How This Investor Keeps Beating The Market

[@JosephCarlsonShow]

Happy Friday Everyone!
For those of you that don't know, I have more investing content on this channel: ua-cam.com/channels/fCT7SSFEWyG4th9ZmaGYqQ.html
Also, you can check out the qualtrim insights after joining the Patreon: www.patreon.com/josephcarlson
Starting the past few days I have been uploading all videos to podcast as well, so check them out there if you want them in audio only.
Also, one correction on this episode. Fund smith manages 36 billion, not 26.

[@abhinaykumar204]

I like this kind of stuff. Thanks

[@elsemuller2460]

"Quality always outperformed the index" - around min.23 Smith showes us with a (rollin numbers) graph .
Isn't this the thinking of Rob Arnott, one of the inventors of smart beta ETFs? He devolved an INDEX based on this thinking, focusing on the fundamentals of companies. I actually do not know if and how much he outperformes too, would have to do some research. What do you think about him and his strategies? Maybe you could make a follow up video about that topic. Greetings and thanks for your work.

[@methos-ey9nf]

Would be awesome if you could provide the link to his full presentation. Thanks!

[@Sonia3holy]

When you say do nothing...are you still buying or not?

[@yagamilighto12]

When are you gonna wake up to TSLA? What's your bear case? It's an amazing company and an opportunity RIGHT NOW! but i could be wrong, time will tell

[@wedsonolivia4103]

Successful people don't become that way overnight. most people see at a glance-wealth, a great career, purpose-is the result of hard work and hustle over time. I pray that anyone who reads this will be successful in life.

[@jerrylee3887]

I DISAGREE. DIVERSIFICATION IS A BIG MISTAKE FOR INVESTORS THAT HAVE CONVICTION FOR ONE GENERATIONAL COMPANY.

[@horn1225]

@@jerrylee3887 lmao what?? Yes type in all caps in makes you look so smart. You don't know anything about what you speak. Conviction doesn't help if you put all your eggs in one basket. Too much risk my dude

[@jerrylee3887]

@@horn1225 No risk. not reward

[@horn1225]

@@jerrylee3887lmao too much risk is how you get loss not profit. I see you're new to this. Go ahead risk away, I'll capitalize off it. Everything has risk but investing one company alone is about the highest risk you could take. Maybe balance that risk a bit bud

[@horn1225]

@@jerrylee3887 might as well just go gamble all your money at that point at that casino

[@pfuiteufel1385]

This is the most insightful video on investing I have seen in a long time. Thank you, Joseph.

[@Arthur_Kizito]

This could be the single most important investing video I have watched.

[@berndh.4937]

Hey Joseph, great episode! I think you should link his video in the description though, as most if your video are clips of it.

[@tuchelbenrobert1595]

One of the best content I've seen. Crypto is
the best though I don't self trade but I still
make my profit with the help of my broker
till I'm sure I can start of self trading.

[@khayonemphonbokamoso6643]

@Patrick Johnson Obviously trading in crypto is very volatile
and risky to trade that's the reason most
investors trade with a professional broker

[@ahmeteymen3955]

Lack of trading discipline is the primary
reason for intraday trading losses.
it is estimated that nearly 80-85% of
intraday traders end up losing money in the
stock market Experiencing loss is also part
of the game but that don't mean you should
give up.

[@ahmeteymen3955]

I'm looking forward to investing in the
crypto market. I am still trying to figure out
how the entire thing works

[@brandlyedward7552]

@@ahmeteymen3955 His services are amazing. My first
investment with Adrian Brayden Calebfx gave
me a profit of over $250,000 ever since then
he has been managing my portfolio so
well.

[@brandlyedward7552]

with him you get to see forex trade from a different
angle....

[@Xairos84]

This is a great video and yet another one that highlights your thesis: teaching people how to market well. Your channel isnt just one that shouts "come to me for all the info" but rather one that says "let me teach you how to really look at things critically".
Much appreciated.

[@thedoug4190]

Great episode. I believe the bigger UA-cam personalities you speak of actually do this kind of investing even with all their click bait thumb nails and trendy stocks they talk about but put most of their money in high quality companies and only a small percent in speculative trendy click bait stocks. It’s the old bait and make ad rev. strategy. Keep up the great work Joseph.

[@TradingLambo]

As a trader, I must say that point 3 of his strategy, "doing nothing" is actually the most important part of his strategy

[@danguee1]

I was a 'do nothing' guy for almost all of the last 12 years I've been seriously investing. Rode out every correction, didn't tinker with investments when 'running flat' for periods - or even trending down. Just made sure, with due diligence, that they were still sound/good to hold.
Then came 2020. Stocks returned almost to trend by late May when I made the crucial mistake of thinking:" whoa - the global economy must surely have been boshed by the pandemic: everyone's locked up, supply chains will be decimated, people will be feeling poor, companies will surely not invest. Time to sell up/take profit". And I sold everything: Lots of great small cap funds, SE Asian tech, even lots of Fundsmith. And then, while sitting on cash, watched them go up and up and up and up.... What an horrendous mistake. Cost me £550k in lost growth - something from which I'll never recover.... So, yes:
DO NOTHING. REPEAT: DO NOTHING.

[@Philip8888888]

and the most difficult. it is often why dead investors do better than living ones...

[@greyhunter9287]

Joseph, this was an exceptional video. I was wondering if you could do a short video on actually looking at some stocks in your portfolio and walking through his process on determining whether a company is a quality company and warning signs that you might look for. For instance, one of the things I like to look at is ROIC vs WACC. However, as I seek out quality businesses that I can hold for the long term I’m wondering if there isn’t a better way than the simple method I use. I think that would be a natural follow on to this video. Keep up the great work sir.

[@kevinomalley1521]

Fantastic to see Terry Smith on here. "Invest in good companies, don't overpays, then do nothing." That's it, that's his strategy. His Smithson Fund is a good buy.

[@Coda1850]

I thought I was going to see a picture of Pelosi & a video on Insider Trading.

[@327efrain]

Lmao me too

[@AfricanusKing]

She should managed a fund. Pelosi would put Cathie Wood to shame 😂

[@vivmomof4g397]

Great content! Although I’m old, I’ve learned so much from you. Thank you.

[@GrindThisGame]

Great video. I like that 3 point rule set!

[@anomanderrake8693]

Perhaps the most interesting video about investing I have ever seen. Thanks for sharing Joseph!

[@samclark3970]

Joseph, awesome video man. Thanks for sharing this content from Terry Smith with us. Kudos!

[@gilbertobourretmarin6519]

Hi Joseph!
I have a question for you: Why do you use a period in Seeking Alpha of 5 yrs and in the total return calculation a period of almost 20 yrs? It doesn´t have to be the same for both calculations to have a good comparison? Thank you a lot, your videos are great!

[@Wisely_monk]

This has to be the single Best Financial Video Content of 2022 and the year just started.

[@avioded2581]

Great video, what question, what source you use to find the investment on capital, also how to look it forward?

[@sagig72]

This is your best video to date Joseph. I learned TONS !! Take care man, love your channel.

[@stabu5622]

Joseph, I really enjoyed this episode. Insightful and interesting. Thank you dearly. Keep up the super work!

[@elcristoph7380]

The biggest confusion people have over P/E ratios is that they think a low P/E means its cheap or a high P/E means its expansive.. That's NOT what a P/E ratio is showing. P/E ratios are telling you how much people are prepared to pay for the company/stock, a growing P/E doesn't mean its getting more expansive, it means more and more people are prepared to pay a higher rate for the company because they feel its future value justifies it.
on the flip side a shrinking P/E ratio is the market saying that investors are prepared to sell it at a lower and lower price as the future projected value of the company is dropping.
The P/E ratio is prob one of the most misunderstood metrics in retail investing.. people basically fill their portfolio with companies believing that cheapness is good, its not.
You have to pay to own quality items, and companies are no different.

[@RCXDerp]

Ehhh there's a lot of multiple compression right now

[@thegreat9481]

Yes it does mean a stock is expensive.
Price to earnings ratio is basic common sense math. How long can you get your money back if earnings remain the same on a per share basis?
A p/e of 4 means it’ll take 4 years IF earnings remain the same. It can either get better, worst, or stay constant. It should be used as a quick measure, the lower the better but find out why.
Please dont go around talking about P/E as if you were correct about it. I hope this recent drop made you eat your words.

[@elcristoph7380]

​@@thegreat9481 See, your comment is a class example as to why you shouldn't get your investing advice from social media.
Market price is a forward looking indicator (for the most part) P/E tells you how much over time people are prepared to pay for a company stock, or to what price traders are prepared to hold a company stock. The more the market values a companies future cashflow/growth the higher its P/E will go as people are prepared to pay a higher price.
Now if you look at a company and you see its P/E is starting to drop, This is not a buying signal. This is a selling signal because the market is looking forward and does not see continuing value/growth. Now this might change in the coming financial reports but its better to remove risk and sit on the sidelines.
Problem with your (pretty poor) understanding of P/E is this. If a companies forward looking value/grow is falling, ie becoming "cheap" what's the incentive to buy it? The market is actively telling you that people are selling it and are not prepared to hold it at that price. Now you can say you believe the market is wrong based on any number of factors, and that's fine.. but buying a company that the market doesn't want because you think its cheap is a dumb way to invest.. You shouldn't really be investing purely of P/E anyway, you trade it based of if you believe there are fundamentally strong reasons to raise the company price..
SO next time you're looking at a company and you see its P/E has been consistently dropping, do yourself a fav, and before you jump in because its "Cheap" ask yourself why.. why does no one want it.. The reverse of course applies.. if you see a low P/E ration that's growing and a price that's recently dropped from a high. This can be an indicator the market is showing interest.. so again, ask yourself why..
its been fun junior.. feel free to ask me any questions about trading or investing and Id be happy to help you out.

[@thegreat9481]

@@elcristoph7380
I didn’t even read. Peter lynch explained exactly what im saying and it makes sense. So if my explanation from one of the most successful fund managers words are wrong then you sir have an ego far beyond the seas.
You’re wrong and will get corrected. It was painful seeing you talk as if you were right 😂 by your logic there is no overvalued stocks. Have a nice day

[@elcristoph7380]

​@@thegreat9481 I've read Lynch's work and if you think he invested based purely on if the P/E ratio was low then you're a absolute fool.. And the fact you didnt even read what I said makes you an arrogant fool as well.
Be humble and educate yourself.

[@markliberatore6377]

Dude. That was interesting as hell! Thanks. I've just been schooled.

[@InvestmentClub]

So good I had to watch it twice. Very insightful investing philosophy, great find thanks for sharing

[@Ieltsadvantage]

Excellent video.

[@paintballkid1818]

Joseph, what is the best tool to use to look at a company's earnings growth? Thank you!

[@domceja62]

Excellent video! Definitely will research into Terry Smith

[@Sanspepins]

After watching this video I an definitely say I've fallen into a lot of traps you mentioned. A lot of the reason for this I feel is just because of how wild the markets have been due to covid. basically anything was a good play at the start of 2020. Will be restructuring my portfolio going forward.

[@may-maytanymaytany_s3417]

Thank you for your transparency,for sharing your portfolio &your journeys. Been your subscriber since day one.🙏👍💕

[@hakansahin4299]

What Charlie Munger mentioned as "if you pay an expensive looking price" is probably not what you think expensive is lol

[@user-li7kp7re9b]

This

[@blackrazorfilms]

Just found you channel and haven't even watched a full video yet but damn what a genius idea showing your portfolio's (increasing!) value on each video!

[@AlpacaCheese]

Really like ur channel, it’s good information without the fluff and interesting support that is concise and to the point

[@davec3974]

As a side note, Terry's fund has almost perfectly replicated the Ishares MSCI World Quality Factor Index fund over the last few years. That is to say that there are cheap ETFs you can buy that will systematically give you exposure to the quality factor for the rest of your life.
As another side note, quality has gone through several long periods when it has underperformed value.

[@Paulie44]

Are you referring to IWQU as the iShares MSCI World Quality Factor? I’m guessing IWQU is the accumulation version, or is there another?

[@angeldelis2838]

Pure quality content!!! Thanks

[@JOSEPHELBOSS]

this video was so eye opening, i can't believe i was blind of such knowledge. thank you so much joseph.

[@anderson6379]

Awesome episode Mr Carlson. You were speaking directly to me here. I overly focus on cigar butts. Thanks for the reflection

[@G1Martins]

Thanks for the video. Where can we find the original video?

[@shadowr6348]

Nice topic, its a nice feeling to "buy the dip", and we always want to find great companies at fair value. Magic formula investing tries to capture both, high roc and earnings yield. Cheers Charlie

[@jaylenbrownfan2112]

How do You calculate ROCE? Thanks to anyone responding.

[@andriis1917]

Thanks for a great video, Joseph!

[@leenglishman1605]

Fantastic episode Joseph and thanks for the intro to Fundsmith. Will definitely be taking a deeper look at investing with them as another part of my portfolio. My being based in the UK too, it looks like I have some tax incentives too, so on the surface - looks a no brainer. Cheers!

[@leenglishman1605]

@Whatsapp➕❶❹❷❺❹❾❹⓿❼❸❹ lol, clown.

[@bartz4439]

Phenomenal video!
Way better than showing chart with +x from dividends
MORE!!!!!!

[@MaxTex69]

This video is brilliant! a must watch for investors well done JC

[@AntonioInvests]

This was a great episode 😁

[@timdangercabeen826]

The best investment one can do right now is investing on forex trading though stocks are good but ever since l swapped to forex, I've seen so much difference.

[@zoehoward3692]

Oh yes you should see the favourable forex rise in proft, This will be the best time to inwest in forex based on current status

[@zakharrusnak6856]

@Dr. George French Can you link me up with your broker? And how good is your broker?

[@zakharrusnak6856]

@Dr. George French Thank you so much for your recommendation l appreciate,
I will get in touch with her right away.

[@robertmichelle1880]

Wow you just mentioned Sophie Arthur? She has helped me too and l earned $20,000 in a month on forex trading

[@martingilbert7642]

@@robertmichelle1880 Forex trading is truly a game changer, It will be a lucrative move to take advantage of forex because it will be very profitable overtime.

[@AB-mb3bi]

The best in class!!Simple philosophy outstanding results! Great book too

[@investing4everyonevideos303]

good video. puts some things into perspective.

[@juancarlosqr]

This is GOLD!!! 💰 This is what we are here for, keep it up!!

[@nick7077]

If the 2nd axiom is ‘Don’t Overpay,’ once you have identified a good business (solid year over year earnings), why do you say PE ratio should not be a primary consideration? How else to quantify how much to pay?

[@24mbronc]

Hello Joseph, I had a question regarding royalty companies like nova. I'm not sure if you made a video addressing these types of companies or not but I was curious on your thoughts on investing in them. Thanks

[@flyingeagle1237]

Hey Joseph did you outperform the SPY on your dividend portfolio in 2021?

[@alexdawson868]

Where can I find the whole report so I can read thru? Great video btw.

[@michaelmajor1549]

Hey joseph, or the general community if anyone knows, does Qualtrim Insights currently take into account ASX listed companies, or is it just US exchanges?

[@leadingworld]

Plz, If Im to put a limit order to buy COSTCO, what do u suggest?

[@isferfun3909]

Great video. This Terry guy and you covers most of sectors but does not include REITs. Why? Isn't some reits make great dividend return and roce as well?

[@cryptogoth]

It's hard to add value on top of Terry Smith's own words, and you did it. Thank you Joseph.

[@user-wo9jj6ii6t]

This was a great episode, hadn't previously heard of this dude

[@shreyaslahoti7542]

This was really intersting!

[@maiasalyamani]

Fabulous. I follow the same strategy. Thanks for the video

[@samuelwhite7856]

why did you say 26bn dollars when it says 29bn pounds which is about 40bn dollars 🙃🙃🙃🙃🙃

[@superswaggerorgasm]

I wish you had citations or something so I can look at the original article or presentation

[@nfish111]

High quality episode👏 would love to link to the full Terry Smith video

[@rokyericksonroks]

Carlson has lost a step, the video is evidence of it. He must go back to the basics that got him here.

[@TETrading]

Yeah good stuff. Thanks for sharing

[@TheRustyLM]

Great video! But how do I find a company’s ROCE?

[@kelle_li]

Which presentation are your clips sourced from? Interested to watch it, thanks

[@jessicamoore3093]

[@jameswood9772]

[@bobbygunz9254]

[@chris-pj7rk]

@@bobbygunz9254

[@danguee1]

SCAMM ALERT!

[@Yorktimer]

Watching your video was one of the best investments of my time. Thank you Joseph.

[@Blackdocks]

@joseph carlson whats the video of Terry smith ? where can I find it ?

[@DimensionRIFT]

Really good video on an investor that is very good at relating the essence of investing. Awesome insights. If only more persons listened to the likes of him and the other greats they wouldn't get caught up in crappy hype companies.

[@alinayukhymenko6295]

Thank you for your hard work. Out of all investing channels that I follow, you produce the most interesting and high-quality content.

[@walkhawaii]

Great video!!!!

[@peterbizon4885]

Great video Joseph !

[@louistran016]

i learn to love your channel again, something different than dividend stocks :)

[@Dr.Dumpnpump]

Awesome video Joseph. Terry is one of my all time favourites and definitely on my “clone” list.

[@JackDuffley]

Once a fund gets to scale, it seems to make more sense to more often try to "buy a wonderful company at a fair price" rather than "a fair company at a wonderful price" since the latter typically are smaller, more illiquid securities that a large fund would likely have to completely buy out to move the fund's needle.

[@eddiegutierrezjr6226]

On a one to one scale from a personal brokerage fund to large scale fund, wouldn’t following the same principles translate to similar success?

[@JackDuffley]

@@eddiegutierrezjr6226 loosely, yes. Though Buffett and Munger have said many times in the past about how "easy" it would be for them to make a million in the stock market if they were just starting out. Buffett made a killing with small, extremely undervalued "fair" companies before his fund got to the point where it made a lot more sense to simply focus on buying larger, wonderful businesses. The universe of meaningful opportunities for Buffett has decreased significantly.
For example, Berkshire today wouldn't focus on, say, a $10 million textile company with more net current assets than its market cap because Berkshire has $100+ billion in cash to move. But a small investor might, and it can move that small portfolio's needle in a big way.

[@Elendil963]

This resonates immensely with me. All his lessons and tips are something that have been brewing in my head for a while, and that is confirmed by someone much smarter and experienced than I am. I spent years investing like a buffoon, and I got buffoon returns. This video really cements what investing strategies I am trying to put in place. I just need more money for all the ideas I am getting haha. Thank you SO much for this video. You're doing the Lord's work (if our Lord is Munger or Buffet haha)

[@BradKaellner]

As a shameless cloner, I keep close tabs on Fundsmith equity fund, Fundsmith Emerging Equities Trust, and Smithson (small and mid caps)
Don't underestimate the importance of Step 3: Do nothing!

[@mikedmann7487]

You rock Jo$eph!

[@shapeofsoup]

I’m afraid a lot of inexperienced investors are going to take the wrong lesson from Terry Smith here. He’s not saying valuation doesn’t matter. It absolutely does, and it’s still a fundamental part of his vetting process. So much more of this summation is semantics than I think a lot of folks realize. Smith is as much a value investor as Buffett, Munger, Lynch, etc. The difference is-at its core-simply a qualitative tilt.
Damodaran addresses the broad misuse of PE as a valuation metric in a different but still very compelling way. It’s effectively useless from a macro perspective, and that’s a hard thing for folks who don’t understand business fundamentals to let go of. Valuation isn’t a static calculation; it’s trend based prediction *and* capitalization of mean reversion.

[@xdman20005]

Well said

[@superswaggerorgasm]

Love when you do fund analysis of other great investors

[@rishabhsheth6087]

Great video, thanks.

[@lthendu2193]

Good stuff!

[@billyjohnson9166]

Joseph this is your best video yet.

[@firelordsozin3677]

Whoa great episode.
So basically if you’re DCA anyway, you should primarily focus on quality of a company.

[@leagueplays2100]

7:30 But you can buy low, sell high. You can make more money this way than just by holding forever.

[@tobiasb.5483]

Hey, can you explain 2 things about the Terry Smith part
1) isn't the 20 year thing a bit "hindsight" .. if a company has 18% over 40 years then obviously it has been doing well... and 40 years back then was obviously not the same as it is today. And you wouldn't know it's 18% until those are up.. it could tank any time before making it a "it's not part of that statistic" thing.
2) doesn't this mean that tech stocks are out automatically because they won't be making returns until way into their lifetime?
Do I have this completely wrong? Would be keen to understand which part I misunderstood here. Cheers, T.

[@amirarshad5194]

Also you should buy some Costco or Apple at current prices if price doesn't matter too much. The price paid still determines the return on investment. Thanks for the content.

[@ahhu.]

Great content 👌🏽

[@markarnoldsfinance2765]

👏 👏 👏 This is a video I wish all my friends and family who invest would watch! Too many of my friends focus on cheap stocks instead of quality stocks and the difference between my portfolio and theirs is that mine is in the green and theirs is in the red.

[@Willtopia]

Best video so far congrats

[@Blackdocks]

whats the video of Terry smith ? where can I find it ?

[@tonywillingham8109]

Your best video yet. You are one of a very few you tubers that understands. Although I will say, if you can get a great company with a margin of safety... gravy.

[@remyjessenlorenzen9713]

Great to see you are learning how to invest.

[@idividendinvest3706]

Has anyone got the link for the fundsmith video?

[@tadakimasu]

Thanks for sharing, I'm glad I found him through you!

[@RandomGuyOnYoutube601]

Fair point.

[@timhanser1943]

As someone whose portfolio is down 41% this last year investing in OATLY , TTCF and BEYOND MEAT I think I will maybe dump the lot and buy Fundsmith equity. Incredible consistency from Terry Smith , liked and subbed .

[@danguee1]

I've held Fundsmith for 5 years - apart from 6 months in 2020 when I stupidly dumped all my investments. It's interesting to see that Fundsmith barely registers the early pandemic slump and the subsequent frothy madness. It just seems to power on up...... Some people say that "Terry's known nothing but tailwinds" - which is a fair point. So he has a major correction to deal with and we will see how well he does. But he shows all the signs of going for very grounded investments which are likely to survive a downturn better than most.

[@tonymartucci7097]

Good vid, one of your better ones

[@Ditronus.]

The main thrust of this video's message is to not be so preoccupied with finding a deal when buying a particular stock, but to be more concerned on whether or not the company is a quality company (has a moat, in a growing sector with future opportunities to deploy capital and grow further, has good returns on capital).
Even with this understanding, it is still hard to determine whether to continue investing. I get the "do nothing" step basically means "don't sell out or think shorterm," so it doesn't address the question of how much more is adequate, and I'm sure part of that is subjective. It is hard to determine whether you should continue to invest in a company like Microsoft or Costco as they are constantly setting new highs. I dipped some more into MS when I saw it dropped 8%, though.

[@scottwingerter6628]

Well said!

[@justmoney139]

So if we filter for stocks that have returned 20% over the past 10 year's we should find a group if quality companies that are likely to return 20% over the long term? Assuming they have defendable moats?