The DIY Investing Podcast

Mental Models discussed in this podcast: Liquidity Risk Insurance First Principles Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience. Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Liquidity: Risks and Opportunities - Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode37 What is Risk? Merriam Webster has a few definitions for us: Possibility of Loss or Injury Someone or something that creates or suggests a hazard The chance of loss or the probability of loss The chance that an investment (such as a stock or commodity) will lose value What this should suggest to you is that there are many different types of risk. This is especially true for investing risk. Each type deserves its own discussion and it would be a mistake to believe that Two Key Elements to risk: Uncertainty, Negative Event Liquidity Risks Personal Value of an Emergency Fund Value of Life Insurance Investment Liquidity Risk - Time to receive your money back in cash More liquid stocks reduce liquidity risk Opportunities offered by Liquidity Personal Large sums of cash provide flexibility Move across the country Make investments Get a good deal on a car Investment Liquidity Opportunity - Less liquid stocks tend to have higher returns than high liquidity stocks When is Liquidity Important? Time-Bound: On the personal side, liquidity is important when you need to spend a large sum of money. Can either be planned for or it is an emergency. When you want to sell: On the investment side, liquidity is important only when you sell a stock. You don't really care about liquidity when you are purchasing a stock. The key point is that you want to be able to sell a stock at a price close to its fair value at the time you determine you need to sell. If done optimally, you can buy illiquid stocks during your buying period and when yous ell them, they will have transitioned into liquid stocks. Liquidity First Principle: More liquid stocks are better than less liquid stocks because they reduce liquidity risk. "All else Equal" Considerations: Unfortunately, this statement is only true when we can rely on everything else being equal. In practice, less liquid stocks tend to have higher returns. Therefore, you really have to make a tradeoff. Would you rather have low liquidity and high returns or high liquidity and low returns? The reason this first principles still holds true is that there may be circumstances where high liquidity can offer high potential returns. When that occurs, it would be preferable to low liquidity options. Summary Liquidity is a topic that offers both risks and opportunities. Lack of liquidity is fraught with risk, especially in your personal life. However, a lack of liquidity can offer many opportunities when it comes to investment potential. You should manage your liquidity risk across all spectrums of your life such that you can receive optimal returns with minimal risk of a total loss of principal.

Mental Models discussed in this podcast: Velocity - Direction matters Relative vs Absolute measures Volatility / Beta Risk Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience. Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Shorter Holding Periods are Better (Investing First Principle) - Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode36 What is Risk? Merriam Webster has a few definitions for us: Possibility of Loss or Injury Someone or something that creates or suggests a hazard The chance of loss or the probability of loss The chance that an investment (such as a stock or commodity) will lose value What this should suggest to you is that there are many different types of risk. This is especially true for investing risk. Each type deserves its own discussion and it would be a mistake to believe that Two Key Elements to risk: Uncertainty, Negative Event Volatility / Beta - the size of uncertainty or risk related to the size of changes in a security's value. (Reference: Investopedia) Problems: the definition of volatility is based solely on the size of fluctuation. The more volatile the stock, the riskier the stock. However, this fails to account for only negative volatility. Instead, you can calculate high volatility for a stock that goes up quickly. This would not be a risk though. High returns are the exact opposite of risk. Often used as a relative measure. Relative measures are not useful to an individual investor, because all they care about is their own personal results. The focus should be on absolute results. Price Risk - The potential for short-term downside fluctuations in stock price below the intrinsic value of the company and below your purchase price Focus is only on the downside Highlights the importance of price fluctuations being short-term in nature Price relative to intrinsic value is what matters Price relative to your purchase price is important solely for the psychological harm it can cause if you lack the proper temperament for long-term investing. Unavoidable - present in all investments Can be mitigated by only purchasing stocks below their intrinsic value. Purchasing overvalued companies will increase your price risk. Summary Risk involves two key elements: Uncertainty and Negative Events. Volatility and Beta are false measures of investments and make key errors in their assumptions. They measure both upside and downside price movements as risk and they equate stock prices to stock values. You should ignore calculated measures of volatility in your investment decisions. Price risk is the key focus. Price risk is the potential for short-term downside fluctuations in stock price below the intrinsic value of the company and below your purchase price. You can mitigate price risk by only buying companies below their calculated intrinsic value.

Mental Models discussed in this podcast: Reversion to the Mean Moats First Principles Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience. Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Shorter Holding Periods are Better (Investing First Principle) - Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode35 Hypothetical Question: Would you rather earn a 10% return in one year or ten years? To clarify: I don't mean compound annual return, but total return. Would you rather earn a total of 10% return in one year or in ten years? When phrased in this manner, the answer should be obvious. (One year) The shorter the holding period, the better, all else equal. When you hold total return constant, you want to earn that return in the shortest period possible. "All Else Equal" considerations - There are a lot of them Long-term thinking is critical for successful investing Difference between CAGR and Total Return The methods by which you earn a high long-term CAGR might be different from how you achieve a short-term high total return In the end, the long-term is made up of many short-term periods Value vs Growth Investing perhaps? I consider all investing to be value investing However, traditional Benjamin Graham value investing was the result of harnessing the power of mean reversion to earn high total returns over short time frames of 3-5 years. Net-Nets strategy Buying at a 30-35% discount to fair value and selling when the stock price reaches fair value after a 50% gain. (The shorter time period over which this occurs, the most profitable the investment) Warren Buffett is an advocate of buy-and-hold and his returns are driven by long-term growth investments in earnings over time. Focus on High Quality The longer that high profitable growth of earnings per share, the higher the returns. Returns are driven by moats and high ROIIC. Summary Shorter holding periods for the same total return result in better investments. The key question: Is the brevity of your holding period within your control. I would argue it is NOT. While reversion to the mean is powerful and can be a huge driver of high returns, you should always make investments with a long-term time horizon. As Warren Buffett would advise, don't invest in a company if you aren't willing to hold it for ten years.

Mental Models discussed in this podcast: Potential Energy vs Kinetic Energy Leverage All Else Equal First Principles Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience. Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Companies with no debt are better than companies with debt (Investing First Principle) - Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode34 Mental Model: Potential vs Kinetic Energy There is a concept in physics called potential energy and kinetic energy. The basic explanation is that potential energy is the energy available in an object to perform work. Meanwhile, kinetic energy is a measure of the current energy an object possesses due to its motion. Example: Water held in a lake behind a dam. (A lot of potential energy) This energy can be used to produce electricity if the water is allowed to flow through turbines at the bottom of the dam. Yet, once the water is released, the potential energy no longer exists. Instead, it has been converted to kinetic energy, creating motion, and electricity. You've used up potential future gain for the benefit of the present. How does this apply to companies and investing? A company without debt is like water held in a lake behind a dam. It has a lot of potential energy. When a company has no debt, there is the possibility of adding debt in the future in order to increase earnings and therefore returns. However, a company with large amounts of debt is like water already past the dam. There is no longer any potential to quickly increase earnings by taking on additional debt. Instead, you have to "PAY" cash to reduce debt if you'd like to gain additional potential energy in the future. In our water example, this would be analogous to pumping the water back uphill to put it behind the dam again. Debt also increases risk Companies without debt or liabilities cannot go bankrupt. However, the presence of debt creates the possibility of bankruptcy. When you own companies with medium or high levels of debt, you are taking on the risk of permanent wipeout of your capital due to bankruptcy. While the additional return is possible due to leverage, your risk is inherently higher. Debt creates automatic forced future payments The value of a company is the net present value of future cash flows available to be paid to you in dividends. If a company has debt, any earnings in the future must first be used to make interest and principal payments on the debt, before you can receive any dividends. By owning companies that use debt to earn higher returns, you are allowing debt holders to have the first claim on future cash flows. "All Else Equal" considerations Debt creates leverage - While leverage can be dangerous it can also provide benefits. It is possible that the leveraging effects of debt can allow a company to increase its returns. This is why I use the term "all else equal." You need to compare apples to apples. If a company provides 10% returns with no debt, this is inherently better than a company that provides 10% returns while holding large amounts of debt. The debt-free company is lower risk. This investing first principle doesn't apply if you are trying to compare a 10% returning debt-free company to a 20% returning high debt company. That's not a fair comparison. Summary Companies without debt are better investments than companies with debt, all else equal. While debt can provide the benefits of leverage, you must never forget the risks. If debt-free companies offer returns that exceed your discount rate, then you should always prefer them over debt-laden companies.

Mental Models discussed in this podcast: Margin of Safety Price vs Value Time Value of Money All Else Equal First Principles Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience. Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Low stock prices are better than high stock prices (Investing First Principle) - Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode33 It is preferable to purchase stocks at low stock prices for 2 key reasons The margin of safety is higher (What happens if you are wrong) Potential Return is higher (What happens if you are right) Relationship between Price and Value Value investing, at its core, is all about purchasing assets for less than they are worth. Price represents what you pay Value is what you receive Obviously, the lower the price you pay, the better the outcome. (Regardless of the value you actually receive) "All Else Equal" considerations Time Value of Money - You can't directly compare the stock prices across time. (ie. today versus the stock price one year ago.) It's quite possible that it makes sense to pay a higher price today than it did a year ago if the value has increased. Variable Business Quality - Some businesses are of higher quality than others. You can't directly compare one company's P/E ratio to that of another. A high-quality business might be worth 20x P/E while another business is only worth 10x P/E. It would be a mistake to assume the 10x P/E company is a better deal. Variable Growth Rates - Some businesses have the capability of profitably growing their earnings, and others do not. Those with profitable and sustainable growth in the future are going to be worth more. You can't directly compare P/E ratio's in that circumstance. Industry Differences - some industries are more attractive than others Summary The scope of this first principle is limited to simply understanding that your goal is to purchase the highest amount of present and future earnings possible. The way you do this is by paying a low price for those earnings.

Mental Models discussed in this podcast: Zero Based Thinking Negative Carry Opportunity Cost Hidden Costs Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience. Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Shorting Stocks is a Negative-Sum Game (Investing First Principle) - Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode32 Mental Model: Zero-Sum Games Any gains by one participant must be offset with losses by other participants. The sum total of all value for all participants is equal to zero Why shorting Stocks is a Negative-Sum Game Stocks as a whole provide a positive expected value Shorting stocks is the opposite. Now you have a negative expected value. Further complicated by the issue of "negative carry." When you purchase stock in a company the only cost of holding it, is an opportunity cost. What you could have spent the money on or what alternative investments you could have chosen. This opportunity cost is an implicit or hidden cost. Shorting is different. The act of shorting a stock involves two key explicit costs, both of which create negative carry. Borrowing Costs Dividend Payments Other Key Problems with Shorting Time Horizon Matters a lot: You can be right and still lose money Everyone is working against you. CEO, Employees, debt markets, other investors, etc... The economy generally gets better over time. You're fighting the tide. Like gambling in a casino "The House Always Wins."

Books Referenced in the Podcast Stocks for the Long Run by Jeremy Siegel: Buy on Amazon You can support the podcast by making a purchase through the above affiliate link. If you do, I'll earn a small commission at no additional cost to you. Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience. Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Buying Stocks is NOT a Zero-Sum Game (Investing First Principle) - Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode31 Mental Model: Zero-Sum Games Any gains by one participant must be offset with losses by other participants. The sum total of all value for all participants is equal to zero Why buying Stocks is NOT a Zero-Sum Game Stocks as a whole don't provide a positive expected value You don't have to "take" from others in order to receive. When companies create value this is "new value." The economy grows, everyone becomes wealthier. Stock Picking vs Index Funds? The thought is that half of the money must underperform an index, and half of the money can outperform an index. The thought, therefore, is that buying stocks is zero-sum. Where is the fallacy? Index's have historically had a positive expected value. If an index returns 10%, even if half of the money receives 8%, and half receives 12%, both parties are successful in growing their wealth. One party doesn't lose 10% so that the index can grow 10%. That's not how this works. Instead, stock ownership is best described as a positive sum game. What is a Positive-Sum Game? A positive sum game is where the total value received of all participants is greater than zero. This means that you can be successful without worrying about the success of others. Frees you from the need for comparison, jealousy, or envy. Just because someone else made money, doesn't mean you lose money. Takeaway: You can ignore index funds and focus on your own personal goals Takeaway: You can ignore macroeconomic trends. As long as your fundamental analysis of a company is correct, the broader economic picture is irrelevant. Why is this true? - Capitalism grows the economic pie Companies are full of employees who go to work each and every day trying to find a way to make your profits grow. While this sometimes involves taking market share from other companies, the greatest gains come from innovation, improved efficiencies, new markets, and new products. This raises the standard of living for all and the overall economic pie for the economy.

Mental Models discussed in this podcast: Zero Based Thinking Resulting Check out Annie Duke's book "Thinking in Bets" to learn more Skin in the Game Check out Nassim Taleb's book "Skin in the Game" to learn more Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience. Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. GameStop Stock Investment Post-mortem - Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode30 Initial Buy Thesis Dividend yield exceeds 10% Dividend is sustainable Check out Episode 5 of the podcast to learn more Investment Results Loss of 50-55% of the principal invested in GameStop stock Investment Process Was my Buy Thesis correct? Root Cause of my Investment mistakes Was my Sell Thesis correct? I did not sell solely because the dividend was eliminated Free cash flow from declining businesses ought to be distributed to shareholders Conclusion My bad process led to bad results in this case Could have been better or worse Lessons Learned Investment Rules Never buy a retail company with declining revenue Never buy a physical retail company with debt on its balance sheet (If they lease their locations) Do not hold onto a stock once you know your investment thesis is wrong Prioritize investing in companies where management has skin in the game Red Flags A combination of large stock price declines without insider buying or stock buybacks Non-investors you talk to think the company will be a bad investment References: Investing Rules - How I limit investing mistakes

Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience. Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. "All Else Equal" Mental Model or Ceteris Paribus - Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode29 Background of Ceteris Paribus Mental Model Often a tool used in economic theory Especially used for explaining concepts such as supply and demand 'All Else Equal' Mental Model applied to Personal Finance Increased income is better than lower income Lower expenses are better than higher expenses The longer you live, the more wealth you'll build Application to Investing The All Else Equal Mental model can be applied to investing to create Investing First Principles Next Episodes: A series on First Principles of Investing Uses what learned in this episode and combines it with Episode 9 where we first introduced the concept of First Principles. References: https://en.wikipedia.org/wiki/Ceteris_paribus

How to Sign Up for Mr. Rebates Sign up through this link! You can support the show by typing in: [email protected] In the section that says "Did someone refer you to Mr. Rebates?" as the "Referrer Email" This is clearly marked optional and I encourage you to see the section in the show notes below called "What's in it for me?" Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience. Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. How to earn cash back online using Mr. Rebates - Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode28 What is Mr. Rebates? Online tool for earning cash back from your shopping online Works at thousands of online retailers including Amazon.com Available here: https://www.diyinvesting.org/cashback How does it work? What I call a "Win-Win-Win" 3 Step Process: You make a purchase at a retailer's website through your Mr. Rebates affiliate link The retailer pays Mr. Rebates a commission Mr. Rebates passes that commission on to you for cash back after taking a small cut. Benefits of Using Mr. Rebates to make Online Purchases Earn bonus cash back on top of any cash back you receive from your credit cards My most recent purchase: Received 2% cash back from my credit card Received 5% cash back from Mr. Rebates Total: 7% cash back Membership is Free and you receive a $5.00 bonus added to your account when you make your first purchase. (as of recording date, this may change in the future) Drawbacks I have used Mr. Rebates for over a year now testing it out. I wanted to make sure that the website was authentic and worked before recommending it to anyone. Here is my review of the drawbacks. Doesn't work on every website Thousands of stores are available to use Mr. Rebates on Includes Amazon Yet, there are numerous stores that Mr. Rebates does not work on. You'll have to see what stores Mr. Rebates offers compared to the online stores you shop at. I have not had a 100% success rate in receiving the cash back. I'd say my success rate has been about 90%. The other 10% of the time is usually due to my adblocker preventing the tracking link from working. You only earn cash back on the Pre-Tax Pre-Shipping price. This is your sub-total, not the final total. While credit card purchases will provide cash back on the total, you only earn Mr. Rebates cash back on the Pre-Tax Pre-Shipping price. What's in it for me? Disclosure: If you sign up and write in my email address the referral email section on the form, "[email protected]" then I will receive a commission when you save money using Mr. Rebates. Our incentives are aligned: I don't earn any commission for you signing up. I ONLY earn a commission WHEN YOU SAVE MONEY. Listing me as having referred you will not affect the cash back you receive in any way. You'll not earn more or less cash back because I referred you. My goal is to save you money. I only earn a commission if you actually save money and earn cash back. I hope you will and I hope you'll save a lot of money by using Mr. Rebates The easiest way to sign up is to click my affiliate link at the top of the show notes of the podcast. Or you can go to www.diyinvesting.org/cashback

Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience. Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. How to calculate Intrinsic Value using Discounted Cash Flows (DCF) - Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode27 What is Intrinsic Value? The present value of all future free cash flows produced by a business. Time Value of Money Cash today is worth more than cash in the future. Therefore, you need to discount future cash flows to be worth less than their stated value. The simplified discounted cash flow formula Intrinsic Value = Owner's Earnings/(Discount Rate - Growth Rate) Discount Rates: 10% (nominal) or 6.5% (real) Growth Rates: Bounded between 0% and 5% Owner's Earnings: Manually calculated by adjusting Net Income Complex Discounted Cash Flow Calculations When to use: Company is in a high-growth phase of its business (has not yet saturated the market) You are highly confident in short-term projections and the business is predictable Reported earnings have a lot of temporary adjustments that make the next few years not match the long-term When not to use: Almost always Why? Complex calculations can trick you into thinking you have a better understanding of the business than you do You'll likely rely heavily on growth and fast growth assumptions are very risky to make References: Part 1: Episode 23 - Discount Rates Part 2: Episode 25 - Long-Term Growth Rates Part 3: Episode 26 - Owner's Earnings Example Intrinsic Value Reports [$10+/month Patrons receive exclusive access]

Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience. Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Owner's Earnings - Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode26 What is Net Income? The total after-tax profits that a company earns in a year What is EPS or Earnings per Share? The After-Tax profits of a company divided by the total number of shares outstanding. The problems with Net Income and EPS as a metric for investment They are not comparable across different companies and industries. Some companies are more capital intensive than others. Net Income and EPS will overstate the economic "cash earnings" for capital intensive businesses that require large capital outlays on a regular basis. Implications for the usefulness of P/E Ratios Since P/E ratios are based on Net Income or Earnings per Share for the "E" component, they share the same problems. P/E ratios are not comparable across industries or even companies within the same industry Owner's Earnings - A better metric Definition: Owner's Earnings - Earnings that can be paid out in cash to shareholders without impacting the earning power of the business How to calculate Owner's Earnings Take Net Income and make some adjustments Joshua Kennon's formula is the best that I have found. See link below in the references. References: Joshua Kennon's Owner's Earnings Formula Examples of how to calculate Owner's Earnings and Intrinsic Value [Intrinsic Value Reports - Exclusive to Patrons of $10+/month]

Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience. Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Long-Term Growth Rate Assumptions - Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode25 What is a long-term growth rate assumption: A key component of a discounted cash flow calculation. (Along with Discount Rate [Ep.23] and Owner's Earnings[Ep.26]) How much growth a company can expect in its earnings over an infinite time horizon. How you can make long-term growth rate assumptions Bounds: 0% lower bound (no growth) 5%-6% upper bound (nominal GDP growth rate) Key components: Inflation Population Growth Productivity Growth Don't assume that a company can grow faster than the economy in the long-term. How to calibrate long-term growth rate assumptions based on management's regulatory disclosures Example: Omnicom (OMC) Using management's forecasts of 4% long-term growth rates, I lowered my growth forecast from 5% (matching nominal GDP growth) to match the 4% forecast by management. This lowered my calculated intrinsic value by 13% for Omnicom stock. Read the full Omnicom Intrinsic Value Report ($10/month - Patron Exclusive Benefit) [Become a Patron here] References: Omnicom's 2018 10k - Required Management Disclosures (pg. 11)

Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience. Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Emergency Fund Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode24 Emergency Fund Sizing: Recommended Size: 1 year Mainstream Alternatives: 3 months 6 months $1,000 $10,000 Why? Liquidity is all-important for investors Value investing requires managing risk and accepting volatility Lack of liquidity can cause you to sell investments when your stocks are undervalued and priced too low A strong emergency fund protects you from this possibility Where should you store it? (Hint: Maximize Safety) You should maximize the safety of your emergency fund. Don't worry about maximizing the rate of return you receive. Store your emergency fund in a government guaranteed account. This can be with either an FDIC-insured savings account. I believe Ally Bank is a good option. A great alternative is TreasuryDirect.gov where you can lend money directly to the US government. Emergency Fund money would obviously need to be invested only in short-term government bonds. (3 months or less to maturity)

Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience. Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Books Referenced in this Podcast Stocks for the Long Run by Jeremy Siegel You can support the podcast by purchasing the book through one of my affiliate links: Available in Hardcover Available for Kindle Available as an Audio Book (from Audible) *Disclosure: If you make a purchase through one of these links, I may earn a commission. This commission comes at no additional cost to you. Please understand that I have personally read all the books that I review. I recommend them because I believe they are helpful and useful, not because of any small commission I might receive. Please do not spend any money on these books unless you feel you need them or that they will help you achieve your goals.* Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode23 Trey's Discount Rates: Nominal Discount Rate = 10% Real Discount Rate = 6.5% Long-Run Inflation Expectations 3.5% How to Select a Good Discount Rate: Your discount rate should be based upon the rate of return you expect to earn on your investments. If you want or need to earn 8% on your investments, then your discount rate should be 8%. If you want or need to earn 10% on your investments, then your discount rate should be 10%. When to use Nominal versus Real Discount Rate: You should use a Nominal discount rate when you are uncertain whether the company you are analyzing will be able to always grow their earnings at least at the rate of inflation. You should use a Real discount rate when you are confident that a company will be able to automatically adjust their prices at least as fast as the inflation rate. In other words, the company must have pricing power. This behavior is typically only seen in high-quality companies. Use the Same Discount Rate for ALL Companies The discount rate you use heavily impacts the result of your valuation analysis. Therefore, it is critical to base this discount rate off of your expected rate of return. You should also not adjust the discount rate you use based upon the risk of one company versus another. If you make this mistake, then you are likely investing in companies that are too risky to make reliable forward estimates of long-run earnings. If you find yourself wanting to use a higher discount rate for a single company, take that as a red flag.

Thank you for your support! In this podcast episode, I mentioned one of the exclusive member benefits for those who choose to financially support this podcast as a Patron. Patron's of The DIY Investing Podcast, receive exclusive access to my business quality reports. Check out the Business Quality Report on Disney. (Exclusive to Patrons of the Show) Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode22 Disney+ $6.99 per month or $69.99 per year ($5.83 per month if paid in advance - basically 2 months free) Launch Date: November 12th, 2019 Access to Disney's incredible library of old TV shows and movies, including: The entire Pixar lineup of movies by the end of the first year All of the Marvel Cinematic Universe (eventually), but Captain Marvel will be available on Day 1 National Geographic All 9 main Star Wars movies, with Rogue One and Solo on top of that Historic Disney Channel movies and TV Shows The Signature collection of Disney classics including Cinderella and Lion King Disney's Business Model "Content is King" Well Disney is the "King of Content" Entertainment giant that has a flywheel effect allowing shareholders to profit off of branded content in numerous ways Disney+ combines the best parts of the TV Channels, Movie Rentals, and Theatre Releases Creates lasting fans Movie Releases in Theatres DVD and Movie Rentals and Purchases Theme Parks (Disney World and Disney Land) TV Channels like Disney Channel Cruise Lines Toy Sales and Licensing New Addition: Direct to Consumer Streaming Service (Disney+) Streaming is Sticky Disney + is going to be a Brand Ambassador for Disney. They will "lock-in" families when they have young children, building life long fans. Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience.

Thank you for your support! This podcast was inspired by the book "The Power of Habit" by Charles Duhigg. You can support the podcast by purchasing the book through one of my affiliate links: Available in Hardcover Available in Paperback Available for Kindle Available as an Audio Book (from Audible) *Disclosure: If you make a purchase through one of these links, I may earn a commission. This commission comes at no additional cost to you. Please understand that I have personally read all the books that I review. I recommend them because I believe they are helpful and useful, not because of any small commission I might receive. Please do not spend any money on these books unless you feel you need them or that they will help you achieve your goals.* Keystone Habits of a Healthy Lifestyle Exercise Regularly The definition of "regular" will vary by the person. The key is to exercise at least every week with a focus on multiple times per week. My personal goal is to exercise 6 times per week every week. This is as close to "daily" as I consider reasonable. The more often you exercise, the greater the results you'll gain from turning exercise into a keystone habit. Cook most of your meals at home from scratch Inspired by the books of Michael Pollan outlining how and why of eating healthy to promote a healthy lifestyle. "In Defense of Food" by Michael Pollan* "The Omnivore's Dilemma" by Michael Pollan* Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Show Notes are available at DIYInvesting.org The full show notes for this episode, including my outline for today's podcast, are available at https://www.diyinvesting.org/Episode21 Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and also grow the show's audience.

Thank you for your support! This podcast was inspired by the book "The Power of Habit" by Charles Duhigg. You can support the podcast by purchasing the book through one of my affiliate links: Available in Hardcover Available in Paperback Available for Kindle Available as an Audio Book (from Audible) *Disclosure: If you make a purchase through one of these links, I may earn a commission. This commission comes at no additional cost to you. Please understand that I have personally read all the books that I review. I recommend them because I believe they are helpful and useful, not because of any small commission I might receive. Please do not spend any money on these books unless you feel you need them or that they will help you achieve your goals.* Keystone Habits of Investing With investing there are both habits that you should consider adopting and habits that you should avoid. Positive Keystone Habits of Investing you should adopt Read one 10k every week. Always write out an investment thesis BEFORE purchasing shares of stock in any company. [Patron Only Benefit] - Read the Buy Thesis that I have written for the stocks that I buy. Negative Keystone Habits of Investing you should avoid Checking stock prices every day Once a week is the most frequently you need to check your stock prices. Ideally, target once a month. Use price alerts for stocks you're interested in buying. That way you will be alerted if they hit your buy price. Otherwise, don't spend any time worrying about stock prices. Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Show Notes are available at DIYInvesting.org The full show notes for this episode, including my outline for today's podcast, are available at https://www.diyinvesting.org/Episode20 Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and also grow the show's audience.

Thank you for your support! This podcast was inspired by the book "The Power of Habit" by Charles Duhigg. You can support the podcast by purchasing the book through one of my affiliate links: Available in Hardcover Available in Paperback Available for Kindle Available as an Audio Book (from Audible) *Disclosure: If you make a purchase through one of these links, I may earn a commission. This commission comes at no additional cost to you. Please understand that I have personally read all the books that I review. I recommend them because I believe they are helpful and useful, not because of any small commission I might receive. Please do not spend any money on these books unless you feel you need them or that they will help you achieve your goals.* Keystone Habits of Personal Finance Track every dollar you spend Track the monthly changes in your net worth Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Show Notes are available at DIYInvesting.org The full show notes for this episode, including my outline for today's podcast, are available at https://www.diyinvesting.org/Episode19 Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and also grow the show's audience.

Support the show by purchasing The Power of Habit through one of my affiliate links: Buy Hardcover Buy Paperback Buy Kindle Book Buy Audio Book (from Audible) Thank you for your Support *Disclosure: If you make a purchase through one of these links, I may earn a commission. This commission comes at no additional cost to you. Please understand that I have personally read all the books that I review. I recommend them because I believe they are helpful and useful, not because of any small commission I might receive. Please do not spend any money on these books unless you feel you need them or that they will help you achieve your goals.* Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast Show Notes available at DIYInvesting.org The full show notes for this episode, including my outline for today's podcast, are available at https://www.diyinvesting.org/Episode18 A written blog post review of this episode is available here. Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. On an iOS platform such as an iPhone or iPad, you can do so by following these steps: In your podcast app, click the search icon that looks like a magnifying glass in the bottom right-hand corner. Type "The DIY Investing" into the search bar. This podcast should be one of the first shows that display. Select the podcast show icon. Scroll down to the "Ratings & Reviews Section" and click on the button that says "Write a Review". Write a short one or two sentence review and give me a rating that matches how you feel about the podcast.

In today's episode, I will be sharing ten of the most important lessons I've learned from Joshua Sheats. These are lessons that apply to personal finance, investing, and beyond. The Top 10 Personal Finance Lessons I have learned from Joshua Sheats Conventional advice should not be accepted simply because it's conventional advice Conventional advice should also not be rejected simply because it's conventional advice. A strategy is more important than tactics. Tactics change over time, but a strategy is enduring. Action leads to life change. Ideas, learnings, and study are all meaningless if you don't take action to improve your life. There is more than one way to become financially successful. There is more than one definition of success. Don't simply accept the definition given to you by society. Don't compare yourself to others, only your past self. Personal finance is behavioral, not mathematical. The mathematics is simple and straightforward. Mastering your behavior takes a lot more effort. You are capable of controlling and curating your desires by what you expose yourself to. Don't be afraid of helping others. Sharing of ideas, knowledge, and skills do not less your own worth. It only improves yourself, others, and the world. (Could be a business idea, how to get ahead, etc. ties into action.) Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast Show Notes available at DIYInvesting.org The full show notes for this episode, including my outline for today's podcast, are available at https://www.diyinvesting.org/Episode17 Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. On an iOS platform such as an iPhone or iPad, you can do so by following these steps: In your podcast app, click the search icon that looks like a magnifying glass in the bottom right-hand corner. Type "The DIY Investing" into the search bar. This podcast should be one of the first shows that display. Select the podcast show icon. Scroll down to the "Ratings & Reviews Section" and click on the button that says "Write a Review". Write a short one or two sentence review and give me a rating that matches how you feel about the podcast.

In today's episode, I will be discussing Joshua Sheats' Framework for Wealth Building. The 5 Key Parts of Personal Finance Increase Income Decrease Expenses Invest Wisely Avoid Catastrophe Optimize Lifestyle Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast Show Notes available at DIYInvesting.org The full show notes for this episode, including my outline for today's podcast, are available at https://www.diyinvesting.org/Episode16 Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. On an iOS platform such as an iPhone or iPad, you can do so by following these steps: In your podcast app, click the search icon that looks like a magnifying glass in the bottom right-hand corner. Type "The DIY Investing" into the search bar. This podcast should be one of the first shows that display. Select the podcast show icon. Scroll down to the "Ratings & Reviews Section" and click on the button that says "Write a Review". Write a short one or two sentence review and give me a rating that matches how you feel about the podcast.

In today's episode, I will be discussing the idea of investing in advertising holding companies. My guess is that many of you have never even considered investing in an advertising holding company. I hope that this podcast will introduce you to advertising holding companies as a possible investment candidate. List of the largest Advertising Holding Companies: WPP Publicis Omnicom Interpublic Havas Dentsu Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Show Notes available at DIYInvesting.org The full show notes for this episode, including my outline for today's podcast, are available at https://www.diyinvesting.org/Episode15 Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. On an iOS platform such as an iPhone or iPad, you can do so by following these steps: In your podcast app, click the search icon that looks like a magnifying glass in the bottom right-hand corner. Type "The DIY Investing" into the search bar. This podcast should be one of the first shows that display. Select the podcast show icon. Scroll down to the "Ratings & Reviews Section" and click on the button that says "Write a Review". Write a short one or two sentence review and give me a rating that matches how you feel about the podcast.

In today's episode, I will be discussing the Pros and Cons of Retail Chain Investing. This topic is particularly interesting for me right now as I have been studying multiple retail chains as potential investments this past month. Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. Show Notes available at DIYInvesting.org The full show notes for this episode, including my outline for today's podcast, are available at https://www.diyinvesting.org/Episode14 Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. On an iOS platform such as an iPhone or iPad, you can do so by following these steps: In your podcast app, click the search icon that looks like a magnifying glass in the bottom right-hand corner. Type "The DIY Investing" into the search bar. This podcast should be one of the first shows that display. Select the podcast show icon. Scroll down to the "Ratings & Reviews Section" and click on the button that says "Write a Review". Write a short one or two sentence review and give me a rating that matches how you feel about the podcast.

In today's episode, I will be discussing the Tax Cuts and Jobs Act of 2017 and its effect on reported 2017 earnings for US-based companies. Full-Length Article Available at DIYInvesting.org https://www.diyinvesting.org/tax-cuts-2017-fake-earnings-chuys-stock/ Show Notes available at DIYInvesting.org The full show notes for this episode are available at https://www.diyinvesting.org/Episode13 Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. On an iOS platform such as an iPhone or iPad, you can do so by following these steps: In your podcast app, click the search icon that looks like a magnifying glass in the bottom right-hand corner. Type "The DIY Investing" into the search bar. This podcast should be one of the first shows that display. Select the podcast show icon. Scroll down to the "Ratings & Reviews Section" and click on the button that says "Write a Review". Write a short one or two sentence review and give me a rating that matches how you feel about the podcast.

Oil majors: ExxonMobil (USA), Chevron (USA), Royal Dutch Shell (UK and Netherlands), BP (UK), TOTAL (French) Traditionally, being an oil major has meant being a fully vertically integrated company from oil exploration, drilling, refining, and chemical production. ExxonMobil continues to fulfill that role, but they are much more than an oil company today. Although they are typically billed as an oil AND gas company. They are much more. Business Model Overview Energy Company Durability Competition Quality Growth Capital Allocation Value Potential Errors Conclusion Show Notes available at DIYInvesting.org The full show notes for this episode, including my outline for today's podcast, are available at https://www.diyinvesting.org/Episode12 Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. On an iOS platform such as an iPhone or iPad, you can do so by following these steps: In your podcast app, click the search icon that looks like a magnifying glass in the bottom right-hand corner. Type "The DIY Investing" into the search bar. This podcast should be one of the first shows that display. Select the podcast show icon. Scroll down to the "Ratings & Reviews Section" and click on the button that says "Write a Review". Write a short one or two sentence review and give me a rating that matches how you feel about the podcast.

Why Patreon? The DIY Investing membership site is hosted on DIYInvesting.org with Patreon used as the payment processor and platform partner. Members are offered exclusive access to investing research and educational resources on how to be a better investor. Patreon allows me to carefully curate this insider content for each individual member of our community. Exclusive Community Member Benefits The public facing content of DIY Investing is focused on providing general purpose investing insight and personal finance education to the masses. In contrast, your membership will offer you exclusive behind-the-scenes access to my personal investing process. As you increase your contribution/membership level you will gain an increasingly inside look at the investment research that I perform on weekly basis. All of the benefits provided here are meant to save you time and help you earn more money from your investing. You'll be gaining access to my personal notes, fundamental analysis, and valuation on companies. Member Benefits Include: Company Quality Analysis Spreadsheet Individual Company Quality Reports Company Intrinsic Value Spreadsheet with Buy/Hold/Sell Ratings "Insider Access" to my Personal Investment Portfolio and Company Holdings Small-Cap Stock Research - My personal notes and fundamental analysis Micro-Cap Stock Research - My personal notes and fundamental analysis "Buy Thesis" reports on each and every company that I currently own and purchase in the future Short-Term Investment Alerts - Updates when I make changes to my personal portfolio Review Full Details at Patreon.com Join our Investing Community Today!

Gilead Sciences is a biopharmaceutical company with a focus on treating and curing diseases. Their areas of focus include HIV, Hepatitis C, Oncology, Inflammation, and NASH. Gilead Sciences (GILD) Business Model Overview HIV Hepatitis C Oncology/Cancer Treatment (KITE) – Yescarta Inflammation - Filgotinib NASH (Liver disease) – Selonsertib Leading cause of liver transplants. Generally related to Obesity Durability Competition Quality and Growth Capital Allocation Value Potential Errors Conclusion Show Notes available at DIYInvesting.org The full show notes for this episode, including my outline for today's podcast, are available at https://www.diyinvesting.org/Episode6 Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. On an iOS platform such as an iPhone or iPad, you can do so by following these steps: In your podcast app, click the search icon that looks like a magnifying glass in the bottom right-hand corner. Type "The DIY Investing" into the search bar. This podcast should be one of the first shows that display. Select the podcast show icon. Scroll down to the "Ratings & Reviews Section" and click on the button that says "Write a Review". Write a short one or two sentence review and give me a rating that matches how you feel about the podcast.

First Principles are a critical mental model for you to understand to be a successful investor. Most people don't make decisions based on facts and reality. Yet, the world of investing is unforgiving. The only way to succeed in the long run is to align your actions with fact-based decision making. There are specific fact-based actions that will increase your odds of financial success. These are the first principles of investing and personal finance. Show Notes available at DIYInvesting.org The full show notes for this episode, including my outline for today's podcast, are available at https://www.diyinvesting.org/Episode9 Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. On an iOS platform such as an iPhone or iPad, you can do so by following these steps: In your podcast app, click the search icon that looks like a magnifying glass in the bottom right-hand corner. Type "The DIY Investing" into the search bar. This podcast should be one of the first shows that display. Select the podcast show icon. Scroll down to the "Ratings & Reviews Section" and click on the button that says "Write a Review". Write a short one or two sentence review and give me a rating that matches how you feel about the podcast.

Recommended Brokerage Companies: 1. Ally Invest 2. Fidelity Investments 3. Vanguard 4. Motif Investing Recommended Motifs (My pre-built index funds for you) 1. Dow Jones Industrial Average (No-Fee Index) 2. Magic Formula Index 3. Generational Wealth Index Show Notes available at DIYInvesting.org The full show notes for this episode, including my outline for today's podcast, are available at https://www.diyinvesting.org/Episode8 Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. On an iOS platform such as an iPhone or iPad, you can do so by following these steps: In your podcast app, click the search icon that looks like a magnifying glass in the bottom right-hand corner. Type "The DIY Investing" into the search bar. This podcast should be one of the first shows that display. Select the podcast show icon. Scroll down to the "Ratings & Reviews Section" and click on the button that says "Write a Review". Write a short one or two sentence review and give me a rating that matches how you feel about the podcast.

Description In this episode, I answer a listener question about how to save for retirement. Specifically, "Should I be using a traditional IRA, Roth IRA, or both for retirement saving?" In order to answer this question, I provide a general overview of the features for both a Traditional and Roth IRA. I compare the similarities and differences. Finally, I provide some rules of thumb which you can choose to make a decision on which type of IRA best fits your situation. Important Links What is your #1 question about investing or personal finance? Answer this one question survey and your question might appear in a future podcast episode. Show Notes available at DIYInvesting.org The full show notes for this episode, including my outline for today's podcast, are available at https://www.diyinvesting.org/Episode7 Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. On an iOS platform such as an iPhone or iPad, you can do so by following these steps: In your podcast app, click the search icon that looks like a magnifying glass in the bottom right-hand corner. Type "The DIY Investing" into the search bar. This podcast should be one of the first shows that display. Select the podcast show icon. Scroll down to the "Ratings & Reviews Section" and click on the button that says "Write a Review". Write a short one or two sentence review and give me a rating that matches how you feel about the podcast.

Synopsis This is a book review of The Little Book that Beats the Market by Joel Greenblatt. The basic concept of the book is that it's quite simple to beat the market. So simple in fact, that a specific magic formula can be used to beat the market. If that sounds too good to be true, that's understandable. The author Joel Greenblatt understands your skepticism. His goal is twofold: 1. Share his magic formula with you 2. Explain the concepts that make the magic formula work. Purchase the book through one of my affiliate links Buy the Book on Amazon Buy the Kindle version on Amazon Buy the Audiobook on Amazon *If you make a purchase through one of my affiliate links, I receive a small commission at NO additional cost to you. This small commission helps to support the show and keep the episodes available for free. Would you like to invest using the Magic Formula? I have developed what I believe to be the easiest and cheapest solution. I created an index version based on the formula. You can buy a 30 stock index of companies chosen using the Magic Formula which I plan to update on an annual basis. All for a single low commission of $9.95. (In contrast to an estimated $150 if you bought each stock individually, at $5 per stock commission) Just go to https://www.diyinvesting.org/magicformula Show Notes available at DIYInvesting.org The full show notes for this episode, including my outline for today's podcast, are available at https://www.diyinvesting.org/Episode6 Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. On an iOS platform such as an iPhone or iPad, you can do so by following these steps: In your podcast app, click the search icon that looks like a magnifying glass in the bottom right-hand corner. Type "The DIY Investing" into the search bar. This podcast should be one of the first shows that display. Select the podcast show icon. Scroll down to the "Ratings & Reviews Section" and click on the button that says "Write a Review". Write a short one or two sentence review and give me a rating that matches how you feel about the podcast.

GameStop in 2018 is a prime example of an investment with asymmetric risk and reward. The company offers a greater than 10% dividend yield with a payout ratio less than 50%. As long as the dividend can be paid we'll make a good return. (NYSE: GME) The show notes for this episode, including my outline for today's podcast, are available at https://www.diyinvesting.org/Episode5 If you enjoyed this podcast and found it helpful, please consider leaving me a review. On an iOS platform such as an iPhone or iPad, you can do so by following these steps: 1. In your podcast app, click the search icon that looks like a magnifying glass in the bottom right-hand corner. 2. Type "The DIY Investing" into the search bar. This podcast should be one of the top shows that displays. 3. Select the podcast by clicking on the show icon. 4. Scroll down to the "Ratings & Reviews Section" and click on the button that says "Write a Review" 5. Write a short one or two sentence review and give me a star rating that matches how you feel about the podcast. I would love to receive a five-star rating, but please be honest. Your feedback will help me to improve the podcast.

In this episode, I review the personal finance classic, The Richest Man in Babylon. This book provides the basic formula for building wealth. Every investor should be aware of the basic habits one must have to become rich. If you'd like to purchase The Richest Man in Babylon, I would appreciate it if you use my affiliate links below: Buy on Amazon Buy Audiobook Buy for Kindle If you purchase through one of my affiliate links, I will receive a small commission which helps to support the show. Thank you for your support. If you would like to see a full written review of The Richest Man in Babylon, you can check it out through this link.

In this episode, I discuss the effect of stock options or stock-based compensation expense on the after-tax returns of shareholders. These expenses paid to executives as compensation are often excluded from expenses when non-GAAP earnings are reported. The show notes for this episode, including a transcript of today's podcast, my sources, and more can be found at https://www.diyinvesting.org/episode3

In this episode, I discuss the mental model of Gradualism and how to become a millionaire by investing only $1 a day. Gradualism is a mental model built upon biology and geography which can be leveraged to enable you to achieve financial independence. The show notes for this episode, including a transcript of today's podcast, my sources, and more can be found at https://www.diyinvesting.org/episode2

In this episode of The DIY Investing Podcast, I discuss the common myth that stocks are riskier than bonds. Join me as I bust this myth, by discussing the capital asset pricing model, beta, volatility, and redefine risk for an investor. The show notes for this episode, including a transcript of today's podcast, my sources, and more can be found at https://www.diyinvesting.org/episode1