Nice Video Richard! I love Charlie Munger's quote, you don't make money buying and selling, you make money waiting. I'm glad to see you use 15%, we use the same so it's nice to see we're in good company.
Value investing is about paying $0.50 for something that’s worth $1. To do that, you need to know how to value companies, and lots of patience. “Catch a falling knife” is just something that’s said by people who don’t understand value investing. Hope that helps.
Fundamental misconception from a Newby investor: investing in the US stock market in the last 12 years, 15% has been pretty easy to get! Try that in the next 'Lost Decade' - impossible. Sure, if you are thinking CAGR over 30 years, then the Lost Decades get bundled together with the Long Bull Runs and you can start to think that way. But not at any time in history: lost decades actually take up slightly more of the years than the bull runs. Going for a 15% as a given shows you haven't been doing this very long and think illogically large growth is a given forever....
I'm not talking about by investing in the market as a whole. I'm talking about individual stocks. But you're right - you're not going to find it amongst the largest companies right now. You have to look at the smaller companies that have less eyes on them and less competition... Check out the next video for more on this: th-cam.com/video/LW1FKwh-JG4/w-d-xo.html
Not cash directly but ability to convert to cash in minutes or hours. One would have to literally be an idiot to hold millions in cash unless you just about to invest it tomorrow or next week for obvious reasons unless interest rates significantly exceed inflation
Sorry if it wasn't clear but I'm not talking about buying the whole market in this video. This video is referring to buying individual stocks and and is for people who value companies.
@@IntelligentStockInvesting No - you were clear, Richard. But it is just the laws of probability: if the average return is down in a lost decade - ie shift the distribution curve to the left - then the thin tail to the right (where we want to be with rewarding investments) moves with it. For, me with this deep value investing method, I think more about an expectation/hope of 'beating the market by a certain amount' rather than some set CAGR figure that I imagine is always available. Don't get me wrong: even in the 2008 crash there were companies which could get you 15-20+% for the year while all around were crashing. Just that it's the law of probabilities that you're far less likely to find them in a flat or falling market and when you do, there will be a whole bunch of us 'value' investors trying to pile in and the room is going to be pretty cramped! [Edit: of course I might be wrong. Maybe there continue to be almost as many 20+% opportunities whatever the general market is doing]
@@danguee1 I hear what you're saying. And it definitely does get easier when the market as a whole has been beaten down. Couple things to add: I'm not saying that the 20% will be there each and every year, but what I'm saying is that over the life of the investment it will provide you with 20% *annualized* returns. Any given year could be far below that or far above that. Some more food for thought: This is a passage from the 100 baggers book I mentioned: "Just because a stock market index, such as the S&P 500, is pricey doesn’t mean you should give up on stocks. Unless you are a buyer of the index itself, it is not relevant to the business of finding great stocks today. Let me give you a historical example: 1966 to 1982. The big-picture crowd likes to cite this 17-year stretch as dead money for stocks. The Dow Jones Industrial Average basically went nowhere. (This performance was worse than it appears because inflation was high during this period.) Thus, you might conclude, you didn’t want to be in stocks. But here’s what my research on stocks that returned 100 to 1 found: there were 187 stocks you could’ve bought between 1966 and 1982 that would have multiplied your money 100x. In fact, during that 17-year stretch, you’d have had at least a dozen opportunities each month to multiply your money 100x if you just held on. In some cases, you didn’t even have to wait very long." ~Mayer, Christopher W. 100 Baggers: Stocks that Return 100-to-1 and How to Find Them. Finding stocks that will give you 20% annualized returns for sure gets more and more difficult in times when the market is more and more overvalued but its far from impossible. Especially for us smaller investors who have this massive universe of stocks we can look at that the big-money can't. Hope this helps. Happy hunting.
You guys come up with some of the best ways to describe things. That example @2:30 was spot on yo
Thanks so much Jessie :)
2:50 "buy the dip" always works, it's the main ingredient in my "secret sauce"
🙌🙌
Cool math showing investing now or waiting! If I only had the problem of having billions 🤑
Not bad eh :)
Nice Video Richard! I love Charlie Munger's quote, you don't make money buying and selling, you make money waiting. I'm glad to see you use 15%, we use the same so it's nice to see we're in good company.
Very cool! Thank you!
Definitely good to have cash for when bargains present themselves!
All the way!
Thesame people that told us time in the market beat timing the market also told us to keep cash and time the market to buy-in whenever it dips😂😂
Great info!! I agree.....
Thanks for watching!
isn't this called "trying to catch a falling knife?"
Value investing is about paying $0.50 for something that’s worth $1. To do that, you need to know how to value companies, and lots of patience. “Catch a falling knife” is just something that’s said by people who don’t understand value investing. Hope that helps.
Fundamental misconception from a Newby investor: investing in the US stock market in the last 12 years, 15% has been pretty easy to get! Try that in the next 'Lost Decade' - impossible.
Sure, if you are thinking CAGR over 30 years, then the Lost Decades get bundled together with the Long Bull Runs and you can start to think that way. But not at any time in history: lost decades actually take up slightly more of the years than the bull runs. Going for a 15% as a given shows you haven't been doing this very long and think illogically large growth is a given forever....
I'm not talking about by investing in the market as a whole. I'm talking about individual stocks. But you're right - you're not going to find it amongst the largest companies right now. You have to look at the smaller companies that have less eyes on them and less competition... Check out the next video for more on this: th-cam.com/video/LW1FKwh-JG4/w-d-xo.html
Not cash directly but ability to convert to cash in minutes or hours. One would have to literally be an idiot to hold millions in cash unless you just about to invest it tomorrow or next week for obvious reasons unless interest rates significantly exceed inflation
Inflation is a silent killer, absolutely.
20% hurdle rate for the 2020s? Lol! Let's talk again in 2031....
Sorry if it wasn't clear but I'm not talking about buying the whole market in this video. This video is referring to buying individual stocks and and is for people who value companies.
@@IntelligentStockInvesting No - you were clear, Richard. But it is just the laws of probability: if the average return is down in a lost decade - ie shift the distribution curve to the left - then the thin tail to the right (where we want to be with rewarding investments) moves with it. For, me with this deep value investing method, I think more about an expectation/hope of 'beating the market by a certain amount' rather than some set CAGR figure that I imagine is always available. Don't get me wrong: even in the 2008 crash there were companies which could get you 15-20+% for the year while all around were crashing. Just that it's the law of probabilities that you're far less likely to find them in a flat or falling market and when you do, there will be a whole bunch of us 'value' investors trying to pile in and the room is going to be pretty cramped!
[Edit: of course I might be wrong. Maybe there continue to be almost as many 20+% opportunities whatever the general market is doing]
@@danguee1 I hear what you're saying. And it definitely does get easier when the market as a whole has been beaten down. Couple things to add: I'm not saying that the 20% will be there each and every year, but what I'm saying is that over the life of the investment it will provide you with 20% *annualized* returns. Any given year could be far below that or far above that. Some more food for thought: This is a passage from the 100 baggers book I mentioned:
"Just because a stock market index, such as the S&P 500, is pricey doesn’t mean you should give up on stocks. Unless you are a buyer of the index itself, it is not relevant to the business of finding great stocks today.
Let me give you a historical example: 1966 to 1982.
The big-picture crowd likes to cite this 17-year stretch as dead money for stocks. The Dow Jones Industrial Average basically went nowhere. (This performance was worse than it appears because inflation was high during this period.)
Thus, you might conclude, you didn’t want to be in stocks.
But here’s what my research on stocks that returned 100 to 1 found: there were 187 stocks you could’ve bought between 1966 and 1982 that would have multiplied your money 100x. In fact, during that 17-year stretch, you’d have had at least a dozen opportunities each month to multiply your money 100x if you just held on. In some cases, you didn’t even have to wait very long."
~Mayer, Christopher W. 100 Baggers: Stocks that Return 100-to-1 and How to Find Them.
Finding stocks that will give you 20% annualized returns for sure gets more and more difficult in times when the market is more and more overvalued but its far from impossible. Especially for us smaller investors who have this massive universe of stocks we can look at that the big-money can't. Hope this helps. Happy hunting.