That's it guys, it's over. I'm completely done with
dividend investing. I give up.
I really, I just really don't enjoy it.
I don't enjoy looking at the gains that I'm making in capital
appreciation and earn dividends. I don't like being able to go
over to my activity feed of my brokerage and see the constant
stream of income coming into my brokerage just adding to my cash
balance, allowing me to constantly contribute more and
more to my portfolio and I especially don't like looking at
the upcoming dividends, how I'm going to earn a hundred and
twenty dollars in a few days. From one of my Holdings, I'm
going. To earn another nine dollars
from Nike store capitals going to pay me a hundred and thirty
six dollars on the 15th of next month.
I don't like seeing all this money coming in and I especially
don't like seeing my yearly dividends the amount of money
that I'm growing. A passive income go up from $300
to $1700 to 3200 dollars almost doubling every single year year
over year and then over the course of months, just having it
go up month after month after month.
You know, it's just something I get tired of after a while.
I don't enjoy it. More.
So I'm completely given up. Okay, obviously, I'm joking.
Happy April, Fool's Day. Everybody, happy, April 1st, I
hope you've had a good first quarter in the market were three
months in. We finally made it.
Now, there are some things I do want to go over in this episode
regarding dividend. Investing investing.
In these more conservative boring, free cash flow companies
with predictable reliable incomes that pay you out
dividends. I want to address some of the
claims being made because there's been some claims that
this style of investing, although it might be fun and it
Provides you with constant income, it really doesn't give
you good total returns. That's what people are saying.
It's not good for total returns, I think that this is very false.
In fact, I think a lot of the data shows that this is false
and that this form of investing, buying low value companies
trading at low multiples, that provide constant stream of
incomes and have high amounts of free cash flow.
They provide Superior returns to the overall market.
So I'll be showing examples of this will be going over this and
examining it. This type of investing first,
the S&P Hundred. So we'll look at that in this
episode. Now, we also have some big news
stories, we're going to be getting to, in this episode,
Microsoft has won this massive US Army contract.
That could be up to 22 billion dollars in value over the next
10 years. That is a lot of money, even for
Microsoft. So we'll be looking at this
news. We're also going to be looking
at news that Discord the chat application.
It's one of the main features of a lot of patreons and my patreon
to get access to a community Discord.
Well the implemented a new feature.
That's basically a ripoff of Clubhouse.
In fact, it functions identically.
We did one impromptu Clubhouse. On the Discord already, it was a
lot of fun, but I'm going to share my thoughts on this whole
idea of different companies like Discord ripping off Clubhouse.
Now, before we get into all of this, be sure to check out the
patreon. You get access to that Discord,
you'll be invited to do lots of fun things like participate in
the clubhouse meetings, we have there's lots of exclusive
content. You get access to every buy and
sell I do as well as just daily discussions.
We're having a party over there so you can join in if you want
to In that party. Now, other than that, another
thing we recently released to the patreon members is this
beautiful portfolio tracking spreadsheet.
So you get this as well, it gives you visualizations on all
different things regarding your portfolio, the P/E ratios of
your company's, the market cap your incoming, dividends your
year-over-year growth and so on and so forth.
So this is another perky get. And again, this is completely
risk-free. You can try it out,
patreon.com/crashcourse have Carlson or there's a link in the
description. Okay now, jump and right in we
have finally made it past the first three Months of the year
where past q1 of 2021 before we jump into the future and my kind
of predictions my Outlook of the future.
I want to take a look at the past and what we've gone through
the Wall Street Journal says that the past quarter was
defined by meme stocks and ft, is in the tech rotation and I
think they're accurate. But they highlight something
else that I think is even more defining of the first quarter.
They say, for instance, meme stock such as Gamestop surge,
celebrities, dived into blank check companies.
Those are specs, those went up like crazy before they came
crashing back down. These auction off, a non
fungible token attached to a digital image 469 million
dollars. So there is an N FP, which is
something I've really I've heard knew about it was something new
to me over the past couple months and now people are paying
69 million dollars form. This is how quickly things are
changing. And then they say and just
before the quarters end a fire sale stock of our kegels Capital
Management had bet on caused well-known companies like Viacom
CBS and Discovery to Tumble. So this is a hedge fund that put
a lot of money into Viacom CBS and discovery.
By pumping up the stock price and then when they are margin
called both, those stocks can crashing down.
So there's a lot of things that have happened over the past
three months. And then they, finally say if
there's any unifying theme to all of this, it is an Investor's
big and small showed no fear of risk-taking to start 20 21.
In fact they embraced it. That's what investors are doing
is they're embracing risk. Now I think that part's a little
bit concerning investors, big and small showed no fear of
risk-taking to start 2021 there. Bracing risk.
They're not fearful, they're not being risk cautious or they're
not being conservative with their Investments.
It's a little bit concerning when I hear talk like that.
In fact, it goes on to say that quote, there's a lot of money
just swishing around in the market.
And that's true. We can look at basically any
investment anything that can be considered investment from
Bitcoin to real estate to the Dow Jones to the S&P, 500 to the
QQQ, everything is close to all-time highs.
Every single type of asset is close to all-time highs.
Investors are taking on more and more risk.
Seeking returns Warren Buffett has warned against this type of
investor Behavior many times cautioning investors to actually
care about risk to view their Investments is investing, in
actual productive assets, that will grow and produce things
over time, rather than just ticker symbols.
And he says, if you do just view them as ticker symbols, you're
eventually going to be scared out of your Investments when
other people become scared that is normal investment Behavior.
If you have a temperament that when others are fearful, you're
going to get scared, Yourself. You know, you are not going to
make a lot of money and security over time in all probability
that he says, if you have the temperament that when others are
scared, you're going to become scared yourself.
You're not going to make a lot of money with Securities.
You shouldn't be investing in individual stocks, and I think
that he's absolutely correct with that.
One of the most popular Investments to have struggled
recently, are the ark ETFs, for instance, the arc Flagship fund
is down about 22% 23% from its all-time highs from just a
couple months ago. From February.
Now this is normal for these type of funds to go up and down
like this, overall, the performance has been very good,
but if you look at what Warren Buffett is warning about an
investment Behavior, you can see that clearly Illustrated in the
fund's assets under management, the amount of assets that go
into this fund as it was making money, steadily raced up until
it hit a peak in February, 12. And then if we zoom in a little
bit, we can see what's happened over the past month.
The amount of assets under management has steadily declined
with the declining performance of the fund.
Jurors were buying in when things were going up and the
ticker symbols were all moving up.
And as soon as things started to decline investors started to
sell out of the fun. This is the exact behavior that
Warren Buffett. Cautions against chasing returns
moving into whatever's, moving up and price and then selling
out as soon as it starts to move down in price.
And I'll people really if they didn't look at quotations.
But of course, the whole world is urging them to look at
quotations and more than that. Do something based on small
changes in quotations, but if you didn't think I much, More
rational we've talked about it before, but think how much more
rational investing in a farm is than the way many people buy
stocks, them needed to buy a farm to get a quote next week.
Get a quote next month. If you buy an apartment house to
get a quote next week or month, no, you look at the apartment
house or the farm and you say I expected it at produce so many
bushels of soybeans and corn, and if it does that it meets my
expectations, but they buy a stock and they think of it goes
up. It's wonderful.
And because now it's bad. We think just the opposite when
it goes down we love it because we'll buy.
Or and if it goes up with it, kills us to buy more Warren
Buffett. Of course, is spot-on.
He always looks for value and low priced companies that
produce goods and he views his Holdings as Farms.
He looks at Coca-Cola as a productive company that produces
goods and it gives them a return and dividends over a decade
after decade after decade, that's the type of investing
that he's done. He doesn't race into whatever is
a popular meme stock, whatever the next.
SPAC, whatever thing is new and shiny on the market.
Warren Buffett has been very Upland and following this
investment style his entire career.
His most recent purchases are into companies that other people
would consider really boring. He sold some Apple stock because
that company race so much up in price that he used that money to
buy Verizon and Chevron a telecom company and an oil
company. They've both been very unloved
by the market for a long time. Both of them are high yielding
dividend paying stocks that people know about.
He also bought a slew of other value companies trading at very
low multiples. We're talking about
pharmaceutical companies here, Merc Bristol-Myers, Squibb
AbbVie Pfizer. These are the very big
pharmaceutical companies that trade out low valuations and
these are the things that Warren Buffett are buying into.
Now, in my portfolio, the passive income account.
There's a link in the description if you want to look
at this. But I've been trying to do the
same thing as Buffett I've been trying to buy into the
companies. I've been ignored by the rest of
the market, and I think that I found some that have traded down
to unreasonably, low valuations, AT&T is one of them.
It's that A9 forward, P/E ratio, when the rest of the market on
average, the S&P 500, It, is that a 26 P/E ratio that's
really expensive in historical terms.
So AT&T is trading at a much lower PE ratio and has a huge
amount of free cash flow. That's a company that I have a
margin of safety when I buy it at these prices so AT&T will
offer me a lot of cash flow. And another company that I've
been buying that will increase my cash flow as well is Dominion
Energy. This company I now have about
5,000 dollars in and it has a 4% dividend yield.
I think that it's an undervalued company, it'll give moderate Of
gains over the next 10 years with capital appreciation, and
consistent dividend payments, that's a company.
I like having in my portfolio adding to that cash flow.
I've targeted pharmaceutical companies that have a higher
dividend yield like Johnson & Johnson and app-v.
I've reinstated the position. In these companies just to
increase the amount of cash flow.
I'm getting with my portfolio with companies trading at a low
P/E ratio that again, provide a lot of cash flow and then to
even increase that cash flow further.
I have the income fund I have now around 20 thousand dollars
worth of jet. AP which is a covered call ETF.
It sells covered calls on the S&P 500 as well as it does.
What's called eln? Switch is equity-linked notes.
I should get at least a hundred dollars, a month.
With this holding Justin dividend income, not counting
any type of capital appreciation.
So that's another way that I'm increasing.
The amount of income that I'm getting is by buying into this
income fund JP. So I'm trying to do what Warren
Buffett says. And by companies that I consider
to be Farms, they just sit there, they produce me cash flow
over long periods of time and I have to About them, I buy him
one time and then I can sit there and earn money from now.
A lot of people say that this type of investing targeting
these boring, dividend-paying companies, these telecom
companies and the more conservative dividend-paying
free cash flow companies. It won't provide you with the
best returns, it's good for constant income and if you need
cash, but it's really not good for total returns.
That's what people tell you, but it's really not accurate.
You can compare the fund. For instance, the SC HD Schwab's
u.s. dividend Equity ETF. That's an ETF.
That only Holds dividends against the S&P 500.
In fact, let's go ahead and look at some of the companies in
sdhd. We have Home Depot, Texas,
instrument, and Ambien as a top three Holdings.
So we don't have apple Google and Facebook.
We don't have a Dobby. We don't have all those type of
companies. We have Home Depot, Texas
instrument, am Jim Cisco, Pepsi, IBM, broadcom, Pfizer,
Coca-Cola, Merc Verizon 3M. BlackRock we have a bunch of
boring companies, right? These are old boring companies.
That pay Ends. And this is what this portfolio
of SCH D is made out of a bunch of these type of companies.
Well if you actually compare the returns to the S&P 500 with
dividends reinvested over the past year, s CH D has
outperformed the S&P 500, it's outperformed the broader Market
67.8% to 56.3. Then we can look at a three year
period for the past three years, sdhd has outperformed the S&P
500, sixty four point three, eight percent to fifty nine
point two. Five percent, we can even look
at the past 10 years, the past decade and surely SC HD during a
time where the tech companies have taken off.
We're all these Cloud companies have really accelerated seh.
Di couldn't have outperformed, the S&P 500 over the past 10
years. Well, it has two hundred and
eighty-six percent returns to two hundred and sixty seven
percent s CH D with companies like Home Depot, Cisco, Verizon
has outperformed the S&P 500. If you include dividends
reinvested back into it, the Dividends are huge part of total
returns and a People don't include them when they're
looking at graphs comparing the returns.
If we switch this to only look at Price return and we exclude
dividends obviously the dividend-paying companies have
not outperformed, the S&P 500. For instance, seh, di would have
returned only one hundred and ninety-one percent while the S&P
500 return, the two hundred sixty seven percent, but with
total returns with dividends included, the dividend fund has
outperformed the broader market. So I'm not saying to only invest
in dividend-paying companies and any dividend-paying companies, a
good investment but I am Saying that companies that trade at low
valuations compared to the rest of the market that have highly
predictable businesses with large amounts of free cash flow
usually tend to be good Investments over long periods of
time. And we've seen that proven time
and time again over the past 50 years over the past 10 years and
over the past five years, these type of companies perform.
Well if you have the patience to hang on to them even when
they're not the popular investment, Charlie Munger talks
about this very type of thing in a shareholder meeting.
He talks about two different types of investors.
One of That's a very active type of investing where you're
constantly looking for. Whatever is a deal right now,
you buy in a different companies and sell out of them after they
run up in price and it's a very active labor, some type of
investing, he likes the type of investing, that's the
alternative, buying good companies, trading at low
valuations, and holding them for a very long time, and doing
nothing. That's the type of investing
that he likes. Well, I agree that all
intelligent investing is value investing.
You have to Acquire, more than you really pay for, and that's a
value judgment. But you can look for more than
you're paying for in a lot of different ways you can use
filters to sift the investment universe.
And if you stick with stocks that can't possibly be wonderful
to just put away in your safe deposit box for 40 years butter
underpriced. Then you have to keep moving
around all the time as they Closer to what you think the
real value is, you have to sell them and then find the others.
So, it's a, it's an active kind of investing.
He's saying, he doesn't like to invest in companies that you
have to be active with the you have to constantly be moving in
and out of different companies. That's a way to find Value.
There's some people that like doing that they can buy into
companies and hold them for short time periods.
Most people aren't really successful doing that but that's
not the type of investing that Charlie Munger likes.
He describes the type of investing that he really enjoys
the investing where you find a few great companies.
And just sit on your ass because you've correctly predicted the
future. That is what it's very nice to
be good at the movie was G-rated even a come on Charlie.
This is a this is a family show here.
The Joseph Carlson shows a family show, sorry about the
language there. But Charlie's correct finding a
few good companies that you can invest in.
And then you can just sit on your butt for decade after
decade and watch the money poor in.
I think, is the preferable way of investing.
That's why I invest in these Type of companies.
I know, I can hold Disney for the next 10 years.
I can hold onto the stock for the next 20 years.
Probably I have Costco. This again is a company that I
can hold on to for 10 or 20 years at a minimum and then Home
Depot and Nike and Comcast and Target.
These are companies that are not short-term plays, I never intend
to sell out of them. I plan on holding them, watching
them pay, me dividends watching them grow their business.
Disney will grow their streaming?
Empire Costco will open new locations?
Home Depot will benefit from a And millions of new people
looking to buy houses and constantly doing projects and
different things to upgrade their homes.
Nike has long-standing Brand value, that can't be replaced by
other brands, Comcast will continue to grow peacock, and
it's different cable services, and CNBC and target, of course,
is one of the best retailers. All these are companies that I
really don't concern myself with the day-to-day.
I don't look at these that often.
The only point that I really look at them is to see if
they've traded down a little bit, so I can accumulate more
shares. That's the only time that I
really look at these companies is to see if Our trading down in
price so that I can pick up shares at a cheaper price point.
But other than that, the growth path is clear for all of them.
And I can say the same thing about my tech companies with
apple and Microsoft or my fintech companies with JPMorgan
and MasterCard I can say the same thing about real estate.
I don't do anything with that other than watch the dividends
role in the same thing with the income fund and so on and so
forth. That's what my portfolio is
based on, is exactly what Charlie Munger describes sitting
there and letting a couple good companies work for me, over the
long term. And I think, I think that this
is a preferable way of investing.
It's the way that I really enjoy and I think it will lead to
better returns. If you're too concerned about
the day-to-day price swings, we have drastic volatility in the
market right now. There's a lot of new investors
that buy and sell things all the time.
A lot of hedge funds are very short term.
Don't worry about them just worry about your company's and
what they're doing. If your companies are good
companies and their growing over time, your returns are going to
follow eventually. Just invest in good companies,
stay out of them, don't worry about them and let them grow.
Time and watch the Returns come in.
That's what I plan on doing with this portfolio.
Now again, if you want to look in each of these categories and
see which companies, I hold, there's a link in the
description, you can look at that for free.
Now, moving on a half to mention this news of this deal, with
Microsoft in the US government, they reached an agreement to
have a twenty one point nine billion dollar contract over the
next 10 years. This is a massive deal, even for
Microsoft and they've been doing these government contracts, more
and more with the win of cloud hosting for the Pentagon.
Now, they're working with the US Army.
Me and they're building augmented reality headsets.
These are apparently what they look like, which is something
that I didn't really realize that Microsoft was that big
into. But the article says that the US
Army said on Wednesday, Microsoft has won the contract
to build more than custom hololens augmented reality
headsets. So these custom Holo lens
augmented reality, headsets. They're building a lot of these
120 thousand to be exact and it could be worth up to twenty one
point, eight billion dollars over a ten-year period.
So it's not exactly a contract for Exact amount of money but
that's what this deal could be worth up to for Microsoft, they
go on to give different prices for things.
They say Microsoft shares moved up higher after the
announcement, the stock was up 1.7 percent to two hundred
thirty, five dollars a share. I'm at the end of Wednesday's
trading session and they say the deal shows that Microsoft can
generate meaningful revenue from a futuristic product resulting
from years of research beyond their core areas such as
operating systems and productivity software.
That's exactly right. That is the takeaway from
Microsoft people talk about companies like palantir and how
they're big into data and they're going to do all these
things at other companies. Can't but Microsoft is now doing
huge government, contracts building, augmented reality
headsets with the US Army. This is stuff way outside of
their core Suite of Office Products.
So, Microsoft is a company. I'm glad to have is one of my
top Holdings. This is a company that has
everything going for it. It has a reliable consistent
stream of Revenue with its office suite and its core
product base, but then they're venturing out into social media.
There's talks of Buying Discord. Now, they're doing big contracts
with the government on a more routine basis.
This is a company that I think has everything going for it,
it's very difficult in my mind. Is Microsoft struggling over the
next 10 years now. Moving on to the next piece of
news, we know that Discord copied Clubhouse.
They build a clubhouse. Like feature, it's basically the
exact same thing. They just built it out and
Discord. They probably did it in one
weekend. I've already done one of these
audio Clubhouse meetings on Discord on our patreon.
It was a lot of fun. It worked really well.
It was already a natural. Fit for this platform.
So discords added this sin. I think it's a great feature.
I think it's going to get a lot of use.
We plan on using it on our Discord, a lot more frequently
now, but this shows you what type of moat technology
companies have their feature set is not their mode.
The amount of features that they can build out, does not create a
moat. In fact, if you look at
Clubhouse, for example, it's a good example of how many times
it can be ripped off. We know that Discord ripped it
off. We can also go to slack, the
slack CEO was so bold with how he's going to rip it off.
That he literally went into a clubhouse meeting on clubhouse,
with the clubhouse, CEO and announced to his face.
That he's going to copy Clubhouse in slack.
That's not body. Was he said that, we're going to
copy your application and just build it out and slack.
And they can do that and get away with it.
And we know that Twitter is basically done the same thing as
well. They built out Twitter spaces
which again is a copycat of Clubhouse.
So we look at companies like Clubhouse.
You ask yourself, what is the moat of this company?
What prevents competitors from being able to still Lll market
share. Well, it's definitely not the
feature set. What really prevents competitors
from stealing market. Share is the network effect of
already having massive scale. The question is, how much scale
do they have? Lots of developers?
Could build a copycat of Facebook but they can't get any
users because Facebook already has global scale.
You have to ask yourself what technology companies have the
scale to keep their market share.
So we'll see how this continues to develop what new companies.
Continue to copy Clubhouse. I think that Spotify will be
like that. Next big one to do it.
They're the biggest audio platform in the world and
they've already signaled that they're going to be building
something similar to clubhouse. I think that Spotify will try to
get it right because there are massive audio platform.
They're really going to want to get this, right?
But interesting nonetheless, it goes to show how quickly these
different features from these startup companies and new tech
companies can quickly be replicated by all the already
existing technology companies. There's really no mo and my mind
outside of the network effect, having lots of users.
Now, that's all for today. I hope you guys enjoyed the
episode. Episode.
I'm going to give frequent updates in the future of all the
different stocks I'm buying as well as my growth and passive
income and the growth of this portfolio so far.
It's going good. I'm very satisfied with it and I
plan on continuing to do this style of investing, I very much
like buying these conservative companies sitting back and
watching them, make me money over and over again, quarter
after quarter, it's a really fun style of investing.
So I appreciate you guys for listening.
I'll check in with you next time.
Episode. I'm going to give frequent
updates in the future of all the different stocks I'm buying as
well as my growth and passive income and the growth of this
portfolio so far. It's going good.
I'm very satisfied with it and I plan on continuing to do this
style of investing, I very much like buying these conservative
companies sitting back and watching them, make me money
over and over again, quarter after quarter, it's a really fun
style of investing. So I appreciate you guys for
listening. I'll check in with you next
time.