeeplink&amp;ts=1973.06\">32:53<\/a>):<\/p>\n\n\n\n<p>The information contained is for general information and\neducational purposes only. It is not intended for a substitute for legal,\ncommercial, and or financial advice from a licensed professional. Review. Our\nfull disclaimer@eainvestingforbeginners.com.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Announcer (00:00): You&#8217;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. Dave (00:41): All right [&hellip;]<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"footnotes":""},"categories":[5973,1178],"tags":[],"yst_prominent_words":[1274,1341,1181,5716,1408,5701,2834,4226,5676,2918],"_links":{"self":[{"href":"https:\/\/einvestingforbeginners.com\/wp-json\/wp\/v2\/posts\/10407"}],"collection":[{"href":"https:\/\/einvestingforbeginners.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/einvestingforbeginners.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/einvestingforbeginners.com\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/einvestingforbeginners.com\/wp-json\/wp\/v2\/comments?post=10407"}],"version-history":[{"count":1,"href":"https:\/\/einvestingforbeginners.com\/wp-json\/wp\/v2\/posts\/10407\/revisions"}],"predecessor-version":[{"id":20984,"href":"https:\/\/einvestingforbeginners.com\/wp-json\/wp\/v2\/posts\/10407\/revisions\/20984"}],"wp:attachment":[{"href":"https:\/\/einvestingforbeginners.com\/wp-json\/wp\/v2\/media?parent=10407"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/einvestingforbeginners.com\/wp-json\/wp\/v2\/categories?post=10407"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/einvestingforbeginners.com\/wp-json\/wp\/v2\/tags?post=10407"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/einvestingforbeginners.com\/wp-json\/wp\/v2\/yst_prominent_words?post=10407"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}