InvestED: The Rule #1 Investing Podcast

When a company makes the decision to go public, shares of that company become available for purchase, allowing anyone to buy a stake in the company.Each share is a stock, and investors are able to buy and sell shares in any public company at any time. Of course, as with any form of business, the goal is to buy a company’s stock when it’s “on sale” or undervalued relative to its actual value, and to sell that stock when it’s fully valued in order to make a profit.A simplified look at a successful investment is one where an investor buys a company for a certain amount of dollars, holds on to the company for an extended period of time until its value has grown to the point that they feel comfortable selling it, and then sells it above what they purchased it for. Buying great companies when they are on sale is what Rule #1 investing is all about, but it’s fine to wait to buy until you are sure you are getting both a wonderful business and a great price.Think of it this way: you would never buy 100% of a company without thorough due diligence, and, likewise, you shouldn’t buy a small percentage of a company without the same.When the experts—such as Warren Buffett or Charlie Munger—are publicly stating that they are sitting in cash, this is an indicator that they are waiting for a dip in the market, or an event to trigger their next large purchase. On this vault episode of InvestED, Phil and Danielle answer a listener’s question regarding sitting on cash and managing your investments.Learn how to invest and make decisions with confidence with the Rule #1 Cheat Sheet for Smarter Investing. Click here to download: http://bit.ly/2KthciL Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's podcast episode discusses how innovation in companies do not always lead to the best investments, and we decided to feature none other than the prestigious Annalisa Gigante.Annalisa Gigante has been an award winning innovator for 30 years, with a track record of commercial success, launching and building multi-billion dollar new businesses across different industries from life sciences and chemicals to services and digital technologies.She served as CTO of LafargeHolcim, and was an Executive Committee member at Adecco Group as Chief Business Development and Marketing Officer, both as global leaders in their respective industries.Her career includes international roles in innovation, business management, strategy, and marketing. Her key focus areas are sustainability, digital technologies including AI and IoT, new business models, and building high performing teams. She has been the subject of two Masters’ theses on women top executives, and a recent monograph on Innomniacs.Innovation in companies can come in many different forms, including organizational, technological, or process innovation. But do innovative companies always make great investments?Before you buy shares in a company, it is essential to thoroughly analyze that company’s mission, management, goals, outlook, fundamentals, and so on. Great investors would never buy 100% of a company without thorough research for due diligence, and, likewise, you shouldn’t buy a small percentage of a company without the same.If you want to learn more about analyzing companies on your watchlist, download Phil’s Four Ms for Successful Investing Checklist: http://bit.ly/3mwFx4k Learn more about your ad choices. Visit megaphone.fm/adchoices

Investing in the stock market does not involve luck or gambling. It requires a strategy and a solid foundation of knowledge.Investing in anything, especially the stock market, when you don’t have a concrete strategy can be scary. It’s a serious journey that shapes your life and can determine whether or not you live a life free from financial burden. For example, if you don’t have a solid amount of money to retire on in 20 or 30 years from now, the government may not have the funds available to support your lifestyle, which is scary.That is why it is becoming increasingly important to learn how to invest for yourself. In reality, the only fear of investing you should have is the fear of what you will miss out on if you don’t invest.You wouldn’t jump in the ring without knowing the basics of boxing, so you shouldn’t jump into the stock market without knowing the basics of investing.Before you begin building wealth, it’s important to understand your long-term goals of investing as well as the basic process that you will use to reach those goals. But once you learn the basics, you must constantly stay up-to-date with trends and market updates. The most successful investors in the world are reading and educating themselves on a daily basis. In today’s podcast, Jake Taylor—Chief Executive Officer of Farnam Street Investments—sits down with Danielle to discuss luck vs. skill in investing, and why it’s important to stay in a growth mindset. Learn how to invest and make decisions with confidence with the Rule #1 Cheat Sheet for Smarter Investing. Click here to download: https://bit.ly/3gNe0ub Learn more about your ad choices. Visit megaphone.fm/adchoices

What's going to happen to the market in the following months? No one knows for sure. All you can do for now is stick to your process, and stay in the right mindset for rational investing. When you get overwhelmed by stress, lack of sleep, or other factors, your rational mind loses power and your emotions take over. This is a terrible mindset for making investment decisions.You can't avoid those stressful situations as an investor, but the way you handle them can drastically change your outcome. When you notice you are feeling tense or nervous about an important investing decision, take a few slow, deep breaths to calm your nerves. Consider stepping back, and resuming when you have a clear head. In the long term, improving your problem-solving skills and looking at things from a larger perspective will help you deal with stress without feeling overwhelmed.Having a set of processes and boundaries when looking for companies to invest in is critical. Benjamin Graham, who was Warren Buffett's mentor, said that the first thing all investors should think about when they buy a stock is that they have bought part of a business. This is an excellent mindset to have as an investor for several reasons.When you own a business, you care about how well the business is performing its core functions. When you focus on that, instead of on how the stock price changes from one day to the next, you adopt a long-term perspective that is crucial for investing success. Thinking like an owner also helps you avoid panic selling. You maintain a rational perspective and avoid being driven by emotions.In today’s podcast, Jake Taylor—Chief Executive Officer of Farnam Street Investments—sits down with Danielle to discuss his investing process and how he keeps a rational mindset before making any important decisions.Reduce stress by only investing in high-performance stocks using my Four Ms for Successful Investing Guide. Click here to download: https://bit.ly/3lRnvt6 Learn more about your ad choices. Visit megaphone.fm/adchoices

Investing has changed drastically over the years. Many of the tools that were hardly accessible or cost money to use are now available at the click of a button.For instance, one of the best tools that investors can access online is the Securities and Exchange Commission, or SEC. The SEC is an independent federal regulatory agency tasked with protecting investors and capital, overseeing the stock market and proposing and enforcing federal securities laws.By using the SEC, you can view information about brokerage firms, investment advisor representatives, and their professional background and conduct. This could include current registrations, employment history, and disclosures about certain disciplinary events involving the individuals. However, these tools that are accessible online can only effectively be used if you have a solid understanding of basic investing principles. One in which includes only purchasing businesses that have excellent management.When you are looking to trust your money inside the walls of a business, you need to have confidence in the people leading the company. Management capable of taking the company to new heights. People who live and breathe the business. Responsible individuals who make decisions that lead the company in the right direction.Tony Hsieh, former CEO of Zappos, a great example of an effective and honest leader, who cultivated a strong sense of culture in his company. He once stated, “In addition to trying to WOW our customers, we also try to WOW our employees and the vendors and business partners that we work with. We believe that it creates a virtuous cycle, and in our own way, we're making the world a better place and improving people's lives. It's all part of our long term vision to deliver happiness to the world."This week, Danielle discusses why company analysis is so important in the investing process, and why a strong leader such as Tony Hsieh is one of the key factors to a high-performance business.Learn more about finding quality stocks to invest in with the Rule #1 Four Ms for Successful Investing Guide. Click here to download: https://bit.ly/2JzMXpC Learn more about your ad choices. Visit megaphone.fm/adchoices

Have you ever cloned another investor? As the name implies, cloning refers to the strategy of following or copying the ideas of famous investors or fund managers. Most investors believe this is an ethical strategy, and Rule #1 investors actually take advantage of the fact that we can clone or follow expert investors. This idea of cloning goes all the way back to when Warren Buffett first started watching Ben Graham’s investing strategies, and other investing gurus openly stating that they cloned other great investors that came before them.Mohnish Pabrai, for instance, is one of the more successful investors out there. He is a shameless cloner and follower of Warren Buffett and Charlie Munger. In fact, Pabrai once famously stated that “Thou shall be a shameless cloner.” Although, the best investors in the world know that cloning is only an efficient strategy when you do your own research on top of that. But what tools will help you successfully clone experts?One of the most popular tools which I discuss today is Dataroma, to track stock picks and portfolios of legendary value investors such as Warren Buffett. The data is consolidated, categorized and presented in an easily accessible format.What you should look out for while analyzing investors in these tools is how many stocks they own. If an investor owns less than 20 companies, for example, they’re almost certainly a Rule #1-style investor. Only clone investors with this characteristic—investors who stick to a few stocks and are passionate about those companies. Because this means they’re putting in 5% of their portfolio on average into one business, which is a scary thought for the vast majority of people who manage money. They don’t want to get committed to anything because they don’t have that level of certainty, and they’re not doing that kind of research. This week, I discuss these tools and the process of cloning in-depth, and discuss why this could be an effective strategy if done correctly. Learn more about finding quality stocks to invest in with my Four Ms for Successful Investing Guide. Click here to download: https://bit.ly/39fTzUK Learn more about your ad choices. Visit megaphone.fm/adchoices

This has been an emotionally exhausting year for everyone, and you’ve probably been affected in one way or another.Gratitude can be a powerful tool for resilience in the face of adversity, so this week we’re practicing being thankful before the upcoming Thanksgiving holiday. We are incredibly grateful for all of our listeners and hope you enjoy thinking about investing from a different perspective this week.Years ago, I spent some time in Japan with a good friend of mine named Wahei Takeda. He’s known as the Warren Buffett of Japan, who made his entire fortune from scratch in post WWII Japan. Wahei told me that the most important thing that you can do every day, the thing that was responsible for him making billions of dollars, is “Be thankful 1,000 times a day.” This hit home, as I felt like I’ve been doing it my whole life, but I’ve never heard anyone put it into a formula for making money and using it as a guide to investing. Wahei calls it, “Maro Up.” “Maro” means being thankful.When Wahei buys a company, he goes to the CEO and tells them that he wants them to learn the technique of being thankful. This idea of being thankful must be really basic and fundamental to some kind of law of nature.So this week, I challenge you to be aware and thankful as much as you can. Put yourself in that psychological position of gratitude. Be thankful for your investing knowledge, and all it has given you in your life. Be thankful for your computer that allowed you to learn, and your ability to read so you could consume life-changing information.There’s something about it that’s so powerful! It turned Wahei, who was poor, struggling in a country that had been devastated, into a billionaire. If it worked for him, we should try it too.Get inspired to invest like the world's greatest investors with this free guide. Click here to download: https://bit.ly/3f82b0x Learn more about your ad choices. Visit megaphone.fm/adchoices

Phil predicts a devaluation of the buying power of the US dollar. Therefore, there may be problems on the horizon for investors.Inflation is a natural result of currency fluctuations, because it will cost more to purchase goods and services. In some markets, inflation destroyed the stock market for 20 years! For instance, when there was a high rate of inflation in the United States from 1965-1983, the rate of return was nearly 0%.If Phil’s predictions are true, there will be a major problem for investors with diversified portfolios, because your buying power will be dwindled down nearly in half.Diversification is the idea of creating a portfolio that includes multiple investments in order to reduce risk. Someone who is an entrepreneur might think it is best to lower his or her risk and have 100 businesses, rather than focus on one or two. Most people over-diversify. They split their money into hundreds of stocks in hopes of making a great return. This is not the best strategy, because your rate of return is going to be widely dependent on whatever fluctuations the market is experiencing. If you know how to invest, you don’t have to diversify. But on the other hand, investors who own fewer companies will be in better shape. Warren Buffett is a perfect example of this! He made billions of dollars in the 1970s—in fact, it was his best era for investing. The reason for this is because as the market started to realize that there were serious structural problems with currency, it became extremely volatile. The market went from 1000 on the Dow Jones peak in 1965, down 30-50% about 10-15 times in the next 15 years. Rule #1 investors thrive in this kind of market environment. This is why it’s so important to understand when and why businesses go on sale, per the Rule #1 investing principles.Focus your portfolio on businesses you understand, that you know you are buying cheap, and let the diversification happen naturally. It’s worse to be in things you don’t understand than to be un-diversified in industries you do understand. If you’re doing your work well, you shouldn’t have an industry-wide permanent bad surprise. The number of stocks I own, and thus my diversification, such as it is, will ebb and flow as I find great businesses to buy.Phil also believes that as a result of this election, there will be dramatic changes in fiscal policies and in tariffs with China. All of these side effects will create a lot of short-term volatility. Even just a few days after the election, the market immediately jumped up, and has just recently leveled out. It’s hard to tell what will come next.On today’s podcast, Phil predicts what may happen next in the market and why all you can do as a rational Rule #1 investor is rely on the knowledge you’re equipped with. Prepare yourself for whatever may happen in the stock market. Download my Stock Market Crash Survival Guide today: https://bit.ly/3eNtFZ6 Learn more about your ad choices. Visit megaphone.fm/adchoices

What's going to happen in the next few months following the election? Nobody knows for sure, but there will likely be some turbulence ahead. If you’ve been following along with my channels for some time, you know the best method to make long term gains in the market. You have to do the research and buy companies that fit the Rule #1 criteria and are “on sale.” So how come everyone doesn't just do it? It could be because they’re busy adjusting to the pandemic, stressed out, or dealing with other external factors. Now more than ever, you need to take care of your mind and body so you can avoid making costly investing decisions and, more importantly, stay healthy. When you get overwhelmed by stress or fear, your rational mind loses power, and your emotions take over. Being able to control your emotions is an essential part of being a successful investor. And being able to control your emotions depends on how well you take care of yourself day-to-day. If you let anxiety, stress, or fear drive your decisions, you will end up making completely irrational choices that could hurt you in the long run. Instead, you want to train yourself to observe those negative feelings and learn how to deal with them. Constantly falling victim to them will only send you into a downward emotional spiral that might lead you to make bad investment decisions. Always fall back on the investing knowledge you have and let your rational mind take over. Rational investors have the ability to recognize when they’re feeling a bit unbalanced - and then walking away. They come back to it when they have a clear head so they don’t make a rash decision based on emotions. Whether it’s practicing staying mindful, reading, working out, or meditating, try to incorporate some form of practice into your life that will enable you to keep a clear head during stressful times. It will be a big help in developing your ability to control your emotions. Prepare yourself for whatever may happen in the stock market! Download my Stock Market Crash Survival Guide today: https://bit.ly/2TPpbYt Learn more about your ad choices. Visit megaphone.fm/adchoices

Danielle is back for this week’s episode of InvestED. After almost seven weeks into recovery since first experiencing symptoms from COVID-19, she starts to reintroduce routine activity into her daily life and discusses both the physical and economic consequences of COVID-19 with Phil.Numbers have spiked in Europe in the past week and a half and there are theories as to why.Why have rates in some countries spiked, while others have been able to keep their number of cases down - and what does this have to do with investing?Phil and Danielle agree that the virus is very political in the United States, especially with the presidential election on the horizon. There is no doubt that if the pandemic continues the way it has, we will see some very serious currency related issues and possibly dramatic inflation.Businesses such as theatres, sporting events, and restaurants are already on life-support, and the long term effects of people continuing to stay home from work and businesses will lead to many businesses going under.Phil and Danielle agree that another stimulus package will be pushed through very soon, but the question remains as to what will happen with the currency; how much can you print and put into the economy, and how will this affect the US dollar (USD) itself?On top of this, the USD is the world’s reserve currency. If the USD goes down in value, it will injure any other country who has the dollar sitting in its vaults.So what should we as investors invest in, and how should we diversify our investments to protect ourselves from economic crash or inflation?If you want to prepare for the next market crash, download Phil’s Stock Market Crash Survival Guide today: https://bit.ly/3m3J7mt Learn more about your ad choices. Visit megaphone.fm/adchoices