All right, here we are. Welcome back everybody.
Welcome to the show. I appreciate you guys joining in
on. It's pretty crazy.
A week ago, well, actually three days ago I posted this video,
the investing in Costco one. This is the most recent one I
posted. And before that I hadn't posted
in like 2 weeks. 2 weeks ago was the one before that in YouTube
time. That's like eons of time.
But it was awesome to see that this video had recordbreaking
metrics for the channel as far as the amount of views and watch
time right after posting it were incredible as well as when I was
gone on vacation on a cruise, I still got like 2000 subscribers.
People are joining the channel and joining the show.
And so I really appreciate everybody new here.
I appreciate everybody sharing the word and spread in this
channel and thank you guys for doing that.
To everybody new, this is a channel about investing, about
finance, about getting things in order so that you don't have the
financial anxiety that a lot of people have and so that you can
get ahead in life, get out of this rat race everybody finds
himself in. And that's what I'm doing with
this portfolio. This portfolio is a dividend
growth portfolio where every week I go over it, talk about
different investing subjects and the news, answer comments and
questions. And it's a little bit just like
a community we have here. As far as an outline of what I'm
going to be going over today, if you guys follow me on Instagram,
you'll know the main subject I'm going to be talking about today.
You already know that which it I posted this right here.
This is my Instagram. So if you guys haven't followed
this, come and follow if you want to see more like behind the
scenes background type of stuff and then like the latest one
here for instance, I go that we're going to be talking about
gambling and that's going to be the subject a little bit about
gambling, how it relates to investing.
I noticed a lot of people they ask what's the difference
between gambling and investing, right?
And I've seen this asked over different Reddit threads and and
different things and I don't agree with them the answers that
are typically given. So I'm going to give you my
answer of what the difference between those two are and what
really separates the two. Beyond that we have news to get
to. A lot of stuff has happened in
the past two weeks. I haven't talked about any of
it. So one of them is United
Technology Rathon merger that's going on, Bill Ackman, who is a
hedge fund manager and he has a pretty colorful past.
I mean, he has had huge concentrated bets and different
companies, some of them he's made tons of money with and some
of them he's lost tons of money with.
He is a share owner of United Technologies.
He's an activist investor, which means he gets involved.
He tries to voice his opinion and influence decisions of the
company. And he does not like this deal
that's going on. And he wrote a letter to United
Technologies, of whom he's a shareholder of, a large
shareholder, of laying out his case for why he doesn't like
this merger. And I'll show you that letter.
I think it's pretty amazing. Some of the stuff he says in it
is just really entertaining to read.
So I'll be going over that a little bit, giving you my
opinion on it. This article I found, this is
smaller news. So this isn't like really big
national news, but it's a story on how seniors were sold these
riskfree retirement reverse mortgages, right, which is a
product most people do not like the reverse mortgage.
But I thought it relates really well to a different principle
that other people do like. And I wanted to talk about this.
So I'll hit on these reverse mortgages at the end of the
show. So I first wanted to do just a
quick portfolio update. I promise I won't spend too long
on this. I wanted to just look at the
week and the month view. So if I go to the week view
here, .63% return and we're up to $157.00.
But the earned dividends for this week was $36.53.
Pretty awesome that I was paid $36 just in the last five days.
Now if I go to the month view here, look at that 2.3%.
If I go and I look at the S&P 500, right?
Yeah, Okay. So here we are at the S&P 501
month view .37 percent .37 compared to 2.3.
So absolutely crushed S&P 500 for the past 30 day performance.
But even cooler than that, look at this earned dividends $176.70
in the past 30 days that since May 14th I've been paid like a
paycheck $176 from these different companies.
They say, hey, you're a shareholder of these companies,
we want to let you in on the profits of our company.
So we're going to go and pay you these dividends.
That's what this is, $176 that I've earned.
Now if you are using M1 Finance, you probably know that the
earned dividends here are different than the paid
dividends here. These are already paid.
And it's like when you're working at your day job, you go
and you earn your paycheck throughout the two week period,
then you're usually paid at the end of a two week period or like
a one month period. That's the same type of thing
that happens here. So there might be on stocks a
little different. It might be a few weeks until
you're actually paid them. Either way, I'm owed that much
money. I will get the $176.
It'll show up in the activity feed and that's where it just
cycles through. Now, I don't want to spend too
much time on the portfolio update.
I want to get into a little story and that has to do with
the vacation that I went on. So many of you that have
followed the channel, you are familiar with it and you know
that I went on a vacation, I went on a cruise to Bermuda and
it was pretty cool to see because that was an island that
my mom was born and raised on. She was able to show us around a
lot of different places that she grew up and spent time and
before she moved to the States. But regardless, I want to
specifically talk about cruise ships.
So take a look at this ship. These things are absolutely
massive. This one in particular, the
Norwegian escape, was the one that we went on.
It's the tallest ship in the world.
And here's I'll just show you a couple pictures of this real
quick. I mean this is the deck of them.
They've made these a lot more modern, these new ships, they
have like entire water parks on them.
Here's another picture of it that it shows off.
In the background you can see the ropes course that you can
walk around on. Up here has one part called like
the Plank where it extends over the edge of the ship so you can
look down like 40 stories into the water.
It's pretty freaky. Regardless, it was a lot of fun.
We went on the cruise we left here from New Yorkers right when
it was docked, leaving. You can see the city skyline
there and then. I mean, they feed you nonstop.
So like if you go on a cruise, you're probably going to gain
about £10. And then here's a photo of
Bermuda. Pretty amazing place if you've
ever been there. One of the things that stuck out
to me on this vacation was the gambling.
Here's a video I took of a machine that people would play
all night long. I'd see the same group of people
playing this machine every single night of the cruise, and
some of them would play it for like two or three hours or more
every single night. It's called a coin pusher, and
it's actually a pretty addictingly fun game.
It does it. I mean all these gambling games,
they do a lot of things to play on human nature to get you to
keep playing, but this one's particularly fun.
You put the coins in here on the slot at the top, they drop down
in here, and then these coins that are just overhanging the
edge, they get knocked down into the tray.
The idea of course, is for you to put in less money than gets
knocked over. And then on top of that, if I go
to another video here, this shows a more close view where
you can see dollar bills, these wads of cash here on top.
A lot of people, what they try to do is they try to knock these
wads of cash into the tray. And now, of course, casinos do a
lot of things to make it so that the your chances of winning are
a little bit more misleading than it seems.
A lot of people, for instance, like this bill right here, it's
already almost like 1/4 of the way over the edge.
You think it'd be very easy to get this thing to move over, but
people would spend entire nights and you did see this thing
barely moving centimeter after centimeter.
I mean, just to get this wad of cash is probably like 40 bucks.
They'd have to put in hundreds and hundreds of dollars to get
it to move a couple inches. And that's how these things
work. And it's interesting.
I've seen this before. I've seen this statement said
before many times where people refer to the stock market is
like a casino or like you're gambling, You're really risking
your money. You're just hoping to make money
easily. That type of thing.
And I don't think that that's true at all.
In fact, I think that there's a distinct difference in what
separates gambling from investing.
There's been a lot of discussion on this in past.
I can go back and find these old Reddit threads.
There's literally dozens and dozens of them of people asking
how is the stock market not considered gambling?
And they make their cases of how people have lost money, how
people have gained money. Just like happens in casinos,
right? And some of these comments are
good. In response, they explain that
you're buying equity in companies and what you're doing
as opposed to just playing games, right.
But I don't think that they go to the core of the difference
between investing and gambling on a really broad sense.
In my opinion, the difference between investing and gambling
is called expected return. Really, in mathematics it's
referred to as expected value, which I'll go and read the
definition of that real quick. Expected value is a predicted
value of a variable calculated as the sum of all possible
values, each multiplied by the probability of its occurrence.
All right, you got that? Understand it?
No, just kidding. It's a little bit complicated
when you look at it that way, but really, it's not complicated
at all. Pretty much.
Expected value is if you took an action and there's all these
different possible outcomes. It just is an average of what
the median outcome would be, what the middle outcome, what
the average outcome would be based off of all the possible
outcomes. That's the expected value.
And the difference is, is anything where the expected
value is below 0, you're gambling anything or the
expected value is above 0. You're investing.
That's where I would draw the line.
Now this still might not be clear.
I want to go ahead and go to the drawing board and I think I can
actually explain this better. Let's go ahead and draw some
dice here. Now as you know, dice have six
sides and there is a one in six probability of rolling each
number. So I'll go ahead and to make
this clear, I'll go ahead and just unravel this dice and just
draw six different boxes. So here we have 123456.
There's a one in six chance of rolling any of these numbers
when you have a normal dice, not one that's a trick dice or
something like that. Now to explain how you get
expected value or expected return, I'll give an example of
this. Let's say that somebody comes to
you and they offer to play a game with you, right?
They say I have a dice here, it's a normal dice.
And if you roll the numbers 1-2 or three, you lose $100.
You have to pay me $100.00. So these numbers are all minus
$100 right now. If you roll 4-5 and six, you
gain $100. What is the expected return on
this proposition? You're going to just calculate
the odds. What is your expected return?
Your expected return is 0. It's completely nothing.
And the reason why is you have a 50% chance of losing $100.
You have a 50% chance of gaining $100.
If you did this over and over and over again enough times, the
results would likely average out to just be 0.
So this is right in between. Now if you change the game and
somebody said if you roll 1-2 and three you lose $110.00.
So if we change this and said 110 and then you roll 4-5 and
six, you gain 100 and dollars. What is your expected return
now? Well, looking at this, it's easy
to see that half the time you're going to lose $110 and half the
time you're going to gain $100.00.
So now your expected return is -5%.
And this can go on. And it gets a lot more complex
when people in investing world, they look at expected return.
What they do is they look at all the different possibilities a
stock can have or at least they try to map out all these
different results and there can be like 10s of thousands of
different possibilities and then they try to find the overriding
average and then that's the expected return, right?
And that's difficult to do. That's not what I'm saying that
you should try to do for your different stocks.
There's some people that try to model this out and they do
regression testing and all these different complicated things,
and sometimes that proves well. But the overriding principle is
that whenever you gamble, for instance, if I go back to this
machine, every time you gamble, your expected return is below 0.
If there was a gambling machine at a casino and the expected
return was anything above 0, you would not be gambling.
You'd be investing. Because you know that if you
play that game enough, eventually you're going to come
out on top. That is, the difference between
investing and gambling is the certainty that if you play it
enough over and over and over again, you're expected to have a
positive return. You're expected to have a
positive return. That makes it investing.
If you're expected to have a negative return, that makes it
gambling. If I go ahead and I look at the
list here, look at this, this is the expected return of all these
different gambling machines. You can see the house edge.
This means by how much the house is going to win, their margin of
winning Blackjack has like one of the smallest craps does too.
And then the rest of them, some of these, I mean the house has
really big edges on them and what you can see is not all of
them are a lot. You know, casinos.
Casinos don't need to win every single time.
What keeps people gambling and keeps people addicted to it is
the fact that they do win some of the time.
They will win the 49.8%, the 49.5%, but the house in the end
always wins just by these slim margins.
These two percent, 3% point 6% leads to a lot of money, gets
people addicted, gets people using these all the time, but
their expected return is always negative.
That's why gambling over long periods of time is usually a
very financially destructive thing.
In some circumstances, people can use specific skills and
knowledge to overcome these odds against them, but they got to
know that their expected return is negative.
Starting out, they're swimming in an uphill current.
Here, the stock market is completely different.
The expected return is positive. The average annualized total
return for over the last 90 years, this is for the S&P 500
is 9.8%. So 9.8% a year for 90 years,
that's a lot of data to go by and we expect that to continue
because as economies we grow and expand and populations expand
and companies expand as well. That leads to this return, the
9.8% year over year. Now that's the difference
between what is gambling and what is investing.
When you put your money in the stock market, when you put it
into the S&P 500 or whatever these good solid companies that
you're buying, the expected return is positive.
If you don't do anything, you're likely going to make money
investing in the stock market. You have to go out of your way
and do self-destructive actions to lose money over the long term
in the stock market. Meaning you'd have to buy high
right before a recession and then sell low like at the bottom
of a recession. Those type of things.
You can lose money, but the expected return is positive.
If you just leave your money in for long enough period of time,
you're expected to make money. And that to me is the absolute
key difference between gambling and investing.
So you can look at that. If you go to these different
games, just know that these type of things are like intentionally
set up to make it so that over playing them for long enough
periods of time you're going to lose money with them.
It was interesting actually looking at this one
specifically. I tried to figure out how the
casino makes money with it. Not only is it difficult to move
these bills, they have this lip at the edge here that lifts
these coins up and makes them so even though they look like
they're just on the edge of falling over, it really takes a
lot more than is expected to push them over the edge.
Now there's other things they do as well.
This video showed that a lot of these machines, they have this
metal triangle in the middle, and it's interesting.
So what it does is it's just the width of like 1/4.
But as the coins are being pushed, they're being pushed to
the sides and notice they're avoiding this middle part here.
And you can see if I go back to the video, where are all the
bills? They're right in the middle.
If you look at this, isn't that amazing?
People playing this would have no idea that all the coins are
being directed away away from the bills.
Now, I couldn't confirm whether this was the case.
Every single night they'd go and they'd restock all the coins and
make sure that this whole middle part is completely covered.
But that's my suspicion is that there is a metal triangle that
directs most of the pressure of these coins moving towards the
edge. In fact, to confirm my
suspicion, I brought this up to my wife and she noticed
something that most of the bills, the ones that were for
higher dollar amounts, like the 20 and 10s, they were always in
the middle. If I go, here's another 120 and
10 in the middle, there's another 120 and 10 in the
middle, there's another 120 and 10 in the middle.
You can see it. I mean these things you don't
notice if you just sit down and play it, but if you actually
look at these things, all these things are are going to make it
so your expected return is much lower than you think.
These type of machines, I bet they bring in thousands a night
and net profit. They're just wealth transfer
systems from people wanting to have a fun time gambling.
It's just to get their money from you into the casino's
pocket. That's really what they do.
Now again there's certain situations you might come out on
top, but I really think that the methods they do are pretty
incredible and and being able to take your money while making it
so that you continue to play. But anyways, interesting
principle I wanted to bring that up.
I want to know your guys thoughts on it as well.
If you think that this is the difference between gambling or
not, I think it is. But I'd be interested to know
what you guys's take is as well. Well, let's go ahead and move on
from that and jump into some news.
Today's top corporate story Dow, Component, United Technologies
and Raytheon announcing an all stock merger after planned
spinoffs. The combined company is going to
be valued at more than $100 billion and have annual sales of
around $74 billion. So we have United Technologies
and Rathon 2 defense companies merging together now.
I wanted to look at the specific argument that Bill Ackman here
had for this merger and why he's against it.
I like looking at the argument these guys give because he gets
he has a lot more money invested in United Technologies than any
of us do. And so looking at why he has
concerns about this, I think is interesting.
And his letter, I have it right here that he wrote the United
Technologies. This was kind of like an open
letter to voice his concerns. And I want to go through and
read some of it because I actually think it was pretty,
pretty amazing some of the stuff, he says.
One part, he says we were quite surprised to read recent press
reports that United that suggested that United
Technologies is close to announce a merger of equals with
Rathon as early as Monday. While we do not know the precise
details of such a potential merger, we are extremely
concerned that such a transaction will significantly
lower the business quality of pro forma United Technologies
aerospace business. And to make matters worse, will
be accomplished through a highly diluted issuance of large
amounts of United Technology stock, which is currently
trading at an enormous discount to its intrinsic value.
So he's saying United Technologies is already trading
out of discounted value, which means that it's more valuable
than really what the price is indicating right now.
And he thinks that once they separate into three separate
companies that United Technologies is doing, each of
those individual companies is going to be worth a lot more
than they are together. And so merging with Rathon with
a pure equity deal is something that is not giving it its full
value. It therefore makes no sense to
us why you would consider a stock acquisition using today's
massively undervalued UTC common stock to buy a large business of
inferior quality to the company's existing business and
for which we cannot comprehend the strategic logic behind such
a transaction. We believe that post the planned
Otis and Carrier spinoff. United Technologies current
aerospace business will become the world's premier aerospace
company with a highly focused portfolio of assets in enviable
market positions and embedded growth for decades to come.
We believe that UTC's aerospace business is uniquely valuable
asset that will achieve an appropriately high mid 20s P/E
multiple valuation when it begins to trade as a standalone
company later, he says. Rathon is significantly inferior
quality business compared to Collins Airspace and Pratt and
Whitney as pureplay defense contractor.
Rathon's growth and profit margins are tied to Department
of Defense budgets which have a limited visibility and high
volatility and which can change drastically based on dominant
political parties priorities. As a pureplay company, Rathon is
also not suffering from a conglomerate discount, as is
UTC. So you're saying Rathon is
already a single company? It's not a conglomerate, and so
there's no discount for it being a conglomerate, and it's still
not valued, Well says. We believe that Rathon's
diversified portfolio, which spans missile systems and
cybersecurity, is much less competitive advantage than
Collins Aerospace and Pratt and Whitney as it has a lower
longterm growth rate, substantially more business
volatility and greater risk. Moreover, given the limited
portfolio overlap between the companies, we believe that
United Technologies lacks the expertise provided effective
oversight of Rathon's business and in attempting to do so, at a
minimum will lose focus. In summary, we believe the
combination of Rathon and UTC's aerospace business will
meaningfully degrade the overall quality of UTC's pro forma
aerospace business and likely harm its operational
performance. So in saying not only are you
going to get the true value, but it's actually going to damage
the business. And I mean this just goes on and
he actually gets more and more bold with the statements as this
letter goes on later on to at the end of this letter he says
obviously we are extremely concerned about what we have
read this afternoon. If the company intends to go
forward with such a transaction, we will oppose it publicly if
necessary as we expect will the substantial majority of company
shareholders. We would welcome the opportunity
to present our views in person to you and the board at the
board's earliest convenience. I hope this is simply fake news,
as it does not seem consistent with the Greg Hayes we know.
Sincerely, bill. Wow.
So he's literally saying that he hopes that this is all fake news
and that this is just something that he misread.
That's how strongly he opposes it.
And say what you will about bill Ackman.
I know. I mean people go.
I mean, he lost a ton of money on Herbalife.
He lost a ton of money on valiant.
Right. But that doesn't mean that
everything that he's saying, the arguments he's saying are
invalid. And he has made a lot of money
on other concentrated bets. He's had an extremely good year
this year, and his hedge fund has performed really well this
past, like I think past six months, he's done extremely
well. So I actually agree with a lot
of the things that he says. I don't think that this deal for
United Technologies is good for them.
I don't think that they're going to be able to properly manage
your Athon. And The thing is, I was in
support of United Technologies breaking up into three separate
companies because I believe that he they can manage them
individually better than they can as a conglomerate.
Conglomerates don't do that well.
But now they're merging with another company that is more in
the direction of a conglomerate having a big massive diversified
company that spans into a bunch of different things.
So I I'm more side with Bill on this one.
I don't know exactly how it will turn out.
I bet this deal will come through.
Bill has stayed out of the news recently, but it looks like he's
about to throw a fit over this so we'll see what happens.
I'll keep you guys up to date if he comes and makes any like
public appearances and goes on the news and talks about this
deal. So.
But anyway, I thought this was interesting to mention.
Now the last bit of news, this really isn't big news, but I
wanted to touch on it because I thought this was really
interesting. This is a post on Reddit, the
real estate subreddit, and it says seniors were sold a
riskfree retirement with reverse mortgages.
It wasn't. And what this is, this is an
article that goes through and talks about how these seniors,
they were sold this financial thing called a reverse mortgage.
We're pretty much what happens is they've been buying and
paying for their home mortgage for the majority of their life
or whatever their working life, right There's 30 years.
Mortgages are the standard one that usually people get.
But if you didn't really plan your retirement while you're in
a situation where you don't have a lot of cash in retirement and
to not live on Social Security, what will happen is some people
will buy this product called a reverse mortgage.
And as the name implies, it works exactly as it sounds.
Just like when you're when you have a mortgage and you're
slowly paying that down and paying off the debt in your
home, reverse mortgage is slowly selling back equity to the bank.
That's how it works. And so hopefully what happens,
the idea is, is that by the time the home is all the way sold to
the bank, you're either dead or you're able to move on, move to
something else. Most of the time it's so that
you're able to die before then. That's pretty much the idea, to
be frank. In fact, that's why they have an
age limit where you can't even start one until you're at a
certain age. Now, if I look at the comments
of this, this is the part that I think is interesting.
Those foreclosures were riped out hard, earned generations of
wealth in the decades since the Fair Housing Act.
But the reason that people don't like reverse mortgages is
because what happens to the kids in this situation?
These parents worked. They raised their families in
these homes and then they sell them back to the bank.
All that work that they went through for decade after decade
after decade, they give that all back to the bank and the kids
get nothing. Their generation gets nothing.
For most people, you know, there's there's always people
that say, well, you don't want your kids to be entitled, you
don't want to give them anything.
But for most people, you do want your kids to have it easier than
you did. Most people want to have a
better life for their kids, and then they did the struggles that
they had. At least I do.
That's the perspective I come from.
I don't want them to be instant millionaires from the, you know,
the day they're born, but I want them to have it a little bit
easier than I did. And so when you're just giving
back your wealth that you've accumulated from this generation
back to the bank, people see that as a negative thing.
And for this, I mean the comments on it are always
negative about reverse mortgages.
In fact, this one here says it mostly screws over the next of
kin who are essentially buy back the house at the current market
value since equity was tapped out.
That's right. You're giving back all the
equity in your home. And there's comment after
comment after comment blatantly realizing that when you take on
a reverse mortgage, you're just giving back all this wealth back
to the bank. That's exactly what you're
doing. Now the thing that I think is
odd is what is the argument for stocks?
What is it for growth stocks? Well, everybody will tell you
that what you do is you accumulate these growth stocks
over and over and over again all throughout your life, decade
after decade after decade. And then what do you do in
retirement? You slowly start selling them.
You slowly start selling them and giving them back to other
people and cashing out. That's what most people are
doing with their wealth is when they get to retirement age, they
saved up all this money in stocks and then they start
giving back that equity to other people.
All that wealth that they generated and created, all that
ownership they have of different companies and different real
estate and things, they start to give it back.
And that is what I don't agree with.
In fact, the same argument applies here.
Here's one of the comments, and this is for reverse mortgage.
Unless your market appreciates faster than the interest
compounds, So he's saying unless your home appreciates faster
than the rate that you're selling it, Well, what does that
sound like? That is the same exact argument
that people make when they say, well, if I sell 3% of my
holdings a year, 4%, it's going to appreciate at 8%.
So I'm still going to make money.
But why does that never work with reverse mortgages?
It's the same exact principle. You're just trying to sell it at
a lower rate than the home appreciates.
I hold the same ideas both ways. I think that if you work your
whole life to accumulate something, you should try to
keep the principal. You should try to keep the
underlying assets that you've accumulated.
I do not agree with reverse mortgages.
I don't think that you should sell back your home.
Just like I don't think that you should sell back all of the
stocks and all the assets that you accumulate throughout your
life. You should put them in things
that create passive income and then live off the yield that
they generate. Just like if you have a reverse
mortgage, you should be able to either live in the house till
you die or be able to rent it out and so that your kids have
that. So just a different line of
thinking. I see reverse mortgages very
similar to the idea of building up a bunch of assets and stocks
and slowly selling them off as well.
You know, hopefully, hopefully your portfolio outlives you.
That's the idea behind it. Hopefully this reverse mortgage
outlives you. I don't love that idea.
I like it the way that my dad is doing it more where he has real
estate and things that generate passive income, hasn't had to
sell a thing in retirement, just has.
And it's not a huge income, just enough that you can live stress
free. When you have no debt and no
expenses, that money goes a lot further.
And so that's what I'm moving towards.
That's what I advocate for. I think it's much safer, much
more sensible way of looking at building wealth and being able
to pass it on from generation to generation.
Anyway, I'll go ahead and move on to a couple questions before
ending. These questions were actually
really interesting and in fact, I'll go ahead and I'll throw up.
I'll put up like 3 different questions because I feel like
they're all pretty much in different ways asking the same
exact thing. First one's from Billy.
He says, hey Joe, I really like your videos and I've watched
most of them, but I don't think this has been brought up yet.
What are your thoughts on ESG scores and ethical investing?
I see portions of your dividends coming from Exxon, Duke and
Chase, etcetera. And being 29 years old, you will
most likely be retiring during some of the worst effects of the
climate crisis. Not trying to be preach to your
judgmental, but I think you are investing.
I think what you're investing in is a reflection of your values.
And of course I don't think that just you stopping investing in
Exxon will stop the climate crisis.
But if a retail investor, if all retail investors gave up the
worst fossil fuel companies, that could help make a
difference in the fight and wanted to know your thoughts on
it. OK, so that's one of them.
He's asking why I'm investing in these oil companies when they're
contributing to, you know, climate change and all of that
stuff, bad stuff for the environment, right.
Another question has, well, this is a comment from a guy he says
Lockheed Martin. Really.
Why do you invest in weapons screwed up if you ask me dot,
dot dot, Here's another one. Hey Joseph, what's your take on
sin stocks like tobacco and alcohol?
Do you see the similarities in all these questions?
They everybody has these different you have different
standards, everybody comes from different backgrounds and
contexts, and you develop your own kind of moral guidelines.
And some people feel more passionate about some issues
than others. The person that might say I'm
never investing in oil companies climate crisis is, you know,
this big thing that we have to fight in combat, right?
That person might invest in Lockheed Martin and then another
person might criticize them for saying, hey, you're investing in
Lockheed Martin, They build missiles that go out and blow
people up and then, you know, Middle East or wherever.
And some people might not have any issue with building that.
And there's arguments for everything.
And one person might say, well, you're investing in tobacco and
alcohol. These things are addictive and
destructive to people's health. So this just is a revolving
thing and a lot of it comes down to your own personal, your own
personal standards, your own personal morals, investing in
things that you like. As far as me personally, yes, I
own some oil companies Now. Overall, it makes up I think
less than 2% of My Portfolio, which as a dividend investor,
that's a tiny amount of My Portfolio and I also have the
percentage lowered. So pretty much at this point all
I'm doing is taking the dividends they pay and putting
them into other companies. Now I probably don't share the
exact same level of fervor and fighting the climate crisis that
Bill does here or Billy does here, but I, I, I work for a
solar company. So I have, I'm trying to
contribute to a, you know, I like buying things that are
electric and run clean and and efficient.
I like the move towards that. There is a clip that I wanted to
share that I think it was on the Joe Rogan podcast.
One of the guests and I totally agree with his way of fighting
this issue. You.
Lower the price of clean technologies massively.
So you basically make clean technologies cost competitive
with some clean technologies innovation.
Ideally you can subsidize in the short to medium term until the
innovation curve is is crossed. I mean like Tesla doesn't have
any patents right? Or they they freely give away
their patents. That's the example of how you
can do it. What he's saying there is
completely what I agree with on as far as this issue goes is
that I don't think destroying oil companies is going to be the
solution. If we don't, if I don't invest
in them and I don't buy their products, if I said everyone to
buy, I would never want to fill up gas in my car.
They will find other consumers. There's there's other countries
that do not feel that they do not share the same passion that
you or I do and they'll find a man there.
The way that I think that this transitions into cleaner energy
is exactly what he said, which is making clean energy more
costeffective than oil and other nonrenewable energy.
So once it breaks the point, we're actually more
costeffective. We don't have to take a moral
stand against it. The market will naturally reward
these more costeffective forms of energy.
And in my opinion, I think we're going to get there pretty soon.
I I don't think the planet will be destroyed by the time we get
there because I see the advances that we're making in such a
short period of time, like working in the solar industry,
stuff is getting cheaper and cheaper every single year by
pretty large margins. And so the sun has unlimited
amounts of energy. We're finding better ways to to
grab that energy and transform it.
So I I think we'll get there eventually.
That's kind of my take on it. As far as these other questions,
what's your take on sin stocks now?
You might notice actually I don't invest in tobacco or
alcohol. I don't have any of those
companies in My Portfolio and that was actually a deliberate
choice because I don't feel, I feel like some products there is
some kind of good outcome with them.
Like there's a trade off with it and tobacco especially, I just
don't feel like there's a really good trade off with it.
It seems like people use it mostly because they're addicted
to it and they now today's, they become like a social pariah.
It's not really a social thing anymore.
And so I just don't think it's a good product.
And I especially don't like the idea of people using a product
because they're helplessly addicted to it.
And I think that is the case for a lot of people that are
Alcoholics or that have issues with alcohol or tobacco.
So I don't know. I just don't put my money into
it. I don't have any judgments if
other people do. Again, it's not going to make a
huge difference in the grand scheme of things, but there's
some products that I I don't think that they have a great
effect on people's lives overall.
I just don't think that they're that enriching to people's
lives. Now I have a brother that this,
this like the same thing. He doesn't invest in Cocacola.
He says that Cocacola creates these highly concentrative, like
addictive caffeinated sugar, addictive drinks that cause
diabetes and heart attack and disease later on in life and run
up medical costs on the country and everything.
And so he has an argument for how immoral that company is with
the amount of problems it's causing.
So again, this is every company that sells anything, most things
you can take and find different ways to look at them negatively,
very difficult to do as an investor.
I would say the specific things you feel passionate about
definitely guide your investment that way.
But also realize that not everybody might share the exact
same ideas and and passions and they might be coming from a
different background on it. And then yeah, Lockheed Martin,
those type of companies, you know I, they make mostly
technology for our defense. So I don't really see too too
much of an issue with that. I think that we need to have
some kind of national National Defense.
But I'll move on to the next question.
It's from Stace Norman. This is from Instagram.
So I'm going to be taking questions from Instagram as
well. He says I'm pretty excited about
you getting an Instagram. I do not have a YouTube account,
so I've not been able to ask a question.
One, my first question is, are you constantly averaging in your
portfolio 2? If not, then when do you buy
each sector? I don't buy.
I don't do orders for specific sectors.
At least I haven't done that in the past.
Now, I might change the weighting of different sectors
and move those around so that future funding does go into
them. But really I use the auto Invest
feature for M1 Finance, which is just based off of your portfolio
allocation. You set a target allocation that
you want each company to hold. So it's like going in and saying
I want Apple to be 1.3% of My Portfolio, I want Costco to be
2%. I want, you know, you pretty
much go through and set all of that and then M1 Finance will go
well. Does this equal this much?
And the ones that are the most off, the most underfunded, those
ones will get the money first. So as you're going throughout
the year, companies are dropping down.
They will get funded until they're back up to where they're
supposed to be. Companies that are going up,
they'll be, they'll be waiting to get funded until everything
else catches up to it. And so sometimes I'll mess
around with that throughout the year because I want to direct
money flow into other different companies or different sectors.
But no, I don't like have any specific buying strategy as far
as that's concerned. Most of the research I do on
when I buy companies is upfront. Then from there, it all comes
down to if anything really drastic happens to them, if they
have a dividend cut, if they have some huge issue or huge
scandal or something happen. But as far as the reinvesting, I
just let the cash keep flowing into companies over and over
again. Most of it gets directed into
the ones that are underfunded from M1 finances, auto invest,
future, All right. But that's all the questions
I'll take this time. I appreciate you guys tuning in.
I have another video coming up next week and I'm going to try
to do a video on my Roth IRA. So I think you guys will be
interested in that. I've made some changes to it.
I have it being funded for the year.
I'm going to actually be maxing out the funding this year, like
next week. So once that money is put in,
I'll go ahead and do a video on it and show you guys what I've
come up with. I don't think, I don't know if
it's perfect yet, but we'll see if we'll discuss it next week
and see what you guys think. But anyway, you guys have a good
one. We'll see you.