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at etfs on moats com plus for

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i guess because it was you dreams are getting requests

1:08

the as she got me into reading saturday's

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today we have a special guess we have somebody joining

1:41

us from down under from all the way from sydney

1:43

australia we have market low monica

1:45

who is the director of

1:47

individual research at morningstar

1:49

he is here to talk to us about craziness

1:52

in the markets and some other fun stuff so

1:54

mark thank you for joining us today we really appreciate

1:56

it's guess we'll start talking about what's

1:58

going on the market that shit

2:00

the place for little bit the i know exactly

2:02

in thank you very much for having me really appreciate

2:04

it south step is obviously been

2:06

a i it's been an interesting time you

2:08

know i think if i don't have to tell people what's

2:10

our what's going on is it is on

2:13

front page every newspaper but yeah

2:15

mean i think if we go back to

2:17

the fourth quarter of last year we

2:19

sort of started seeing some the

2:21

most speculative shares a really small

2:24

tap growth shares start to dive

2:27

and you know these are really companies

2:29

that had no fundamentals rights had no

2:31

earnings and that is

2:33

spread to so you know starting

2:35

in i was starting in january

2:37

we started to see that creep up the got

2:39

into mid cap growth and then gotten a large

2:42

cap growth and you know based on

2:44

run that we've gone on in the past

2:46

couple years as large cap growth

2:48

companies that make up so much

2:50

at big indexes south settlers

2:52

we sit there and look at the snp five hundred and that

2:54

sort rob the market down and

2:57

you know i will say that i think what has happened

2:59

so far as is really did evaluations

3:02

ribbon bear markets you

3:04

know we haven't really seen yet

3:07

said think everyone's thinking about it but we haven't

3:09

really seen yet huge falls and earnings

3:11

we really just saw the market reprice

3:13

shares or the under the dates that's

3:15

really what's happened market looked at evaluation

3:18

levels and have adjusted them and will

3:20

sort of see what happens next mean i'm a

3:22

little bit worried about this next stage

3:24

but stats or be seen so far it

3:26

hasn't seen like is they'll

3:29

wagging the dog the dog wagging tail

3:31

today as record this we heard

3:34

the said talk about raising bias and

3:36

the five basis points which is points

3:38

seven five percent summertime

3:41

because live i'll probably be all news and will be talking about

3:43

the next race height suffice

3:45

you know is our interest rate moves something

3:47

that investors should be worried

3:49

about is it interest

3:52

rate plus iranians

3:54

coming down that they should be worried about should

3:56

they be focusing on something completely

3:59

outside of we see what the news

4:01

headlines

4:02

yeah let's go back to talk about what's happened so basically

4:05

you know we had central banks around

4:07

world saying it was gonna be years

4:09

for interest rates are going up and

4:12

will not changed or don't know

4:14

the market sat there in way that we value

4:16

shares right we've looked at cashflows

4:19

and we project task was in the seats are we just

4:21

count them back to the presence and that

4:23

discount rate there's and

4:25

people use different things but you know it is

4:28

driven by interest rates so

4:30

that's where we saw that repricing

4:32

valuation levels now that

4:35

is anticipate right the market is forward

4:37

walk i think the issue

4:39

we have now with interest rates is the reason

4:41

obviously they're getting raised his to slow

4:44

the economy and so that's

4:46

i think the next concern and sort of see

4:48

the next like down and i do

4:51

think the market will keep falling at it

4:53

the next like down i'll be driven by

4:55

earnings right so you know we sit there

4:57

simplistically and will get price earnings ratio

4:59

we've seen that price change earnings

5:02

haven't really did hit yet and united

5:04

sort of to problems

5:06

were going to run into if we look at we look

5:08

at things from the arctic side is number

5:10

one we need realize that he go

5:12

back over the past decade water

5:15

the earnings growth that we've seen

5:17

has been driven by a margin expanses

5:19

of a scary when we talk about margins a

5:21

company sells goods and services

5:24

and then they have a bunch of different expenses

5:26

and and something comes out bottom right earnings

5:29

and so we haven't really seen

5:31

earnings growth from selling

5:33

a lot more we haven't seen huge revenue

5:36

growth and we're looking at the aggregate years

5:38

but what we have seen as margin expansion

5:40

and so you know that margins managers come

5:43

from india lasers like number one obviously

5:45

there were the trump's outskirts so

5:47

that is one way corporate tax cuts that's

5:49

one way we see margin expansions

5:52

we've also seen it from sort of the continue

5:54

to facts of globalization and

5:57

you know the under the day the scene

5:59

offshoring outsourcing we

6:01

seen sort of a lot efficiency and

6:03

supply chains right the sort of just in

6:05

time notion of the

6:07

building car and all the good show up that day

6:09

he told the garments great you don't carry inventory

6:12

and a lot of that is on wind right

6:14

light of we sit there and look at everything

6:17

that's going on we're not going to get another

6:19

chance start you know has sausage anywhere

6:21

around the world governments are saddled with it's

6:23

hundred deaths from all of the stimulus

6:25

during told it to knock and attack

6:28

starts wanted globalization

6:30

pieces unwinding right

6:33

like we hear about this disruption

6:35

to supply chains and that is temporary

6:37

bart you know i think a lot of countries

6:39

got caught off guard are involved with i

6:41

couldn't get things in there's a big

6:43

companies and countries talking about okay

6:46

now we're going on sure things again and try

6:48

be a little more independence obviously

6:50

there's the continued trade war with china

6:52

others you know russia like

6:54

this mobilization stories on a fallen apart

6:57

so you know my concern is

6:59

an awesome obviously inflation right

7:01

you know we don't know it's very difficult

7:03

manage a business with high inflation

7:06

and i think we're going to start to see that margins

7:08

and pressure and yeah we'll

7:10

see what happens with economy that's just on

7:12

the revenue reside we'll see what happens at abbott i

7:14

think organ start to see this marching compression

7:16

because historically as to spin

7:20

way higher than we've ever seen in

7:22

history rise you go back and look at

7:24

the margin levels like

7:26

they should revert to mean

7:29

and i think that's can be our problems

7:31

though you say that you think the market's

7:33

gonna go down it's quite likely

7:35

that goes down and the next month's follow

7:38

to , that means individual messrs

7:40

average investors should be saleen ah

7:43

what kind of mindset should they be a protein

7:45

the next three their eyes months

7:48

yeah i mean i think was it's an easy story

7:50

to sit there and you know this is me

7:53

saying i think the market's going go down as not exactly

7:55

a bold predictions at this point

7:58

five you know i think it's all about your

8:00

goals and you know i know

8:02

personally that you know my

8:04

goals are far away in

8:06

have not been selling over past couple years

8:08

i've built up more cash sites

8:10

audience and putting any more money ends of savings

8:13

that i've had idol something tasks

8:15

i turned off misses me personally this

8:17

is awesome to have more insights i have

8:19

turned off all the dividend reinvestment it's

8:22

wins in my town so the past couple years

8:24

so i did building up tasks so

8:26

yeah i wouldn't say it's necessarily

8:28

time to buy it's but also you

8:30

know i hadn't been selling things right you know eyes

8:33

splitting the other day that this is the

8:35

third bear market i've gone through since

8:37

i started investing for that

8:39

he can't i target wants to didn't write

8:41

downs deserves a monster sides yeah

8:43

i think it's focusing on your goals and

8:45

it's figuring out you know as

8:47

investor what are you comfortable

8:50

actually by and yeah i

8:52

think that's an underappreciated part

8:55

investing is that you know the biggest

8:57

manage biggest piece of edge of we want to

8:59

use arts sort of finance

9:01

terms because he's of ads we

9:03

have as individual investors is the ability

9:05

to have a long term outlook and

9:07

in order to do that you need to be comfortable

9:10

used to own things you're comfortable with the

9:12

not sell when they fall so i think that's

9:15

my advice figure out what kind industry are

9:17

figure out what you're comfortable with kind of taking

9:20

that approach says you know

9:22

looking up the landscape and obviously

9:25

like you said margins are historically

9:28

high of it's very possible they could revert

9:30

to the mean and we have inflationary

9:32

pressures all these pressures could eat at profits

9:35

are there certain sectors are

9:37

signs of companies that are

9:40

potentially not as impacted

9:42

as as it

9:44

may sound like are going to

9:46

be impacted in aggregate

9:48

yeah i mean what's an easy that

9:50

easy answer to that me answer everyone has

9:52

as you know inflationary times commodities

9:55

do very well said these are looking at

9:57

resource shares are know sitting here

9:59

in austria there are a lot of researchers

10:02

so you know we start to look at

10:04

miners oil producers like

10:06

traditionally they have done really

10:08

well what i would

10:10

say is honey taking a step back you know we

10:12

need to think about what are companies and

10:14

when we talk about margin what are the companies

10:16

are can be able to protect that and

10:19

so you know who has pricing

10:21

power in it morningstar you

10:23

know what we look at his mouth

10:25

and you know sorry from that baset

10:27

popularized and euros are so you're

10:29

reading that are analysts gives and

10:31

those are companies with sustainable competitive

10:34

advantages south i think those

10:36

the companies that over time will

10:39

do well and you know it's

10:41

not you know if we look it's or the craziness

10:43

has happened the last couple years still

10:45

those have not been companies that have done particularly

10:48

well not the ones have been popular with investors

10:50

be cares you know that sustainable competitive

10:52

advantages cruz over times

10:55

and you know think those are the

10:57

company's it should be able to protect

10:59

their margins should be able to pass

11:01

on those costs to consumers

11:04

and said come out said

11:06

some to decide okay

11:08

some people say the metaverse will only

11:10

be virtual that

11:11

one day in the metaverse doctors

11:14

will practice high risk surgeries

11:16

hundreds of times before they operate on

11:18

real patients

11:19

students will be transported to ancient

11:21

rome and saturn's rings improving

11:24

health outcomes learning and more

11:27

the metaverse maybe virtual but the impact

11:29

will be real learn more one

11:31

todays buying for measure of are at measure

11:33

the com selection measure importance

11:36

remember

11:38

that if you that kpmg as

11:40

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trust and move forward in a digital era

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right talent and technologies generating

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insights that spark opportunities explore

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their thinking visit read it dot kp

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you opportunity

11:59

it

12:00

the great point so how should and individual

12:02

investors work for companies

12:04

that have those kinds of sustainable

12:06

advantages are most of the of

12:08

besides morning stars great charts

12:11

deal as somebody this somebody this

12:13

for work and to turn to find his cancer companies

12:15

what we're cancer things which you suggest

12:18

yeah so you know it's it's interesting one

12:20

so you know number one i think it is and

12:22

we believe the morning started fundamental research

12:24

sort of the approach we take and

12:27

you know what i will say that investing there's lots different

12:29

approaches at work right sort of finding

12:31

the one that you're comfortable as south and fundamental

12:33

research is really is studying companies

12:37

studying the dynamics of the

12:39

industry they operate in span

12:41

yeah i know that sort of a vague answer

12:43

but think really understanding the company's

12:45

understanding their competitors understanding

12:47

that sometimes environments and then you actually

12:50

see it when you look at

12:52

financial statements as well as a dozen important

12:54

thing to size and or started to different

12:56

ways that you see it like margin is

12:58

certainly one so you

13:00

know going back there and looking at

13:03

and go back ten years right by you know

13:05

this obviously this need to be a long term

13:07

study go back and what is margin are able to

13:09

maintain and potentially spam their margin

13:11

that comedian qb some updates to

13:13

have him boats and the other places shows

13:15

up his return on invested capital

13:18

so basically what return bessie

13:20

capital is measuring is

13:22

know when a business reinvest

13:24

business itself what return

13:27

are they getting that is what a ceos

13:29

job is is to sit

13:32

there and our t capitals so

13:34

the capital that the are putting back into

13:36

the business what return are they getting and what

13:38

we wanna see from a moat

13:40

perspectives and sorry for using all this

13:42

finance jargon but what

13:44

we wanna see his we wanna see

13:46

a return on invested capital over

13:48

the long term that is higher than

13:50

their cost of capital so very

13:53

simply what that means if we think about

13:55

we're running small business that we want

13:57

to go borrow money at five percent and

14:00

we want to invested in accompanied

14:02

and aren't ten percent right

14:04

and over time that difference and that's

14:06

obviously pretty big difference by the

14:08

time that difference is what cruise

14:11

to shareholders and what

14:13

we see in general we think about

14:15

capital is what is capitalism it is competitions

14:18

and what that means is

14:20

it supposed to benefit us as consumer

14:23

rights or companies are out there and they

14:25

compete in two ways or try to build better

14:27

product which benefits asked as

14:29

we get better stuff and also

14:31

they're going to compete on price that

14:33

that it's it's ours that we get stuff

14:35

for cheaper now that's really good

14:37

for us as consumers is really bad for companies

14:40

this or that causing competitions

14:43

investing in creating better products and

14:45

services and and lowering prices as much

14:47

as possible so that's not great for a company

14:50

though generally what companies

14:52

will do is they will drive

14:54

down that return on invested capital

14:57

in till it hits the cost of

14:59

capital rights and then just as company that

15:01

sort of self perpetuating right

15:03

they borrow at five percent they invest in they aren't

15:05

viper sites and you know that's

15:07

fine they'll stay in business and

15:10

that's great but we want companies

15:12

that are investing in actually able to

15:14

send off that competition on a higher

15:16

returns guy

15:18

, reading something recently that

15:21

survey suggested working for companies

15:23

that had week into these hard times

15:26

other words they hire more people they

15:28

invest more money they acquire

15:30

more businesses is just looking to take

15:32

advantage of the downturn

15:35

in their competition and they

15:37

can benefit from that in it may

15:39

be bloody them little bit in the short

15:41

term but in the long term will come out ahead

15:43

yeah no absolutely and think that there's lot

15:45

of junk out there you know if you sit there

15:48

and you look at you know the most speculative

15:50

parts of the market have done well

15:52

sense that tonic oh that mardi gras

15:55

these are companies that don't make any money

15:57

and you know they we got companies

16:00

make any money we've got companies are heavily

16:02

reliant on borrowing money he sort

16:04

this notion of the zombie companies that

16:06

are just started going out there and just borrowing

16:09

money and that's how

16:11

we're raising at through answer job

16:13

at own everything else is a subway money out of

16:15

people's like those are the companies are

16:17

in trouble but yeah i think you're right that's there

16:19

are certainly opportunities out there companies

16:21

that the you have if

16:24

their interest or on financial position and

16:26

that are looking ten years down the road and

16:28

not try nerve pay their employees

16:30

with next couple years like those are the company's i will

16:32

do well and they can take advantage of these opportunities

16:35

does is a think that i think is interesting about

16:38

the stock market is that the

16:40

when we go through

16:42

situations like this where we have a bear markets

16:45

or the other starting of a bear

16:47

markets that everybody kind of runs for the

16:49

hills and when we go to the store

16:51

we all want buy stuff on sale but for whatever

16:53

reasons we don't want to buy things on

16:55

sale in the stock market and i have never quite

16:57

understood that

16:59

yeah we are now i think it's mentality

17:01

and i think one thing i would warn against

17:03

his we sorta had this notion of

17:06

by the depth and you

17:08

know by the jap certainly

17:10

worth spike it's a bull market

17:12

trading strategies right light

17:15

if we're if we're in bull market which

17:17

basically means you are continuing

17:19

to hit new highs now doesn't go

17:21

straight up the deportes great

17:24

right market goes down five percent you

17:26

by the know it another ice

17:28

but any people have been doing that we've seen

17:30

in lot sort of with retail investors

17:33

globally in australia in us

17:35

where you know people have gotten into this mentality

17:37

and they've kept buying the depths

17:40

so i just would caution against

17:42

that like if it's very important to have a plan

17:45

and you know your way

17:47

and i don't think people said deviate from

17:49

their plans but or this notion

17:51

that you are gonna are gonna your plan

17:53

and keep sewing money and every time the market

17:55

goes down to present probably as the

17:57

great approach you mentioned how

18:01

in oak investors really piled into these

18:04

and of more speculative names that aren't making

18:06

profits the one great

18:08

way to kind of avoid that fargo

18:11

for the higher return are the best the capital

18:13

companies but something about

18:15

and thus serves as they just kept and i keep themselves

18:17

away from the lights so how

18:19

do you investors

18:22

you know whether it's thinking about cost the capital

18:24

whether it's return on invested capital

18:27

have you get investors move

18:29

away from the big promise

18:31

of these fast growing companies

18:34

and move more towards the companies

18:36

that are generating these high returns

18:38

high profits but maybe

18:40

aren't growing as fast so it's not as exciting

18:43

how can we hit investors like foot that mentality

18:45

i think there's couple different things to i

18:47

to think about number one think that we need to realize

18:50

that you know as humans we are

18:52

attracted to narratives and

18:55

you know

18:56

certainly in the investing world were tracked

18:59

it's narratives are you know i you

19:01

look at arc innovation for example

19:03

right that is a narrative now i

19:05

think the narrative is bs

19:08

for lack of said her our way to describe

19:10

it but that is but that is a narrative

19:12

writers that's very attractive to

19:14

investors like we're investing

19:16

in cutting edge companies that

19:18

are going to to use the world's wealth that doesn't

19:20

make them good investment so i think we

19:22

need to realize that's a good story

19:25

and even lot of growth does not

19:27

make good investments and you know there

19:29

examples throughout history

19:32

and you know one of the time easy

19:34

ones railroads and

19:36

you know we forget white how big

19:38

of an innovation railroads worse

19:40

and they were horrible investments that

19:42

they changed world there was

19:44

tremendous growth but there

19:46

were so much capital that rushed into that

19:49

that as an investor they all went out of business

19:51

now what did that benefit

19:53

vote actually benefited the companies that use the

19:55

railroads you know just like in a

19:57

more recent example in sort of similar examples

19:59

we go back the com caution how

20:01

into at research beginners one

20:03

the interpret on we for

20:05

are to google to

20:09

one the internet and spread the internet well

20:11

where's world com and where's global crossing

20:13

they went out business the internet didn't go

20:15

out of business but all the money that was

20:17

invested their the go lot of

20:19

basically capacities lead

20:21

to all these companies now you know you wouldn't

20:24

have you tube we wouldn't be doing nurse were

20:26

looking at each other on video i'm in

20:28

australia we wouldn't be doing this if there wasn't

20:30

a ton of bandwidth and it was really

20:32

cheap slight so and

20:34

agree to that to be careful about those narratives

20:36

and you know one of my favorite

20:39

boxes you know jeremy see goals

20:41

wrote couple different box by your stocks

20:43

for the long run it basically went back and what

20:45

that's what the best

20:48

returning shares and did he wrote

20:50

this i think in the early two thousand

20:52

but either way you looked at his north korea for

20:54

my nineteen twenty five on and

20:56

looked at what company the

20:59

the best if we look at the us

21:01

stock markets and it was philip

21:03

morris and get

21:05

out we sit there and we look at philip morris of course

21:07

is and it's split into a couple companies now

21:10

but they make cigarettes and

21:12

you know if we go back and we think about that period

21:14

from like nineteen twenty five to

21:16

the early two thousand we got out

21:18

and look at that period we think about everything that

21:20

happens you know like you

21:22

know the automobile be

21:24

gotten mass adopted we

21:27

obviously hadn't bomb semiconductors

21:29

invented in computers and the

21:31

internet all this stuff and

21:33

you know smoking actually teach in us in

21:35

the early sixties flight we

21:37

actually know everything that's happened with cigarettes

21:39

the government regulation these

21:42

lawsuits tax increases

21:45

so you know that's terrible narrative

21:47

but the company just sat there was very

21:50

efficient paid high dividends

21:52

you know those are the good investments like

21:54

boring over long term that

21:57

works and so think we just had be very

21:59

wary of those narratives under somebody's telling

22:01

you a story and they're normally the people

22:03

telling you these stories somebody trying sell you

22:05

something to they're trying to sell us

22:07

analogy to ask they're trying to sell you

22:09

a products i just be very wary

22:11

of that's

22:13

what a long way to get started in

22:15

the money load andrews been

22:17

closed for free as stock market

22:20

stock com really

22:23

, advice and also a good book recommendation

22:26

know that book is packed with

22:28

charts and all this great statistics

22:31

information so thank you for that what

22:33

your thoughts on e t f i kind piqued and

22:35

i saw and your podcast feed that that

22:37

potentially how to controversial this

22:40

advice your some are completely are

22:43

investing on paras the your what

22:45

your thoughts are the t of thank

22:47

the research and the really of

22:49

research paras

22:51

yes per se but

22:53

you know the reason we do dot is because

22:55

you know i think particularly a lot of the

22:58

investors that have started investing

23:00

since kobe which is grades have

23:03

been drawn city awesome there's a lot of advantages

23:05

around each yes and get out certainly

23:07

they are for the most part low cost

23:10

it is certainly easy to invest in

23:12

nantes think the problem isn't

23:14

a lot of this goes back to kind of vanguard and

23:16

looking at john bogle and who

23:18

cheated gts which is interesting

23:20

obviously concerned be on guard is obviously

23:22

huge provider of each asks you

23:24

know think it's the ability

23:27

to trade something all day means

23:30

of course people trade stuff all day

23:32

and you the example we use

23:34

on our podcast little bit

23:36

of crude example been swayed if you

23:39

are trying to you

23:41

know stop using drugs you

23:43

probably shouldn't sell your house with drugs

23:45

right that's not going to make you use drugs

23:47

but it doesn't make it easier to quit

23:49

and i think easy as encourage trading

23:52

and so once again there's nothing wrong with that the

23:55

mom with an e t af which is realize

23:57

that that ability to sit there now

23:59

and years the phone and traded yeah so you're

24:01

in line at deli is not

24:04

a good thing so i think investors

24:06

as to take step back and say you

24:08

know why do i need to trade something all

24:10

day like if i look at funds

24:13

vs meet yeah flights what

24:15

is that each he has given me that of fun desert

24:17

it's giving me the ability to trade old a just make

24:19

sure you don't do it so that's adding all

24:21

we're saying so more more

24:23

than talking about eighty houses is looking at investor

24:26

behaviors and things we know don't

24:28

was chasing returns doesn't work

24:30

over trading doesn't work and

24:32

you know getting asked sort of encourage

24:34

all

24:35

alex corral is one of over seventy thousand

24:37

google career certificate graduate

24:39

the google career certificate program completely

24:42

changed the trajectory of my life i've always

24:44

been interested in computers but i never thought

24:46

can turn this into career anytime i

24:48

got little break i just pop open the of

24:50

course on my phone that allowed

24:52

me to have that path into

24:54

a career that are passionate about dream

24:56

online for in demand jobs in eighty

24:59

you are design data analytics

25:01

project management and more is

25:03

it grew dot google slash certificate

25:06

though i guess moving for i think we can kind

25:08

of

25:09

understand that lot of the speculative names

25:11

have been smacked bind deaths probably

25:13

a really bad idea on lot of those names

25:16

the always talked about companies

25:18

with motes can you give an example

25:21

of maybe something in your portfolio

25:23

that is a good example of strong

25:26

mo with higher returns compared

25:28

to it's cost the capital

25:29

yeah so you know minimize

25:31

i'm sorry bonus points if it's boring that

25:35

the boy i did his kind of borisov

25:37

the the big and will say that you

25:39

know sort of during i have been building up their

25:41

cash once again this is all person or not

25:44

morningstar you know i have been building up

25:46

the stairs for several years now

25:48

and so i went into that coded market

25:50

dropped with a fair amount tasks

25:52

and you know i probably

25:54

should have invested more start the market was

25:56

even keep going down so you don't take

25:59

obviously my prediction earlier with the market going

26:01

down to grain salt but yeah

26:03

i bought one thing bought was constellation brands

26:06

and so easily constellation brands

26:08

cells beer and made they do couple

26:10

other things as well they got some wine

26:12

some sort of that great

26:14

litter brands are really they sell beer

26:16

and is a mexican beer a child corona's

26:19

is kind their big one but modelo

26:21

as well as years ago and

26:24

you the entity i think this is this is kind

26:26

of a classic example of a moat

26:28

from grants and you

26:30

know i don't know what your personal feelings are

26:32

about grown ups but you know

26:35

i don't think it's a great beer fight

26:37

, know if we look at from a brand

26:39

perspective what they built and

26:42

i did say corona almost anyone in the

26:44

world and they're thinking about sitting on a beach

26:46

being out on a both they built this incredible

26:48

brand and ensuing thing about corona

26:50

is so grown as made with very cheap

26:52

ingredients there's a difference

26:54

right basically between you know

26:57

what goes into a cronus and

26:59

what goes into any other sort of mass produce

27:01

beer but they sell it

27:03

at sell it price and

27:05

so you know since amazing thing that if sit there

27:07

and might take bud light and all

27:09

the sudden my jack prices up by forty

27:11

percent probably not can do very well but

27:14

corona has been able to do that so

27:16

you know certainly when we look at the ingredients to go

27:18

into beers there are of course

27:20

premium ingredients and we see a lot of add

27:22

in premium beers in general

27:25

different microbrews everything else that as

27:27

a our butts corona has that

27:29

ability to go in there

27:31

and not spend lot money on ingredients

27:34

but sell at a premium price outs i

27:36

think that's an example there's all sorts of other reasons

27:38

right there are times you know secular

27:40

trends of course of the us and

27:42

demographic shifts to that's certainly

27:44

are benefiting down but i think more than anything else

27:46

it's that brand that they've been able build

27:49

you know it kind makes me think about

27:52

compare i also think saw talked about enough i

27:54

can't remember what the name as my now it's like specific

27:56

bias were let's say

27:58

somebody would hear

28:00

that as a potential stock

28:02

idea opportunity but

28:04

you don't like corona the brand and

28:07

so we tend to think that our own

28:09

preferences are similar to the way

28:11

rest the world think so we must think all the rest

28:13

the world thinks that prone as crappy band

28:16

obviously numbers play are different ways i really

28:18

wonder how many opportunities investors

28:20

miss out on because they have this

28:23

sphere of world us as well i

28:25

think that this is how a particular

28:27

business or brand is that

28:29

must be how the rest of world as

28:32

karma is pure and when staff right you

28:34

know that's go buy things

28:36

that you use and might and by

28:39

terry i i occasionally drink grown

28:41

up not saying that i'm not saying that don't

28:43

bites yeah i mean i think people maybe

28:45

take that mentality of a little far south

28:48

as probably bunch of people that are up thousand

28:50

bites during covert and decided

28:52

that this was the best batsman ever and

28:54

probably aren't you happy about that right now spite

28:57

yeah i mean think we just have to try to take step

28:59

back that's why it's said you said

29:01

i've been looking at the fundamentals of accompanies

29:03

just like i don't think you should go out there in

29:05

by a you know somebody

29:07

that producers directors you like the beers

29:10

but that could be great lesson to take step

29:12

back and think about you know what is it

29:14

like what is it about that company

29:16

and you know a lot of it you

29:18

know we talk about we want keep using beer examples

29:20

lights yeah there's lot of good beers so

29:24

you're arnold and being good beer is really

29:26

going do much for you as as starting

29:28

look sort of cost and brandon

29:30

you know how does that slow into a

29:32

financial statement the

29:34

you mentioned margins which

29:36

is one thing people can look out for fundamentals

29:39

basically how much revenue to bring

29:41

em whether the costs and then what's

29:43

the profit there's two other kinds margin

29:45

to be will have get into the

29:48

those by fino also

29:50

return on invested capital but any

29:52

other key fundamentals are people said

29:54

look out for as starting point to say

29:57

this can be good indicators us companies

29:59

with boats

30:00

yeah i mean you i think those are probably

30:02

the two main things i've lookout for most

30:05

but the other thing that think it's really important to

30:07

look at years we have another rating

30:09

it morningstar called the uncertainty rate

30:12

and basically you know what that means

30:14

is as an analyst and be

30:16

an analyst courses the

30:19

debris difficult thing because you are predicting

30:21

the future right you know the whole

30:23

when you're analyzing is air as investors

30:26

we just need be very cognizant that it does not

30:28

matter what happened the past right

30:30

like those and financial savings and

30:32

everything else like that is all the past we

30:34

only look at those there's clues into

30:37

what's gonna happen future right south

30:39

what analyst or what any investors how

30:41

to do is predict the future and

30:43

we do need to acknowledge and this is words around

30:45

finding a share that's right for you we

30:48

, need to acknowledge that the uncertainty

30:51

around the future around

30:53

these tweets are tassos is different for different

30:55

companies and so

30:58

young and simple examples

31:00

is that you know if i am

31:03

a small tap company so

31:05

i'm company new company maybe

31:07

i have one products i don't

31:10

have big history a trying to

31:12

expand that's very

31:14

different than if i'm a large

31:16

established company right so the differences

31:19

are large established companies generally

31:21

would have more diverse products range as they

31:23

would generally cells in more

31:25

market south local conditions

31:27

wouldn't affect them as much they generally

31:30

are more financially sound so they can go out

31:32

there and raised happen or something bad happens

31:34

right we saw that are insolvent saw companies

31:36

go back and raised capital to say didn't

31:39

know how they were going get through this so

31:41

i think that doesn't make large stop investing

31:43

her smallcap investing that's just one examples

31:46

that doesn't make either one good

31:48

or bad but could make a good or bad

31:50

for you right so you know

31:52

how much uncertainty do

31:54

you want around seats are task

31:56

was one coca cola i can tell you

31:58

that i toke is not going to sell half

32:01

as much coke next year or doubles

32:03

much coconuts you're right you know that's

32:05

not gonna happen so it's easy like of

32:07

on trying to sit there and predict the future

32:09

it's we're talking maybe a couple percentage

32:11

revenue up or down rights each

32:13

year if i'm some small

32:15

cap bio tech companies that

32:18

has a drug that's up for f t a approval

32:21

that's a very different range of outcomes

32:24

and is just making sore and both

32:26

to be you know great investments which is

32:28

making sure you're comfortable with that's and

32:30

knowing what you're investing in so i think a lot

32:32

of people were investing in very

32:34

speculative shares right the fact

32:36

that you know something like half

32:39

of the russell three thousand growth

32:41

shares we're unprofitable

32:43

or on profitable maybe

32:46

that's good bad things like but

32:48

not those companies are going to make

32:51

those are all really really good

32:53

points you do have to be careful with

32:55

these on profitable companies

32:57

that could potentially go away and

33:00

in seen as risk versus return

33:02

and often times do to take

33:04

more resting and more return but you don't always

33:06

have to daves is you have anything else

33:08

yeah we're to talk to your a little bit about excrete

33:10

we mentioned off the air before we came on about

33:13

what a great investor years and kind of how

33:15

unknown years and think others discussion

33:17

about most i think probably appropriate

33:20

time to maybe talk a little bit about next sleep

33:22

and some of the things that he advocated for

33:25

and kind of his sir advancement approach

33:27

think it's something that would be beneficial for investors

33:29

to hear

33:30

the i think the in sing sing about him

33:33

and we did podcast episode sort of watching

33:35

outside of lessons you can take from great

33:37

investors like i think the in sing sing about him

33:40

is in a we have lot of advantages

33:43

as individual investors and people don't

33:45

think that we do right

33:47

people think about professionals and yes

33:49

this is their jobs there's lot

33:51

of things that professional investors

33:53

generally can't do some

33:55

generally they can't take sort of in

33:57

and and swain what if the world

34:00

right like you know him look for different

34:02

investment opportunities of generally they have

34:04

mandates that mandate is generally

34:06

pretty narrow that okay i

34:08

may large cap us investors

34:11

so i see some huge opportunity europe

34:13

that's great but i can't do that because

34:15

that's not my mandates and think the and sing

34:17

sing about him and know something

34:19

that you know weezer depaul realize

34:21

have the advantage of being an individual investors

34:23

is that he had basically no mandate

34:26

and , he could invest

34:28

in anything he wanted anywhere around

34:31

the world and that that is

34:33

very screens and that

34:35

they're going to be different opportunities

34:38

and you know i don't i really don't want people

34:40

to think that you know they should go out there

34:43

and

34:43

know continually trade to

34:45

go try to find these different opportunities

34:48

but you know you can invest

34:50

there is value somewhere

34:52

in the world at all times right

34:54

and so that doesn't mean selling everything you have

34:57

and moving everything in there but it does

34:59

mean that if we took sort of this wide

35:01

view of opportunities that can be a real advantage

35:03

for us so think that's one of the things

35:05

that sort we like about him and

35:07

we i'm talking about my podcast

35:09

partner as well so are you know she's

35:12

not here but a sort of royal

35:14

way yeah i mean i think that's one the real things

35:16

dunno what about you guys what are some the things you

35:18

liked about him i think the thing that i liked

35:20

about there are multiple things but

35:22

everything's really kind of talked about today as

35:24

far as the fundamentals those

35:26

were guiding principles for him

35:29

and he really stuck

35:31

to his guns and was able

35:33

to invest in

35:35

companies like amazon costco men

35:37

particular amazon when it

35:39

would it went down to you know that ninety

35:41

percent drop he was able to stay with

35:43

the company and continue

35:45

to believe continue what they are trying to do

35:48

based on the business model that

35:50

they had and where he sought the company

35:52

was going and think that's one of things

35:54

i really like about his approach

35:56

was that he was very determined to kind

35:59

of the it hold but not

36:01

by hold stupid way but

36:03

buying hold is such that he really believes

36:06

in his convictions of what he thought he was buying

36:08

and really stuck to his guns with the fundamentals

36:10

and where he thought the business going for talking

36:13

earlier about narrative and modes

36:15

and i think he was really good at something out

36:17

what i'd vote for particular company

36:20

would be and kind of

36:22

be able to forecast said into the feature

36:24

and think that's kind of a special skill that i think

36:26

he are a rare few people have a a buffet

36:28

included yeah and think that that's

36:30

it i think the important thing that we're talking about

36:32

early years you know that is having conviction

36:35

what you're doing and skills this notion

36:37

that there are all types

36:40

different approaches you can take to be a successful

36:42

investors but the networks

36:44

were you and you know

36:46

are they are couple that he's he's at his nature

36:49

and the ability to whole thing's

36:51

for long term is a huge advantage we have

36:53

is individual investors and the only way

36:55

you do that as if you're comfortable rights

36:58

are you know in the example you you talked

37:00

about lights you know the whole thing goes down ninety

37:02

percent are you need to be very

37:05

very comfortable and sir are

37:07

you know what you're investing in the hole

37:10

through that right it's very challenging

37:12

and just roman emotional sticking point more

37:14

than anything else to stick with it

37:16

and that's you know that's believing

37:18

in what you're investing in the brochure

37:20

to

37:21

earlier and or thing that really liked about

37:23

him was his realization that

37:25

what he was doing is not the end all be all

37:27

of everything and that he and

37:29

his partner zach wrapped up the fund

37:32

when they could have continued easily could

37:34

see was what they're doing and made the

37:36

money but he and his partner

37:38

realize that there was more to life

37:41

than just being the next warren

37:43

buffett of want to column that's and

37:46

the something that i admire that he was able strikes

37:48

me as somebody there was this really motivated

37:51

by i guess said guess said set

37:53

of rules than most of us as something

37:55

that i admire

37:57

yeah you're adding how to be investing was added

37:59

added year when we talk it out edge resort

38:01

lot of managers that's in we have

38:03

as individual investors snow one of them as

38:05

or this notion of structural ads right

38:07

it's all the things that if

38:09

i'm doing something professionally and

38:12

your we can all things that own careers of i'm doing something

38:14

precisely what are all the they

38:16

knew that are going to drive my decision

38:18

making that aren't necessarily just

38:20

purely about my job right and number

38:22

one it's keeping your jobs it's certainly

38:24

pay eat you know and so professional

38:27

investors are obviously very well compensated

38:29

you know a lot of them despite

38:32

what they say are doing it because of that

38:34

reasons and that's why they would continue

38:36

on right and scout

38:38

buffet at in adding passage to really answer

38:40

you example you know when he wound up his

38:42

for spawns is you know was another

38:44

sort of crazy bull market said i don't understand

38:47

what's going on anymore so

38:49

i'm just not going to do this and

38:51

sort sold out say that his partners

38:53

and young didn't quit to the

38:55

obsolete chap that you know little textile

38:57

mill berkshire hathaway spy basically

38:59

said i own owners and us anymore i'm

39:01

walking away while most investors

39:03

most professional messrs don't do that he

39:06

goes knows there's mortgage today

39:08

and their kids in private school when

39:10

all sorts of different reasons that are

39:12

not necessarily in nice if they're igniting

39:14

this is a terrible markets but then show

39:16

up the next day and have to invest so

39:19

yeah i've threats origins is a recent

39:21

one the

39:22

i think the the last thing that i think i really

39:24

liked about him was that he really advocated

39:27

understanding would it was you are buying and

39:31

don't buy if you don't and eats

39:33

the out the canada buffet idea of you don't have to

39:35

swing it every pitch kind of thing and

39:37

i think that he was really choosy about

39:39

the the company's you invest in and

39:42

that's something that i admire of was cited

39:44

so should be more choosy that feel

39:46

like he was and yeah that doesn't like

39:48

circles competence then

39:51

write that one hundred oh i see

39:53

lot of people invested in things that i

39:55

know they don't understand i don't understand

39:58

yeah just started out what words are not you're

40:00

like fundamental research like you need to understand

40:02

company and understand the industry and

40:05

what is going to make them successful in

40:07

order to our island in

40:09

order to be success or dresser totally

40:12

lamarcus was great conversation so

40:14

many lessons here for investors to

40:16

think about and great perspective

40:18

on what's going on in market today

40:21

how we can kind of digest that and

40:23

use that moving forward to make

40:25

better investments evergreen park

40:27

as investing compass people

40:29

, go check it out you have a lotta grandpa

40:32

says on there and i've heard you talk

40:34

about next sleep on their we mentioned

40:36

you talked about it yes to so deftly

40:38

people's to check that out anywhere else people

40:40

can go online to find out more about

40:42

what she got going on

40:44

yeah mean i think at the end that just google

40:46

you my name i i do publish a fair amount of articles

40:49

on our website down in australia but of course

40:51

because it's the internet you can read it anywhere

40:53

so yeah i would go look at that as well

40:55

okay awesome war again mark we'd really

40:58

really do appreciate getting up at six o'clock

41:00

the mornings the com that as great

41:02

this was an awesome conversation we had a lot of fun

41:04

and i know our listeners will get a lot out of as

41:06

other that wisdom that you were dropping with everything

41:09

today souls or thank you again for taking

41:11

the time to come join us and everybody got their

41:13

and events with margin safety as the

41:15

sun safety have great weekend we'll talk

41:17

till next week

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