Danielle Town is an investor, host of the InvestED Podcast, and author of INVESTED.
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
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Creator Details

Location
Zürich, Switzerland
Episode Count
322
Podcast Count
6
Total Airtime
1 week, 1 day
PCID
Podchaser Creator ID logo 109535