InvestED: The Rule #1 Investing Podcast

The digital age, with all of its monopolies and consolidation across various markets, has also seen a rise in innovation and small companies seeing success by having unprecedented access to consumers through new channels of commerce and communication. With market stability and consumer confidence taking hits in recent years, small luxuries like makeup continue to do well despite the struggles of luxury brands in general. With the success of some niche brands in this highly competitive and specialized sector of cosmetics, what does the weather look like for some of the more established players in the makeup industry? This week, Phil and Danielle wrap up their discussion about the beauty industry and the way that boutique brands might affect the bottom line for the big names in cosmetic products. If you want a huge clue as to whether or not you’re looking into a business that will deliver predictably strong returns, don’t miss out on your free copy of The Big 5 Numbers Guide: https://bit.ly/3psMESQ Topics Discussed: ETFs Augustinus Bader Victoria Beckham Beauty Ulta Sephora Kering LVMH D2C vs retail Cosmetic science Resources Discussed: Lisa Eldridge Learn more about your ad choices. Visit megaphone.fm/adchoices

How important is investing to the economy at large? While companies don’t see a direct increase on their bottom line from the secondary market, it can be very important in helping to determine the value of a business and the drive interest in the primary market. For value investors, having a strong understanding of a business’s weather, i.e. their moat, competitive advantage, and other factors that determine their long-term success, is paramount to generating returns on a multi-year timeline. From the Rule #1 perspective, that’s the key difference between investing and simply gambling on the market. After a few weeks’ break on the subject, Phil and Danielle return with part 1 of an extra long 2-part episode breaking down the weather of the makeup industry giant Ulta, and share some of their insights into their own weather analysis of their history with this business. For help identifying the durable advantage of a company you’re looking to invest in, click here for your free copy of The 5 Moats Investment Guide: https://bit.ly/3Kmb33J Topics Discussed: Primary market vs Secondary market CFO CEOs Ulta Augustinus Bader Victoria Beckham Beauty Learn more about your ad choices. Visit megaphone.fm/adchoices

A crystal ball would be the ultimate tool for any investor, but given that we’re not living in a fantasy world, how do top investors prepare for an uncertain future? With the inevitability of market downturns, finding a balance between generating returns and being ready to strike when the iron is hot can be a tricky position to navigate. Discovering that equilibrium, along with the patience to hold on through the ups and downs once you’ve bought into a great company, can be what makes or breaks a portfolio in the long run. On this week’s episode, the deep analysis of the 2023 Berkshire Hathaway shareholder letter continues as Phil and Danielle wring every ounce of wisdom from Buffett’s annual communiqué.. For help with future-proofing your portfolio, click here for a free copy of The Ultimate Stock Market Crash Survival Guide: https://bit.ly/3xNXFlf Topics Discussed: Munger’s influence on Buffett’s philosophy Investing in the information age Mutual funds vs ETFs Modern market volatility Forgoing returns to prepare for downturns Resources Discussed: Berkshire Hathaway shareholder letter Wilshire GDP ratio Learn more about your ad choices. Visit megaphone.fm/adchoices

Here’s a scenario: you’ve identified a potential investment, you’ve gone through the checklist and done your research, and you decide that you’ve found a deal that other people seem to be overlooking. You pull the trigger to buy into this company, and then the stock price begins to decline and you begin to wonder if you’ve made a mistake. Knowing the difference between having confidence in your investing process and being arrogant or blindly confident in a position can allow investors to act on proven strategy as opposed to being driven by fear and emotion. Having a long-term outlook and a diligent methodology is the way for capable value investors to find the deals and realize the returns that many others in the market get wrong. This week, Phil and Danielle tackle another constant issue for investors as they dig into when, how, and why you should (or shouldn’t) stick with a purchase that doesn’t seem to be panning out the way you’d suspected. For help finding businesses that you feel confident investing in, click here for the “3 Circles” Exercise Guide: https://bit.ly/3LOexg2 Topics Discussed: Patience and discipline in value investing The dangers of hubris and confirmation bias Informed assumptions vs speculation Resources Discussed: Berkshire Hathaway shareholder letter (2013) Learn more about your ad choices. Visit megaphone.fm/adchoices

Free cash flow can be a golden ticket in the hands of a company with the right leadership. They can use it to supercharge innovation, expand their reach, or reward shareholders with dividends or buybacks, and for value investors, it’s like spotting a diamond in the rough. After the growth and maintenance expenditures are accounted for, the way a company deploys its additional capital can signal the strength of management and the potential for future returns. As Buffett tells us in his recent letter, once you’ve got companies that check all of the boxes he’s looking for, this is the icing on the cake. Join Phil and Danielle as they continue their analysis of this year’s shareholder letter from Berkshire Hathaway, pulling out key takeaways that might’ve been overlooked by some readers. For help in crunching the numbers in your investment research process, click here to get your free Rule #1 Calculators for Investing Analysis: https://bit.ly/42dBHSn Topics Discussed: Individual values in investing Entrepreneurship See’s Candy Operating cash flow Growth/maintenance capital expenditure Rare companies Resources Discussed: Berkshire Hathaway shareholder letter Learn more about your ad choices. Visit megaphone.fm/adchoices

As detailed in the most recent edition of Berkshire Hathaway’s annual shareholder letter, finding success in value investing doesn’t require fancy credentials, obsessive research, or exploitative scheming — it takes common sense and the willingness to keep yourself informed about your investments. In a world full of people rabidly vying for your attention in every imaginable arena, knowing how to focus that attention on what’s important while weeding out the noise of the pundits and snake oil salesmen is what separates successful investors from the rest of the pack. In this week’s show, Phil and Danielle get a bit more granular on the most recent Berkshire Hathaway shareholder letter and discuss what separates Bertie Buffett from her competition. To get the inside scoop on more ways industry leaders mislead investors, click here for your free copy of The 3 Greatest Stock Market Myths Ever Told: https://bit.ly/45NycoE Topics Discussed: Flashy and half-baked or simple and flawless Simplifying the research process Snowboarding lessons for investing Typical CEO letters Punditry vs information Resources Discussed: Berkshire Hathaway shareholder letter Learn more about your ad choices. Visit megaphone.fm/adchoices

“Character reveals itself in adversity” is a saying that can not only apply to the human race and how our true nature shines through when faced with a challenge, but also one that can apply in the business world. Although brand loyalty can be a common trope in 21st century consumer culture, how does that sentiment hold up when the rubber meets the road? In these times of inflation, shrinkflation, and other types of -ations that we’ve yet to ascribe catchy names to, some brands are seeing once-loyal customers jump ship and look for better value as prices rise. While some brand relationships can’t stand the test of time, perhaps we can look to the long-lasting friendship and business partnership of Warren Buffett and Charlie Munger for inspiration. In this week’s episode, Phil and Danielle are back to talking from different continents (and dealing with the inherent technological mishaps of that setupt) as they discuss what constitutes a brand moat, and how strong that supposed moat can be in moments of economic instability. Think you know Warren Buffett as well as the people who’ve spent decades building Berkshire Hathaway with him? Take our Buffett quiz and find out for yourself: https://bit.ly/43qtOLz Topics Discussed: Jackson Hole, WY Heliskiing/snowboarding Unilever dumps Ben & Jerry’s Brand moats Buffett and Munger’s friendship Resources Discussed: Cambridge Long COVID study Berkshire Hathaway shareholder letter Learn more about your ad choices. Visit megaphone.fm/adchoices

In a vault episode from the early days of the podcast, explore the world of value investing in this as Phil and Danielle delve into the power of dividends. Discover how making well-researched, long-term investments can potentially amplify returns and provide a steady income stream. They discuss the strategy of reducing risk by 'getting your money off the table' through dividend-producing companies. But remember, while dividends offer stability and returns, they're not without their tradeoffs. We'll uncover the complexities of managing dividend-paying companies and navigating potential risks. Tune in to learn how to strike the balance between steady returns and prudent risk management in your value investment journey. Keep in mind the Rule #1 that’s the namesake of Phil’s company: “don’t lose money.” Click here for a deeper examination of that rule that’s helped so many value investors over the years: https://bit.ly/43jTNEr Topics Discussed: Weather Matrix Ben Graham’s Margin of Safety RULERS Compound return Free cash flow (FCF) Maintenance capex Resources Discussed: Berkshire Hathaway shareholder letter Email us your questions! Learn more about your ad choices. Visit megaphone.fm/adchoices

"Invert, always invert" — Charlie Munger To become a top-notch Rule #1 investor, having a well-defined investing strategy is essential. It starts with crafting a compelling narrative for the company you're eyeing and understanding why it's a stellar investment. But here's the twist: flip that narrative on its head and scrutinize the opposing viewpoint. Challenge yourself to construct a case against the investment. If you can't, it's a sign that you might lack comprehensive knowledge about the company. When applying inversions to business acquisitions, consider formulating a robust inversion for every reason supporting the purchase. Familiarize yourself with every argument against buying the company, surpassing even the short sellers' insights. Develop compelling rebuttals for each inversion, effectively nullifying them and proving the short sellers wrong! Join Phil & Danielle in this throwback episode as they delve into the significance of inversion and highlight four essential aspects to contemplate when integrating it into your investing strategy. Click here for your copy of The Four Ms for Successful Investing: https://bit.ly/3LhVUAR Topics Discussed: 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 and Gamestop Learn more about your ad choices. Visit megaphone.fm/adchoices

In the practice of value investing, just like with so many other things in life, knowing when to wait patiently or when to jump ship is critical to the long-term success of your portfolio. Being able to stomach market fluctuations isn’t something that everyone is capable of, but the mindset of buying into a business with long-term goals of generating cash flow means buying with the confidence that you’ll be able to weather the storms that may, and often do, come your way. As the series on the Weather Matrix continues, Phil and Danielle discuss the importance of being in the “high understanding” quadrant of this tool as you consider potential investments and how that position makes it easier for you to decide what to buy and what to reject. For a leg up on practices for generating consistent returns, click here for your free copy of How to Pick Stocks: The 5-Step Checklist: https://bit.ly/3ros8mU Topics Discussed: The power of compounding Vanderbilts vs Rockefellers Owner earnings Investments vs speculation Inverting Durable competitive advantage Pitch decks Resources Discussed: David Einhorn’s pitch decks Learn more about your ad choices. Visit megaphone.fm/adchoices

Is there a limit to how much an investor should know about a potential investment? While it can seem like there’s an infinite amount of relevant considerations for any given business, the ability to discern the difference between important information and extraneous data is an indispensable tool in the investor’s kit. If jumping into the deep end of the S&P 500 seems like a daunting proposition, keeping your investing practice focused on a smaller scale can make the process of understanding “the weather” a much more manageable task. Keeping the boundaries of your research close to the boundaries of your own circle of competence can go a long way in terms of keeping the process from being overwhelming. This week we join Phil and Danielle in a continuation of this series discussing their idea of business meteorology, a topic that has utility for everyone from investing novices to the most seasoned of financial forecasters. To get started on your own Weather Matrix, click here for your free copy of The 5 Moats Investment Guide: https://bit.ly/3Kmb33J Topics Discussed: Investing circle of confidence Intimidation in the research process Buffett on taking advantage of the moment Spotting warning signs Netflix vs. other streamers Resources Discussed: The Weather Matrix (value/understanding) Learn more about your ad choices. Visit megaphone.fm/adchoices

Last week, the episode was centered around a tool for evaluating potential investments based on the myriad factors impacting their current performance and future trajectories, a topic that our hosts dubbed “the weather” of a business. While having a handle on a company’s worth and a clear gauge on one’s own understanding are both vital in making investment decisions, what other factors can—or should—influence the process? The fundamental feeling of excitement or intrigue can be a divining rod in terms of pursuing investment opportunities, and though it can be easy to get caught up in the hype of compelling new prospect, it’s also important to remember that interest can be a powerful motivator when faced with a formidable research project. Join Phil and Danielle as they venture further into the grid of their Weather Matrix, and learn how to find your own sweet spot when it comes to investing your time into researching investments. For help in identifying opportunities and constructing your own Weather Matrix, click here for a free copy of 6 Market Crushing Investing Principles: https://bit.ly/45szJ2v Topics Discussed: Buffett’s mistakes Buffett’s mistakes cont. The value of intrigue in investing Speed reading Toxic positivity Stoicism Resources Discussed: The Weather Matrix (value/understanding) The Innovation Stack Seeking Alpha The Storyteller Man’s Search For Meaning Invested Learn more about your ad choices. Visit megaphone.fm/adchoices

The 21st century has brought the world a number of revolutionary developments that have turned the world on its head, with one of the most important cultural shifts being the rise of the attention economy. With so many entities all vying for a piece of your time, how can you know when you’re spending too much of that limited resource on your investing research? With decades of investing experience and a bit of basic mathematics, Phil explains a tool to classify companies into four groups based on their price/value ratio and the investor’s understanding of the business. If you find yourself getting bogged down or stuck in the weeds on your investing journey, this method could be the thing you need to streamline your research. For more help calculating the ever-important metric of price vs value, get your free copy of Understanding Market Capitalizatin: https://bit.ly/44p1xE9 Topics Discussed: How much effort is too much effort? Accumulation of knowledge Price/value discrepancies Being prepared to “weather the storm” How to capitalize on market downturns Importance of repetition Resources Discussed: The Weather matrix Learn more about your ad choices. Visit megaphone.fm/adchoices

Following up on last week’s discussion about the “weather” of a business, or how the climate of various internal and external factors can influence the long-term success of your prospective investment. With so much data available at our fingertip, how can we know what information is useful for research and what can safely be left out of our analyses? Whether you’re looking into a company’s direct competitors or doing a bird’s eye view of a whole market sector, knowing when to go deeper vs when to stop digging is an incredibly useful skill to have in the world of 21st century global finance. For the value investor, the ability to reliably ascertain the value of a business is crucial for finding the right moment for a good deal. Listen in this week as Phil and Danielle ponder the age old question of “what is enough?” When it comes to your investments, where is the magic line between being adequately informed and wasting your time? For a better understanding of a business’s future success, click here to get your free copy of The 5 Moats Investment Guide: https://bit.ly/3Kmb33J Topics Discussed: Being paralyzed by the research process Netflix growth issues Evaluating a business’s moat Instinct in the investing process Change vs stability Resources Discussed: Invested Learn more about your ad choices. Visit megaphone.fm/adchoices

For our first full episode of the new year, Phil and Danielle are reunited to talk about the various factors of a business’s climate that can help better understand where their weather will take them in the future. From government overregulation to corporate mismanagement, there are risks inherent to investing that we can identify and include in our analysis for a more complete picture of the economic landscape. Staying current with the news doesn’t just make for a good citizen, but a good investor as well. Join our hosts as they discuss Argentina, Medicare, CEO compensation, and why all of those should matter to the value investor of the 21st century. If you want to start the new year on the right foot, get your free copy of Map Out Your Investing Journey to mark your progress and plan for the future: https://bit.ly/3DTy4qN Topics Discussed: Inherent risks of investing S&P 500 and other market indices SEC rules Argentina/USA in the 20th century and today Governmental influence in economics GM borrowing to pay dividends Clinton’s executive pay reform When to stop researching (more next week) Resources Discussed: Invested Learn more about your ad choices. Visit megaphone.fm/adchoices

As we get all of our 2024 ducks in a row, Danielle checks in to share some positive vibes for the upcoming year and offer a quick toast to prosperity and successful investing in 2024. While it's a short break from our regular programming, it's a moment to celebrate the journey we've taken together and the exciting opportunities that lie ahead. To start your new year by planning for the ones to come, click here to get a free copy of our “Rule of 72” Cheat Sheet and gain a better understanding of retirement planning: https://bit.ly/47awVb6 Learn more about your ad choices. Visit megaphone.fm/adchoices

Happy 2024 to all InvestED listeners! While our hosts enjoy the holidays, we’re opening a year by going back to January of 2022 for a discussion about interest rates. With word of rate cuts on the horizon, how different are things now from when inflation was still climbing rapidly? Understanding the Federal Reserve's interest rate maneuvers and their correlation with inflation is vitally important for assessing investment opportunities. The intricate dance between interest rates and the economy can impact borrowing, spending, and investment behaviors, so it’s crucial to keep up with the Fed’s moves in order to plan ahead. To stay prepared for any changes in inflation or to the market as a whole, claim your FREE copy of the Rule #1 12-Month Planner: https://bit.ly/31ImPCl Topics Discussed: Inflation The future of the economy & markets Supply & labor bottlenecks Wage increase Substitution Resources Discussed: Federal Reserve Economic Data (FRED) FRED M1 Chart Shadowstats Learn more about your ad choices. Visit megaphone.fm/adchoices

On this bittersweet episode of InvestED, Phil and Danielle come together after taking some time to reflect on the impact of Charlie Munger, both in the financial world as well as in their own personal lives and investing journeys. The loss of such a magnanimous figure will surely leave a void in the value investing community, but as Li Lu penned in his eulogy for Munger (link below), the man’s contributions to the collective understanding of investing practice will be felt utilized and pored over for generations to come. Looking back on a life of great successes, philanthropy, and pithy wisdom that has inspired so many great investors to reach new heights, we have nothing to add. For help following Charlie’s process of finding new companies to invest in, click here for Phil’s Value Investing Cheat Sheet: https://bit.ly/3QeCCje Topics Discussed: Investing as enlightenment Munger’s aphorisms EBITDA Modern Portfolio Theory Resources Discussed: Li Lu’s eulogy for Charlie Munger Autobiography of a Yogi Munger’s BBC interview Learn more about your ad choices. Visit megaphone.fm/adchoices

We dig deep into the vault this week, going all the way back to 2018 to revisit one of our Charlie Munger-centric episodes. Phil and Danielle delve into the lesser-known strategies of the late great “Abominable No-Man,” revealing the hidden gems that can transform an ordinary investment portfolio into a stellar one. Join us as we explore the wisdom of investment gurus, uncover the power of "cannibal companies," and unearth the untapped potential of valuable spin-offs. As we look back on the life and lessons of one of the investing world’s heavyweights, we learn how these insights can elevate your returns to an entirely new level of success. For more ways to bolster your portfolio, click here for your free copy of the Rule #1 Must Have Investing Checklist: https://bit.ly/49bSWZ7 Topics Discussed: Net-net investing Cannibal companies Apprenticeship Resources Discussed: Security Analysis You Can Be a Stock Market Genius Avatar DanielleTown.com Learn more about your ad choices. Visit megaphone.fm/adchoices

The podcast is taking a break this week, but Danielle checks in briefly to share her thoughts on the loss of one of the investing world’s titans as Berkshire Hathaway’s Charlie Munger passed away this week at the age of 99. Rule #1 owes a debt of gratitude to Charlie and the wisdom he’s contributed to the investing community over the past several decades. The legacy he leaves behind—from his outsized impact on the business world to the Mungerisms he was so fond of sharing—will be irreplaceable to those who looked to his guidance in their practice of value investing. For a peek into some of the sharpest minds that the field of investing has to offer, click here for Rule #1’s free guide to The Best Investors in the World: https://bit.ly/3DhbmIS Topics Discussed: Charlie Munger Learn more about your ad choices. Visit megaphone.fm/adchoices