InvestED: The Rule #1 Investing Podcast

 “It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.” — Charlie MungerMunger is the Vice Chairman of the world’s greatest compound interest machine: Berkshire Hathaway, Inc. In the time of his and Warren Buffett’s reign as the leaders of Berkshire, the company has returned roughly 2,000,000% on its initial value. We can learn a lot from Charlie Munger!Charlie Munger once said that “Coca-Cola is the perfect business because it has this gigantic durable competitive advantage, or moat, which gives it predictable cash flow.” This allows us to figure out what the future cash flow will be and value the company today, so we know whether we can buy it on sale or not.Charlie Munger also once stated that “You don’t make money when you buy and you don’t make money when you sell. You make money when you wait.” That assertion is so powerful that it is easy to overlook how critical it is. The whole idea of Rule #1 Investing is buying a stock low, and selling it high. But, the key here is that you’re doing nothing most of the time.When Charlie says, “Wait” he means, “Wait for 5 years if necessary”. If you’ve been given serious money to invest, waiting five years in cash is not a plan; it is a recipe for disaster.Charlie believes there are only a small number of real opportunities to get very high returns with very low risk. Maybe 20 in a lifetime. He said that if you remove the 10 best deals Warren and he ever did, Berkshire would have average market level performance. The only way to get those kinds of returns is to wait and wait for the right opportunity to come along.In today’s podcast, Phil and Danielle explain some of their favorite Charlie Munger quotes, and cover how many of the Rule #1 Investing principles are based on his teachings.Get inspired to invest like the world's greatest investors like Charlie Munger and Warren Buffett with this free guide: https://bit.ly/3fr7VmB Learn more about your ad choices. Visit megaphone.fm/adchoices

The Berkshire Hathaway Annual Shareholder Meeting took place on Saturday, May 1, featuring Warren Buffett and Charlie Munger. In this episode, Phil and Danielle discuss more of the major highlights from the meeting.In the meeting, Buffett discussed his significant investment in Chevron."I think Chevron has benefited society in all kinds of ways, and I think it continues to do so," said Buffett. "We're going to need a lot of hydrocarbons for a long time, and we'll be very glad we've got them."While Buffett also stated, "Chevron is not an evil company in the least and I have no compunction about owning Chevron. If we owned the entire business, I would not feel uncomfortable about being in that business."This poses the question regarding investing with your values. Our personal values are incredibly important to successful investing. Almost no one talks about how to connect your values or your heart to where your money is going.Remember that wherever you’re putting your money is what is going to grow in the world. And by making the decision to invest based on our personal values, we can change the world radically. Probably faster than any single thing we could do is to put our money where our values are.Rule #1 investors only buy companies that we really want to see in the world. Now, how do you know what your values are? Your values are what you do. Your values are not what you say you’re going to do. Learn how to invest with your values first with my 3-Circles Guide. You’ll discover how to use what you know and love to find businesses that match your values and lifestyle. Click here to get started: https://bit.ly/3ofTar7 Learn more about your ad choices. Visit megaphone.fm/adchoices

The Berkshire Hathaway Annual Shareholder Meeting took place on Saturday, May 1, featuring Warren Buffett and Charlie Munger. In this episode, Phil and Danielle discuss some of the major highlights from the meeting.Munger took an aim at bitcoin and cryptocurrencies during the conglomerate’s annual meeting on Saturday, stating “I think the whole damn development is disgusting and contrary to the interests of civilization.”Buffett and Munger also discussed potential tax hikes from the Biden administration, and expressed not being concerned about them. Buffett mentioned that some companies try to fear-monger by saying the tax rates will be passed through to customers.“It's corporate fiction when they put out statements about the fact that it will be terrible for all of you people,” Buffett said.Buffett also stated that there is a lot more to investing than picking a budding or trending industry. Buffett warned newbie investors, and Phil and Danielle have always agreed with this take on smart investing. Listen to this InvestED podcast today to hear more highlights, and Phil and Danielle’s takeaways on the topics discussed in the Berkshire Hathaway Annual Shareholder Meeting. Rule #1 has been built on the principles of a proven investing method used for the last 80 years by successful investors like Buffett. To invest the Rule #1 way means to “Never Lose Money,” but what it means in practical terms is to invest with certainty. Certainty comes from this: buying a wonderful business at an attractive price. The word wonderful actually encompasses three out of four elements in the Four Ms: Meaning, Moat, Management, and Margin of Safety. Learn more about the Four Ms with this free guide: https://bit.ly/3tjv2ED Learn more about your ad choices. Visit megaphone.fm/adchoices

The stock market crash of 2020 began on Monday, March 9, with history’s largest point plunge for the Dow Jones Industrial Average (DJIA) up to that date. Some investors were scared or nervous but Rule #1 investors, like Danielle, were actually excited about the drop. She is confident in her investing decisions and realized it was an excellent opportunity to load up on more great companies.The market runs in cycles. It goes up, it goes down. But we have to look beyond the charts. While the cycles give us warning signs of potential crashes, predicting the market is not an exact science. The economy reacts to more than just the market cycles. You need to have the perfect storm — many events and economic conditions coming together — for a drop to happen. The important thing is to be prepared for whatever may happen in the market. Keep on saving for retirement and keep on making good investment decisions. Rule #1 investors know how to take advantage of all kinds of economic conditions, including market drops.If you understand the principles of Rule #1 investing, you will find opportunities to increase your long-term wealth. Rule #1 investors do not fear market crashes. They know that downturns provide the best buying opportunities.Today, Phil and Danielle discuss how to look at the market objectively so you have an advantage over other investors during a market drop. Learn how to pick stocks with this free guide I’ve created for you and be ready when your chosen companies go on sale. Preparation plus opportunity equals success. Click here to download: https://bit.ly/3nrRyKq Learn more about your ad choices. Visit megaphone.fm/adchoices

If you haven’t heard the news already, Bernard Madoff has just passed away at the age of 82 in a federal prison hospital in Butner, North Carolina. For more than 50 years, Bernie Madoff was renowned on Wall Street as a big money manager who founded his own firm at age 22 and became non-executive chairman of the Nasdaq in 1990.Madoff was famously known for running the largest and possibly most devastating Ponzi scheme in financial history.He defrauded thousands of investors out of tens of billions of dollars over the course of about 17 years. Madoff was busted on December 11, 2008 after his two sons turned him in. Victims included director Steven Spielberg, actor Kevin Bacon, former New York Mets owner Fred Wilpon, Hall of Fame pitcher Sandy Koufax and Nobel Peace Prize winner Elie Weisel, as well as ordinary investors like Burt Ross who lost $5 million in the scheme. In a 2013 email to CNBC from prison, Madoff mentioned that the break in the market that started the Great Recession led to his scam.“I thought this would be only a short-term trade which could be made up once the market became receptive. The rest is my tragic history of never being able to recover.”In today’s podcast, Phil and Danielle discuss Bernie Madoff and his scheme that led to the nation’s largest financial fraud in history, You can learn a lot from the history of financial figures and investors. Check out my guide where I discuss some of the best investors in the world: https://bit.ly/2P21xJs Learn more about your ad choices. Visit megaphone.fm/adchoices

According to Phil and other value investors, investing should always essentially involve the same principles — even for non-stock investments like bonds. Putting your money where your values are, buying investments at a discount, and being able to move through different types of assets fluidly.  For example, bonds and securities are other types of low-risk investments that investors purchase. However, their potential for returns is much lower as well. A bond might only make you a 3% return on your money over multiple years. This means that when you take your money out of the bond, you’ll have less buying power than when you put it in, because the rate of growth didn’t keep up with the price of inflation.  Bonds can be purchased from the US government, state and city governments, or from individual companies. Mortgage-backed securities are a type of bond typically issued by an agency of the U.S. government, but can also be issued by private firms.  When you purchase a bond, you are essentially loaning money to either a company or the government. For U.S. investors, this is typically the U.S. government, though you can buy foreign bonds as well. The government or company selling you the bond will then pay you interest on the “loan” over the duration of the bond’s life cycle. Corporate bonds are slightly riskier than government bonds because there’s more risk of a corporation defaulting on the loan. Unlike when you invest in a corporation by purchasing its stock, purchasing a corporate bond doesn’t give you any ownership of that company. In today’s podcast, Phil and Danielle discuss bonds, and why the best investments to make for yourself depend on your risk tolerance, level of understanding of certain markets, timeline, and reason for investing.  Learn more about your different investment options with this Complete Guide to Investing for Beginners in 2021: https://bit.ly/3dYlBVI Learn more about your ad choices. Visit megaphone.fm/adchoices

Warren Buffett is currently sitting on about $150 billion in cash. Could this mean that doomsday — or a major market correction — is coming?Most of the time, successful investing is a waiting game. Just as there are poor times to sell your stocks, there are poor times to buy them as well. And sitting on cash while you wait for a better opportunity is often one of the best investing decisions that you can make.As Rule #1 investors, we try to invest in companies that have at least a 50% margin of safety, meaning that there is at least a 50% upside between the company’s stock price and its true value.When valuations are as high as they currently are, though, it becomes difficult to find any quality companies that exhibit this margin of safety.Looking at the Shiller PE ratio, prices have only been this high twice in the past 140 years. The first time they got this high was in 1929. The second time was in 1999. But we might not be here for much longer. Following the smart money — defined as money from big-time investors who know the market better than anyone — is rarely a bad idea, and right now, these investing gurus aren’t putting a lot of money into the market. Instead, the majority of the money flowing into the market right now is coming from retail investors.While these retail investors are buying stocks faster than ever before, the big investing gurus are sitting on their cash. This alone is a pretty good indication that right now might not be the best time to buy into the market.As Rule #1 investors, we like to find companies that are solid enough to survive and thrive no matter what the market does. When a major market correction, as the one that is very likely on the horizon drives the price of these companies down, the opportunity for great returns is higher than ever.Will the stock market crash? What are you going to do if it does? Today, Phil and Danielle discuss what investors should look out for in the stock market, and how to prepare for a potential doomsday.This Stock Market Crash Survival Guide will help you prepare for the next market crash and help you cash in when the market drops: https://bit.ly/3dDUfnF Learn more about your ad choices. Visit megaphone.fm/adchoices

In thinking about the process of finding wonderful companies at attractive prices, it helps to think of what I call the Four Ms: meaning, management, margin of safety, and moat. This podcast is focusing on moat. Most people know a moat to be the water around a castle but in investing terms, a moat is the durable competitive advantage that a company has that protects it from being attacked by competitors. A moat is what makes a company predictable and allows us to put a value on the business. Charlie Munger said that “Coca-Cola is the perfect business because it has this gigantic durable competitive advantage, or moat, which gives it predictable cash flow.”  This allows us to figure out what the future cash flow will be and value the company today, so we know whether we can buy it on sale or not. Finding a business with a wide moat is key to finding a successful business to own, because a business with a wide moat is much more predictable for the next 20 years than a business with no moat. The idea of the moat is really simple. If an industry looks as if it might be very easy to get into, there probably isn’t a moat. On the other hand, if an industry looks as though it might be really hard to get into and be successful, you’ll probably find some wide-moat businesses. In today’s podcast, Phil and Danielle discuss moat and value, and the processes in which they pick stocks with confidence.  Learn more about moat and the other three Ms of investing with this free guide that I’ve created for you: https://bit.ly/31xiBto Learn more about your ad choices. Visit megaphone.fm/adchoices

Stock splits happen from time to time, so it's important for us as investors to understand what they mean and how they might impact our investing decisions.A stock split is when a company decides to exchange more shares of its stock at a lower price for stockholders' existing shares. So, what happens to a stock’s price when it splits?  Nothing actually, although, it’s going to look like something big happened. Stock splits don’t change the market cap, which is the market price of the stock on a given day multiplied by all of the shares, or the sticker price of a stock one single cent. Not a penny. All a stock split does is change the number of shares and the price per share. I repeat: this does not change the total value of all those shares by even one cent.A lower stock price makes it easier to trade because the stock becomes more attainable for interested investors who may have been priced out of buying it in the past. Lower prices make it easier to find buyers than higher prices.When a stock price goes over $100 a share, people start to think of it as “expensive” even though the price of the stock has nothing to do whatsoever with the actual market cap of the business. A business worth $1 million is worth $1 million whether there is one share worth $1 million or 1000 shares worth $1000 each or 1 million shares worth $1 each.But how many buyers are out there for a single share of stock worth $1 million? Not very many. Let’s say there was one buyer. The owner of that single share might have to take a much lower offer simply because there is only one buyer. But if there were a million shares at $1, there can be lots of buyers. Lower stock prices make trading easier, which makes investors trade more often. Trading more often makes for higher stock prices.The bottom line is that stock splits have no effect on the true value of a company. As Rule #1 Investors, we care about the value of a company, not its stock price. We don’t base our investments in a company on the price per share but instead look at the entire company as a real owner does.Learn how to find high-performance stocks with my Four Ms for Successful Investing guide. Click here to download: http://bit.ly/3f4Q32o Learn more about your ad choices. Visit megaphone.fm/adchoices

It’s never a great idea to sit on too much cash. Why? One word: inflation. Inflation is the devaluing of a currency’s buying power. It occurs over time as the government pumps money into the economy and there’s a larger money supply buying a relatively fixed amount of items. As the money supply grows, people feel like they have more money, so they’re willing to pay more for things. When there’s a lot of inflation, wages tend to increase and people then feel like they’ve got even more money, so they’re willing to pay a little bit more for a Coca-Cola. Inflation is something that many people completely forget to factor in when calculating how much money they’re going to need for retirement. Most people tend to assume that if you want to live on, say, $50,000 a year for the rest of your life you need to multiply that number by 30 years and that’s how much you need.  What they don’t take into account is inflation. This means that to retire, you may need much more than you think. The small percentage may not seem like a lot, but over time, it adds up. This is why investing is one of the most important things you can do to set yourself up for a financially secure future. Not just investing in anything, but investing in companies that align with your values. By making the decision to invest based on our personal values, we can change the world radically. In today’s episode of the InvestED podcast, Phil and Danielle discuss why cash is trash, and why it’s important to set yourself up for a financially secure future by investing with your values.Learn how to invest with your values with my Four Ms for Successful Investing Guide. Click here to download: http://bit.ly/3eFrdWP Learn more about your ad choices. Visit megaphone.fm/adchoices