Welcome back, everyone. Today, I'm the jealous of
Carlson show. We're rounding out 2022.
And as we get to the end of the year, I think it's time to do
something that I haven't done for a while.
My goals about the future, I've outlined my 20 23 goals, and
four things in particular that I want to accomplish next year.
In this video, we'll be going over all of them and why I think
these ones are important. Now, we also have a new addition
to the passive income portfolio. It's one that's in the finance
category, the company's SPG I, which is the SP Global remember
in The movie, The Big Short that scene with the lady with the
dark glasses. She worked for SP Global in this
did not illustrate this company in a good light as long as
anybody with it with a credit score in a pool.
So what do you think we do here? All day is not sure, that's why
we're here. That's what we're also going to
try to figure out what does this company do all day?
How does it make money? Why am I investing in it?
Especially when it's portrayed as such an evil company back in
2007? Now, I also have a bit of
research. I want to get into JP Morgan
came out with their research for 2020.
Re this is where they give their Outlook and predictions and part
of this research, they talk about dividends, they call it
defend with dividends and they lay out with a lot of detail and
data why they think companies that pay dividends will do
especially well next year. And then finally, we have
Tick-Tock again, we have a user here, explaining his goals for
2023, and how he plans to turn his situation of only having a
couple thousand dollars into being a millionaire, a million
dollar-plus portfolio in one year.
It's a pretty ambitious plan. An ambitious goal and I want to
see how he does it. So as always, we have a lot to
jump into in this episode. Let's go ahead and start off
with the goals and my portfolio and everything.
I'm wanting to do in 2023. I've always looked at my channel
is basically a window into my finance.
This has never been a place to get the hottest stock tips or
stocks that will go up 5x or 10x.
I've never advertised a channel that way this is always been a
window into what I'm doing with my finances and I never imagined
this YouTube Endeavor would grow to this big of a thing.
And that's I want to first start by thanking.
All of you all the followers, even the silent ones.
That just listen for fun and you don't really comment or
interact. Thank you, as well.
I really do appreciate your support.
I appreciate every subscriber even ones that disagree with me
from time to time. Even ones that leave snarky
comments, I really do appreciate all of you.
The channel has grown beyond my wildest expectations.
When I started this, it has over a quarter million subscribers
which is just incredible when you really think about.
Out that and then not to mention a lot of channels that have
million plus subscribers. Sometimes, they get really low
engagement but that's not the case.
Here, we have videos, getting 60,000 40,000 50,000, many of
them, get above 100,000 on average.
The channels get anywhere between 700 and 1.3 million
views per month on a very consistent basis.
So I appreciate everybody that's involved in this.
It's been a very interesting, very fun thing to do.
And I find Especially interesting to see the channel
grow and the engagement grow even when the stock market's
going down, we're having a tough year in the equity Market, but
we're still gaining progress, overall on YouTube.
The Joseph Carlson show is growing and subscribers and
engagement, and not only that the secondary channel has now
moved to a place where it's getting nearly as many views as
my primary Channel. It has less subscribers, but
that's gone up dramatically this year.
We have 68 thousand subscribers on Joseph Carlson after hours.
This channel was started as kind of a side thought.
Something where I just put in some money into a girlthe
portfolio, I picked more risky stocks that were little bit
outside of my normal investment strategy, and I've been
following along with that smaller portfolio and giving my
opinion on over all these different tech companies and
different related topics. But it's been amazing to see
this channel grow as well. It's now at a point where a lot
of the videos are getting 30, 40, 50 thousand views.
This is a substantial amount of views for channel that has 68
thousand subscribers. It's getting all Almost as many
views as subscribers and every video and every month were
adding thousands of new subscribers outside of the
YouTube channels. We have the podcast growing, the
Joseph Carlson show audio version.
Some of you I know like to listen to the episodes when
you're driving and you don't want to use your data on
YouTube. So a lot of you are listening.
A lot of you are viewing. But either way, I appreciate you
following along. And then, finally, with the
patreon membership, I appreciate all of you that are part of the
patreon, and we've seen some incredible growth with this as
well. It's actually been incredibly
consistent. This What the membership looks
like since starting patreon at. This isn't altered or changed in
any way. That's straight off the patreon
dashboard, we've gained members, basically every month, since the
very start of it. And in terms of timeline, that's
the point where I quit. My job as a full-time programmer
to focus entirely on the YouTube and the patreon.
So looking back over the year I'm very happy with the growth
of the channels with the growth of the patreon and with the
performance of the portfolio, I think things.
Generally speaking are moving in a positive direction, I'm not
near the point or even Close to the point like some YouTubers
that are making millions of dollars a year.
We're a long ways off from that, but we are moving in a positive
direction. Now, with that said, I'm not
satisfied, I'm not becoming complacent.
I think there's a lot more that we can do here, and that's where
these goals, come into place for 2023.
Let's go ahead and start off with gold number one.
Number one, I'm going to substantially increase the
investment into qualtrics quiet room is a website, it's called
from.com, and it's a suite of tools that's available to
patreon members. This is something where it
started off as a little project and it grew into something much
bigger over time now. It has well over 2,500 members
using it every single day. It's become quite popular on the
patreon. And I think a lot of members are
getting a lot of value out of it.
When I started call trim, it was basically an app to take my
spreadsheets off of spreadsheets and put them on a website and
then it started to grow from there.
Where I tracked, different data. With my month-over-month
dividend growth, my year-over-year growth, my
upcoming dividends my year-over-year dividend growth,
so on and so forth. It did a lot of fun little
Things were tracking dividends. The next thing that I difficult
Rim is built something called insights, insights is a data
analysis, tool for stocks where I try to take out all the stuff
that I think, doesn't matter that much and only leave the
data in. That's the most important for
doing valuations of stocks. The entire idea of this website
is to give a 360 view. A full view of the fundamentals
of a company by just looking at one page right here, every
single chart need to see every single graph, every single piece
of data, And most importantly visually Illustrated that is
critical when viewing data. Some people say I'm a visual
learner. I learned things easier when I
look at graphs and charts and visuals.
That's not you you're not unique that way.
We have studies from Vanderbilt University that people are
generally speaking visual Learners that is the easiest way
to learn. So when I build quality trim,
its with that in mind, every bit of data is visually Illustrated
with very easy ways to see progress and see performance
over long periods of times of companies.
And then you do have a National Data to give numbers to those
visuals, but overall that's been a core focus when I looked at
other tools, I was using at the time, things like Yahoo finance,
this just doesn't click. When I look at rows of tabular
data, stacked on top of each other and then trying to
decipher what's going on from this.
It takes literally 10 times the amount of time when I can have a
lot more clarity with a short amount of time with insights.
So insights was a key tool to qual, trim.
And the second one that we built after creating the insights
page, we created the dip finder, which is a Watch list that shows
you, the moving averages of your company, they're currently
trading in a dip or if they're searching in price.
So that's required, term is currently.
But what I've done is hired more developers and I plan on
substantially increasing my investment into qualtrics
because I think I can get a good return on this investment right
now. I plan on doing this with the
price remaining ten dollars a month which one I compared to
virtually any other patreon. Any other data analytical tool
for analyzing stocks, it is far and away one of the cheapest in
the market for the data it offers.
I'd like to go through all of 2023 without a single price
increase, so I'm going to have it remain $10 a month, but I
want to have easier onboarding more intuitive interface.
I want to have international support and Canadians support.
I want to have more features a redesign of a lot of different
pages and a better mobile app on Android and iOS we've hired a
mobile developer that's going to be rebuilding it from the ground
up. And the Hope here is that all of
these investments in the amount of money that this is costing,
will eventually pay off all have high Returns on Capital
employed, So to speak. So I'm going to be building out
all of these tools. I'm going to be refining, call
trim. I'll be making it substantially
better than its competitors and the Hope here is that it adds
more users that will have an influx of users that will help
fund the additional investment here.
Now, moving on, we have goal number two, and this is another
investment goal outside of investing into qualtrics and
hopefully getting a good return on that.
The next place where I think I can get a good return, is the
passive income portfolio. I want to grow it.
I really want to push as hard as I can to grow this.
Portfolio as aggressively as I can.
So I'm going to be increasing the amount of dollar cost
averaging into that portfolio to two thousand dollars per week.
That is Michael, it's more ambitious and it's something
that I'm not sure that I'll be able to do but I think I can
currently I have around 70 thousand dollars saved in the M1
spend account, that should help with that goal.
So I have a bit of a Runway because two thousand dollars per
week is right around, 100 thousand dollars for the year.
So basically my goal is to dollar cost.
Jin a hundred thousand dollars in 2023.
I have 70,000 dollars saved that should help out with it and then
that should also increase my dividend income on top of the
reinvested dividends. Remember right now, my dividend
income is at seven thousand three hundred and ninety-three
dollars for 2022 and that is up. 36% my goal is to increase this
once again by over thirty five percent which is right around a
10 thousand dollar a year. So I want to go from five
thousand dollars. The seventy four hundred dollars
to ten thousand dollars plus in dividends in 2023.
Now one thing I want to mention on this goal is that obviously
two thousand dollars per week is a ton of money.
It's a stretch for me to do this.
I'll only be able to accomplish this if things go really well in
2023. So this is a goal that might be
altered or paired back. If I have unexpected expenses,
which often times is a case with something like YouTube, that's
very unpredictable. But I realize that in all 100
thousand dollars being deposited in a portfolios, a ton of money.
Me for single year. If you're not able to deposit
that much money, that's fine. You don't need to, you can build
your portfolio at a slower pace and still have an amazing
retirement, my parents never once, got to the point where
they could put this much per week into their portfolio and
into their Investments, and they still retired in a very good
situation. So this is entirely unnecessary.
You do not have to build up your portfolio at a thousand or two
thousand dollars a week. I'll be sacrificing purchasing
anything like brand new car. Or anything really expensive to
try to make this goal happen. Now, moving on to number three,
I have another goal regarding Investments but this time, it's
not about me building, qual trim or investing more into the
passive income portfolio. This one's about my actual
Investments, the type of things that I'm investing in, in the
passive income portfolio. Everyone's been following the
channel knows that I've been focused on Compounders, I've
been on a bit of a kick with Compounders, some people have
joked and said, when I go to the fast food, drive-thru, I order a
compound And cheese. I get the joke.
I'm really focused on Compounders and I'm going to
relax from this a bit and introduce back higher risk,
lower Quality Companies into the portfolio.
All right, I'm just kidding. I'm not going to be introducing
lower quality higher risk companies in the portfolio,
quite the contrary, I'm doing something called High grading,
the portfolio. That is where you sell off your
weaker higher risk positions and you buy more of your strongest
positions that have strengths in different categories.
I'm looking for When is it have moats, that's an obvious one,
but people use the term moat very Loosely.
I'm looking for real modes, I want outright monopolies in my
portfolio. I know from a consumer
perspective and from a civilization standpoint,
monopolies aren't looked at positively.
Monopolies are looked at as evil companies that own an entire
Market, from an investment perspective, I don't care, I
want to own the companies that have the Monopoly, they have
such a lock in on customers that they basically have no one they
compete with. If I can't find an answer.
Outright Monopoly. I'll move to the next best thing
which is an oligopoly. Basically a monopoly shared
between a couple different companies.
These are the type of notes. I'm looking for companies have
such a Stranglehold on a market that they literally have no
competition at all. I want companies that have
predictability with their earnings and companies that I
consider to be undisrupted Bible.
They're so locked in with their industry and Market position
that they cannot be dislodged. Now, when I look at my current
Holdings, I do have companies that I think meet that
categorization, I've described Union Pacific and Canadian
Pacific as As many times, I think they're locked in, and I
think they're virtually undisrupted able, I've described
apple as basically having a monopoly, it has one of the
widest melts in the market, in my opinion, based off of its
huge ecosystem. And I'd say the same for
Microsoft. I think this is a very
monopolistic company in some ways.
It has such a strong Market position in so many different
aspects of technology that I consider this company to have an
incredibly wide mode and to be very difficult to be disrupted.
But there are some companies that I do think follow into the
weaker category Target being one of Them.
I think this company doesn't really have a monopoly on
anything. It's just another retailer.
It's a great one and I made money with the stock, but I
don't think this company's monopolistic at all church and
white cells. Mostly secondary products.
It's a great company but I don't consider this company
monopolistic at all. So, part of high grading, a
portfolio is making judgment calls.
It means that you're selling off these weaker less monopolistic
less predictable parts of the portfolio and moving that money
to the stronger. More resilient more Modi parts
of the portfolio. That's going to be a big focus
of 2023. Overall, strengthening the
portfolio to the point where I think every single holding in.
It is incredibly strong and I'll let you know about different
changes. I make with the portfolio as we
go along this year, I'll be showing every single thing I'm
doing with transparency like I have from the start.
Now, finally moving on to number for my final goal of 20 23 is to
improve the content quality and this is something I try to do.
Basically, every year I want to remain with the core aspects of
Of the Joseph Carlson show which I think is centered around,
being honest and transparent with everything that I'm doing.
But I also want to make some different improvements.
I want to improve the technical setup, improving, the technical
setup. Literally means I just buy
better tools to be able to create the production of this
show. Last year, the quality of the
videos on the after-hours channel.
For example, look like this and then this year I upgraded the
camera quality, I change the framing a little bit, I added in
new editing and I think overall it makes for a better
production. This is a technical Improvement
to the show over time and That I plan on continuing to do and to
2023 and outside of improving the text set up to produce the
show. I also plan on increasing the
ways to view and follow the show.
I've been putting more content onto Twitter.
I've been creating more content on the secondary Channel and
I've been putting more content more frequently on the podcast
version trying to give followers more ways to follow along with
the journey at your convenience. And I also have a goal to
increase the actual quality of the content that's being
produced. Both in terms of editing, And
the data and insights that's being shared early on in the
channel. I had a strong focus on looking
at the qualitative parts of a company.
The leadership, the mode of the company, the intangible assets,
the business model, the way, the company would try to outplay and
outdo, its competitors. This is the story of a stock,
this is the qualitative analysis, the things that the
numbers, don't tell you then later on in the channel, I
started to emphasize more, the quantitative aspects of a
company. The valuation, the pricing, the
free cash flow yield. The New Growth that ibadah
growth, the free cash flow, the free cash flow subtracting out,
stock-based compensation. And so on and so forth.
This isn't the qualitative aspect of a company.
This is the quantitative aspect of a company.
This is the fundamentals. And what I want to do in 2023 is
combine, both the quantitative data, the things that we can
calculate as well as the qualities of a company.
The intangible aspects and I want to combine them into one
rich, full investment thesis on a company so that you have both
an understanding of Of all of the fundamentals and the
qualities of a company and I think I can accomplish this.
I plan to step up my level of research and Analysis on these
companies and really try to portray the full story of a
company, both the data and the qualities, and a full
well-rounded analysis. So that's really it.
That's my four goals for 2023 and I think these are ones that
I can do, but sometimes things unravel in a way that we don't
predict. So even though these are goals,
they're not guarantees. But this is what I'm hoping to
accomplish next year. So we have a lot.
We're going to be doing in 3. It's going to be a busy year and
I think we're going to have a lot of fun going through it
together. Now, having said that I want to
jump in to the new addition to the portfolio, which is sp GI, I
put it in the financial category because this is a financial
service company. But it's not necessarily like
tiro price or it's just a money manager.
It's not a bank like JP Morgan. Chase VSP Global is known to be
one of the big three credit rating agencies.
They're known as The Big Three because there's just three of
them and they're all really big. This is what a monopoly is, it's
what an oligopoly is. It's when a couple companies
control, a huge market and they have a position where it's
nearly impossible to disrupt them from that position.
The big three in this case, our SP Global, which is the one I'm
buying into Moody's, which is one Warren Buffett has owned for
decade after decade calling the company, basically bulletproof
and then Fitch group. Now, the thing a lot of
investors don't realize because we don't really have a close
connection with this company. We're not really using it.
Personally is how powerful of a They really have Buffett has
repeatedly talked about Moody's Corporation as having these
qualities that are very attractive to investors.
We pay Moody's a lot of money to write us, you know, I'd like to
not pay him that money. So I've seen their position, the
competitive position and, you know, they operate in a business
with very wide profit margins. Very high Returns on Capital and
it's a business that will probably grow over time.
This is it a conflict of interest that you pay them to
rate you? Well, I wish it were so that we
didn't have to pay him but as a practical matter, you know, we
need their ready. We shouldn't need to ready.
I mean, anybody should be able to look at Berkshire Hathaway's.
That's a wonderful credit, but the world in the way, the world
exists, we need, they're ready. And we need standard Poor's
rating. And we are not in a position to
negotiate on price and I hate to say that on National Television,
where the guy listening, maybe the guy that determines my
buildings time. But that is a position where we
live in a world where we need their rating.
They have. Have it and they're not in a
position to negotiate on price. Now, even though the credit
rating agency is a very big moat market and it's a nice one to
control, it is very cyclical and that is something that I've said
many times, I don't like I don't love highly cyclical companies
and we can see what's happening right now as a lot of companies
are preparing for recessions. You can see that they're issuing
less debt. They don't like to issue debt.
If we're going into a slowing economy so we can even see with
companies like Moody's. The amount of free cash flow
every community. Quarter for the past year, has
been going down because remember these companies make money by
rating debt, they rate the bonds.
And if there's not as many bonds issued, they don't make as much
money. So the amount of earnings per
share is also gone down 30 or 40 percent year over year because
there's less bonds being issued now than there was a year ago in
this time period in excitement and cheap debt.
There is bonds being issued left and right, companies were taking
out record amounts of debt so Moody's and S&P Global were
benefiting greatly from all that.
Tapping issued. And when we flip over to SP
Global, we can see the very same thing here.
Earnings per share are dropping because the amount of bonds
being issued is going down. And that's a problem with these
companies. Something that I don't like what
I do like to see is this company actually addressing this problem
with their stock, in their company, see what SP Global has
done over time as Diversified their revenue stream, the try to
make it a less cyclical company. Since 2021, the ratings portion
of the business made up 49 percent of the income.
So, roughly half comes from Ratings.
But then we have 27 percent coming from their Market
intelligence applications, we have eleven percent coming from
Platts. That's like market indicators
and things that a lot of Traders and big Banks use.
And then we have the indices, they control things like the S&P
Global, and they get kind of a franchise fee from anybody that
makes ETFs based off of their indexes.
So they also get residual income from their indices and the
growing passive income trend has benefited them.
So what we see here is a level of diversification, even though,
Their business is highly cyclical.
This part of the business is far less cyclical and still they're
using this additional income to smooth out the revenue and the
free cash flow over time. Now SP Global has even done
more. The try to diversify their
income and make their business setup for more future growth.
They don't want to be hampered down by just a credit rating
portion of their business. They want to have stronger
secular Trends and so they purchased a company called IHS
Market, which is a market data company, providing data that
everyone needs. Needs to invest in the market.
Do research build ETFs, all of that type of stuff.
There is a ton of data this company owns.
Now, the effects of this merger will even diversify their income
more where now the ratings make up roughly 30% of the revenue,
going down from fifty percent and then the financial info and
services make up 32%. And this is a good business to
be in everything that they purchased with this acquisition
is almost entirely reoccurring Revenue.
So the company they purchased is all data driven.
Option based Revenue with very high margins.
They have 14% going to transportation and energy, 15%
going to commodity, and energy, and the 9% going to the indices.
So, when I look over this transaction of SP, Global buying
IHS Market, I really like it. I think this is a good decision
for management. It is true that the largest moat
part of their company. The ratings part is becoming a
smaller portion of the company but they're sacrificing a little
bit of moat to make it so that they have way more secular
growth trends. And the thing that they're
buying is still pretty wide mode Financial info, and services is
a very good Market to begin with high margins and reoccurring
revenue and it has strong secular Trends.
There's going to be a far bigger need for these Financial info
and services in the future than there is right now.
So, I think management is setting the company up very
well. For the next decade of growth, I
view this type of transaction. As similar to Google, not just
relying on their course, search engine, but trying to grow and
things like cloud. Things like YouTube and other
bets. It's a way of a company that has
an incredibly wide moat with one part of their business, using
that moat to buy other growth pass for the company.
And in this case, every single aspect of this company, that it
competes in does have strong secular growth Trends.
Ratings has Revenue growth over the past five years.
Their Market Intelligence Division has Revenue growth over
the past five years. Market, indicators, has Revenue
growth through both pricing power and expansion of customers
and not only are they growing of the top line revenue with Every
individual division, but they're growing their operating profits.
Every single division is they're growing their operating margins.
Their margins are either consistent or slightly growing
over time. So this company here is
service-based, reoccurring Revenue, High margins with
growing revenues throughout every part of the company,
growing operating profits and growing margins.
It's very difficult to find something so far at this company
that I really don't like. And then not to mention the
first thing that they actually go through and their earnings
report, the very first thing, Is there free cash flow?
I look at a lot of earnings reports and I don't see many
companies that want to highlight their free, cash flow, right up
front. But this company is so focused
on growing real free cash flows, undiluted free cash, flows that
they put it front and center. This is Page, 8 of the investor
relations. This is at the very beginning of
their 100-page report because they're proud of the growth.
They've had in free cash flows. So when I look at quatrain, we
can see they're very same free cash flows, their massive free
cash flow growth. Over the past five years and
very consistent before that for literally, two decades.
So this company is a first and foremost, free cash flow, Focus
company, but they also focus on returning Capital to
shareholders that something. They highlight right up front.
They're focused on resulting in strong, total shareholder
returns. And that is something that they
have successfully done. The irony with SP Global is the
company benefits from people moving to passive investing
buying the S&P 500. They're the company that's
basically selling you. The S&P 500 selling you passive
investing. But had you invested in Sp
Global instead of the passive investing ETFs?
You would have done far better, buying the company creating the
passive investing than buying the passive investing itself.
SP Global's returns without dividends is five hundred and
twenty-two percent over the past decade, and they are a big
dividend payers. In fact, this is one of the most
well-respected dividend payers because of their long history in
2023. They're going to become a
dividend aristocrat. At if they do one more dividend
rays, which they will, that will make it so that they have 50
consecutive years of dividend raises.
And, in the past five years, they've average dividend raises
not at this. Puny one cent raise every year,
like, companies trying to just hang on to some record and
they're doing it as a symbolic raise.
They've averaged 15.7% of and raises for the past five years.
I only have a couple other companies in my portfolio that
have raised dividends that fast. So this should be one of the
faster dividend increase in companies in my entire
portfolio. Folio.
Now, of course, the fundamentals of this company scream that it's
a compounder and basically every aspect growing net income over
time, growing earnings per share over time, very consistent and
growing free cash flow. That's exploded recently, I
think this will become even more consistent with their latest
acquisition. If we look at the balance sheet
of the company, they've taken on a lot of debt, it's nearly
tripled, but that is for this new purchase and they've
committed to paying this debt down aggressively and you can
see that they're already doing that their debt for the
acquisition, went up to 11 .33. Billion down to 10 .78, down to
10 .73. Every quarter they're slashing
away. More of their long-term debt and
likewise they also funded this acquisition in part by shares
outstanding. You can see that they issued a
lot of new shares to pay for this new company, but what are
they doing right away? They're aggressively buying back
the shares. They just issued with their new
income stream, 338 million shares, outstanding 1/4 later,
it's 329 million. That is a huge share reduction,
right? An acquisition.
And this company says that they're doing an accelerated
aggressive, repurchasing of shares.
They want to get this dilution back under control as fast as
possible and of course we can look at that defining metric of
a high quality company Returns on Capital employed, we have a
company here, that consistently has above 30% often getting up
into the forty percent Returns on Capital employed.
That is topped hair. That's getting up with companies
like Estee Lauder. This is the Terry Smith metric.
The number One where he defines a good company from a bad one.
And in terms of valuation, it's hard to do valuations right now,
without the full impact of their acquisition.
But the company has the risked, a lot in terms of valuation,
it's come down in price 26 percent this year.
So, it's had a substantial drop as investors are a little bit
concerned about the slowing economy, and the slowing credit
rating agency business. But like I said before, that's
going to make up a smaller portion of their overall
company. And I think the secular trends
of this company will outweigh Any short-term problems.
So right now I'm looking at it as an opportunity to buy in at
less inflated prices buying it over here.
I think is a mistake. You're just getting a very
frothy company high prices but it's D risked a lot coming down
into this Zone. Maybe this company will go lower
over the next year but that's fine for me.
This is a multi-year holding which I plan on dollar cost
averaging in over 20 23. So I'm not saying you should buy
this company but for me this is exactly what I'm looking for a
wide moat service based. P'nay with secular growth
Trends, high amounts of consistent, free, cash flow and
a company. That doesn't dilute the
shareholders through massive amounts of stock-based
compensation. And a company that also pays a
growing dividend and has done that for 49 years.
It checks all the boxes. I'm happy to have it in the
portfolio. Now, moving on, I was reading
through a lot of different investment Outlook write-ups
from different companies and Banks like Goldman Sachs and JP
Morgan. And I was reading through
jpmorgan's investment outlook for 2023 and something caught.
My attention JPMorgan has an entire section.
In here called defend. What dividends they say that our
base case sees a moderate recession and most major
developed economies in 2023. That's pretty consistent with
the consensus. They say that we believe that
the equity markets have already priced in a lot of the bad news
in 2022, but stocks which provide an attractive income
appear, more reasonably valued than those with little, or no
income investors, who are more cautious than us about the
Outlook. May want to focus on this
cheaper segment of the market to hopefully limit further
downside. Side.
Of course, the income stream from Dependable dividend.
Payers can also help buffer returns strong dividend-paying
companies. Often go to Great Lengths to
maintain dividends. Even when the earnings are under
pressure with payout ratio, is relatively modest at present,
maintaining current dividends looks more feasible than, in
some prior recessions. So what they're saying there is
right now, companies have a lot of leeway, they have a lot of
flexibility with their dividends because of the low payout ratio.
For example, a company like, SP Global has Payout ratio of 27%,
they have a lot of flexibility. They could raise that to double
and still be able to safely cover their dividend.
Now, next JP Morgan goes on to highlight a point that I've been
making over and over again. So JP Morgan's late to the game
here but they're pointing out something that I really think is
important. Dividends are far more
consistent and reliable a reliable form of returns in the
stock market than any other form of return.
Dividends tend to fall less than earnings in recessions.
So on this chart, there's Two different, graphs are two
different colors. The blue is the EPS drawdown in
different companies and the Orange is amount of dividends
being paid. Notice that the Blue Line, the
amount of earnings of companies goes up and down way more
dramatically and volatile than the amount of dividends being
paid. This is because dividend
companies are not only more resilient more full
weatherproof, they're more recession resistant but they
also give a strong priority to continually paying the dividend
even during difficult times. Unless they really think it's a
long-term problem. They will continue.
Need to pay the dividend now, they say in conclusion, even
though we expect a challenging macroeconomic environment in
2023 and downward corporate earnings revisions we think
income stocks could have a good year with dividends proving more
resilient than earnings for investors that are tentatively
looking to increase their Equity exposure on income tilt could
prove relatively resilient in the worst case scenario, while
also providing the potential for outperformance and a more
optimistic scenario for markets, given the attractive valuations.
So they see both upside with dividend payers.
If things go south next year. And if things go well because
evaluations in both cases, they're suggesting a tilt
towards income stocks. Now enough about my plans and my
ambitions. I want to hear the input and
plans with someone else, this individual here who highlights
his plan of how to break out of the situation, he's in he's
working at a gas station and by the end of 2020 3 he wants to
have a million dollar portfolio and he lays out in just a minute
Thirty hair. He plans on accomplishing that.
Let's go ahead and Jump Right In.
This is my step by step plan on how I'm going to get rich from
working at my gas station job. So first, let's break down my
expenses. I spend $1500 a month on rent.
The first thing I want to do is pause right there and just say I
feel bad for people in the situation, paying $1500 for rent
is crazy. I pay less for my entire Home
Mortgage. I bought a home back in 2017.
I paid a lot down to get the payment down and it's actually a
lesser mortgage than his entire rent.
Meant. So I feel bad for people having
that much of their income eaten Away by rent payments.
That's, that's crazy. It's been $100 a month on
electricity. I spend like 30 dollars a month
on Wi-Fi and another 34 cellular data and then food I spend like
30 dollars a day. So that's $900 a month.
And so that brings us to a total of what 2560 and also got like
insurance and Hulu. So I'm gonna add another two
hundred dollars just to be accurate.
So two thousand, seven hundred sixty bucks.
Dollars for a single person. It sounds like it's just him.
It's a lot of money. I think that's normal.
If you have, like, a family but that seems like a lot for just
one person so every month. So that's a lot of money right
now. I'm working 40 hours a week at
this job and I'd get paid 1150 an hour.
So that brings us to 460 dollars a week which is 800 a month.
So even if I'm working 40 hours a week, I'm still going to be
losing like nine hundred twenty dollars a month, yikes.
So the first thing I'm going to do is stop spending $30 a day on
food and cut that down to 10. And if I do that then, I'm only
losing like 300 bucks a month. This is crazy to me.
He's working 40 hours out of job.
That doesn't even afford what he's currently paying in all of
his expenses, he's cutting down on his food budget, which I
think is good, but I think that housing cost is a lot.
I'd be looking for anywhere cheaper to live.
If I was him, cancel my mint Mobile Cellular, and I stopped
using Netflix and Hulu and all that shit.
I think I can get to the point where I can live just off of
this job so I'm gonna do that. So that brings us to Net Zero
but I'm still making forty dollars a day from crypto
mining. So that's twelve hundred dollars
a month so I'm gonna get another job. 30 hours a week, the pays
at least $15 an hour and off that brings me up to 800 plus
the 1200 from crypto mining. That breaks me up to three
thousand dollars a month and I'm a doordash and shovel snow to so
I'll probably be making about thirty five hundred dollars a
month so he's working 40 hours per week at one job. 30 hours a
week at another job and then doing doordash on top of that
and shoveling snow. If that's true.
I have to give him credit. That is that is hustling my take
all that money invested. I think I can get at least 100 K
by the end of 2020 3. Alright so he wants to save at
least 100,000 Dollars by the end of 2020 3, which I think is
something he could do. If you really does cut down on
his expenses and works basically all day every day you can save
up a hundred thousand dollars. I've seen people do that, I've
seen people write on doordash forums, how they're, they're
making an extra Thirty forty thousand dollars a year just on
that side gig. So I think you could accomplish
this, but how does he get to the million dollars?
He says he wants to get that to a million dollars and I'll take
that hundred K, invest into a stock that will 10x and then
I'll Be A Millionaire boom easy. So that answers it.
He's going to take the hundred thousand dollars.
Worked all year for invest it in a stock that will 10x easy and
then he's a millionaire. Just the simple 10x, which I
think is the most simple step to any investment strategy.
You save up the money. You work really hard for one
year and then you just simply 10 exit, you get your million
dollars and you're done, you've saved up enough for life.
Now, I genuinely wish him the best and hope that he does find
a stock that 10x is because of how much it work, how much
actual work he's putting into this, but this just makes me so
nervous to think of someone working.
All year around the clock and then putting all of their
savings into a single stock in of itself is extremely risky.
The amount of concentration that has the amount of risk implied
in it. Not something that I would do, I
think there's a better path but best of luck.
Hopefully, you find a good stock that's all for now.
I hope you enjoyed the show. If you want to share your goals
with me as well. Leave them in the comments
below. I will read over them.
Having said that, I'll see you in the next episode.