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.❤
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.
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).
'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.
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.
Truly one of your best videos. For years now, even going back to 2018 when I got heavy into RUclips 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.
Investing does not need to be complicated. In fact, the simpler the better in my opinion. I'm retired and did so at age 42 with about $1.1M for two people. We had an advisor from Morgan Stanley in our corner. Maxed 401k for many years and then saved additional in index funds in taxable account. Our rate of return has been around 10% percent per year in the taxable account over the last 10 years.
Agreed. I have some fun money in RH but the big majority is managed by Morgan Stanley. I’m actually outperforming them this year but the value they’ve added in other ways over the last several is well worth it for me.
That's amazing congrats. I grew up in a cash only savings environment and a mother who has a small 401k saving. I’m just now learning about the stock market creeping towards 30 so I would appreciate more information about your advisor.
She goes by Nancy Magaret Delony I suggest you look her up. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did.
I just Googled her name and her website came up right away. It looks interesting so far. I'm going to send an email to her and let you know how it goes. Thanks for sharing
I use vanguard personal advisor services. They charge 0.3% a year. I could tell you what he has me invested in, but AGE matters so much. I am 52 and retired. So I have stocks and bonds. Stocks are in "Vanguard total stock market fund", and some in "Vanguard international fund". There might be a third similar one. I'd have to look at my bond fund. For you at age thirty, mostly stocks is advised.
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!
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 :)
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.
@@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
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
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
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.
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.
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.
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 :)
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.
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!
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!
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 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.
Really great video Joseph. Inflation is very real as are taxes. Good companies can increase prices to negate most inflation and you don't pay taxes until you sell. This is why Warren has held 400,000,000 shares of coke since the mid 80s and 90s.
Really nice one! For further reference on this topic, Warren Buffet's yearly dividends on Coca - Cola are almost half of his original purchase price. Crazy to think how great companies compound if you have the courage and patience to hold onto them!
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.
Yeah, while stocks are the best long term investment, the video seems to underplay the risks inherent, just because recent years has not seen a major crash. After 2000 the Nasdaq lost 75% and took 15 years to regain highs. The lesson is it's best to have a balanced portfolio, with a mix of stocks/etf's and bonds.
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.
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.
"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.)
Dear Joaeph, I agree that stocks are a very high compounding investment. But I think You got it a little bit wrong. Bonds etc have a compounding effect too. If You reinvest the annual dividends into bonds it is compounding, but at a lower leverage. Maybe You should add this to your video...
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.
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
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
Some of my favorite conversations are with a local commodity trader. He decided long ago, securities are not a good asset for trading. He and I are both bearish on the market. His wife invests in securities and they agree to keep their books separate. He says she does just fine in securities and that she often reminds him he’s been preaching bear markets for a decade. He trumps all of us with his commodity trades, but his risk is outlandish (at least from my vantage point). His brain and my brain don’t think alike, yet I’m somehow a better investor and trader from our conversations. I love hearing how truly intelligent people think from diverse points of view.
One thing about all of the companies you mentioned that are compounding machines- all very low capital intensive companies, high capital intensive companies have to deal with inventory, cost of goods/raw material inflation, etc
Investing hard-earned money in the stock market can’t be stressed enough for first-time investors, especially compared to banks, where interest is more predictable. However, with uncertain times, a volatile market, and banks gradually failing, I'm aiming for a retirement fund of around $2M and have a solid six-figure amount ready. Are there any opportunities left for someone like me, a boomer, to make this work?
Personally, I would say have a mentor. Not sure where you will get an experienced one, but if your knowledge of the market is limited, it seems like a good bet.
It's often true that people underestimate the importance of financial advisors until they feel the negative effects of emotional decision-making. I remember a few summers ago, after a tough divorce, when I needed a boost for my struggling business. I researched and found a licensed advisor who diligently helped grow my reserves despite inflation. Consequently, my reserves increased from $275k to around $750k.
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with Sophia Maurine Lanting for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look-her up.
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
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.
That's what I was thinking too. My guess is certainly doesn't. My guess is that it would be similar enough for the example. Even if half the fcf growth goes to stock price, it'd be pretty good.
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.
When I bought Apple in 2009 it was around 100 billion market cap ($190/share). Now it's around 2.7 trillion? I remember it having a lot of cash on it's balance sheet. Anyone can get rich when you find a stock like that. I sold it too early (2015), but I still own it through Berkshire Hathaway.
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
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.
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"
Truly one of your best videos. For years now, even going back to 2018 when I got heavy into RUclips 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.
Investing does not need to be complicated. In fact, the simpler the better in my opinion. I'm retired and did so at age 42 with about $1.1M for two people. We had an advisor from Morgan Stanley in our corner. Maxed 401k for many years and then saved additional in index funds in taxable account. Our rate of return has been around 10% percent per year in the taxable account over the last 10 years.
Agreed. I have some fun money in RH but the big majority is managed by Morgan Stanley. I’m actually outperforming them this year but the value they’ve added in other ways over the last several is well worth it for me.
That's amazing congrats. I grew up in a cash only savings environment and a mother who has a small 401k saving. I’m just now learning about the stock market creeping towards 30 so I would appreciate more information about your advisor.
She goes by Nancy Magaret Delony I suggest you look her up. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did.
I just Googled her name and her website came up right away. It looks interesting so far. I'm going to send an email to her and let you know how it goes. Thanks for sharing
I use vanguard personal advisor services. They charge 0.3% a year.
I could tell you what he has me invested in, but AGE matters so much. I am 52 and retired. So I have stocks and bonds. Stocks are in "Vanguard total stock market fund", and some in "Vanguard international fund". There might be a third similar one.
I'd have to look at my bond fund. For you at age thirty, mostly stocks is advised.
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
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 :)
Great point!
Terry Smith would love this 👏🏻 great video
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.
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.
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
Love this video! Best finance RUclipsr in the game.
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
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.
Really good video, thank you. The Basics of stock investing always helps out.
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.
Why I love Joseph
Probably THE BEST video I've seen comparing the risk free rate of return vs stock yield. Excellent work!
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 :)
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 makes me tempted to buy the Patreon
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!
The starting yield you were talking about is free cash flow compared to stock price in percent?
Joe this is great information! This format and super investor analysis are the best stuff u are creating!
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!
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.
Thank you for this great video Joseph!
Really great video Joseph. Inflation is very real as are taxes. Good companies can increase prices to negate most inflation and you don't pay taxes until you sell. This is why Warren has held 400,000,000 shares of coke since the mid 80s and 90s.
Great job on your video!
Really nice one! For further reference on this topic, Warren Buffet's yearly dividends on Coca - Cola are almost half of his original purchase price. Crazy to think how great companies compound if you have the courage and patience to hold onto them!
Ive been following you for about two months, and after seeing all your last videos this was the best one yet👏🏻👏🏻👏🏻
Great video Joseph! Thank you for sharing it, so needed.
Great video as usual, addicted to your analysis.
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.
Yeah, while stocks are the best long term investment, the video seems to underplay the risks inherent, just because recent years has not seen a major crash. After 2000 the Nasdaq lost 75% and took 15 years to regain highs. The lesson is it's best to have a balanced portfolio, with a mix of stocks/etf's and bonds.
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
Thank you Joseph!
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.
Excellent, Joseph. Thank you.
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.
Great info and appreciate your insight.
This mindset shift is much needed. Thank you Joseph!
You make a great point about $NVDA.
Why isnt the model made with 5% reinvested to give a fair comparison with compounded fcf yield?
I love stocks too. What are your thoughts on ARM?
Excellent content. Thank you.
"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.)
Am I missing something? We get a dividend yield rather than FCF rate. No?
🤣
@@Coda1850 instead of laughing. Care to explain what I’m missing?
Thank you Joseph! This is my favorite kind of stuff, and you shared it well.
Loved the conversation piece. Thanks for the insight.
Great perspective! Thank you so much for this one.
Thank you for another great video 👍
Loved this kind of video Joseph ❤
Dear Joaeph, I agree that stocks are a very high compounding investment. But I think You got it a little bit wrong. Bonds etc have a compounding effect too. If You reinvest the annual dividends into bonds it is compounding, but at a lower leverage. Maybe You should add this to your video...
Rates can change, the interest rate for a bond 10 years from now will be different than it is today
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.
Thank you Joseph 👏🏻👏🏻👏🏻👏🏻
Great presentation, thank you. Can Qualtrim analyse Stocks listed in other countries like Australia?
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.
I love these deep dives 🙂
I remember watching this video 8 months ago. Free cash flow is something I am watching now. Great advice.
Great info! Thanks!
Excellent video and providing your viewers valuable info so we can grow our wealth. Thank you!
Always enjoy your videos. Always clear and informative info.
Thanks a lot for this vid! You explain this topic in a genius way.
Unfortunately 20 year treasuries pay more like 2% because of the inverted yield curve.
Thank you for educating the Populus
Fantastic video Joseph
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?
Thank you so much for sharing! This was really insightful!
Amazing video again Joseph! I just canceled my Disney+ and put the money into a Qualtrim subscription. Love the information I am getting there
This was a real nugget ! Thanks Joseph 👍
I understand how to see this when its happened in the past but how do you predict it in the future Growth rate
Awesome Video. Great content like always. Thumbs up
As a newbie investor(sub 1yr) many thanks for this simple, understandable brake down👏
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
This must be one of your best videos, congratulations and thanks for sharing
Some of my favorite conversations are with a local commodity trader. He decided long ago, securities are not a good asset for trading. He and I are both bearish on the market. His wife invests in securities and they agree to keep their books separate. He says she does just fine in securities and that she often reminds him he’s been preaching bear markets for a decade. He trumps all of us with his commodity trades, but his risk is outlandish (at least from my vantage point). His brain and my brain don’t think alike, yet I’m somehow a better investor and trader from our conversations. I love hearing how truly intelligent people think from diverse points of view.
I love stocks because you learn much abour business administration topics.
One thing about all of the companies you mentioned that are compounding machines- all very low capital intensive companies, high capital intensive companies have to deal with inventory, cost of goods/raw material inflation, etc
Hi @Joseph - Does Qualtrim portfolio support integration with Vanguard, Robinhood & Webull?
Investing hard-earned money in the stock market can’t be stressed enough for first-time investors, especially compared to banks, where interest is more predictable. However, with uncertain times, a volatile market, and banks gradually failing, I'm aiming for a retirement fund of around $2M and have a solid six-figure amount ready. Are there any opportunities left for someone like me, a boomer, to make this work?
Personally, I would say have a mentor. Not sure where you will get an experienced one, but if your knowledge of the market is limited, it seems like a good bet.
It's often true that people underestimate the importance of financial advisors until they feel the negative effects of emotional decision-making. I remember a few summers ago, after a tough divorce, when I needed a boost for my struggling business. I researched and found a licensed advisor who diligently helped grow my reserves despite inflation. Consequently, my reserves increased from $275k to around $750k.
That's impressive ! I could really use the expertise of these advisors.
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with Sophia Maurine Lanting for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look-her up.
She appears to be well-educated and well-read. I ran a Google search for her name and came across her website; thank you for sharing.
excellent video as always
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
I'm so glad you made this video. Also glad you released it. This information is very interesting. Thank you.
How do you find these stocks? Which tools do you use?
This is super incredible explanation. I should binge watch your entire content here. Salute 🙌
Awesome video as usual joeseph!
Great video thank 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
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.
Does growing cash flow always translate to growing share price?
Benjamin Graham - 'In the short run, the market is a voting machine but over the long run, it is a weighing machine.'
That's what I was thinking too. My guess is certainly doesn't. My guess is that it would be similar enough for the example. Even if half the fcf growth goes to stock price, it'd be pretty good.
Sometimes companies will be dumb and acquire other companies and pay too much. This can really set back this formula.
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.
Thanks for the video man!
Very good video thank you
One of the best videos I’ve seen of yours.
When I bought Apple in 2009 it was around 100 billion market cap ($190/share). Now it's around 2.7 trillion? I remember it having a lot of cash on it's balance sheet. Anyone can get rich when you find a stock like that. I sold it too early (2015), but I still own it through Berkshire Hathaway.
Thank you so much for sharing! I would even like more of this different format and content presentation.
Keep up the great job!