435- We Don't Pick Stocks

InvestED: The Rule #1 Investing Podcast

Phil Town & Danielle Town

Investing, Business

4.6 • 1.6K Ratings

🗓️ 12 September 2023

⏱️ 38 minutes

🔗️ Recording | iTunes | RSS

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Summary

For people outside the world of finance, the difference between value investing and trading stocks can be difficult to break down. This is further complicated by many of our financial institutions relying on outdated theories and principles to prepare new investors as they begin their investing practice. The Rule #1 method puts a focus on buying into a company at a discount based on fundamental analysis and holding it until the market reflects its true value, while simply picking stocks relies heavily on taking advantage of short-term fluctuations to capitalize on market movements. The risks of day trading are far greater than that of responsible value investing. Join Phil and Danielle as they break down the disparities between these approaches, explain the philosophy behind Rule #1, and struggle to remember names of what they’re discussing. The key to value investing is buying the right company at the right price—for some sound guidance on finding the perfect investment, click here for your free copy of The Four Ms for Successful Investing: https://bit.ly/3LhVUAR Topics Discussed: Stock investing vs. value investing Modern portfolio theory Price vs. value Overthinking in investing Institutional imperative Multilevel Marketing Responsibilities of corporate governance The importance of due diligence Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Hey everybody, this is Phil Town.
0:11.0	And this is Danielle Town.
0:12.6	Welcome to the invested podcast, where we talk stock investing, which isn't really stock
0:19.3	investing, is it?
0:20.4	It's not really stock investing, we're talking about buying pieces of businesses.
0:25.4	Yes.
0:26.4	That's what we're really doing.
0:28.2	Other people do stock investing.
0:30.0	So if you want to watch stock investing, you can go over and watch Jim Kramer on Mad
0:33.1	Money in the US, or tons and tons and tons of people talk about stock investing, which
0:39.5	is, in my view, mostly a form of speculation, hoping things go up, and following the market
0:47.3	and doing all kinds of clever things, and sometimes it works.
0:51.0	But if you want to really make a lot of money in a long, long, over a long period of time
0:55.4	and end up with a great retirement, what we're talking about here is something developed
1:00.9	by a strategy developed by Ben Graham, who said, you know what?
1:05.3	Really, it's not stock investing, it's buying a small piece of a business, and you need
1:09.4	to look at it like a business, like you actually are going to own that thing.
1:14.1	Small piece of a business, and that Mr. Market, who controls the prices of these businesses,
1:20.8	the whole market, controls the price, is a manic depressive, this has been Graham for
1:26.2	back in the 1930s, is emotional, and can get very emotionally out of whack in either direction
1:32.9	of exuberant, in which case he'll pay ridiculous prices for your companies if you want to sell
1:38.3	them, or depressed, in which case he will sell you wonderful companies at ridiculously low
	...

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