October was pretty active month for investment decisions, especially as the market continues to surge and set records on an almost daily basis. Because of this I had to break up this post into a couple of smaller posts. In this first of a 2-part series, I share my thought process that I was going through with several investment decisions that involved buying more stock as well as a decision where I decided at first to hold my position but eventually I decided to sell and incurring a loss.
The essence of my coaching practice is to teach people to make more successful investment decisions. Investing is about making decisions. Should I buy, sell, or hold a stock or ETF? At face value, successful investment decisions are a product of improved education of the mechanics of investing as well as continuous engagement. This is great however it does not on its own lead to making consistent successful investment decisions. There is another level of thinking that needs to go into the process and the great investors incorporate this level of thinking into their investment decisions. In this episode, Aman shares some insights into what is called Second Order decision making, which can when practiced consistently and implemented within an investment playbook can improve the probability of making successful investment decisions.
This episode is a total going down memory lane thing. 99 episodes ago, I dared myself to prop up my phone, open up Periscope and put myself out there for the world to see me um and ah'ing my way to babbling about investing. I thought I had maybe 3 clips of 3 minutes before I would run out of things to say. Somehow though, I was able to do it for a year before a colleague suggested that I try podcasting which from what I knew was a pretty labour intensive project, however it turned out the mechanics were much easier than I thought and the practice of doing Periscope videos gave me both a library of content as well some confidence. The next thing you know, I'm knocking on my 100th episode of Stock Talk. I honestly cannot believe and I honestly cannot believe the response since I switched over to podcasting from Periscope. It's been quite astonishing. So as I knock on the door to episode 100, I decided to look back on some of my favourite episodes and also some of yours based on your feedback. Thanks to all for your support. More to come!
It appears that central banks around the world are either engaging or leaning towards increasing interest rates. At a first level thinking, rising interest rates spell trouble for stocks in the short to medium term, however as we've been living in a prolonged era of excessively low interest rates, an increase interest rates is actually a welcome event in the long term. In this episode I share my thoughts on why higher interest rates are a welcome tonic for free market economies.
Since the financial crisis of 2007-08, there has been a big proliferation of dividend oriented investing strategies. There is vast inventory of material that has been shared by many that have benefited from adopting an investing ideology of investing in stocks that pay dividends. The two main drivers for the popularity of dividend investing has been uber low interest rates that has forced investors to seek riskier investment opportunities and secondly, just a basic fear to protect what's left of their savings. This is all well and good and I always say that there is no single investment strategy that rules them all, however what concerns me is that simply adopting a strategy of investing in dividend paying stocks can give people a false sense of security. In this episode Aman gives us a crash course on what dividends are all about and while they are a welcome source of extra income for investors, they can still expose investors to risks.
For some reason, we tend to gravitate to making decisions that are complex rather than going for a more simple elegant solution. We find the rational and thought process that incorporate words we've never heard of, lengthy math formulas, and fancy charts to be the validation that we need in order to take our investments to the next level. In the investment industry this is quite evident in the types of portfolios that financial professionals design for their clients. The reality is a simple portfolio of low cost baskets of assets are suitable enough for most investors, but for some reason, we never see these type of portfolios created. Why is this? Well Alan Roth penned a piece trying to figure out why the investment industry struggles to keep portfolios simple. In this episode I speak to this and offer some takes.
Young people, especially millennials appear to be always coming under some element of criticism, be it a lack of motivation and excessive coddling among other things. Now a paper by finance professor claims that people who start investing in their younger years are predisposed to make bad decisions. In this episode Aman offers his takes on this premise and wonders if youth and investing are indeed a toxic mix?
It's decision day again!. In this episode I share my thought process on two recent investment decisions I made. One involved buying more shares in Disney and the other my decision to buy shares in Nike. Aman shows how he uses the 8 questions everytime he evaluates a stock to determine if it's worth buying.
Investing thanks to computer processing power has allowed us to filter, slice, and dice ridiculous amounts of information to give us insights into the behaviours and financial performance of stocks. It is driving more and more of our decision making and I feel that at the expense of more qualitative elements that are just as important in the decision making process. People who work in the investment industry are so dependent on the numbers that they have lost context and perspective and more importantly a respect for the value of money. This is attributable to the culture of Wall Street and Bay Street. In this episode (podcast on iTunes), I provide some examples of how easy it is drown in numbers to the point that we lose context and meaning in those numbers and how as individual investors, having an awareness of this perspective can be an enormous asset and advantage in making successful investment decisions.
The cornerstone of my investment coaching practice is to teach and mentor people to make better investment decisions as it pertains to the buying and selling of individual stocks and ETF's. It’s one thing to teach this stuff. It’s another thing to model the behavior and it’s a totally different thing to actually demonstrate tangible results. In this episode I reviews my updated Last 100 list and shares my insights on my investment experience and pedigree.
One of the things that intimidates people about investing is the endless formulas and ratios..the mathi'ness of it all. The image of someone sitting there pouring over spreadsheets can give people hives. I came across a pretty good article recently that outlined 7 steps to quickly analyzing a stock. I noticed that all 7 steps involved some element of math, which again to most people would be a turn off. It's fine but I believe there are other elements that go into evaluating stocks and ETF's that are not math related can be just as effective in framing investment decisions. In this episode I try to give some comfort and hope to those who have angst about investing. There really is more to investing than math.
I'll be honest, I really had no intention about offering any takes on the cryptocurrency mania but I get asked ALL THE TIME about whether it's worth investing in Bitcoin or any of the other cryptocurrencies that are exploding on the scene. To me investing Bitcoin is no different than investing in any other traditional paper currency....which is highly risky. At the same time, I really haven't had much of a grasp of how Bitcoin operates and what makes it so appealing. So in this podcast, I take a pretty deep dive to figure out how Bitcoin and cryptocurrencies work. So if you are in the same boat, then check out this podcast and let's learn together! NOTE: This episode was recorded prior to a couple of developments that have cast a bit of a cloud on Bitcoin, specifically China's decision to ban Bitcoin Exchanges as well as JP Morgan CEO Jamie Dimon's take that Bitcoin is a fraud, comparing it to the Tulip Mania.
In the last few months we've seen some business activities and transactions that I think will have major reverberations on how we do business and ultimately the types of investment opportunities that will emerge from them. In this episode Aman offers some hot takes on the Amazon/Whole Foods merger, the Alphabet (Google) partnership with Walmart, and finally the decision by Disney to part ways with Netflix and start distributing its content directly to customers. These three strategic moves are truly game changer moments in business.
With Mad King from North Korea and the Mad King from the USA trash talking using their nuclear weapons on each other, Aman tries to map out what that could look like and how it could potentially impact stock prices around the world. Suffice to say, it won't be good in the short term. What's more concerning is the impact it will have on how commerce is done around the world. As much as the rhetoric has been quite hot, these 2 "leaders" have a track record for talking a good game.
As stock markets around the world set record high's on an almost daily basis and despite all political chaos and maybe surrounding it, I keep wondering, and asking myself how sustainable this is? This just can't continue on like this. Something deep down is telling me this epic run will somehow end...but how? What is it that will take this whole house of cards down? In this episode Aman tries to brainstorm some possible scenarios that could be the trigger to pulling the stock market down.
The active investing versus passive investing debate continues and it will likely continue forever. An interesting wrinkle though in the debate has popped up and it involves literally the patriarch of index investing changing teams. In this episode Aman dives into this stunning change of heart. At first Aman was ready to go into full "gotcha" on this, however this case highlights an important quality that investors needs to build up in their tool box. Excuse the coughs!
At the core of my personal investing ideology is the concept of having entry and exit points for when a stock or ETF reaches a certain return level. In this episode I share some of my recent investment decisions many of which came to down to whether to hold or sell a few positions in my portfolios as they had crossed my personal return threshold.
In episode 69, I reported some interesting changes that occurred on my Robo Advisor portfolio that I setup a few years ago. At the time, I thought that the changes could have been temporary as part of stepping stone. In this episode, I check in on my Robo portfolio at the mid-year mark to see if those changes have remained.