Buying stocks is not something that should be taken lightly. Selecting which companies to buy can make or break you as an investor. Before you buy shares in a company, it is essential to thoroughly investigate that company’s mission, management, goals, outlook, and fundamentals. 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 doing the same. You can do your due diligence by using an investing checklist, so you can reduce your risk and maximize your profits over time. In this podcast, Phil and Danielle discuss investing using a checklist, and how it oftentimes relates to experiences in the real world.  Download my easy-to-use checklist and learn how to apply the Four Ms of investing: https://bit.ly/305Cr1p Topics discussed in this podcast: Investing metaphors Real-life investing scenarios How to pick stocks The Four Ms of investing Company valuations Understanding companies  Learn more about your ad choices. Visit megaphone.fm/adchoices

Invested: The Rule #1 Investing Podcast

339- The Investing Checklist in Real Life

Rule #1 has been the basis of excellent investing for the last 80 years by successful investors like Warren Buffett, and it will be the basis of excellent investing 80 years from now.  First, understand that Rule # 1 literally is “Don’t 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. This is a part of the must-have checklist before purchasing any stock. In this podcast, Phil and Danielle discuss why sticking to this checklist is critical for never losing money in investing.  Learn more about the Four Ms with this guide: https://bit.ly/305Cr1p Topics discussed in this podcast: How to pick stocks The Four Ms of investing Company valuations Understanding companies  Recessions Market fluctuations   Learn more about your ad choices. Visit megaphone.fm/adchoices

338- Stick to the Investing Checklist!

“Invert, always invert” — Charlie Munger If you want to really be a great Rule #1 investor, you must have an investing strategy in place to help guide you.  You must create a story for the company you want to invest in and determine why this is a great company. Once you have that story, invert it by flipping to the opposite point of view.  You should try to create the argument that this investment isn’t the best idea, and if you can’t, then that is a sign that you don’t know enough about the company yet. So, as a part of your Four Ms checklist, one of the last steps is to invert.  When you apply inversions to buying a business, there are four key reasons to look at:  You have a serious inversion for every key reason to own the business You know every reason not to buy a company, better than the short sellers For every inversion, you know a solid rebuttal that erases the inversion Short sellers are wrong! In this podcast, Phil & Danielle cover why it’s important to invert along with four key things to consider for your checklist inversions. Learn more about buying wonderful companies with the Four Ms Guide! Click here to get started: https://bit.ly/3uHlZ2T Topics discussed in this podcast: How to Create a Story Why You Should Always Invert How to Invert to Own a Business Four Key Points of Inversions Relating to Chipotle & Gamestop Learn more about your ad choices. Visit megaphone.fm/adchoices

337- Checklist Inversion

If you’re doing it right, investing in the stock market is much more than picking a few companies, buying a few shares, and hoping for the best. Smart investors are those that are disciplined and have an investing strategy in place to help guide them as they go along with their investment choices. And that includes having a checklist to help you make important investing decisions. Rule #1 investors like to use the Four Ms checklist. They tie into the strategy of, “Buying wonderful businesses at attractive prices” and are important to consider when investing your money for the long-term. “Wonderful” indicates that any business you invest in strongly meets the criteria of three of the Four Ms: Meaning: You understand the business enough to want to own the whole thing if you could, that you’d be proud to own it, and that it reflects your values. Moat: The business must meet certain criteria in terms of financial strength and predictability, creating a symbolic Moat to surround and protect it from competitors. Management: The business is led by skilled, experienced individuals that you respect. Margin of Safety: You are buying the business on sale relative to a known value (which I teach you to calculate easily). Rule #1 is straightforward, but you must be thorough. That’s why Phil created this Four Ms Checklist to help make sure you don’t miss a thing.  In this podcast, Danielle covers a few of her checklist takeaways, and explains why it’s important to have your own checklist and stick to it to reduce your risk in the stock market. Learn more about buying stocks on sale with the Four Ms Guide! Click here to get started: https://bit.ly/3ocoMQg Topics discussed in this podcast: Stock market events How to find stocks on sale How to pick stocks Company valuations Understanding companies    Learn more about your ad choices. Visit megaphone.fm/adchoices

336- Investing Checklist Takeaways

Why do stock market events cause stocks to go on sale? Let’s say that cotton prices start to go nuts because of the Arab Spring. Maybe they’re not going to harvest Egyptian cotton crops, so cotton prices go from $1 to $3. The guys who own companies that depend on cotton prices to be low look at the price and say, “Oh no. It’s going to take over a year before cotton prices come down, I need to get out of this company.” This happens even if there isn’t anything wrong with the company, it’s just going to have a bad year. That company could go from $45 to $15 simply because there are no big buyers. They all get out of the company on momentum. This is what causes stock market prices to change. So, how do Rule #1 Investors take advantage of stock market events? Rule #1 investors buy for the long term. They wait, and when they see something that’s on sale because the big guys have sold it off, it takes them just a few seconds to get in there and take advantage of these stock market events. In this episode of the InvestED podcast, Phil and Danielle discuss stock market events more in-depth, and how to take advantage of when stocks go on sale. Learn more about buying stocks on sale with the Four Ms Guide! Click here to get started: https://bit.ly/3hRUZs1 Topics discussed in this podcast: Stock market events How to find stocks on sale Uncertainty in the market Warren Buffett Tesla Learn more about your ad choices. Visit megaphone.fm/adchoices

335- Rule #1 Event Checklist - Part 2

The key to finding stocks on sale is to wait for a Rule #1 event. What’s a Rule #1 event? It is when something happens that affects the entire market and makes the stock price of a good company drop far below its real value. This could be a recession, a pandemic, an election — you name it.  Remember, the stock price doesn’t reflect the actual value of the company. We know that the company’s price will bounce back in time, and because we take a long-term approach to investing in stocks, we aren’t worried.  During an event, when others are panicking, we can take advantage of the downturn and buy wonderful companies at a tremendous discount.   This is why it’s so important to have your watchlist of wonderful companies ready to go. When you do, you can just sit back and wait for a Rule #1 event to temporarily lower the price of the stocks on your watchlist, and then BUY. When the company recovers from the event and returns to its previous price, your investment could double. In this episode of the InvestED podcast, Phil and Danielle discuss stock market events more in-depth, and how to take advantage of these opportunities as an investor. Learn more about buying stocks on sale with the Four Ms Guide! Click here to get started: https://bit.ly/3Ac9Ogl Topics discussed in this podcast: Stock market events How to find stocks on sale Uncertainty in the market Greed in the market Warren Buffett Mohnish Pabrai Valuation methods Chipotle stock recovery Learn more about your ad choices. Visit megaphone.fm/adchoices

334- Rule #1 Event Checklist

When it comes to investing, conventional wisdom says to hand your money over to a financial advisor and let them diversify your investments for you. Why think too much about where your money is going if you don’t have to? But there’s a problem with that mindset: your values matter and you should be investing in what you love.  Consistently pouring your life and efforts into the things you care about — that matters. As much as 85% of the stock market is controlled by small investors. Imagine the impact those small investors could have if they invested based on their passions and values, rather than the values (or just the blind greed) that drives financial institutions’ investment decisions. You can choose to invest in whatever you want and wherever your passions lie. And the great thing about it is that everyone values something different. Invest in stocks that you value. If you’re not sure what your values are, it’s time to step back and do a little searching. In general, it might make sense not to invest in products or companies that make the world a worse place to live in, but that’s totally up to you. In today’s episode, Phil and Danielle talk about taking charge of your investments and making sure that you’re putting your money where your passions and values lie. Because at the end of the day, you’re better off knowing that you’ve used your resources as wisely as possible, and that you’ve done your best with what you’ve got. Learn more about investing in companies that you already know and love with this Four Ms Guide! Click here to get started: https://bit.ly/2X0sRvq Topics discussed in this podcast: Warren Buffett How to pick stocks Company analysis Investing with your values COVID-19 vaccines Learn more about your ad choices. Visit megaphone.fm/adchoices

333- Invest in What You Love!

In today’s episode, we discuss some words of wisdom shared from the letters of Warren Buffett. There is one concept in particular that we can take from these letters that still applies today, and that is inflation. First, we focus on Warren Buffett’s 1979 letter, where inflation rose to 11.2% in the United States. Buffett decided to write about this in the letter along with larger financial issues in the macro-economic world. He starts by telling other investors that we do not know what will happen with the stock market or the underlying currency. Long-term fixed interest bonds may not continue to serve as a financial instrument and may even become obsolete.  Warren Buffett also points out that there’s no corporate solution to the problem of growing inflation. As currency becomes more worthless, companies do not have a solution to this problem - they just have to do their best. As we fast forward to the early 1980s, Warren Buffett writes some solutions to these types of problems.  First, choose an investment that is adaptable to inflation. This means that earnings will increase consistently with its raised prices without adding in additional capital. The second solution is to choose an investment with very little bad debt, which could sink the company. And lastly, shift your measure of success from earnings, which no longer mean anything on their own, to gains and purchasing power. Danielle leaves us with a final thought on how the pace of economic change has become breathtaking and we need to be ready to adapt. If you want to learn more about what type of companies to look for that can withstand inflation and this uncertain market, register for my NEW investing webinar: https://bit.ly/3mQCVlh Learn more about your ad choices. Visit megaphone.fm/adchoices

332- Warren Buffett's Inflation Principles

The Rule of 72 is a simple equation to help you determine how long an investment will take to double, given a fixed interest rate. It’s a shortcut that you, as an investor, can use to estimate if an investment will double your money quickly enough to be worth pursuing. When you see how quickly your money can double, you’ll understand the power of compound interest.  Compound interest is what makes you wealthy over time; the longer your money is invested, the more it grows. But, how? As you earn interest on your initial investment, those earnings are added to the initial amount while earning interest. This produces more earnings, which can then be reinvested as well.  It’s a powerful cycle that can lead to incredible growth. The Rule of 72 paints a picture of how quickly your money can grow without any additional investment on your part.  You don’t need a special ‘Rule of 72’ calculator to figure out this equation — it’s easy.  Simply divide 72 by the fixed annual rate of return and you’ll know how many years it will take for your money to double.  72 / rate of return = # of years If you’re trying to compute when your money will double at a given interest rate, this formula can be used to determine the interest rate you need your money to double in a set timeframe:  72 / # of years = rate of return In this vault episode of the InvestED podcast, Phil and Danielle discuss the Rule of 72 more in-depth and explain why it’s critical to understand this rule in order to be a great investor.   Topics discussed in this episode: Rule of 72 Compound interest How to pick stocks How to double your money     Learn more about your ad choices. Visit megaphone.fm/adchoices

331- From the Vault: Rule of 72

Physical commodities are investments that you can physically own, such as gold, silver, natural gas, and oil.  Take gold, for example. The price of gold rises and falls, depending on the demand. Demand tends to go up only when people are feeling afraid or uncertain about the future. The problem with investing in gold is that you can’t accurately predict what the demand will be at any particular time. That makes investing in gold more like gambling than like smart investing. If you really want to learn how to invest the smart way, it takes a good amount of due diligence and patience but the long-term payoff is worth it. By following smart investment practices that have made people like Warren Buffett extremely wealthy, you may not make money fast, but you have the potential to make more of it. Warren Buffett started with a small amount of money too, and he turned it into $30 billion. This goes to show that it isn’t about the money you have, it’s about the knowledge you have.  In this vault episode of the InvestED podcast, Phil and Danielle discuss investing in commodities, whether or not they keep up with inflation, and in what scenarios they could be a worthwhile investment despite their inherent risk.  If you want to learn how to reduce your risk while investing, check out this guide where Phil explains how to pick stocks the Rule #1 way: https://bit.ly/3fX1adE Topics discussed in this episode: Valuation methods of investing Types of investments How to pick stocks Commodity stocks   Learn more about your ad choices. Visit megaphone.fm/adchoices

330- From the Vault: Investing in Commodities - Part 2

Physical commodities are investments that you physically own, such as gold, silver, natural gas, and oil.  A commodity stock has several key attributes:   Its products compete primarily on price, but it is not a low-price competitor. Its products are the same as another company’s products. It has no brand identification.  It can’t raise its prices with inflation or increasing costs.   Let’s take gold for example. The practice of investing in gold goes way back, but that doesn’t necessarily mean it’s a great investment. Gold’s price is based on scarcity and fear, which can be impacted by political actions or environmental changes.  If you are investing in gold, be aware that your protection against a price drop, your moat, is based on external factors so the price can fluctuate a lot, and quickly. The price tends to go up when scarcity and fear are abundant and down when gold is widely available and fear is abated. If you think the world is going to be a more fearful place in the future, then gold could be a good investment for you. But this isn’t the case for everyone.  In this vault episode of the InvestED podcast, Phil and Danielle delve further into commodities and discuss what sets them apart from other types of investments. If you want to learn more about how to pick the right investments for you and your lifestyle, check out this guide where Phil explains these principles more in-depth: https://bit.ly/3CGUQkf Topics discussed in this episode: Valuation methods of investing Types of investments How to pick stocks Commodity stocks           Learn more about your ad choices. Visit megaphone.fm/adchoices

329- From the Vault: Investing in Commodities

“Sticker price is what I call the value of the business.” — Phil Town Why does Phil call it the Sticker Price? You know how you have a sticker on the window of a new car and it tells you what the price of the car is, and you never pay the Sticker Price? That’s why we named the value of the business the “Sticker Price.” Rule #1 investors never pay the Sticker Price. They always want to buy it at a significant discount to its true value. How do you find the Sticker Price? That’s the critical part of this whole equation of understanding what businesses to buy. First, you have to make sure it’s a business that you understand the meaning of. You understand it has a big, durable moat and it has a great management team. Now you can start looking for the value. Next, in order to evaluate the Sticker Price you want to find the Future Growth Rate, the P/E Ratio, and your Minimum Acceptable Rate of Return. The Future Growth Rate is always an estimate, the other numbers you can find on financial statements and plug them into the calculator above to see the value, or Sticker Price, of the company's stock. Next, you simply cut that price in half (or take 50%) and that is your Margin of Safety price. For example, if you wanted to buy into a business that was worth $80 per share (Sticker Price), you would look for a Margin of Safety of $40. If the company cannot be bought at $40, then you should add it to your watchlist, update your calculations periodically as new information becomes available, and exercise patience. This week on InvestED, Phil and Danielle discuss Phil’s investing valuation checklist more in-depth and discuss why it’s critical to only purchase companies with a large Margin of Safety, at a discounted Sticker Price. If you want to learn more about evaluating companies using the Four Ms of Rule #1 Investing, check out this guide where Phil explains these principles more in-depth: https://bit.ly/37hIOPv Topics discussed in this episode: Valuation methods of investing Rational investing The Four Ms of investing How to pick stocks Chipotle Stock Warren Buffett Charlie Munger   Learn more about your ad choices. Visit megaphone.fm/adchoices

328- Valuation Checklist

Warren Buffett said, “Be certain,” and here’s how you’re going to be certain. If you buy a wonderful business at an attractive price, you’re certain to make money. It’s essentially like buying a $10 dollar bill for five bucks. You focus on a couple of key things to make sure you know what you’re getting. So, what is a wonderful business?  A wonderful business is understandable, and we’re passionate about it. We call that the meaning of the business. It’s durable, we call that the moat. Like the water around a castle protects it from attack.  The CEO is honest, passionate, and owner-oriented, and we call that management. Those are the first three M’s. We make sure that we understand all three M’s before we go forward, then we look at the price. Ben Graham, who taught Warren Buffett how to do this said, “The three most important words in investing are margin of safety”. The margin of safety is a measure of how “on sale” a company’s stock price is compared to the true value of the company. You need to be able to determine the value of a company and from that value determine a “buy price”. The difference between the two is the margin of safety. The goal is to find wonderful companies for 50% off their actual value. This allows you to purchase a company when it is undervalued at a price that all but guarantees a great return on your investment. This week on InvestED, Phil and Danielle discuss Phil’s investing checklist in-depth and explain why it is the essence of Rule #1 Investing, as well as value investing as a whole. If you want to learn more about the Four Ms of Rule #1 Investing, check out this guide where I explain these principles more in-depth: https://bit.ly/3eZYvPQ Topics discussed in this episode: Warren Buffett Charlie Munger Valuation methods of investing Rational investing The Four Ms of investing How to pick stocks Learn more about your ad choices. Visit megaphone.fm/adchoices

327- Phil’s Investing Checklist Review

William Albert Ackman is an American investor and hedge fund manager. He has a well-known 8-point investing checklist, which is straightforward and reflects the basic principles of Rule #1 Investing. That checklist includes only investing in simple and predictable businesses with a dominant market position, limited risk, a strong balance sheet, excellent management, high return on capital, free cash flow generative, and large barriers to entry. Sound familiar? There’s a lot of talk in the financial community about “diversification,” which simply means investing your money in a variety of ways in order to provide a safety net should one investment go south. The thing is, you don’t need to diversify if you know how to invest and understand what you are investing in. By taking the time to research and learn about the companies you are investing in, you are providing your own safety net, because you won’t invest in any company that doesn’t meet the standards for a wonderful company, as it is defined in Rule #1 Investing. That is key.  This week on InvestED, Phil and Danielle discuss Bill Ackman’s checklist more in-depth, and explain why you can’t blindly put your money in stocks chosen at random and expect to achieve great returns. In order to succeed investing in the stock market, you have to use a system and a strategy. Learn how to find and pick quality stocks with this FREE Four Ms Guide: https://bit.ly/3krSdvB Topics discussed in this episode: Bill Ackman Valuation methods of investing Rational investing Tesla stock Coca-Cola stock Learn more about your ad choices. Visit megaphone.fm/adchoices

326- Bill Ackman’s Investing Checklist Part 3

Michael Burry is an American investor, hedge fund manager, and physician. Burry is one of the most renowned names in the hedge fund industry, managing over $1 billion in assets. Michael Burry has been in the news recently after regulatory filings revealed that he had PUT options on more than 800,000 shares of Tesla (TSLA).  There has also been information released on which stocks he plans to sell, including The Allstate Corporation (ALL), Discovery, Inc. (DISCA), The GEO Group, Inc. (GEO), and Ares Capital Corporation (ARCC). But what can people do with this information? Coattailing is a popular technique in investing. When you use coattail investing strategies on some of the best investors, you’re essentially looking and copying the people who we know have made enormous rates of return over 20 and 30 year periods of time. Some examples of these types of investors are Michael Burry, Charlie Munger, Warren Buffett, David Einhorn, and Bruce Berkowitz. So, how can you coattail the best investors?  Investors who manage more than $100 million dollars have to file what they bought and what they sold every quarter with the SEC. All you have to do is look it up. It’s free information. Find out what investors you want to copy and then go to the SEC website and look at what they are buying and selling every quarter. They have to file every 90 days, so check to make sure the price of the stock is still around what they paid for it. If you like the company, which is critical, apply the Four Ms of investing and make sure it’s on sale for an attractive price. In this episode of InvestED, Phil and Danielle discuss Michael Burry’s 13F filings and why it’s important to do your own research as an investor. If you want to learn more about finding quality stocks based on the Four Ms of investing, download this FREE guide: https://bit.ly/3r4L2Lb   Topics discussed in this episode: Michael Burry  SEC Reporting Leveraged investments Options  Pfizer stock Google stock Tesla stock Picking stocks   Learn more about your ad choices. Visit megaphone.fm/adchoices

325- Michael Burry’s 13F Report

Phil Town is a hedge fund manager and author of 3 New York Times best-selling investment books, Invested, Rule #1, and Payback Time. On the InvestED podcast, Phil and his daughter Danielle shine a light on the successful investing strategies that gurus like Warren Buffett have used for 80 years. Listen in for a great stock market education on basics, learn how to invest on your own, and follow along with real-time examples and investing tips from week to week. Subscribe and leave a review. Questions? Email questions@investedpodcast.com.

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Invested: The Rule #1 Investing Podcast

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