Why I Love Stocks
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- Опубліковано 3 лип 2024
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I am not a professional investor and have never claimed to be. I'm an amateur investor sharing my experience of what I've learned, where I have had success, and where I've had failures. I share my thoughts on investing and performance with transparency. My approach and goal to investing is to buy high-quality long-term investments in world-class businesses that I call "compounders". I view my investments as businesses, not as stocks. Before creating content on UA-cam full time I worked as a senior-level programmer for 8 years. Over the years as a programmer, I compounded my knowledge of development. I take the same iterative learning approach to my study of investing. I study investing as a craft in the continual pursuit of being better. I will make mistakes in investment decisions from time to time. Results are not guaranteed. Please do not blindly follow me into any investments, and make sure your portfolio and investments are built around your specific income, risk tolerance, personality, timeline, and overall circumstances.
Decided to throw this one out publicly. Hope you all enjoy. If ya want more content make sure you check out my other youtube channel and the Patreon in the description.
❤We just placed our entire retirement account in the stock market today. We figured that the US government will bail us out as they have done in the past.❤
@@wh-lo4tf cringe
What's the other youtube channel?
I passed this on to my friends. Thanks 🤙🏾
@@easyrawlins2392 www.youtube.com/@JosephCarlsonShow
I started buying some more stocks at the beginning of the year, but nothing big. Why am I treating this so harshly? I still want to be the first person in my polygamous family to make a million dollars despite the fact that others in my field make six figures per person. I am well aware of the costs associated with working more to get more money.
Due to my demanding job, I lack the time to thoroughly assess my investments and analyze individual stocks. Consequently, for the past seven years, I have enlisted the services of a fiduciary who actively manages my portfolio to adapt to the current market conditions. This strategy has allowed me to navigate the financial landscape successfully, making informed decisions on when to buy and sell. Perhaps you should consider a similar approach.
this is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
My CFA ’Tenley Megan Amerson’ , a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
Appreciate this recommendation, hopefully I can get some insight to where the market is headed and strategies to beat the downtrend with when I hear back from Appreciate this recommendation, hopefully I can get some insight to where the market is headed and strategies to beat the downtrend with when I hear back from ''Tenley.
Bot. Same text comment on some of Joseph's other videos but from different "person"
Thanks for making this video public
What
Nothing better than hearing someone talk about their passion.
This was a fun one. Thanks for making it public
My portfolio for the past 30 years has always been self managed and I own 3 shares of Berkshire Hathaway Class A stock (BRK:A) which I bought in at about $17,000 during the mid 90s, I’m currently liquidating some of these positions to incoporate new Gen. Stocks, but am I better off re-investing into Gold as it seems stocks are a little too unstable right now.
Invest in real estate, ETFs and high-yield savings account.
Just buy Gold and protect your assets, the stock market is a rollercoaster.
If you know your way around the market, it's not always a rollercoaster. There are plenty of possibilities to make significant money in the current market. Simply purchase and hold solid firms with robust earnings if you are not too knowledgeable about the market, or get advice from consultants on actively managed funds and exchange-traded funds (ETFs).
Would you be willing to suggest a trusted advisor you've worked with?
'Melissa Rose Francks' is the licensed advisor I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
Overall, 51% of traders think this year would favor stocks, mutual funds, and other equity-based investments, despite Treasury yields and other safer cash-like investments paying big. I’m looking for opportunities in the market that could fetch me $1m ahead of retirement by 2025
Look for stocks that have paid steady, increasing dividends for years (or decades), and have not cut their dividends even during recessions. Alternatively speaking to a certified market strategist can help with pointers on equities to acquire
True. Having the right financial planner is invaluable. My portfolio is well-matched for every season of the market and recently hit 90% rise from early last year. I and my CFP are working on a 7 figure ballpark goal, though this could take till Q3 2024.
Please can you leave the info of your lnvestment advsor here? I’m in dire need for one
Evelyn Alicia Schoenholtz' is the licensed coach I use. Just research the name. You'd find necessary details to work with a correspondence to set up an appointment.
Thank you for this Pointer. It was easy to find your handler, She seems very proficient and flexible. I booked a call session with her.
Truly one of your best videos. For years now, even going back to 2018 when I got heavy into UA-cam finance folks, a part of me always disagreed with Real Estate being the *it* investment. It seemed that anytime a self-made wealthy person was interviewed, real estate was their investment of choice. But with stocks you can literally have an investment go up 20% in a matter of months! And I didn't have to deal with local ordinances, tenants, building issues, etc. Stocks, for me, were always the way to go, even if it did seem "lazy". It was great to see you so passionate about something and I thoroughly enjoyed this educative video.
Do not apologize for this video. It was a great insight.
Really good video, thank you. The Basics of stock investing always helps out.
A very great point about the value of stocks and why investors should love them!
I do want to point out a small mathematical thing though. Even though the 3% yield grows to 6% after 5 years, there is still some time left before it catches up to the treasury that has been 5% from the beginning. After some napkin-level math it looks like after 5 years the company in this example will have accumulated a yield of about 20% on the initial investment not counting reinvestments, versus the 25% of 5 years at 5%. This is quite a bit worse when we consider reinvested returns, since the treasury yield gives more money to reinvest earlier, though the math seems a bit more complicated for that if we assume reinvestments that start at 3% again every time. Of course, it won't take much long after year 5 to catch up, but that is a long time to hold to be equal to treasuries. It just goes to show the importance of evaluations :)
Terry Smith would love this 👏🏻 great video
Love this video! Best finance UA-camr in the game.
Thank you Joseph!
Excellent, Joseph. Thank you.
I want a balanced portfolio with growth investments, safe investments, and also focus on dividends to gain up to $20K monthly, my concern is picking the right stocks that can survive a recession. How do i go about this Joseph?
In this current unstable markets, It is advisable to diversify while retaining 70-80% in secure investments. looking at the worth of your portfolio, you should consider financial advisory.
Agreed, my portfolio is well-matched for every market season yielding 85% from early last year to date. I and my advisr are working on a 7 figure ballpark goal, tho this could take another year. IMO, financial advisors are the most sought-after professionals after doctors.
I’ve been down a ton, I’m only holding on so I can recoup, I really need help, who is this investment-adviser that guides you
Thank you for this Pointer. It was easy to find your handler, She seems very proficient and flexible. I booked a call session with her.
Bots lol
Thank you for this great video Joseph!
Best explanation of why we invested in stocks, not crypto or gold.
You do not need to hate gold ;) gold in my opinion is a good insurance for the future, a real storage of wealth, and i mean physical gold
Real estate, stocks, and gold. I think these are all solid investments. Real estate and gold for safety and stocks for growth+income.
Closest I got to investing in gold was because of Robert Kawasaki and I'm so glad I never did.
Joe this is great information! This format and super investor analysis are the best stuff u are creating!
Good message.
To beef up your point even more, it is important to note that the 5% return on the treasury is a 5% simple return, NOT CAGR. The difference is a big risk bonds have - reinvestment risk. When you collect the coupon payment, you may not be able to reinvest the coupon into a bond at 5% if yields have fallen. Just one more reason I love stocks even above bonds!
Fair point
Michael, God smiles down upon you on this day.
Oh .. that was why I was confused why he kept saying only stock will compound...
Returns should be mentioned with clarity i
guess
very instructive, thx!
one doubt that i have with these calculation is you can never know how well they execute their plan! when you calculate nflx fcf, by dividing this year's revenues to forward fcf, you hope they achieve that increase! if not, they will fall even further (see for example pypl stock); so, it''s an average of historical past, present figures and future hopes - but nobody knows future for sure! ;)
also, i believe fcf is not the only indicator you watch when you buy a stocks, there are many others: debt, profitability margins, competition, etc
Great video Joseph! Thank you for sharing it, so needed.
This mindset shift is much needed. Thank you Joseph!
Always enjoy your videos. Always clear and informative info.
Great info! Thanks!
Excellent content. Thank you.
Great info and appreciate your insight.
This video works really well for people who already like stocks. Articulating the science behind your personal conviction, in turn, helps others who are receptive to it. These are concise reasons why I, not only, appreciate this video, but continually rely (not just enjoy, but rely) on videos like yours... Of course, while maintaining my independent thought for choosing my own allocations, holdings, brokerage, tax advantage, etc.
Have to take in to account risk. Most people dont understand/will never understand the psychology of stocks either.
Exactly. Trying to get my wife to understand how it works. And I get the skeptical look. 😂.
W❤😂😅
@@davidmay2294 I feel you on this one. I'm either not good at explaining or I've screwed up enough in the past that she really has no reason to trust me with this. haha
@@davidmay2294😂
Most people dont have the will to learn is just that simple ... when someone asks me something about it an then doenst have a 5 minute time of paciente to try to even understand ... waste of time
I love stocks too. What are your thoughts on ARM?
Great perspective! Thank you so much for this one.
Loved the conversation piece. Thanks for the insight.
You make a great point about $NVDA.
Thank you so much for sharing! This was really insightful!
The starting yield you were talking about is free cash flow compared to stock price in percent?
Why I love Joseph
Thank you Joseph! This is my favorite kind of stuff, and you shared it well.
Great video thank you
Loved this kind of video Joseph ❤
Thank you for another great video 👍
That’s true, although Private Equity Fonds with Companies or Real Estate can be more profitable with a high degree certainty. That’s what rich people can do. For normal people, peasants like us, Stocks are the easiest. Real Estate is a nice side hustle, high certainty but also work and too rich valuations in metropolitan areas. Unless you live in a shithole city, Real Estate valuations combined with a high tax burden and normal income is not really attainable unless you lever it to the titts. Of course it could work, but you will cashflow significantly only after a few or many years. With stocks you cant use leverage, but liquidate your gains at any time and they could be really significant in some cases. Also you would immediately cashflow with dividend stocks.
What doesn’t come to mind when we talk about options, is starting a own business. This could be much much more profitable. Or buy a business. In general that’s basically all our investments based on. Of course we don’t buy mom and pop’s store or amazon fba businesses, we buy businesses on another scale. Be it in private equity, real estate (part of someones salary or earning of a commercial business) or a stock.
Peasants 😭😢. Very true tho.
Awesome video as usual joeseph!
I will be forever grateful to you, you changed my entire life and I will continue to preach on your behalf for the whole world to hear you saved me from huge financial debt with just a small investment, thank you Katherine Flores.
I'm surprised that you just mentioned Katherine Flores here. I met her at a conference in 2018 and we have been working together ever since.
The very first time we tried, we invested $1400 and after a week, we received $5230. That really helped us a lot to pay up our bills.
What impresses me most about Katherine Flores is how well she explains basic concept of winning before actually letting you use her trade signals. This goes a long way to ensure winning trades.
You trade with Katherine Flores too? Wow that woman has been a blessing to me and my family.
I'm new at this, please how can I reach her?
This is the first time I learned the real importance / emphasis of free cash flow. Thanks a ton for making this. Would love to hear any other videos you make explaining different metrics!
Thank you Joseph 👏🏻👏🏻👏🏻👏🏻
Except that Treasuries don't drop 70% in price in a matter of days. Okay, they can on the secondary market based on government fiscal policy, but the Treasury you have in your hand does not change in value. Unlike NFLX. You buy a share at almost $800 and one earnings report later that share in your brokerage account drops to less than $200 and does not reach break-even for years, if ever.
You have inadvertently pointed out the most important thing to understand about stocks. You discard the second-hand market value of the treasury bill, because you can just hold it and get the income from it so why bother with the price? *That is exactly how you should think about stocks*. Who cares if the stock price crashes? As long as the business is going you will keep getting that income, so why bother with the price? The only thing the price should be able to do to you is to allow you to buy when a company is cheap and sell when a company is too expensive.
Excellent video and providing your viewers valuable info so we can grow our wealth. Thank you!
Very good video thank you
Thanks for the video man!
I'm so glad you made this video. Also glad you released it. This information is very interesting. Thank you.
Great video and i learned new things on how to analyze companies. You should certainly do more educational videos like this focusing on certain metrics that you like. Recently you mentionned that you were closely watching MSCI and they are all in line with your compunding metrics. 4.32% fcf yield and around 20% free cash flow growth over the last 5 and 10 years. Pretty amazing!
thanks for the video Joe!
excellent video as always
Fantastic video Joseph
Great job on your video!
I love these deep dives 🙂
Great presentation, thank you. Can Qualtrim analyse Stocks listed in other countries like Australia?
I love stocks because you learn much abour business administration topics.
"I love stocks" is best shouted from a mountaintop.
Thanks for including the cheapskates like me. (Months ago, did you mention adding international stocks to Qualtrim? That's a game changer to me.)
looking back my meta buys in 2022 were at like a 10% + yield, but I wasn't really looking at that when I bought it; more so the fwd pe of under 10
Awesome Video. Great content like always. Thumbs up
the yield on bonds have decreased especially on the long end (30 and 10 Y) indicating that the demand is still there even if the supply remains huge showing a preference for safety. I'm still at a crossroad regarding whether or not to liquidate my $138k
Find quality stocks that have long term potential, and ride with those stocks. I have found it takes someone who is very familiar with the market to make such good picks.
I agree with you. I started out with investing on my own, but I lost a lot of money. I was able to pull out about $200k after the 2020 crash. I invested the money using an analyst, and in seven months, I raked in almost $673,000
Please will you be kind enough to share the details of the man that helped you?
Actually its a Lady. Yes my go to person is a 'MARY KALIOPE BRAUN'. So easy and compassionate Lady. You should take a look at her work.
Thanks for sharing. I curiously searched for her full name and her website popped up after scrolling a bit. I looked through her credentials and did my due diligence before contacting her. Once again many thanks
Amazing video again Joseph! I just canceled my Disney+ and put the money into a Qualtrim subscription. Love the information I am getting there
Unfortunately 20 year treasuries pay more like 2% because of the inverted yield curve.
Thanks for sharing this, I have a few questions. If the company shrinks and has less free cash flow would your dividend yield decrease? These stocks paying out dividend are nice but handing out money every year to the share holders, wouldn't the share price not grow as fast then?
Why isnt the model made with 5% reinvested to give a fair comparison with compounded fcf yield?
Thanks a lot for this vid! You explain this topic in a genius way.
Hey Joseph. What about HSY (Hershey)? Their 5 years free cash flow yield is around 4%, they are after a major sell off, trading at a 20 PE ratio where the lowest PE in the last 10 years is around 18, max is 44 and the median is 27.
I think this video is great! Do you mind explaining the crux of this argument a little more? Why free cash flows are the only thing to care about? I get the reason is because it's literally the left over capital that can be output to the owners, but I think it's a little more complicated. Shareholders don't get 100% of the output as the company has to continue to invest to maintain it's growth rate. Would love to see a video on that explanation!
Free cash flow should be a measurement of how much can be returned *after reinvestment*. Because free cash flow already subtracts out CAPEX. You may have to make some adjustments for dilution / sbc. But overall FCF is the clearest gauge of how much cash the company is returning to the shareholder.
@@JosephCarlsonAfterHours Free cash flow can still be misleading though, and is a better measurement of some businesses than others depending on how you want the compamy to generate value.
For example, a company that is expanding by building a new factory will have low/negative free cash flow as their capital will be fed into the factory, but that investment might generate a great return on invested capital and enable profit growth for future cash flows. An obvious example is Costco building new stores. I wouldn't consider it a bad thing if Costco saw the oppurtunity to expand faster, but that would reflect negatively on their current FCF.
It's really all about what the company *does* with that money and how effective those actions are. Capex for maintaining current earnings is bad, as that is essentially investments at a 0% roic. Capex that expand and generate high roic is good. FCF that the company withhelds to make inefficient stock buybacks at high valuations or to make bad aquisitions is bad. FCF used for efficient stock buybacks or good aquisitions or if nothing else paid as dividends is good.
All that aside, if your focus is on companies that can scale their business without significant capex and that will employ capital in good ways reinvested at high returns or paid in dividends then it makes a lot of sense to put a large emphasis on FCF. I think you speficially look for those kind of companies, so the focus on FCF is very consistent :)
How do you think about the opportunity cost in a 0 interest rate environment?
This was a real nugget ! Thanks Joseph 👍
Don't you need to account for the reinvestment/ compounding of interest from the treasuries?
No. With bonds the rates won’t be the same when you reinvest. In fact, the chief appeal of them right now is they’re abnormally high; long-term, your reinvested returns will probably be lower unless inflation spikes again.
This must be one of your best videos, congratulations and thanks for sharing
As a newbie investor(sub 1yr) many thanks for this simple, understandable brake down👏
This makes me tempted to buy the Patreon
If you calculate the area under those curves, the 5% strategy will beat the 3% one compounding at 15% until more or less year 8 or 9. This means you will need at least 8 years of holding a stock to beat the treasury assuming that the company indeed compounds at 15%. In terms of FCF alone it seems quite concerning and illustrates the problem of paying a premium for that kind of stock given the added risk.
Don't forget taxes.
Ive been following you for about two months, and after seeing all your last videos this was the best one yet👏🏻👏🏻👏🏻
Thoughts on Nvidia?
One of the best videos I’ve seen of yours.
One thing Joseph doesn't really state is that the bond cash flows are also eroded overtime due to inflation while the stock cash flows are somewhat inflation protected because they are growing. Also there is duration risk in both of these but it is expected that the company will earn more money in the future
And the evil taxes on bond based income.
So just megacaps with Free-cashflow between 3-5 % or mid caps as well? Also, what price range should we consider?
Doesn’t matter the cap as long as the business can grow its FCF at an attractive rate. Usually businesses with competitive advantages over internal and external factors can do this. Price range depends on the stock, but you’re looking for a price that equates to the 3-5% range or whatever range you deem suitable.
Joseph, I like your explanation, but if basing valuation on free cash flow starting yield and growth, then Costco and FICO both are near 5% starting FCF yield. I would assume you would be an active buyer of both of these, one you already own (COST), and one I know you want to add (FICO)?
If Costco and FICO had a starting yield of 5% today, with the same growth outlook they currently have. I would put over 50k of savings into each of them tomorrow. Unfortunately right now Costco's is a bit under 3%, and FICO's is 1.6%. I think both of them will have better potential entry prices in the future.
How do you find these stocks? Which tools do you use?
I've been watching you for 6 months now and love your content. This video was so informative and useful when it comes to fundamentals of investing, that I'm going to subscribe to your patreon.
Real-estate with 20% down have 5X leverage built in. If price increases 3% per year, you are getting 15% ROI on down-payment with very low risks. It also have lower taxes, how will you compare it with stocks, a video would ve awesome for this new subscriber.
I don’t quite understand this point. Could you elaborate a little further?
I agree. My real estate (residential rental) is yielding me 15% while my $1.1mill investment since 2006 in 401K now stands @ 700K after investing in funds and moving to money market when the market tanked losing gains on growth. Perhaps I am a bad investor. But lot of my friends lost money too.
In terms of returns, commercial real estate has given more returns to investors but when we include the amount of work, yeah stocks is easier to buy.
Sounds like a lower actual return so?
Does the beginning example only make sense if the market cap stays the same? Because the yield would be going up if the market cap is increasing. Or are we just saying we’re looking at the yield at different points in time. Even if the free cash flow and market cap are moving in tandem. A great stock only trades at those high yields during times of neglect.
Thank you for making this great video. I really like watching your channel 👏👏👏
Okay i believe i missed something. The free cash flow per share would be compounding right? But in the example you don't let the bonds compound? Are bonds not compounded?
Thanks you!
I had a hard time following certain concepts you explained but I get the gist of it and I basically have had this opinion for a while now... I appreciate this video. Compound interest baby
Which tool/website do you use for FCF growth charts?
Hey appreciate mentioning the relevance to compounding in a clear way with real world examples. I've never had it explained to me. I appreciate the information you give out for free. It's unfortunate this stuff isn't taught in schools
You should make this video, this channels landing video. Super informative and ovreall good tldr of your channel
Agree maybe he could recreate a video like this to show his strategies and give a more thorough introduction to the channel and his goals
I understand how to see this when its happened in the past but how do you predict it in the future Growth rate
Thx Joe
Loved the video. Please post more videos like this
I have friends that also invest in crypto and don't understand why I don't invest in Crypto. I tell them that with stocks I can see the cashflows of companies and I see how those cashflows grow over time. With Crypto I don't understand where it gets its value from. To me its speculative worth. This video hits the nail on the head of why I invest in stocks. Thanks for making this public. I am joining your patreon. Even if you didn't have videos like this your patreon would be worth it just for Qualtrim.
That's right, I understand there's real potential use cases for crypto, especially for governments that don't have as robust of financial systems as the US/Europe.
But... I can't value something if it doesn't produce cash flows. How can you come up with an intrinsic valuation of crypto? You have to just base it on generalities and overall trends of adoption, you can't place it on any specifics of what you believe the yields or cash flows will be from it. For that reason I just choose not to focus any time on it, just like I don't focus any time on gold.
@@JosephCarlsonAfterHours Crypto is likely a fools gold in it current state but only time will tell how this pans out. It will probably end not well in the end.
Nice video Joseph. Thanks.
Great explanation Joseph. The only issue I have with your presentation is your not accounting for the true affect of compounding. The company you're using as an example is not compounding 15% linearly.