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Well, we have a huge day today. 
My portfolio is up quite a bit, 

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it's up one point three, eight 
percent four thousand eight 

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hundred dollars. 
Just on the day. 

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The past week were up 5.5 1% 
that beats out. 

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The S&P 500 were up 18 thousand 
six hundred dollars. 

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I was just doing videos saying 
that is kind of depressing when 

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the stock market goes down. 
It's not fun to go through but 

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what I do is basically do 
nothing. 

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I just buy more into good 
companies and hold on and 

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typically this is what happens 
if you buy I really good 

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companies at attractive prices, 
the market will eventually have 

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some type of bounce back up. 
Now we're back up to 56 thousand

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nine hundred dollars in gains 
and the market is rallying 

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overall. 
The NASDAQ sup 1.76 percent the 

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S&P 500 is up. 
One point zero five percent and 

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the Dow Jones is up point seven,
nine percent. 

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So the broader markets are all 
rallying at a time where the Fed

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chair drone pal is actually 
becoming more hawkish. 

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In fact, the big headline from 
his last meeting was Quote if we

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think it's appropriate to raise 
rates by half a point at a 

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meeting or meetings, we will do 
so. 

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So that's him saying if we need 
to get more aggressive will get 

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more aggressive. 
We're not afraid to do so and 

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despite that more aggressive 
stance, the stock market is 

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going up. 
So I'm going to try to explain 

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this phenomenon of the Stock 
Market trading up, while this is

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going on, but I also want to 
explain why. 

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I now believe that inflation is 
transitory. 

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I think the inflation numbers by
the end of this year, will be 

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lower than they are. 
Right now. 

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And I want to explain why I 
believe that in this video. 

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So as always, we have a lot to 
jump into in this episode. 

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And if you're new to this 
channel, you can follow along 

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for free. 
I track this real portfolio of 

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mine of real money every single 
week with complete transparency,

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which means I show you 
everything I'm doing with the 

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portfolio. 
Every company. 

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I'm buying everyone that I'm 
selling the results, good, or 

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bad. 
I'll show you if my companies 

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aren't performing, I recently 
purchased a lot of Starbucks and

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I'm in the red on this holding. 
Even if I The end up losing 

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money on Starbucks. 
I'll show you the outcome as of 

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right now. 
I really have no reason to 

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believe that ultimately end up 
losing money on this company. 

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I'll also show you the company's
at. 

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So far have been very successful
Investments with apple. 

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I'm now up over 21,000 dollars. 
This is a company that's done 

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very well for me, and this is 
one that I was heavily 

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criticized. 
When I was buying in on it, in 

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fact, I remember the videos a 
year ago, people sing that I was

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buying one of the most 
overpriced companies in the 

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market and now investors are 
still looking at it as as having

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some decent value. 
So, either way, no matter what I

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do with my portfolio, I'll show 
you the outcome transparently 

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and we'll track it week by week.
This is a dividend growth 

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portfolio, which means every 
company pays a growing dividend 

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over time and I reinvest those 
dividends back into the 

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portfolio. 
Hair is what those dividends 

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look like over time. 
This is a chart that I made. 

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That is the trailing 12 months 
of dividends every single month.

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Meaning if I look at one month 
in particular, it shows how much

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money I made in. 
In the previous 12 months. 

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So this kind of shows a trailing
growth of how much money my 

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portfolio is putting out and 
last month, February my 

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portfolio made six thousand one 
hundred and seventy four dollars

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in dividends in the trailing 12 
months. 

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So it's not forward-looking. 
It's backward-looking and every 

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single month this should improve
month over month. 

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Now, I have to mention that a 
lot of these gains in the reason

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this portfolio is growing and 
it's putting out more dividends 

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is because of continual 
deposits. 

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Every single month. 
I take Income from YouTube and 

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patreon and any other source I 
have all the money I have left 

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over and I try to fund my 
portfolios as aggressively as 

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possible because I know that 
when you're trying to get 

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something, the compound getting 
it started is the difficult 

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part. 
If you're starting out in just 

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the past couple of years with 
your portfolio, your deposits 

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will make a significant 
difference. 

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Every time you can put in 500 
bucks, 100 bucks that will help 

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spur growth with your portfolio.
So my advice to new investors is

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really focus. 
On deposits. 

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Focus on buying either ETFs are 
very established attractively 

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priced companies and just 
continue to plow money into it 

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as much as you can save as much 
as you can budget your income. 

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Try to do extra bits of work and
different side projects and put 

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that money into your portfolio 
to get this ball rolling because

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once that snowball is rolling, 
it can turn into an avalanche. 

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And right now, my portfolio just
in dividends is putting out over

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six thousand dollars a year and 
almost every company that I'm 

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invested in. 
Also does BuyBacks. 

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That's another way of returning 
Capital to the shareholder by 

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increasing the share price. 
So I have a lot of momentum now 

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with my portfolio in and of 
itself and if you're just 

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getting started just keep 
pushing forward. 

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You'll get to this point 
eventually. 

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Now, if you want to see all the 
companies that I'm invested in 

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and you want to see what every 
company is, and every holding 

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is, there's a link in the 
description of this video called

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dividend portfolio. 
You can click on that and open 

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it up and see every company that
I'm invested in. 

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Now, moving on, we gotta 
discuss. 

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What is the major headline of 
The week and possibly of the 

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month the Fed chair Jerome, 
Powell says the FED will 

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consider a more aggressive 
interest rate increase to reduce

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inflation. 
So this is an example of a Fed 

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chair, becoming more hawkish, 
meaning that he's becoming more 

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aggressive with his stance. 
He says, quote, if we think it's

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appropriate to raise rates by 
half a point at a meeting or 

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meetings, we will do so. 
So he's basically telling the 

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market look, if inflation, does 
go out of control and out of our

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predicted bounds, we will 
increase interest rates by a 

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half percent, not even just a 
quarter. 

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This is very important for 
investors. 

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You have to understand the 
mechanics of how this works if 

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the FED aggressively increases 
interest rates, that makes it so

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that the yield for bonds like 
the 10-year go up the 10 years 

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already. 
At two point three, eight 

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percent that is a very high 
Spike. 

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Just recently and as bond yields
go up typically stock yields go 

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down because investors and big 
institutions have other place. 

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To put their money. 
So if the 10-year treasury went 

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up to like, 5% or 6%, that would
be an incredible amount of 

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downward price pressure on 
stocks Warren Buffett describes 

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it as gravity. 
It's like gravity pushing down 

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the price of every stock. 
So, drone Palace signaling that 

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he's becoming more aggressive. 
And that if inflation does run 

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higher, he's going to raise 
interest rates far more 

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aggressively half a percentage 
in one meeting and investors 

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seem to be shrugging this off. 
Well, I actually agree with the 

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stock market. 
Today, I don't think that 

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Jerome, pal will have to 
increase interest rates by half 

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a percent. 
In fact, I think inflation will 

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go down over the course of 20 
22, and I think it will be lower

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by the end of 2020 to than it is
today. 

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Now before you say, Joseph, 
you're just believing the words 

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of the FED you're just naive. 
You're just agreeing with 

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anything. 
They say, that's not true. 

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I have disagreed with the FED 
for over the course of a year. 

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Three months ago, I came out 
with a video called how to 

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invest during High inflation. 
Shannon. 

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And it suggested that real 
inflation was much higher than 

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what the Fed was suggesting. 
I explained how inflation is 

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going to be much higher going 
forward. 

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That was just three months ago. 
Four months ago, I came out with

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a video called inflation, will 
get worse not better. 

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Here's why. 
And I literally say on the 

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thumbnail of the video, he was 
wrong with a picture of drone 

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pal, that was four months ago 
before he admitted that he was 

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wrong. 
So up until now I have largely 

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disagreed with the fed and add 
another video. 

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Ten months ago. 
I have a picture of Michael 

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burry and I say that he was 
right. 

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Michael burry was right. 
Inflation is hair and I say in 

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the video, openly the all these 
companies are saying how bad 

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inflation is getting. 
And I think that the Fed chair 

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is going to be wrong by saying 
that inflation is transitory and

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it's going to be at two percent 
by the end of 2020. 

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One I said that the Fed was 
incorrect and explain so in 

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multiple videos. 
Well of course this is how the 

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markets work ten months ago. 
I was saying that inflation is 

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getting out of control. 
Troll. 

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I was quoting Michael burry who 
was also explaining how 

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inflation is going to go much 
higher than other people are 

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predicting. 
And this was around the time 

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that drone pal said that he's 
retiring the word transitory 

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here is the exact video footage 
of him saying we're now getting 

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rid of the term transitory. 
So I think the word transitory 

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has different meanings to 
different people. 

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Too many it carries a time, a 
sense of short-lived, we tend to

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to use it to mean that it won't 
leave a permanent mark. 

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Mark in the form of higher 
inflation. 

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I think it's, it's probably a 
good time to retire that that 

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word and try to explain more 
clearly what we mean, he said, 

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it's time to retire. 
The word transitory because 

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inflation is spiraling out of 
control. 

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And many investors are meaning 
on him? 

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They're mocking him for 
suggesting that it was 

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transitory so drone, pal, 
retired, the word transitory and

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now investors are predicting 
that inflation is completely out

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of control. 
Well now instead of disagreeing 

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with your own pal in the FED 
over the past year, I'm finally 

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going to actually agree with 
them. 

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I think that their new timeline 
of how inflation will dissipate 

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is probably correct. 
Here is a graph showing how 

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their analysis sees inflation 
dissipating over the course of 

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20 22. 
You can see that they believe 

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that it basically spiked right 
now, right now is the worst time

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for inflation and it should 
start to actually fall over the 

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course of this year and they 
think that by the end of this 

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year and early 2023 inflation 
will be around three percent so 

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not Too much higher than its 
historical Norm. 

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Now, most investors and most 
content creators think that this

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is incorrect. 
They think that inflation is 

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hair. 
We're in a death spiral and 

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inflation is going to be out of 
control and I really don't agree

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with that stance. 
I do agree with the fed this 

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time that I think inflation will
dissipate now, I want to explain

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why. 
I hold this view with one simple

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chart here is a chart of the 
month over month, inflation 

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rates, from February of 2021, to
February of 2022. 

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So this is over the past year 
starting February and we can see

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that February of 2021 inflation 
was not an issue. 

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It was a total non-issue. 
During that time, it was one 

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point seven percent. 
So it was below their targeted 

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2% and then March of twenty 
Twenty-One, it spiked way up, 

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went up a percentage to 2.6 
percent and then April of 2021 

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it went up to 4.2 percent. 
So in the course of three months

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inflation went up, something 
like two and a half times. 

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X, that is an enormous jump and 
inflation in a three-month 

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period. 
Now, look at the rest of this 

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chart. 
May it goes up to 5% June, it 

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goes up to five point four 
percent. 

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It stays flat a little bit 
throughout the summer months and

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then in September it goes up to 
five point four percent October 

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up to six point two percent 
November, it continues to climb 

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by half a percentage up to six 
point eight. 

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00:10:52,800 --> 00:10:56,500
Then it goes up point to 27 then
in January of twenty twenty two 

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were up 7.5% and then in 20:22 
were up 7.9%. 

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So when you look at those 
numbers and you're hearing this 

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acceleration of inflation at 
first glance, you're 

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00:11:08,500 --> 00:11:11,800
impressionist probably. 
Wow, this is really out of 

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control like the FED has no 
control over inflation. 

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This is just a chart of the 
numbers going up month after 

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00:11:18,000 --> 00:11:20,400
month and they don't even know 
what they're doing, right? 

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The FED doesn't have any control
of the inflation of the economy.

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This is really spurring out of 
control. 

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That is the initial impression 
that you would have, but I 

229
00:11:28,408 --> 00:11:31,700
actually think that is there, 
The wrong impression and let me 

230
00:11:31,700 --> 00:11:35,100
explain why this is only one 
year's time. 

231
00:11:35,200 --> 00:11:38,700
If you look at the chart here, 
the first month is February. 

232
00:11:39,000 --> 00:11:42,300
That's the first month and 
inflation wasn't an issue. 

233
00:11:42,600 --> 00:11:48,900
So from February of 2021, to 
February of 2022, the comps, the

234
00:11:48,900 --> 00:11:54,300
comparison is incredibly easy 
for high inflation, 7.9 percent 

235
00:11:54,300 --> 00:11:59,000
inflation year over year. 
So from February of 2022, to 

236
00:11:59,000 --> 00:12:03,000
February of He won, we have a 
7.9 percent increase in 

237
00:12:03,000 --> 00:12:07,100
inflation but that's pretty easy
to accomplish because last year 

238
00:12:07,100 --> 00:12:09,600
inflation was only one point 
seven percent. 

239
00:12:09,900 --> 00:12:13,500
So the comp the comparison 
between the two is really easy 

240
00:12:13,800 --> 00:12:17,900
then you get to March that's 
still a pretty easy comp 2.6 

241
00:12:17,900 --> 00:12:20,500
percent. 
So to have high inflation levels

242
00:12:20,600 --> 00:12:24,900
we only have to beat 2.6 percent
but take a look at what happens 

243
00:12:24,900 --> 00:12:28,700
when you get into April. 
It bumps up to 4.2 percent. 

244
00:12:29,000 --> 00:12:31,600
That means to Have high 
inflation to have something 

245
00:12:31,600 --> 00:12:33,700
above like seven or eight 
percent. 

246
00:12:33,900 --> 00:12:37,100
It would have to be compared 
with four point two percent of 

247
00:12:37,100 --> 00:12:40,400
last year. 
So that is a much more difficult

248
00:12:40,400 --> 00:12:42,000
comp. 
That means that you would have 

249
00:12:42,000 --> 00:12:44,900
to have not only the four point 
two percent increases of last 

250
00:12:44,900 --> 00:12:48,300
year but way above that to have 
high inflation. 

251
00:12:48,300 --> 00:12:51,100
So keep in mind that the 
inflation reports are 

252
00:12:51,100 --> 00:12:54,900
year-over-year, you're always 
competing with the same month of

253
00:12:54,900 --> 00:12:57,400
last year. 
So February is compared to 

254
00:12:57,400 --> 00:12:59,600
February of this year, which is 
a very easy. 

255
00:12:59,800 --> 00:13:03,400
Person March will be compared of
March this year, which is 

256
00:13:03,400 --> 00:13:06,800
another very easy comparison. 
So I think on March will still 

257
00:13:06,800 --> 00:13:09,900
have high inflation numbers but 
I think when April comes around 

258
00:13:10,100 --> 00:13:12,700
the comps become much more 
difficult to have excessive 

259
00:13:12,700 --> 00:13:16,000
inflation and I could see that 
the April month could be much 

260
00:13:16,000 --> 00:13:18,400
lower than the March month 
because you're not comparing 

261
00:13:18,400 --> 00:13:21,600
against 2.6, you're comparing 
against four percent. 

262
00:13:22,000 --> 00:13:25,400
And then when we get into the 
second half of the Year, October

263
00:13:25,500 --> 00:13:29,000
November December, those 
comparisons are going to be very

264
00:13:29,000 --> 00:13:31,200
difficult. 
For inflation to be super high. 

265
00:13:31,500 --> 00:13:36,700
Inflation will have to exceed 
14% on a two-year basis to beat 

266
00:13:36,700 --> 00:13:38,600
out the seven percent in 
December. 

267
00:13:38,600 --> 00:13:42,500
So that's no longer such an easy
comparison with January and 

268
00:13:42,500 --> 00:13:45,400
February of this year. 
We are comparing against numbers

269
00:13:45,600 --> 00:13:49,300
that are sub 2 percent and later
on this year, in just a couple 

270
00:13:49,300 --> 00:13:52,200
of months, the comparisons are 
going to be much more difficult.

271
00:13:52,200 --> 00:13:55,400
This issue of tough comparisons 
year-over-year is not something 

272
00:13:55,400 --> 00:13:58,500
that just exists with inflation.
This exists. 

273
00:13:58,500 --> 00:14:01,600
Any time you're comparing Data 
on a year-over-year basis. 

274
00:14:01,900 --> 00:14:04,800
If the numbers rapidly 
accelerate like they are with 

275
00:14:04,800 --> 00:14:08,700
inflation, the next year, it 
tends to be a lot lower because 

276
00:14:08,700 --> 00:14:11,100
you're comparing against the 
previous year of Rapid 

277
00:14:11,100 --> 00:14:14,000
acceleration. 
Take Zoom, for example, this is 

278
00:14:14,000 --> 00:14:17,400
a company that really struggled 
with the issue of tough comps. 

279
00:14:17,800 --> 00:14:20,600
You can see that prior to the 
pandemic, their revenue growth 

280
00:14:20,800 --> 00:14:24,500
was very low, but it was steady.
There are going from 60 million 

281
00:14:24,500 --> 00:14:29,600
and a quarter to 7490 105. 
This was fast. 

282
00:14:29,700 --> 00:14:32,300
Growth but it wasn't exponential
growth. 

283
00:14:32,500 --> 00:14:35,300
Then the pandemic happen 
everybody was locked into their 

284
00:14:35,300 --> 00:14:37,700
houses and they had a use zoom 
to communicate. 

285
00:14:38,000 --> 00:14:44,900
So the revenue grew in 1/4 from 
328 million to 663 million. 

286
00:14:45,200 --> 00:14:48,300
And if you actually do the 
year-over-year comparisons, this

287
00:14:48,300 --> 00:14:53,700
was Q3 of 2020, they had 663 
million you compare that against

288
00:14:53,700 --> 00:14:57,900
Q3 of 2019. 
They had 145 million. 

289
00:14:58,100 --> 00:15:03,500
So comparing this That is this 
massive leap and growth. 

290
00:15:03,600 --> 00:15:07,500
It's like 350 percent Revenue 
growth because that's easy 

291
00:15:07,500 --> 00:15:09,900
comparisons. 
They're comparing one month of 

292
00:15:09,900 --> 00:15:13,300
rapid growth against another 
month last year, when there 

293
00:15:13,300 --> 00:15:16,500
really wasn't rapid growth. 
So that easy comparison leads to

294
00:15:16,500 --> 00:15:20,400
a number of 350 percent, but 
then we go on throughout the 

295
00:15:20,400 --> 00:15:23,600
year, but you might notice that 
the growth decelerate, it as 

296
00:15:23,600 --> 00:15:26,800
people largely became used to 
using zoom and most people that 

297
00:15:26,800 --> 00:15:30,000
had it already had signed up. 
So we look at the last Order 

298
00:15:30,300 --> 00:15:33,800
last quarter in 2022, they did a
billion dollars in Revenue, 

299
00:15:34,000 --> 00:15:36,800
that's pretty good. 
That's a record high, but the 

300
00:15:36,800 --> 00:15:39,800
issue is the comps, the tough 
comparisons. 

301
00:15:40,000 --> 00:15:42,600
If we go back to what we would 
compare this number to the first

302
00:15:42,600 --> 00:15:46,400
quarter of 2021, it was 882 
million. 

303
00:15:46,500 --> 00:15:51,600
So the jump from 882 is only 
like 25 percent zooms Revenue 

304
00:15:51,600 --> 00:15:56,800
went from gains of 350 percent 
to 25 percent that is the 

305
00:15:56,800 --> 00:15:59,300
problem with tough. 
Comparables, we can even see 

306
00:15:59,300 --> 00:16:03,100
this You better Illustrated with
a chart of the percentage gain 

307
00:16:03,200 --> 00:16:06,300
year over year of their 
quarterly, revenues back in two 

308
00:16:06,300 --> 00:16:10,000
thousand, nineteen ninety-five 
percent, gain 85 percent gain, 

309
00:16:10,200 --> 00:16:14,600
77 percent gain, then in 2020. 
It sped up a hundred and sixty 

310
00:16:14,600 --> 00:16:17,900
nine percent gain. 
Then in July, this was that huge

311
00:16:17,900 --> 00:16:19,900
quarter. 
Three hundred and fifty five 

312
00:16:19,900 --> 00:16:23,200
percent gain three hundred and 
sixty six percent gain. 

313
00:16:23,400 --> 00:16:26,200
Three hundred sixty, eight 
percent gain, but then the 

314
00:16:26,200 --> 00:16:29,500
comparisons got tough one 
hundred and ninety-one percent. 

315
00:16:29,600 --> 00:16:33,100
Eight fifty three percent gain. 
So all of a sudden, the revenue 

316
00:16:33,100 --> 00:16:36,600
growth starts to decelerate as 
the comps get tougher. 

317
00:16:36,600 --> 00:16:39,800
The last two quarters were 35 
percent gain and then last 

318
00:16:39,800 --> 00:16:42,300
quarter was only a 21 percent 
gain. 

319
00:16:42,400 --> 00:16:45,400
So in the course of a year and a
half, they went from growing the

320
00:16:45,400 --> 00:16:48,100
revenue, three hundred fifty 
five percent to twenty one 

321
00:16:48,100 --> 00:16:49,500
percent. 
So if we go back to the 

322
00:16:49,500 --> 00:16:52,100
month-over-month inflation 
numbers, I think this paints a 

323
00:16:52,100 --> 00:16:54,600
better picture. 
You can see why inflation might 

324
00:16:54,600 --> 00:16:58,600
be more difficult to rapidly 
accelerate in April and May than

325
00:16:58,600 --> 00:17:01,300
it is in. 
During March March should be a 

326
00:17:01,300 --> 00:17:03,900
relatively easy month for 
inflation to beat. 

327
00:17:04,000 --> 00:17:07,400
But once it gets to April and 
May, it will become much more 

328
00:17:07,400 --> 00:17:10,200
difficult to see these high 
inflation numbers and then if we

329
00:17:10,200 --> 00:17:13,900
fast-forward to the back half of
2021, the comps become, even 

330
00:17:13,900 --> 00:17:16,599
more difficult for high 
inflation numbers, having to 

331
00:17:16,599 --> 00:17:19,500
beat out seven percent. 
Inflation is going to prove a 

332
00:17:19,508 --> 00:17:22,000
lot more difficult than 1.7 
percent. 

333
00:17:22,099 --> 00:17:25,300
The only way that I see 
inflation actually, increasing 

334
00:17:25,300 --> 00:17:29,900
over the second half of this 
year is if inflation is Really 

335
00:17:29,900 --> 00:17:34,000
embedded in our society. 
If we have achieved the total 

336
00:17:34,000 --> 00:17:37,800
death Loop of higher wages, more
money, more spending power, 

337
00:17:37,800 --> 00:17:40,700
higher inflation. 
And we can't break that Loop. 

338
00:17:40,800 --> 00:17:43,600
That is an option. 
I would give that like a five to

339
00:17:43,600 --> 00:17:47,400
ten percent chance of happening,
but I think there's a 90% chance

340
00:17:47,400 --> 00:17:50,400
that doesn't happen and that 
inflation is less by the end of 

341
00:17:50,400 --> 00:17:52,400
this year. 
On top of the issue of tough 

342
00:17:52,400 --> 00:17:55,700
comps, we can also look at what 
really is causing inflation. 

343
00:17:56,000 --> 00:17:59,400
We know that inflation has been 
heavily caused by a lot of one. 

344
00:17:59,700 --> 00:18:03,800
Events by one-time events. 
I mean, the FED adding seven 

345
00:18:03,800 --> 00:18:06,200
trillion dollars to their 
balance sheet, look how much 

346
00:18:06,200 --> 00:18:09,400
they added since 2020. 
They went from four trillion 

347
00:18:09,400 --> 00:18:12,200
roughly speaking on the balance 
sheet, all the way up to, like, 

348
00:18:12,200 --> 00:18:15,400
eight and a half trillion. 
So they added nearly seven 

349
00:18:15,400 --> 00:18:17,300
trillion dollars on the balance 
sheet. 

350
00:18:17,300 --> 00:18:19,100
But the FED has stopped this 
action. 

351
00:18:19,200 --> 00:18:21,300
They're no longer buying assets 
right now. 

352
00:18:21,600 --> 00:18:24,600
In fact, they're going to start 
reversing it and offloading 

353
00:18:24,600 --> 00:18:26,300
these assets back into the 
market. 

354
00:18:26,400 --> 00:18:29,000
The next thing that is a 
one-time event where these 

355
00:18:29,000 --> 00:18:31,600
stimulus Is checks. 
Remember how much money was just

356
00:18:31,600 --> 00:18:33,700
given to people from the central
government? 

357
00:18:33,900 --> 00:18:38,300
We had 123 stimulus Checks Plus 
a bunch of other government 

358
00:18:38,300 --> 00:18:40,900
programs. 
Like enhanced unemployment we 

359
00:18:40,900 --> 00:18:43,200
had deferments and student loan 
payments. 

360
00:18:43,400 --> 00:18:46,500
We had all these events that are
coming to an end we don't have 

361
00:18:46,500 --> 00:18:48,600
the enhanced child tax credit 
anymore. 

362
00:18:48,600 --> 00:18:50,400
We're not getting enhanced 
unemployment. 

363
00:18:50,500 --> 00:18:54,300
The huge majority of stimulus 
has come to an end and even 

364
00:18:54,300 --> 00:18:57,400
though this injected trillions 
of dollars into the economy 

365
00:18:57,500 --> 00:19:00,900
which of course led to a 
one-time spur of And it has come

366
00:19:00,900 --> 00:19:03,800
to an end and of course, I 
predicted this will take a long 

367
00:19:03,800 --> 00:19:06,800
time to work its way through the
economy, but I think that this 

368
00:19:06,800 --> 00:19:09,300
eventually will work its way 
through the economy. 

369
00:19:09,600 --> 00:19:13,100
People are running low on money,
they're running out of the huge 

370
00:19:13,100 --> 00:19:16,100
influx of money that they once 
received human behavior, really 

371
00:19:16,100 --> 00:19:18,500
doesn't change. 
We can look at the savings rate 

372
00:19:18,500 --> 00:19:22,900
of US households, the savings 
rate spiked during 2020, but 

373
00:19:22,900 --> 00:19:25,800
that really shouldn't be 
considered a savings rate. 

374
00:19:26,000 --> 00:19:28,700
Because what happened was, 
people had direct deposits of 

375
00:19:28,700 --> 00:19:30,900
thousands of dollars. 
From the central government, 

376
00:19:30,900 --> 00:19:32,300
right into their checking 
account. 

377
00:19:32,300 --> 00:19:35,000
So in a way, I guess they were 
saving that money but that was 

378
00:19:35,000 --> 00:19:36,600
really money, just given to 
them. 

379
00:19:36,600 --> 00:19:39,700
If we look at the savings rate 
of households, it's completely 

380
00:19:39,700 --> 00:19:41,800
normalized. 
People are right back to the 

381
00:19:41,800 --> 00:19:44,500
same savings rate that they had 
previous to covid. 

382
00:19:44,500 --> 00:19:47,700
People are not saving any more 
money than they used to. 

383
00:19:47,700 --> 00:19:50,600
And even though we might have 
more money right now than we 

384
00:19:50,600 --> 00:19:53,600
used to, that is just a 
consequence of having leftover 

385
00:19:53,600 --> 00:19:55,900
cash from the government. 
And I do believe that that's 

386
00:19:55,900 --> 00:19:58,900
working its way out of people's 
pockets every single month. 

387
00:19:58,900 --> 00:20:01,500
So I also Considered the 
stimulus and the height and 

388
00:20:01,500 --> 00:20:04,800
savings and the better balance 
sheets of us households as a 

389
00:20:04,800 --> 00:20:08,400
largely one-time event. 
And I think that one time event 

390
00:20:08,400 --> 00:20:10,700
is running, its course. 
We can, of course, look at 

391
00:20:10,700 --> 00:20:13,600
supply issues, we know that 
there's docks out of California 

392
00:20:13,600 --> 00:20:17,000
that have dozens of these, huge 
shipping vessels that are 

393
00:20:17,000 --> 00:20:19,500
carrying hundreds and thousands 
of crates. 

394
00:20:19,500 --> 00:20:22,000
This isn't normally how 
Logistics and shipping work. 

395
00:20:22,000 --> 00:20:24,400
A lot of these companies can't 
offload because they can't find 

396
00:20:24,400 --> 00:20:26,700
enough employees. 
There's too many issues with the

397
00:20:26,700 --> 00:20:30,900
whole Logistics and this is 
something that is Also largely a

398
00:20:30,900 --> 00:20:33,700
one-time event. 
I think that over time, these 

399
00:20:33,700 --> 00:20:35,800
issues was shipping will 
diffuse. 

400
00:20:35,900 --> 00:20:38,500
It's already happening to some 
extent, there's less shipping 

401
00:20:38,500 --> 00:20:40,200
vessels. 
Now, waiting to be unloaded than

402
00:20:40,200 --> 00:20:42,600
there were six months ago. 
So I think a lot of the effects 

403
00:20:42,600 --> 00:20:46,000
purring this rapid inflation are
one-time events to argue that 

404
00:20:46,000 --> 00:20:49,000
they're not one-time events that
this will be sustained and it'll

405
00:20:49,000 --> 00:20:51,500
be something that comes in green
and Society. 

406
00:20:51,800 --> 00:20:54,100
You have to believe that this 
will go on forever. 

407
00:20:54,300 --> 00:20:57,600
The all these problems will 
persist and so far I remain 

408
00:20:57,600 --> 00:20:59,200
unconvinced that that's the 
case. 

409
00:20:59,200 --> 00:21:02,400
I think A valid argument to say 
that inflation might be higher 

410
00:21:02,400 --> 00:21:05,100
by the end of this year. 
I don't think you're crazy for 

411
00:21:05,100 --> 00:21:08,000
saying that because there are 
some valid arguments, we do have

412
00:21:08,000 --> 00:21:10,300
a war in Europe that's also 
exacerbating the problem of 

413
00:21:10,300 --> 00:21:13,000
inflation when Russia is 
attacking Ukraine. 

414
00:21:13,300 --> 00:21:16,500
This is causing even further 
issues to globalization to 

415
00:21:16,500 --> 00:21:19,900
supply problems especially with 
all the Commodities that Russia 

416
00:21:19,900 --> 00:21:22,300
supplies. 
So this may actually throw a 

417
00:21:22,300 --> 00:21:25,700
kink in the thesis that 
inflation is going to dissipate 

418
00:21:25,900 --> 00:21:29,300
but I believe that even with 
these issues there's so many 

419
00:21:29,300 --> 00:21:30,600
wonderful. 
Time events that caused 

420
00:21:30,600 --> 00:21:33,900
inflation to begin with that. 
I still think there's a decent 

421
00:21:33,900 --> 00:21:35,700
chance. 
It will be lower by the end of 

422
00:21:35,700 --> 00:21:38,100
this year. 
Like I said, I think there's a 

423
00:21:38,100 --> 00:21:41,300
90% chance that inflation will 
be a lot lower by the end of 

424
00:21:41,300 --> 00:21:43,700
this year. 
A 10% chance, I'll be wrong. 

425
00:21:43,800 --> 00:21:47,000
So, in summary, even though I've
disagreed with the FED for the 

426
00:21:47,000 --> 00:21:50,200
course of a year and a half and 
I have publicly explained why I 

427
00:21:50,200 --> 00:21:53,500
think inflation will prove to be
a more difficult challenge than 

428
00:21:53,500 --> 00:21:57,300
they initially anticipated. 
I find myself agreeing with 

429
00:21:57,300 --> 00:21:59,400
them. 
I finally agree with the fed and

430
00:21:59,600 --> 00:22:02,400
Forecast, I do agree with them. 
That inflation will decelerate. 

431
00:22:02,400 --> 00:22:04,500
It'll go down by the second half
of this year. 

432
00:22:04,600 --> 00:22:07,800
I think that's the case both 
because of the tougher comps and

433
00:22:07,800 --> 00:22:10,300
the one-time events. 
So, that's my prediction. 

434
00:22:10,300 --> 00:22:12,900
Now, of course, this is all a 
game of probabilities. 

435
00:22:13,200 --> 00:22:16,000
I think there's a high chance 
for inflation to go lower, but 

436
00:22:16,000 --> 00:22:17,600
there's always a chance I could 
be wrong. 

437
00:22:17,700 --> 00:22:19,600
Now, if you're asking the 
question Joseph, what if you're 

438
00:22:19,600 --> 00:22:22,500
wrong? 
What if that 10% chance happens 

439
00:22:22,700 --> 00:22:25,300
and inflation? 
Just spirals out of control when

440
00:22:25,300 --> 00:22:29,200
you go into an environment, like
the 1970s of hyperinflation, 

441
00:22:29,600 --> 00:22:32,200
Let's go ahead and just observe 
what I would do and that 

442
00:22:32,200 --> 00:22:35,800
situation the truth is I 
wouldn't do much. 

443
00:22:36,000 --> 00:22:40,200
I wouldn't change much because 
the best hedge against inflation

444
00:22:40,300 --> 00:22:43,400
is buying good companies. 
Good companies are the best 

445
00:22:43,400 --> 00:22:45,700
thing to invest in whether or 
not you're investing in a 

446
00:22:45,708 --> 00:22:48,800
hyperinflation High inflation or
low inflation. 

447
00:22:49,100 --> 00:22:52,400
You should always be buying good
companies, Terry Smith just 

448
00:22:52,400 --> 00:22:55,400
released his recent report where
he talks about good companies. 

449
00:22:55,600 --> 00:22:59,400
That is his investing strategy. 
Simply put its the by good. 

450
00:22:59,600 --> 00:23:03,100
Please don't overpay for them 
and then the most important step

451
00:23:03,100 --> 00:23:05,300
is to do nothing. 
The way that he defines a good 

452
00:23:05,300 --> 00:23:08,300
company are by many of the 
characteristics that define a 

453
00:23:08,308 --> 00:23:11,400
company that can also withstand 
High inflation, your return on 

454
00:23:11,400 --> 00:23:14,800
Capital, employed your gross 
margins or operating profits, 

455
00:23:15,000 --> 00:23:17,500
your cash conversion and your 
interest cover. 

456
00:23:17,800 --> 00:23:20,900
All these metrics of margins 
means that companies have 

457
00:23:20,900 --> 00:23:24,100
pricing power that they can fend
off inflation really well. 

458
00:23:24,200 --> 00:23:28,200
Terry Smith explains why he'll 
never own bad companies and he 

459
00:23:28,200 --> 00:23:30,800
defines Bad Company. 
He's as ones that have poor 

460
00:23:30,800 --> 00:23:34,600
cash, conversion poor margins, 
there in cyclical, Industries 

461
00:23:34,800 --> 00:23:38,000
companies, such as oil, 
companies companies, like BP. 

462
00:23:38,200 --> 00:23:42,000
He says, comparing L'Oreal with 
BP is an example of how cash 

463
00:23:42,000 --> 00:23:45,900
conversion was unusually. 
Good for bad companies and 

464
00:23:45,900 --> 00:23:49,700
again, he says that fun Smith 
will never own BP because BP is 

465
00:23:49,700 --> 00:23:52,900
not a good company. 
BP's cash conversion was at one 

466
00:23:52,900 --> 00:23:56,700
hundred and forty seven percent 
in the trailing 12 months but is

467
00:23:56,700 --> 00:24:01,000
only 66 percent on average. 
So be He over doubled their 

468
00:24:01,000 --> 00:24:05,300
margin over the past year, 
whereas lore'l, a good company. 

469
00:24:05,500 --> 00:24:08,700
Their cash conversion was still 
at 133, percent in the trailing 

470
00:24:08,700 --> 00:24:12,100
12 months, but was 110 percent 
on average. 

471
00:24:12,600 --> 00:24:17,100
So even though companies like BP
are having this massive increase

472
00:24:17,100 --> 00:24:20,800
in margins right now on average,
they're not great companies. 

473
00:24:20,800 --> 00:24:23,600
Their cash conversions are low. 
Their margins are low. 

474
00:24:23,700 --> 00:24:27,100
BP's cash conversion has been 
more volatile and its net income

475
00:24:27,100 --> 00:24:31,000
has half over the years. 
So Terry Smith doesn't violate 

476
00:24:31,000 --> 00:24:34,200
rule number one, which is buying
good companies, even if bad 

477
00:24:34,200 --> 00:24:36,700
companies are performing better 
than good companies. 

478
00:24:36,900 --> 00:24:40,700
And at times that does happen, 
this is one of those times if we

479
00:24:40,700 --> 00:24:43,300
look at the performance of the 
S&P 500 year-to-date. 

480
00:24:43,700 --> 00:24:47,400
Good companies like Microsoft, 
Apple, Google and Amazon are all

481
00:24:47,400 --> 00:24:49,300
on the read. 
Every one of them is down. 

482
00:24:49,300 --> 00:24:52,800
Year-to-date, the companies that
are not great companies, in the 

483
00:24:52,800 --> 00:24:55,900
energy sector. 
Like ExxonMobil, Chevron, these 

484
00:24:55,900 --> 00:24:58,000
are companies that have 
consistently lower margins and 

485
00:24:58,000 --> 00:24:59,800
net income than big. 
Back. 

486
00:25:00,100 --> 00:25:03,400
But these ones are doing really 
great right now they're up 30 

487
00:25:03,400 --> 00:25:07,300
and 40 percent and that might be
tempting for investors to jump 

488
00:25:07,300 --> 00:25:10,200
into these companies and try to 
get part of that rally. 

489
00:25:10,200 --> 00:25:12,600
But that's something that I 
don't plan on doing for brief 

490
00:25:12,600 --> 00:25:14,900
moments of time. 
Poor quality companies, like 

491
00:25:14,900 --> 00:25:18,400
ExxonMobil will outperform 
high-quality companies, Exxon 

492
00:25:18,400 --> 00:25:20,800
Mobil is up twenty seven point 
nine percent. 

493
00:25:20,800 --> 00:25:24,600
Year-to-date apples down five 
percent year-to-date if you zoom

494
00:25:24,600 --> 00:25:28,200
out over five years ExxonMobil 
is basically flat. 

495
00:25:28,400 --> 00:25:30,000
You can add in the Buttons 
there. 

496
00:25:30,000 --> 00:25:33,200
So maybe you're getting like a 
4% return but other than that, 

497
00:25:33,200 --> 00:25:36,200
the company's completely flat 
over a five-year timeline. 

498
00:25:36,300 --> 00:25:38,900
And if you zoom out with apple, 
you see a completely different 

499
00:25:38,900 --> 00:25:40,600
scenario. 
It's up three hundred and eighty

500
00:25:40,600 --> 00:25:42,600
percent. 
If you're a long-term investor, 

501
00:25:42,600 --> 00:25:45,200
you should be focused on 
long-term results, higher 

502
00:25:45,200 --> 00:25:48,200
quality companies defined by 
higher margins, better pricing 

503
00:25:48,200 --> 00:25:51,000
power better, net incomes and 
better, reinvestment 

504
00:25:51,000 --> 00:25:54,700
opportunities will outperform 
lower quality counterparts. 

505
00:25:54,800 --> 00:25:57,400
So when I get the choice between
investing in a company like 

506
00:25:57,400 --> 00:26:01,300
apple or Microsoft, or And 
Chevron, I'm going to pick up on

507
00:26:01,300 --> 00:26:03,500
Microsoft. 
So I understand if you're racing

508
00:26:03,500 --> 00:26:06,000
into these companies, they've 
had good returns over the past 

509
00:26:06,000 --> 00:26:09,400
couple of months, but I don't 
plan to every company that I own

510
00:26:09,400 --> 00:26:12,600
performs better over a long-term
time Horizon than the oil 

511
00:26:12,600 --> 00:26:14,300
companies. 
And then the Commodities and I 

512
00:26:14,300 --> 00:26:17,700
have a firm conviction that 
these companies will outperform 

513
00:26:17,800 --> 00:26:21,000
over the next five years. 
So I don't plan on racing into 

514
00:26:21,000 --> 00:26:23,800
lower Quality Companies because 
they're going through a little 

515
00:26:23,800 --> 00:26:27,400
spout, a couple months of good 
performance over the past five 

516
00:26:27,400 --> 00:26:29,200
years. 
Now the last step that I think 

517
00:26:29,200 --> 00:26:32,700
is the most important one and 
that I reiterate often because I

518
00:26:32,700 --> 00:26:34,900
think there's so much 
competition on this point in 

519
00:26:34,900 --> 00:26:37,300
YouTube. 
There's so many YouTubers that 

520
00:26:37,300 --> 00:26:41,600
can't stand doing nothing. 
They can't sit patiently for two

521
00:26:41,600 --> 00:26:43,700
seconds. 
They have to come out with 

522
00:26:43,700 --> 00:26:47,400
emergency updates and big 
changes to their portfolio and 

523
00:26:47,400 --> 00:26:49,700
the hottest stocks for the next 
2 seconds. 

524
00:26:49,700 --> 00:26:52,900
The most important step in 
investing is having the self 

525
00:26:52,900 --> 00:26:56,400
control of doing nothing of 
being able to buy into high 

526
00:26:56,400 --> 00:26:59,100
quality companies and actually 
let them work for you. 

527
00:26:59,500 --> 00:27:02,400
The companies grow let them do 
share BuyBacks, let them 

528
00:27:02,400 --> 00:27:05,400
generate free cash flow. 
Let them pay you dividends and 

529
00:27:05,400 --> 00:27:08,000
sit by idly and let these 
companies do all the heavy 

530
00:27:08,000 --> 00:27:10,000
lifting. 
I think it's so smart for Terry 

531
00:27:10,000 --> 00:27:13,800
Smith to highlight do nothing as
the third step to investing 

532
00:27:14,000 --> 00:27:17,900
having the discipline and the 
self-control to do nothing is 

533
00:27:17,900 --> 00:27:20,300
heavily underrated. 
I think it's the most important 

534
00:27:20,300 --> 00:27:22,600
part in investing. 
So that's my thoughts today. 

535
00:27:22,700 --> 00:27:25,600
I think that it's unlikely for 
inflation to continue to go up 

536
00:27:25,600 --> 00:27:29,200
the second half of this year. 
I think it will go down, but I'm

537
00:27:29,400 --> 00:27:31,600
vesting in a way where it 
doesn't really matter. 

538
00:27:31,600 --> 00:27:34,500
I'm investing in high quality 
companies that I think we'll do 

539
00:27:34,500 --> 00:27:37,700
really well during times of high
inflation or low inflation. 

540
00:27:37,800 --> 00:27:40,100
That's all my thoughts for now. 
Subscribe to the channel if you 

541
00:27:40,108 --> 00:27:42,600
want to see future updates and 
I'll talk to you next time.