WWII 100th Episode Celebration and Special Announcement
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Main Topic: 100th Episode !!! (Yay!!! I did it!) and a Special Announcement
Wow, this is the 100th episode of the podcast! I can’t believe it has been a year!
I started this podcast in October of 2016, so it has been a year since I started. So far, I recorded and published 99 episodes and had 29,000 downloads from 81 countries.
The first sixty or so episodes were about bringing the truth about investing out of the darkness and into the light. The last fourty or so were about a number of different investing topics like:
- whether to concentrate or diversify,
- how to do a sum-of-the-parts valuation,
- Interpreting the price to earnings ratio,
- how to do a private market valuation using the EBITDA method,
- understanding the CAPE ratio,
I also did a number of episodes about the investment process, such as:
- How to set up an Idea Management System (two part series)
- Part one of idea management systems
- Part two of idea management systems
- Setting up Buying Programs
- Idea Generation for new investors
- How to think about Capital Allocation
- Practical advice about managing correlation in your portfolio,
- using opportunity cost to run your portfolio,
I did a few more book reviews like:
- Martin J Whitman: Distress Investing
- Poor Charlie's Almanack
- The Rediscovered Benjamin Graham Book Review
I also recorded some Investor Case Studies like:
- Ronald Read (episode 3),
- Jack Gsantner (episode 12), and
- The millionaire recluse twins (episode 24), Lewis David Zagor’s secret fortune,
I continued with coat-tailing ideas with 13F reviews for investors like:
- Michael Price
- Mason Hawkins of Southeastern Capital Management
- 13 New Buys from Three Value Guys
- David Dreman 13F Review
I started to bring you some investment ideas, discussing some lesser known investment strategies like arbitrages and squeeze-outs, undervalued REITs, and so on.
I had one fun and amazing interview with Sven Carlin (and hope to have more in the future) and I was able to answer a bunch of really good question submitted by listeners like Yaokai, Nicholas, Dan, Elvis, Alex, Matt, Hein, and Chris.
Along the way, I’ve learned even more about investing from researching certain topics for the podcast that I probably wouldn’t have spent time on otherwise. I’ve made my own investment process even more efficient and productive.
To celebrate this hundredth episode, I have a special invitation for listeners of this podcast: I’ve decided to open my friends and family practice to listeners of this podcast. I have the right to have a limited number of non-accredited investors and have two slots open at the moment.
The first two listeners to sign up and finish the paperwork get a slot. I don’t know when I will have another slot open up, so if you have been thinking about it anyway, now is the time.
Ideal client profile:
- Less than 40 years old – If you are less than forty years old, then you have at least 25 years left before you reach retirement age. 25 years will allow for a long runway for compounding your money. The longer you give your capital time to be compounded by the underlying businesses, the more wealth you will end up with.
This requirement is based on my experience running money for people who are retired or close to retirement age. People who have reached the age of 65 plus are required to take minimum required distributions from their account every year, and it makes managing those accounts more difficult when funds are continuously removed.
- You have a career that you enjoy and expect to remain in it – This requirement is important because it should mean that you will not need to use the capital I am managing to support yourself in the future. If you are happy with your work, check this requirement and move on to the next. If you are miserable with the work you are doing, then you should figure that situation out first. If you need to go back to school or take a big pay cut to switch careers or something, you may need to capital back and that is also not good for compounding.
- You have no high interest debt - No credit card debt, no high interest student debt. If you have any high interest debt, you should be paying that down first, before investing anything in the stock market, or anywhere else. If you are paying 24% interest on debt, it makes no sense to invest hoping to get a compounded 10% or 20% return.
- You have an emergency fund. Stuff happens. Be prepared by having a minimum of six months, and preferably one year of expenses saved in cash in an FDIC insured account. This is your “sleep well at night” cash hoard. If something goes horribly wrong in your life, health wise, job wise, family wise, you will be prepared and not have to pull money out of your investment account.
- You will set up a monthly automated deposit into your investment account. – The best way to compound money is to combine the power of savings with the power of investing. If you get into the discipline of adding to your investments every single month, you will see your net worth climbing over the years, and the more you contribute, the more you will end up with. There is nothing worse for client / investor relations than to fund an account once and then stare at it every day watching it go up and down.
- Minimum account to get started is $25,000 with preferred minimum of $100,000
- You understand that the goal is long term compounding and you intend to not touch the money in the account until near retirement age
Here is the service I will provide and the relationship that you will have with me
- Your relationship will be with me and me only. We will talk about every six months or anytime you have a question.
- I will work with you to fill out the paperwork, sign the contract, get the automatic deposits set up.
- The account will be invested in value ideas fully researched and vetted by me.
- They will be long only (no shorting)
- No arbitrages or other short-term type investments
- No leverage / no margin
- Most purchases will be held through thick and thin, all the ups and downs of the market. The compounding comes through the increased value of the underlying business over the years
- Accounts will have 30% cash at all times until the following occurs
- Market corrects 10% from its peak – 1/3 of the cash (10% of the account) will be put into the buying program to be invested over three to six months
- Market corrects 20% from its peak – 1/3 of the cash (10% of the account) will be put into the buying program to be invested over three to six months
- Market corrects 30% from its peak. Any remaining cash will be put into the buying program to be invested over three to six months
- Once fully invested, account will remain fully invested until market reaches its peak again, or some holdings have reached an extreme over-valuation and can be reduced to raise cash back to the 30% level.
- My one and only fee is a Total Assets Under Management fee, starting at 1.75% per annum for assets of $500k or less. If you have assets under management greater than $500k, the fee is a smaller percentage.
- The fee is calculated by average the ending account net worth for the three months of the quarter in question, multiplied by the percentage divided by four. Super easy to and you will get an invoice and calculation each quarter. Very transparent.
So to summarize, I have two slots open and I would love to fill them with listeners of this podcast. First two to complete the paperwork get the slots. Click the email address to contact me:
Lastly, I want to thank all of you for listening and especially to those of you who have submitted questions for me to answer (which helps me generate content) and for the kind words about this podcast.
It has been quite a rewarding journey and I hope to continue to provide value to you in the future.
Ask JB: Where is the market valuation compared to historical ratios?
Ask JB: Submitted by listener Yaokai: Hi Jeremy,
In episode 96, you mentioned that U.S. market's isn't really overvalued because there are pockets of turmoil. I agree with the turmoil part but I would like to have your thoughts on the median valuation, such as median P/E, P/B and P/S. All three are much higher than their historical values.
JB Says: Great question, but the answer is that if you were to remove the 4% of companies that have been driving the overall market, what would these ratios really be? There are lots of articles out now about how the market valuation is approaching the “irrational exuberance” level and the Shiller CAPE ratio is similar to 1996. In that case, there were four more years of rising markets before the bubble burst in 2000. What I don’t like to do is compare to averages. I prefer to compare to extremes. If the market is valued at an extreme, then I have more concern than if its just well above an average. For example in 2000, at the peak of the internet bubble, the stock market had an overall valuation of 25 times earnings per share, compared to 18 times earnings as of early November. So that suggests to me that we are actually not at extreme levels yet.
Looking under the surface, there are certainly a number of technology companies whose individual valuations I would consider extreme, but there are plenty of other large companies throughout the market indexes whose valuations are nowhere near extreme. There are even still pockets of value to be found throughout the market, resulting from other, industry specific factors.
A look at the buffett indicator of Total Marlet Index of $26 trillion compared to the last reported GDP of $19.5 trillion suggests that the market is 138% of GDP, definitely near the top of the valuation range and close to extreme levels. However, GDP has been expanding and is expected to continue growing. Only with a looming recession would today’s levels be considered truly extreme. And I for one, don’t see a recession looming.
Do you have a burning question on investing you would like answered? Click the button below to send it to me and I will answer it on the podcast!
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