Welcome everyone. Thanks for joining.
We have a lot to get to in this episode of the drill.
So Carlson show, of course, I'm going to be doing a portfolio
update. So I'll show you what I'm
buying, what companies, I think are good value.
I'll give you a quick update of what's going on with the
portfolio, but we also have some other important subjects to get
241 inflation. Seems to be out of control.
It's going higher and higher and we've now entered into a very
difficult situation where the FED has to raise interest rates
without Causing a recession and that's a pretty difficult thing
to do. It's so difficult that a lot of
forecasters are now increasing their chances and their
forecasts predictions of a recession and this has generated
a lot of Buzz, a lot of talk over time.
So in this episode we're going to go through and actually
assess the probability of a recession and see how that plays
in to our investing strategy. And then we have another topic I
want to discuss that I think is very important.
In fact, I actually think it's more important than all.
Is macro events and that is the principle of discipline.
This is something that frankly looking around on on YouTube and
Twitter and with individual investors and investors in
general discipline is lacking and I think that this is an
incredibly important topic. So I'll be discussing how I
think discipline plays into every other form of investing
and how you can actually develop discipline with your investing
strategy. So we have a lot to get into a
lot to go over if you want to subscribe To the channel.
You can do so on Fall along for free.
I get frequent updates with my portfolio at least once a week,
and I do so with complete transparency.
So if you want to see how real money invested in real
companies, turns out over a long period of time, you can follow
along for free. Now let's go ahead and quickly
start off with the portfolio update.
This is my personal portfolio, it's real money.
I have three hundred and thirty-five thousand dollars and
thirty-five thousand six hundred and gains.
The first thing that I want to mention is it's difficult.
Especially as somewhat of a public Financial figure to give
updates on your portfolio when it's basically doing nothing but
losing more and more money going down in value month after month
and week after week. If I look at my portfolio right
now I look at thirty five thousand six hundred dollars in
gains and that's okay but just three months ago we are at 80
thousand dollars in gains. So we've given up a lot of gains
over the past three months and if I just go to the past one
month, And we're down twenty five thousand dollars in the
past one month that's a lot of money.
And when you're looking at this, it's very easy to become
discouraged to feel like you're a bad investor to feel like you
should give up, but I don't think that's the right attitude
to have. Keep in mind that this money
right here is not actual money. I don't have money in my
brokerage, I own equity and companies and this is basically
a bid of what people are willing to pay for those equities.
He's right now, this minute and this bid can change over time.
In fact, it changes every single day.
It's the equivalent of looking at your home on Zillow and
seeing what the current value of it is, does it really matter
what your home is valued at right now?
If you don't intend on selling is your home value.
Even relevant to you if you don't intend on selling right
now. Well not really and that's the
way that I look at my portfolio right now.
The price has gone down but I don't plan on selling my
positions in fact, when the price is Down that gives you the
opportunity to buy more and that's all I've been doing with
my portfolio. I've been buying a little bit
more every single week as stocks drop further.
And further, I just recently highlighted and my previous
video of how I thought JP Morgan was good value so I bought an
additional 2,000 dollars of this company.
It pays above a 3.1 percent, yield Starbucks.
Also continue to trade down into the high 70s, which I think is
incredibly good value for this company.
So I dollar cost average further down, lowering my Cost basis and
buying an additional thousand dollars of this company and I
remain very bullish on it. Despite the fact that the price
currently isn't looking good, you know it's going down in
price and that's discouraging but really, I remain very
bullish on this company. So overall, all I've been doing
with my portfolio is keeping my Holdings, and great companies
and buying ones that I think are offering particularly good value
right now. So, as we go throughout the next
couple of months, it's becoming an increasingly emotionally and
difficult. Time to invest, we can look at
days like today. My portfolios up two percent.
Six thousand six hundred dollars today.
When you look at these big numbers going up, you can become
optimistic and that's something that amateur investors and new
investors often. Do you get Hope on the up days?
Then on the downturns, you get very discouraged.
I don't think that's the way that you should look at it.
We shouldn't be very happy when stock prices go up and we
shouldn't be super sad. When stock prices go down, you
should try to only disconnect from your portfolio, not have
that play a factor realize that you're buying high quality,
equities cash, producing assets and regardless.
If the stock market goes down or up, these companies are still
producing a return on their investment Capital.
They're still growing their revenues and growing their
sales. So over time whether the market
realizes it my portfolio is growing.
Now big part of the reason why investing is so difficult right
now is because of the ongoing macroeconomic events, like
inflation. Malaysian seems to be getting
out of control. We're now in a situation where
it seems like it's on the verge of a death spiral where
inflation goes higher employers, start paying their employees
more to adjust for inflation employees have more money,
creating more demand, which causes more inflation.
That seems like the route we're headed down now luckily the FED
has a tool to curb inflation. They have a tool to completely
stop, it called interest rates, if they higher interest rates
that will stop inflation. The problem is the in Interest
rates are a blunt tool and they have side effects.
One of the big ones is that if you raise interest rates too
much, history shows that has a good chance of causing
recession. So the FED has a tool to deal
with inflation but they have to deal with the recession
possibility as well and forecasters believe that this is
getting to be a tougher situation for the fed and
they're raising their forecasts of a chance of a recession
caused. By the FED hiking interest
rates. So if we actually look at the
situation we're in right now, it's pretty complex.
Basically, before Russia invaded Ukraine, the outlook for the US
economy was stressed but hopeful pandemic pressures appear to be
peeking. Inflation was widely, expected
to normalize and the FED stood, a credible chance of
engineering, a soft Landing meaning, they lower inflation
without causing a recession, but they note the situation has
changed an enormous amount of carrying atrocity in Europe has
triggered an unpredictable Global Financial and economic
conflict. That will see Sequences Ricochet
though, new risks have emerged and uncertainty is higher at
present the main impact on the crisis.
On the US economy is the exacerbation of existing
pressures and risks. The path of inflation and the
policies to contain it remain the main threat to the cycle.
So they're basically sing the biggest threat to causing a
recession right now is a misuse of fed policy.
Them going to aggressive with raising interest rates and they
say, while the risk has gone up, it need not be a Real come.
So they're saying that even though there is an increased
risk of recession, it's still not entirely necessary.
Now, I'm still in the camp that even though I think there's a
decent chance of a recession in the u.s., I still believe
there's a good chance. We will get through this without
causing a huge recession. First of all, a lot of the
things that were causing inflation seem to have peaked
and are now actually leveling off the demand for retail sales
is actually going down. This is a good thing.
This will put less pressure on inflation retail.
Inventories are recovering meaning stores now have more
stuff to sell which again lowers inflation.
The labor market demand is actually stabilizing, it's not
skyrocketing anymore. This is another positive
development in terms of lowering inflation and the labor force
participation rate is starting to recover which again is a very
good thing for the economy. Another graph that we can look
at is the economist forecasts of inflation over the next two
years. They break it down into these
different colors. That mean, different things that
are causing Inflation, you can see the mustard.
One here is Supply, constrained durable goods and that one has
really spiked inflation and they see that one actually minimizing
over the next year. It'll decline pretty steadily.
Then we have other Goods, which is also contributing to
inflation. That's supposed to go down
naturally, as well. So a couple of the biggest
causes of inflation are actually supposed to be transitory.
They're supposed actually decline over the next year, even
with the FED not raising interest rates.
Rates. And that makes the situation a
lot easier for the Fed. So, really, this comes down to a
game of probabilities. There is a chance we will go
into recession because of policy error because we raise interest
rates too fast or not enough to handle inflation.
If that happens, we go into recession and the market may not
like that but there's also a percent chance that we don't go
into recession. Now, luckily for me, the way
that I invest either of those outcomes is.
Ok, I invest in every single company looking historically.
Berkeley at how they do during recessions and trying to do
analysis on. If these companies will hold
their own during recession, and I believe that every company in
my portfolio Will Survive a recession.
Now, having said that all the talk about recession and all the
predictions do have a side effect of causing investors
become increasingly emotional and increasingly fearful.
And I can see this happen all over online.
I see so many investors, becoming fearful and changing
their entire stance on investing one video.
That I remember watching a few months back, this was three
months ago. December 13th Was Won by chicken
genius. Singapore.
This is one titled. Quit your job.
That's the name of this video. Let me go ahead and just play a
little bit of this. Hello, friends.
Took me one minute to make hundred and six thousand four
hundred dollars. This covers my entire year's
expenses. Is he just said that this took
him one minute to make a hundred and six thousand dollars in this
covers his entire year of expenditure.
Sit, that's the claim. This took him one minute.
He made a hundred six thousand dollars and a one-year of
expenses is covered. Hence the title quit, your job,
call those my entire year's expenses is super life-changing
and in Sharing what I do, hopefully, it changes yours.
I'm not asking you to quit your job and work is good, but at
least be happy working in this video again because I do what I
preach. But please note it may look
difficult. But I assure Assure you.
My donkey can do this with his eyes closed.
All I did was by January 20, 23 roughly a year from now, if
Tesla stock drops below 1000, I'll buy it means by January 20
23. If Tesla's stock is $900, I will
need to buy at 1000. I simply wrote a guarantee, so I
got paid for it. That's all I did.
He wrote a guarantee for Tesla. Now the guarantee was that Tesla
would stay at a certain stock price by 2023 and by writing
that guarantee of that stock price he's compensated by one
hundred and six thousand four hundred dollars that he gets
paid an upfront credit that's how he's saying he made a
hundred six thousand dollars in one minute.
Now again this is December 13th of last year just three months
ago and he goes on to explain how risk-free this strategy is
is quite stupid. If testosterone drops with $900,
Hours. Here's the Met I'm still in
profit and if there's a stock drops to $800 steering profit
$750. I'm still in profit.
Let's say it drops to $600. I'll sell another years
guarantee and I'm break even and this point it becomes stupid to
us. If this is risky, in fact, I
think whatever I do, this is the safest strategy.
How here is he explained to me? He says it's stupid to ask how
this is risky. In fact, if it is risky explain
to him, he'll this was the attitude.
Just three months ago that you could basically have hundreds of
thousands of dollars of risk free money.
Now of course markets can change very quickly.
From that video just year-to-date the S&P 500 is
down, eleven point five seven percent, the QQQ is hit, even
harder it's down. 19% year to date and Tesla, what you
guaranteed, the price of is already down 34 percent to seven
hundred and ninety five dollars. Now, since that video, 3 months
back of quitting your job and having risk free money.
I've noticed a change in tone and his videos.
The most. Recent one is, I believe a
recession is Nair, has flames in the background, doesn't look So
Rosie anymore and just recently a couple days ago he came out
with a video called I'm selling frowny face.
And in that video he highlights what he's selling, he's selling
out of pound here at a fifty one thousand dollar loss and he's
selling out of that same Tesla position that same Tesla
guarantee at a forty nine thousand, six hundred and ninety
Eight dollar loss. Now, when you sell out of this
early, the premium that you are paid up front that one hundred
and six thousand dollars he was paid.
You also lose that He's out that one hundred and six thousand
dollars. It was basically risk free money
on top of losing an additional forty.
Nine thousand six hundred ninety-eight dollars in.
This was just three months ago, it seems like things can change
so quickly, one moment, everything is easy.
Money is easy to come by money, seems risk-free.
And the next moment we're selling out of fifty thousand
dollar loss now, I'm not trying to single out chicken genius,
but I think it's a good example of how quickly things can
change. One moment we have something
that seems like a sure plan. Ask free.
And the next moment, it becomes very difficult when the market
takes a turn. This is why sticking to a
well-thought-out, methodically driven plan is very important
investing. And one of the key things that I
think separates amateur investors and new investors from
professionals, and the best investors in the world is
discipline. I think this is the key element
that separates the two groups. Warren Buffett.
Defines this level of discipline is having emotional separation
from your Investments. Keeping a level head.
Don't need You don't need a lot of brains in this business.
I mean, I've always said if you got an IQ of 160 give away 30
points or somebody else, cause you don't need it Investments.
What you do need is emotional stability, you have to, you have
to be able to think independently.
And they have to be, you have to be, when you come to a
conclusion, you have to really not care what other people say,
and just follow the facts and follow your reasoning.
And, and that's, that's tough for a lot of people.
At that part, I think I was just lucky with, I was born that way.
This is what Warren Buffett refers to as as one of the
Disadvantages. He has as an investor as being
emotionally detached from your investments in this is something
in common with every great investor.
Think about this, for a minute, you can name off every single
great investor and no matter what strategy they pursue.
If they're a great investor, they have a high amount of
discipline. You can take Warren Buffett as
an example. You can take Sir, John Templeton
one of the best investors of the past hundred years.
He's extremely disciplined. He says, that's one of his best.
Heuristics, you can look at Nick sleep and Zakaria and their fund
that they ran where they invested in three companies
Berkshire, Costco, and Amazon, and they made Market beating
returns. They attribute part of that to
not getting distracted by the market and the constant news
they remained disciplined in their investing strategy.
You can look at Michael burry he's always looking for Pure
value with his Investments and he doesn't make decisions
emotionally you can go across the board to any great investor
whether or not you're doing. Analysis or growth, investing
whether you're doing, momentum, investing or technical analysis,
having discipline is key. And, in my opinion, no matter
how good you get at this stuff, no matter how good you are at
momentum investing, or fundamental analysis or value
investing. Or even if you're just ETF
dollar cost averaging, you're not going to have good returns
if you lack discipline if your portfolio is driven by emotions.
So, I may not be the best investor in the world, or even
the best stock picker, I'm sure there's better.
Doc, Pickers are investors out there than me.
But one thing that I do plan on continuing to have with my
investment strategy, is a high amount of discipline.
I am not going to let emotions and fairs change.
My investment strategy. I'm going to continue to buy and
dollar cost average into high-quality compounding
companies that I think will offer significant value for the
future. And I look at these type of dips
in the market as buying opportunities not issues to be
concerned about, I think, if you have this type of attitude,
you'll have much better returns. So that's my thoughts today.
I hope you enjoyed the episode and if you want to follow along,
I'll have more out this week so subscribe and you can follow
along for free other than that. I'll see you in the next one.