1 00:00:00,400 --> 00:00:02,000 All right. Welcome back, everybody. 2 00:00:02,100 --> 00:00:03,500 I hope everyone's having a good week. 3 00:00:03,500 --> 00:00:05,800 I just want to do a quick video and check in. 4 00:00:05,800 --> 00:00:08,900 See how everyone's doing. It's been a busy week. 5 00:00:08,900 --> 00:00:12,500 I mean, just this last Monday morning, it feels like it's been 6 00:00:12,500 --> 00:00:15,300 a long time, but just this last Monday morning, I posted my most 7 00:00:15,300 --> 00:00:17,800 recent upload. And it was the often ignored 8 00:00:17,800 --> 00:00:21,100 truth about bonds. And in this video I went over 9 00:00:21,100 --> 00:00:23,900 and I explained I wasn't trying to advocate for bonds or say 10 00:00:23,900 --> 00:00:25,800 that everybody needs them in their portfolio. 11 00:00:26,000 --> 00:00:28,700 I just wanted to create a little bit more awareness about the 12 00:00:28,700 --> 00:00:31,400 role that they play. And I think it's especially 13 00:00:31,400 --> 00:00:33,600 useful and weeks like this week that we've been having. 14 00:00:33,900 --> 00:00:37,200 If I look at this, the S&P 500 is gone down about one point 15 00:00:37,200 --> 00:00:40,000 seven percent in the past five Market days. 16 00:00:40,300 --> 00:00:43,500 So it's gone down quite a bit. So I'm going to be talking about 17 00:00:43,500 --> 00:00:44,900 that. I know a lot of people are new 18 00:00:44,900 --> 00:00:47,400 to the stock market, they're entering in and now they're in 19 00:00:47,400 --> 00:00:49,300 the red. And so I'm going to be going 20 00:00:49,300 --> 00:00:52,000 over that in just talking about a few things that you might want 21 00:00:52,000 --> 00:00:57,400 to look at other things is I've had maybe over 200 comments on 22 00:00:57,400 --> 00:00:59,000 this past video. I mean it's hundreds and 23 00:00:59,000 --> 00:01:02,900 hundreds is All is probably a couple dozen emails. 24 00:01:02,900 --> 00:01:06,100 And so, in this video what I wanted to do for the main part 25 00:01:06,100 --> 00:01:08,600 of it was just go through pick a few of the questions that I 26 00:01:08,607 --> 00:01:10,300 thought were interesting and answer those. 27 00:01:10,500 --> 00:01:13,000 So I'll be doing that for the majority of the video and then 28 00:01:13,000 --> 00:01:15,600 there was one news item. I'm going to hit on on the end 29 00:01:15,600 --> 00:01:19,000 which was Carl Icahn suing Occidental Petroleum. 30 00:01:19,000 --> 00:01:21,800 That's one of my Holdings. He's a shareholder of the 31 00:01:21,808 --> 00:01:24,800 company as well as me. He owns a little bit more of it, 32 00:01:25,200 --> 00:01:27,500 but he's suing because he doesn't like this deal that 33 00:01:27,500 --> 00:01:29,900 Warren Buffett's doing and he doesn't like the situation. 34 00:01:30,100 --> 00:01:32,000 I just wanted to mention that at the end of the video, I'll go 35 00:01:32,000 --> 00:01:33,000 over it. All right. 36 00:01:33,000 --> 00:01:36,100 So first, let's jump into this week and see how things are 37 00:01:36,100 --> 00:01:39,600 going my portfolios down 1.75 percent. 38 00:01:39,600 --> 00:01:43,000 That's a little bit more in the S&P 500 mostly because real 39 00:01:43,000 --> 00:01:46,000 estate and utilities have been hit pretty hard this week. 40 00:01:46,900 --> 00:01:49,700 I mean I've been through this so many times, real estate has so 41 00:01:49,700 --> 00:01:52,300 much money to go in and out of it all the time that it gets a 42 00:01:52,300 --> 00:01:54,600 little old, it just money flows into it. 43 00:01:54,600 --> 00:01:57,200 Money flows out of it. And in the meantime, the 44 00:01:57,200 --> 00:01:59,100 important thing is whether these companies are doing well, 45 00:01:59,300 --> 00:02:01,000 whether they continue, To pay their dividends. 46 00:02:01,400 --> 00:02:05,000 That's really what matters if I look at this from week to week. 47 00:02:05,300 --> 00:02:08,199 And I'm always concerned about the market going down, or I'm 48 00:02:08,199 --> 00:02:11,100 happy when the market goes up. That's not how I do this 49 00:02:11,100 --> 00:02:13,500 portfolio. I've said over and over again 50 00:02:14,000 --> 00:02:18,400 that I do not really care or Focus about the capital 51 00:02:18,400 --> 00:02:22,100 appreciation. This Top Line market gains is 52 00:02:22,100 --> 00:02:24,600 capital appreciation. The bottom line is earn 53 00:02:24,600 --> 00:02:27,900 dividends from the past month I've earned $122 in dividends 54 00:02:27,900 --> 00:02:30,000 that's the past 30 days market gains. 55 00:02:30,100 --> 00:02:34,200 Hazard down $759. Now a lot of people say well how 56 00:02:34,200 --> 00:02:36,300 can you not care about capital appreciation? 57 00:02:36,300 --> 00:02:38,200 Right isn't that a big part of the portfolio? 58 00:02:38,800 --> 00:02:41,500 Sure I think capital appreciation will eventually 59 00:02:41,500 --> 00:02:44,600 follow the level of income. A portfolio puts out. 60 00:02:44,800 --> 00:02:48,100 So if I continually if I go to my chart here I'm tracking my 61 00:02:48,100 --> 00:02:50,600 dividends here. If I continually increase the 62 00:02:50,600 --> 00:02:54,000 amount that my portfolio pays out, I believe there will be a 63 00:02:54,000 --> 00:02:56,600 trend of capital appreciation, that follows that. 64 00:02:56,900 --> 00:02:58,900 But I think the capital appreciation is a lot more 65 00:02:58,900 --> 00:03:02,100 Jagged than this. This line of just increasing my 66 00:03:02,100 --> 00:03:05,600 dividend payments and the reason why is because if you look at 67 00:03:05,600 --> 00:03:08,900 the news, I mean, every little thing that happens Trump talking 68 00:03:08,900 --> 00:03:12,400 about terrifying Mexico were or the issues with the trade, war 69 00:03:12,400 --> 00:03:14,600 with China or all these different things going on. 70 00:03:14,800 --> 00:03:17,200 Every little thing seems to affect the market and scare 71 00:03:17,200 --> 00:03:18,500 people, One Direction or the other. 72 00:03:19,300 --> 00:03:22,500 Now, it's hard to keep track of and frankly, I don't think you 73 00:03:22,500 --> 00:03:24,600 should try to keep track of all the little changes in the 74 00:03:24,600 --> 00:03:28,100 market, but I do think that this is a good thing for people 75 00:03:28,100 --> 00:03:29,900 entering the market that are brand new to it. 76 00:03:30,800 --> 00:03:33,200 And I know that's a little bit counterintuitive because if you 77 00:03:33,200 --> 00:03:35,900 just enter the market and you see yourself losing money, right 78 00:03:35,900 --> 00:03:38,300 at the start, you might be thinking, how is that? 79 00:03:38,300 --> 00:03:41,800 Possibly a good thing, but I think it is and the reason why 80 00:03:42,100 --> 00:03:44,400 it gives you a good gauge of your risk tolerance. 81 00:03:44,800 --> 00:03:47,100 It's the same type of thing where you can read about 82 00:03:47,100 --> 00:03:49,600 surfing, you know, you can read about that in text books all 83 00:03:49,600 --> 00:03:52,300 day, but you do not experience it until you actually go out on 84 00:03:52,300 --> 00:03:54,500 the waves. And that's what it's like, 85 00:03:54,500 --> 00:03:56,200 filling the market, go down a little bit. 86 00:03:56,300 --> 00:04:00,000 This dip 1.7% isn't a whole lot. The market could go. 87 00:04:00,100 --> 00:04:04,000 Down 10% or 20%. And so, what you have to do is 88 00:04:04,000 --> 00:04:06,600 you have to look at your portfolio, see how your 89 00:04:06,600 --> 00:04:11,300 portfolio did with this downturn and adjust your risk based on 90 00:04:11,300 --> 00:04:12,700 that. So, if you look at this 91 00:04:12,700 --> 00:04:15,400 portfolio and you go, wow, this went down a lot, you know, a lot 92 00:04:15,400 --> 00:04:17,899 more than I'm comfortable, with for this type of downturn. 93 00:04:18,300 --> 00:04:21,000 That means you might want to bump up this section right here. 94 00:04:21,200 --> 00:04:22,500 This section that's in the green. 95 00:04:22,800 --> 00:04:25,600 If this downturn was a little bit more than you're expecting 96 00:04:25,600 --> 00:04:28,000 or it makes you uncomfortable, you're not happy with it. 97 00:04:28,200 --> 00:04:31,800 That type of thing you might Be better suited, bumping bonds up 98 00:04:31,800 --> 00:04:35,500 to 40 percent or 30 percent, right, adjusting your risk based 99 00:04:35,500 --> 00:04:38,200 off of what's going on with the market. 100 00:04:38,400 --> 00:04:40,500 And so, a lot of people everybody has different risk 101 00:04:40,500 --> 00:04:43,700 tolerances if you were fine with this and this doesn't bother you 102 00:04:43,707 --> 00:04:45,200 at all. And you're just buying more 103 00:04:45,200 --> 00:04:47,400 shares right now as it's going down and you're excited about 104 00:04:47,400 --> 00:04:50,100 it, then you might want to lower your amount of bonds. 105 00:04:50,200 --> 00:04:52,600 So it just depends on the person, depends on what you're 106 00:04:52,600 --> 00:04:55,500 doing. My portfolio, went down 1.75 107 00:04:55,500 --> 00:04:58,700 percent in the past week. If I go to the month view, it's 108 00:04:58,700 --> 00:05:01,600 down. 1.7% And percent. So a little bit less for the 109 00:05:01,600 --> 00:05:05,400 overall month, if I go to the month of the S&P 500, it's down 110 00:05:05,400 --> 00:05:09,300 4.8%. So, even though my portfolio 111 00:05:09,300 --> 00:05:13,200 went down a little bit more than S&P 500, just this week for the 112 00:05:13,200 --> 00:05:16,400 month view, it went down less than half as much, so it's still 113 00:05:16,400 --> 00:05:19,800 a lot more conservative than S&P, 500 over a little bit 114 00:05:19,800 --> 00:05:22,600 longer period of time. But regardless, I really do 115 00:05:22,600 --> 00:05:25,600 think if you're just getting in the market, now's the time to 116 00:05:25,600 --> 00:05:28,200 figure out your risk tolerance. Figure it out guys. 117 00:05:28,300 --> 00:05:32,500 If you have Lower risk tolerance if you're going wow I am 118 00:05:32,500 --> 00:05:35,300 stressing about the amount of money I'm losing already and you 119 00:05:35,300 --> 00:05:37,400 just enter the market and only have a couple thousand dollars 120 00:05:37,400 --> 00:05:39,000 in it. Imagine if you have a hundred 121 00:05:39,000 --> 00:05:42,500 thousand dollars and you lose five thousand in a day or 10,000 122 00:05:42,500 --> 00:05:44,300 a day. This is the time to figure out 123 00:05:44,300 --> 00:05:46,300 your risk tolerance. Adjust it. 124 00:05:46,400 --> 00:05:50,200 If you have bonds you can control risk a little bit by 125 00:05:50,200 --> 00:05:51,800 upping the amount of bonds you have. 126 00:05:52,200 --> 00:05:55,000 You can control Risk by lowering the amount of the things that 127 00:05:55,000 --> 00:05:57,600 are really volatile. You have Tech over here. 128 00:05:57,600 --> 00:06:01,000 That went down 7% Industrials went downstairs. 6%. 129 00:06:01,200 --> 00:06:03,700 The bonds are the ones that you probably can adjust risk the 130 00:06:03,700 --> 00:06:05,700 most by. I just think it's a good time to 131 00:06:05,700 --> 00:06:07,700 do that. We'll see where the market goes. 132 00:06:08,000 --> 00:06:11,700 One thing I have been thinking about doing in my bonds pie, I 133 00:06:11,700 --> 00:06:14,000 have these different Holdings and I think they're all great. 134 00:06:14,000 --> 00:06:17,600 I really like lqd but I've been thinking about adding another 135 00:06:17,600 --> 00:06:22,400 one called be n DX. And that it's vanguard's total 136 00:06:22,600 --> 00:06:27,100 international bond Market ETF. And the reason why is I read a 137 00:06:27,200 --> 00:06:30,900 article about how this is a currency hedge and it's a really 138 00:06:30,900 --> 00:06:34,300 good International hedge against the US currency or inflation or 139 00:06:34,300 --> 00:06:37,200 anything like that to happens as well as it pays a decent yield 140 00:06:37,200 --> 00:06:40,700 3% and it's heavily Diversified, it has a lot of assets under 141 00:06:40,700 --> 00:06:42,800 management. So it's really a liquid and 142 00:06:42,800 --> 00:06:45,500 Vanguard always has a low expense ratio so I've been 143 00:06:45,500 --> 00:06:49,200 considering adding this one to my bonds pie, but I haven't made 144 00:06:49,200 --> 00:06:50,800 up my mind on that. It's It's something I look at 145 00:06:50,800 --> 00:06:53,000 into other changes to my portfolio. 146 00:06:53,000 --> 00:06:55,200 I will mention because I know a lot of people are following my 147 00:06:55,200 --> 00:06:57,700 portfolio. You'll notice some of the actual 148 00:06:57,700 --> 00:06:59,700 and Target our little bit adjusted. 149 00:07:00,100 --> 00:07:02,000 So I started off with real estate. 150 00:07:02,000 --> 00:07:05,300 When I only had like I say only, I mean it's all relative but 151 00:07:05,300 --> 00:07:08,800 when I had like five or ten thousand I started off with 33% 152 00:07:08,800 --> 00:07:12,100 real estate and as I've been gaining more and more money, 153 00:07:12,400 --> 00:07:15,200 I've been slowly lowering my exposure to real estate. 154 00:07:15,400 --> 00:07:20,100 What I did was I put it so that the targets at 25% and then I 155 00:07:20,200 --> 00:07:23,300 Added in percentages, to all these ones to adjust for it. 156 00:07:23,500 --> 00:07:26,300 And I just want to, I was really Overexposed. 157 00:07:26,300 --> 00:07:29,000 You know, I had a really large amount of real estate and I want 158 00:07:29,000 --> 00:07:31,800 to balance out the portfolio a little bit more so that I have 159 00:07:31,800 --> 00:07:34,500 these other sectors a little bit more exposure to these other 160 00:07:34,500 --> 00:07:37,300 sectors. So, other than those changes to 161 00:07:37,308 --> 00:07:39,700 portfolio, not too much has gone on. 162 00:07:39,700 --> 00:07:43,100 I mean, with this type of week, yeah, we went down, we'll see 163 00:07:43,100 --> 00:07:45,100 what happens. Nobody can see the future with 164 00:07:45,100 --> 00:07:46,800 it. The big thing, I pay attention 165 00:07:46,800 --> 00:07:50,000 to like I said, is this income? I want this to continue to go 166 00:07:50,000 --> 00:07:52,500 up. Up the thing that concerns me is 167 00:07:52,500 --> 00:07:54,800 when companies cut their dividends that's what I hate to 168 00:07:54,800 --> 00:07:57,300 see. I don't really care to see, this 169 00:07:57,300 --> 00:07:59,400 doesn't bother me. In fact if this happens and 170 00:07:59,400 --> 00:08:01,100 companies are doing great and they're not cutting their 171 00:08:01,100 --> 00:08:03,800 dividends, that's great, we get a better deal on the companies 172 00:08:03,800 --> 00:08:07,600 were buying but if this happens and it's an actual indicator of 173 00:08:07,600 --> 00:08:10,900 something serious going on and companies cut their Dividends 174 00:08:10,900 --> 00:08:13,700 are struggling to survive. That's when things actually 175 00:08:13,800 --> 00:08:16,200 become a problem, right? So, right now, I'm not really 176 00:08:16,200 --> 00:08:19,400 too concerned about this, but anyway, let's move on to some 177 00:08:19,400 --> 00:08:22,400 questions. Alrighty, so you can write in. 178 00:08:22,400 --> 00:08:24,200 It's a the emails Joseph Carlson show. 179 00:08:24,200 --> 00:08:28,200 Gmail.com, Joseph Carlson show at gmail.com and I'll throw up. 180 00:08:28,200 --> 00:08:31,400 The first question is from Amelia, she says, is a new 181 00:08:31,400 --> 00:08:34,200 investor being able to get some dividends rolling in and 182 00:08:34,200 --> 00:08:37,000 starting out as a little rough. Especially when the Mark is on a 183 00:08:37,008 --> 00:08:40,400 decline is increasing our contributions to our portfolio. 184 00:08:40,400 --> 00:08:43,900 The only way to offset that loss or do we ride the wave and trust 185 00:08:43,900 --> 00:08:46,600 that our investments will pull us through if we continually 186 00:08:46,600 --> 00:08:49,700 contribute normally whether it's weekly monthly excetera, thank 187 00:08:49,700 --> 00:08:50,800 you. Okay. 188 00:08:51,500 --> 00:08:53,700 So yeah. I mean, it is dividend investing 189 00:08:53,700 --> 00:08:55,900 starting off as rough to begin with, because your Dividends are 190 00:08:55,900 --> 00:08:58,200 so small to begin with. There's not a whole lot of 191 00:08:58,200 --> 00:09:00,100 compounding that happens right at the start. 192 00:09:00,300 --> 00:09:02,000 It takes a lot to get the ball rolling. 193 00:09:02,400 --> 00:09:05,500 Now, as far as the question part of it, where they were she says 194 00:09:05,900 --> 00:09:08,600 is increasing our contributions to our portfolio. 195 00:09:08,600 --> 00:09:12,200 The only way to offset the loss. That's one way, that's not the 196 00:09:12,200 --> 00:09:14,600 only way. If you're concerned about the 197 00:09:14,600 --> 00:09:18,900 market, going down this past week, it's gone down 1.7%. 198 00:09:18,900 --> 00:09:21,000 If we actually let me go over to A graph here. 199 00:09:21,500 --> 00:09:25,300 So if I go to the one month, In the past month, it's gone down 200 00:09:25,300 --> 00:09:28,700 about 4.8%. If we zoom out to six months, 201 00:09:30,000 --> 00:09:33,400 Past six months gone down, just point to 6%. 202 00:09:33,700 --> 00:09:39,300 Then if we go a year to date, the market is up 10.8%. 203 00:09:39,300 --> 00:09:43,100 Almost 11%. Now along this timeline, it 204 00:09:43,100 --> 00:09:45,700 totally depends on where you just started investing. 205 00:09:45,900 --> 00:09:48,800 So, if you started investing long care, you've made money. 206 00:09:49,000 --> 00:09:53,500 If you started investing along care, you've lost money and you 207 00:09:53,500 --> 00:09:55,900 can't really do anything to control for that. 208 00:09:55,900 --> 00:09:58,800 A lot of that is just luck of when you start investing, most 209 00:09:58,800 --> 00:10:02,300 of the companies, my Folio or S&P 500, Blue Chip companies, so 210 00:10:02,300 --> 00:10:04,700 they're going to follow the S&P 500 pretty closely. 211 00:10:05,100 --> 00:10:08,700 Now, as far as mitigating the losses or what to do in the 212 00:10:08,700 --> 00:10:11,800 downturns, if you bought solid companies that you're really 213 00:10:11,800 --> 00:10:14,800 comfortable with owning for the next 10 or 20 years, you can't 214 00:10:14,800 --> 00:10:16,800 be looking at a one month time period. 215 00:10:17,000 --> 00:10:18,600 You have to understand these companies. 216 00:10:18,800 --> 00:10:21,200 They're prepared to go through recessions and downturns. 217 00:10:21,200 --> 00:10:23,300 They're prepared for that and they've done it before. 218 00:10:23,500 --> 00:10:27,600 Most of the companies, I own, they went through 2009, the 219 00:10:27,600 --> 00:10:30,400 worst Financial recession we've ever had and Survived it. 220 00:10:30,400 --> 00:10:32,700 And so there's no reason to suggest they won't be able to 221 00:10:32,700 --> 00:10:35,500 survive the next one. It's whether you can survive. 222 00:10:35,500 --> 00:10:38,800 It is the real question. I think most companies I own 223 00:10:39,100 --> 00:10:40,300 will probably do. Okay. 224 00:10:40,300 --> 00:10:42,700 Some of them might fall off but a lot of them will do okay? 225 00:10:43,000 --> 00:10:46,000 And so it's, whether you can survive the downturn and keep 226 00:10:46,000 --> 00:10:48,900 invested during that time. One thing you can do, you can 227 00:10:48,900 --> 00:10:50,700 dollar cost average in. Like you're saying keep 228 00:10:50,700 --> 00:10:54,100 investing during a downturn, but I really think it's a time to 229 00:10:54,100 --> 00:10:56,900 just pick your risk tolerance. You have to figure out your risk 230 00:10:56,900 --> 00:11:00,800 tolerance if this is a lot to handle, Like this past week or 231 00:11:00,800 --> 00:11:03,200 the past few weeks of it going down 4%. 232 00:11:03,900 --> 00:11:08,900 Again, if we look at this graph, year-to-date it's up 11% there's 233 00:11:08,900 --> 00:11:11,600 nothing to stop this Market from going down 11%. 234 00:11:11,900 --> 00:11:14,500 So if you look at it and you would be destroyed, if it went 235 00:11:14,500 --> 00:11:18,500 down, 11% increase the amount of fixed income, you have increase 236 00:11:18,500 --> 00:11:22,200 the amount of bonds that you have, by investor grade bonds 237 00:11:22,200 --> 00:11:25,500 treasury bonds and you know, International bonds and those 238 00:11:25,500 --> 00:11:28,100 type of things to help help soften those blows. 239 00:11:28,400 --> 00:11:31,100 So you can just pick a More conservative portfolio, 240 00:11:31,100 --> 00:11:33,500 allocation, there's nothing wrong with that if you feel more 241 00:11:33,500 --> 00:11:36,800 comfortable with that. Okay, so the next question is a 242 00:11:36,800 --> 00:11:38,300 good one. She says hi Joseph. 243 00:11:38,300 --> 00:11:41,000 I would like to know where m 1 Finance gets its income if it's 244 00:11:41,000 --> 00:11:44,000 not from transactions. I assume some of it is from the 245 00:11:44,000 --> 00:11:45,800 cache on the account that is below $10. 246 00:11:46,400 --> 00:11:48,700 I like your conservative sensible approach to investing. 247 00:11:48,700 --> 00:11:49,700 Thank you. Okay. 248 00:11:49,700 --> 00:11:51,500 So, how does M1 make money right? 249 00:11:51,500 --> 00:11:53,300 There are free broker, they don't charge anything for 250 00:11:53,300 --> 00:11:56,000 transactions. And there's no like hidden fees 251 00:11:56,000 --> 00:11:59,000 anywhere either. And that was one of the biggest 252 00:11:59,000 --> 00:12:00,500 questions I had. When I signed up for him on 253 00:12:00,500 --> 00:12:02,100 finances, how on Earth they made money? 254 00:12:02,400 --> 00:12:05,400 And I did a lot of research on it and there is A really 255 00:12:05,400 --> 00:12:09,200 sensible answer to it. So one thing is most even 256 00:12:09,200 --> 00:12:12,200 traditional Brokers they don't make most of their money on 257 00:12:12,200 --> 00:12:15,900 transaction fees, they make maybe like from 30, you know, 20 258 00:12:15,900 --> 00:12:18,100 to 40 percent of it on transaction fees. 259 00:12:18,500 --> 00:12:21,600 Now those transaction fees are going down and down because 260 00:12:21,600 --> 00:12:24,900 Brokers like M1 are pushing the whole industry to reduce the 261 00:12:24,900 --> 00:12:28,100 amount of transaction fees are charging, but where they do make 262 00:12:28,100 --> 00:12:29,500 their money. There's lots of ways that 263 00:12:29,500 --> 00:12:32,900 Brokers monetize, your money. The cash on the account is one 264 00:12:32,900 --> 00:12:36,000 way, I don't think M1 makes, Literally a lot of money that 265 00:12:36,000 --> 00:12:38,400 way because anything over ten dollars can be invested. 266 00:12:38,600 --> 00:12:42,000 So I don't think they have tons of money sitting as cash, but 267 00:12:42,000 --> 00:12:43,800 that's definitely one way that they make money. 268 00:12:44,400 --> 00:12:47,700 Another way is called lending shares, which there's other 269 00:12:47,700 --> 00:12:52,200 Brokers that allow for short selling win mm1, Finance lens, 270 00:12:52,200 --> 00:12:56,300 your shares to short sellers, they charge interest on that an 271 00:12:56,300 --> 00:12:59,000 M1 Finance Pockets. The interest that they charge 272 00:12:59,000 --> 00:13:01,800 that helps pay for em on finance, so you don't get the 273 00:13:01,800 --> 00:13:04,800 interest on your lended shares and one Finance, does they? 274 00:13:04,900 --> 00:13:07,500 A monetize your shares that way, it doesn't affect you. 275 00:13:07,500 --> 00:13:10,700 Although like lending shares is a totally common practice that 276 00:13:10,700 --> 00:13:13,300 every broker virtually does. So that's one way to make money 277 00:13:13,300 --> 00:13:15,900 is lending shares another's. Cash on account. 278 00:13:16,200 --> 00:13:19,000 Another selling order flows, they make money that way as 279 00:13:19,000 --> 00:13:22,400 well. Another one is M1 Finance has m 280 00:13:22,400 --> 00:13:25,600 1 bar 0, which is a way that you can get margin on your account 281 00:13:25,600 --> 00:13:28,800 and you pay interest fee on. That's like a 4.25 percent 282 00:13:28,800 --> 00:13:31,300 interest on margin. So that's like a fifth way they 283 00:13:31,300 --> 00:13:34,400 make money and then another way that they're going to make money 284 00:13:34,400 --> 00:13:37,600 is They're coming out with M1 spend which is their banking 285 00:13:37,600 --> 00:13:40,900 functionality and then they have a premium version coming out. 286 00:13:40,900 --> 00:13:44,300 That's a yearly membership that gives you a bunch of perks, high 287 00:13:44,300 --> 00:13:46,800 yield savings account or high-yield checking account all 288 00:13:46,800 --> 00:13:49,800 these different things and that's called M1 plus and that's 289 00:13:49,808 --> 00:13:52,000 going to be like I don't know it's like 50 or 100 bucks a year 290 00:13:52,000 --> 00:13:54,100 or something like that to get all these extra perks. 291 00:13:54,100 --> 00:13:57,200 They're not changing the price of the whole base investing 292 00:13:57,200 --> 00:14:00,100 system so that will always be free but they have I mean right 293 00:14:00,100 --> 00:14:02,100 there that's like five or six different ways that they can 294 00:14:02,100 --> 00:14:03,900 monetize so they have a lot of ways of making money. 295 00:14:04,900 --> 00:14:07,800 These aren't one of them that they want to pursue and I think 296 00:14:07,800 --> 00:14:10,600 the whole industry is going to move more towards that way, a 297 00:14:10,600 --> 00:14:13,600 lot of traditional Brokers that were charging fees or 298 00:14:13,700 --> 00:14:17,100 drastically reducing them. Okay so the next question is 299 00:14:17,100 --> 00:14:19,300 from Brad. He says, can you please explain 300 00:14:19,300 --> 00:14:22,100 in a video? Why companies and S&P 500 301 00:14:22,100 --> 00:14:24,300 especially like Amazon do not pay dividends. 302 00:14:24,900 --> 00:14:29,400 So this is a this is kind of a question about why companies 303 00:14:29,400 --> 00:14:32,200 return value to shareholders in different ways. 304 00:14:32,200 --> 00:14:34,800 There's different ways companies can return value to 305 00:14:34,900 --> 00:14:37,700 Shareholders. They can either give part of the 306 00:14:37,708 --> 00:14:40,300 cash flow that they're generating through dividends or 307 00:14:40,300 --> 00:14:43,800 they can try to increase their overall company's growth and 308 00:14:43,800 --> 00:14:46,600 standing and market capitalization through 309 00:14:46,600 --> 00:14:49,900 expansion. Now, there's some companies that 310 00:14:49,900 --> 00:14:51,500 I think it's great. They pay dividends those are the 311 00:14:51,500 --> 00:14:54,200 ones I bet invest in their companies that have excess 312 00:14:54,200 --> 00:14:57,700 amount of cash flow, more than necessary to reinvest in 313 00:14:57,700 --> 00:15:00,900 themselves and expand what they do at that excess cash flow, is 314 00:15:00,900 --> 00:15:03,400 they return value to their shareholders by dispersing? 315 00:15:03,400 --> 00:15:06,100 Some of that cash flow to the investors to us. 316 00:15:06,100 --> 00:15:10,000 Those are dividends now, there's other companies like Amazon and 317 00:15:10,000 --> 00:15:13,200 Amazon has such a smart team. They have so many smart people 318 00:15:13,200 --> 00:15:16,000 working there, and they're expanding into so many different 319 00:15:16,000 --> 00:15:20,600 Industries all at once that they need 100% of their cash to be 320 00:15:20,600 --> 00:15:24,000 able to fuel that growth. And they're thinking, well, we 321 00:15:24,000 --> 00:15:27,000 don't need to return value to shareholders through cash 322 00:15:27,000 --> 00:15:30,100 because if you can return value to shareholders by rapidly 323 00:15:30,100 --> 00:15:33,200 expanding into many, as many different Industries as we can, 324 00:15:33,800 --> 00:15:36,100 and that's the goal behind it. It's a different strategy. 325 00:15:36,400 --> 00:15:39,400 They're they're both successful. There's some people that do 326 00:15:39,400 --> 00:15:41,800 growth companies and there can be a lot of success. 327 00:15:41,800 --> 00:15:44,500 That way there's people that do Dividend strategy and there can 328 00:15:44,500 --> 00:15:46,900 be a lot of success. That way there's different 329 00:15:46,900 --> 00:15:48,900 benefits and pros and cons to each of them. 330 00:15:49,100 --> 00:15:52,200 But you have to look at what's the best way of company can 331 00:15:52,200 --> 00:15:55,300 return value to it shareholder, for some companies that's paying 332 00:15:55,300 --> 00:15:57,200 dividends for some, it's growing. 333 00:15:57,400 --> 00:16:00,800 Amazon is one of the companies that has decided it can return 334 00:16:00,800 --> 00:16:04,300 more value to its shareholders by reinvesting in itself. 335 00:16:04,300 --> 00:16:07,600 And Going rather than sharing some of its cash degenerates. 336 00:16:08,200 --> 00:16:10,500 Okay, so I'll do one more question. 337 00:16:10,600 --> 00:16:13,000 I have another like six lined up, but this could go on for 338 00:16:13,000 --> 00:16:15,100 another hour for let it. So, I'll answer the others in 339 00:16:15,100 --> 00:16:17,500 another video. This last one is from Dillon. 340 00:16:17,500 --> 00:16:20,300 He says, doesn't growth of a stock and Trend matter. 341 00:16:20,600 --> 00:16:22,500 You always talk about how you don't care about capital 342 00:16:22,500 --> 00:16:24,900 appreciation. But if a stock takes a 15 to 20 343 00:16:24,900 --> 00:16:27,900 percent loss in a year, and you're given is 2 to 3%. 344 00:16:28,200 --> 00:16:30,600 Doesn't it kind of take away from return on investment 345 00:16:30,700 --> 00:16:32,500 curious on your take on this. Thanks man. 346 00:16:33,300 --> 00:16:34,900 All right Dylan. So that's a good question. 347 00:16:35,200 --> 00:16:38,700 I have said before, I'd it's not that I don't care about capital 348 00:16:38,700 --> 00:16:41,300 appreciation. It's that I don't use it as a 349 00:16:41,300 --> 00:16:45,000 gauge of how my portfolios doing because capital appreciation. 350 00:16:45,100 --> 00:16:49,000 I mean it's decided on investor sentiment at least in the short 351 00:16:49,000 --> 00:16:53,000 term investor sentiment and emotion plays a huge role on 352 00:16:53,200 --> 00:16:55,700 capital appreciation. Investor's just moving their 353 00:16:55,700 --> 00:16:59,500 money in and out of a company investors decide capital 354 00:16:59,500 --> 00:17:02,700 appreciation. The company decides the dividend 355 00:17:03,000 --> 00:17:07,099 Do you see the difference there, investors and external Force are 356 00:17:07,099 --> 00:17:08,400 deciding the capital of the company. 357 00:17:08,400 --> 00:17:12,300 While internally, the company itself is deciding the dividend. 358 00:17:12,300 --> 00:17:15,900 So what I'm doing is saying, I'd rather focus on the thing that 359 00:17:15,900 --> 00:17:18,900 the company is actually deciding, they're the ones that 360 00:17:18,908 --> 00:17:20,900 have the balance sheet, they're the ones that are deciding how 361 00:17:20,900 --> 00:17:23,500 much of a dividend they pay. They don't decide how much their 362 00:17:23,500 --> 00:17:25,000 company is worth by capital appreciation. 363 00:17:25,000 --> 00:17:28,099 That's investors. I think investors are much more 364 00:17:28,099 --> 00:17:30,600 finicky. A much, much more emotional than 365 00:17:30,600 --> 00:17:32,900 the executive team at these different companies that still 366 00:17:33,000 --> 00:17:35,600 Over the balance sheets. So what I'm saying is that I 367 00:17:35,600 --> 00:17:39,200 focus on the balance sheets, I focus on the dividends that are 368 00:17:39,200 --> 00:17:43,100 reflection of that. Now, we can go to your example, 369 00:17:43,100 --> 00:17:47,300 specifically, for company loses 20% of its value and it's paying 370 00:17:47,300 --> 00:17:50,100 like a 3% dividend. What does that do to the 371 00:17:50,100 --> 00:17:52,200 dividend yield? When a company goes down in 372 00:17:52,200 --> 00:17:54,100 value. But it's paying a, you know, it 373 00:17:54,100 --> 00:17:58,900 was paying a 3% dividend that yield increases and what happens 374 00:17:58,900 --> 00:18:02,000 when a company, a good company pays a high dividend that 375 00:18:02,000 --> 00:18:04,000 attracts more. Is in one more investors. 376 00:18:04,000 --> 00:18:06,700 Buy into a company that drives up the price of the share, which 377 00:18:06,700 --> 00:18:08,200 increases the capital appreciation. 378 00:18:08,600 --> 00:18:12,300 So, dividends do increase the capital appreciation over time. 379 00:18:12,500 --> 00:18:15,600 If a company is able to sustainably increase the 380 00:18:15,600 --> 00:18:19,300 dividend over time, the capital appreciation will follow because 381 00:18:19,300 --> 00:18:22,900 investors they seek yield at. They want to find yield and when 382 00:18:22,900 --> 00:18:26,200 companies are able to provide that investors will follow, now 383 00:18:26,200 --> 00:18:29,500 there's some companies that will have a high yield and investors 384 00:18:29,500 --> 00:18:31,200 still go. No way I'm in put my money in 385 00:18:31,200 --> 00:18:33,700 that, you know, you might have GameStop As an example. 386 00:18:34,100 --> 00:18:36,900 And the reason that happens is because there's things actually 387 00:18:36,900 --> 00:18:40,500 going wrong with the company. There's actually decaying 388 00:18:40,600 --> 00:18:43,100 fundamentals in the company and that will happen. 389 00:18:43,100 --> 00:18:45,700 Whether you have capital appreciation, Focus or not. 390 00:18:45,700 --> 00:18:47,400 So the people that are just growth investors. 391 00:18:47,700 --> 00:18:50,600 They're going to have some companies that fall because the 392 00:18:50,600 --> 00:18:52,500 fundamentals Decay. So there's nothing you can do 393 00:18:52,500 --> 00:18:55,600 about that. But my strategy is not to focus 394 00:18:55,600 --> 00:18:59,100 on the whims of the investors is to focus on the actual companies 395 00:18:59,100 --> 00:19:02,100 that things that are decided internally and see how their 396 00:19:02,100 --> 00:19:06,000 fundamentals are. I think if a company is able to 397 00:19:06,008 --> 00:19:08,800 continually increase its dividend payment year over year 398 00:19:09,000 --> 00:19:12,300 and keep that as a fundamental strength of the company capital 399 00:19:12,300 --> 00:19:15,000 appreciation will follow because investors Will Follow That 400 00:19:15,000 --> 00:19:18,000 increasing yield. So that's the basic premise of 401 00:19:18,000 --> 00:19:21,100 this investing strategy. So that's all the questions I'll 402 00:19:21,100 --> 00:19:22,800 do. Let's talk about the last thing 403 00:19:22,800 --> 00:19:26,000 which is a news. I had a touch on this new story, 404 00:19:26,000 --> 00:19:27,100 so I thought it was pretty great. 405 00:19:27,100 --> 00:19:30,900 This is a follow-up to the whole Occidental Petroleum, buying 406 00:19:30,900 --> 00:19:33,800 Anadarko deal. I talked about this like a week 407 00:19:33,800 --> 00:19:37,200 or two ago about how Occidental Petroleum is buying another 408 00:19:37,200 --> 00:19:40,700 company around the same size of them called Anadarko. 409 00:19:41,100 --> 00:19:44,400 And in order to make the deal work they had to find Outside 410 00:19:44,400 --> 00:19:47,200 funding and they found it with Warren Buffett and Warren 411 00:19:47,200 --> 00:19:49,400 Buffett. Made out a wonderful deal for 412 00:19:49,400 --> 00:19:52,700 himself where he got preferred shares and higher dividend yield 413 00:19:52,700 --> 00:19:56,400 and the common shareholder. And the consensus on this was 414 00:19:56,800 --> 00:20:00,300 that the common shareholder of Occidental, got kind of screwed 415 00:20:00,300 --> 00:20:02,300 in the deal. They were they got the bad end 416 00:20:02,300 --> 00:20:04,700 of the deal. And that showed I mean the stock 417 00:20:04,700 --> 00:20:07,200 went down like 40% so I'm way down on it. 418 00:20:07,300 --> 00:20:09,100 Luckily, it's a very small holding of mine. 419 00:20:09,500 --> 00:20:12,400 Now this guy right here is Carl Icahn. 420 00:20:12,400 --> 00:20:15,500 He's worth about 17 billion dollars, he's an active 421 00:20:15,500 --> 00:20:18,100 investor. And what I didn't know is that 422 00:20:18,100 --> 00:20:20,400 he is a shareholder in Occidental. 423 00:20:20,600 --> 00:20:24,300 So he disclosed that he holds 1.6 billion dollars of 424 00:20:24,300 --> 00:20:26,700 Occidental shares. Nearly 5% of the company. 425 00:20:27,200 --> 00:20:31,000 He's not happy about this deal at all he calls it hugely 426 00:20:31,000 --> 00:20:34,400 overpriced he's suing. Occidental, you know, he's 427 00:20:34,400 --> 00:20:36,700 trying to get paperwork and trying to figure out what's 428 00:20:36,700 --> 00:20:39,900 going on because he thinks that this deal is fundamentally 429 00:20:39,900 --> 00:20:42,200 misguided. So way that he put it and then 430 00:20:42,200 --> 00:20:46,200 he took a big jab at the leadership saying quote a 431 00:20:46,200 --> 00:20:50,100 90-minute deal negotiation with one of History's can taste 432 00:20:50,100 --> 00:20:52,400 investors. I mean like most shrewd 433 00:20:52,400 --> 00:20:55,600 investors is no place to gain merger and acquisition 434 00:20:55,600 --> 00:20:57,700 experience at least if you care about protecting your 435 00:20:57,700 --> 00:21:01,500 stockholders he's talking about their negotiation with Warren 436 00:21:01,500 --> 00:21:02,900 Buffett. He pretty much says it. 437 00:21:03,000 --> 00:21:05,600 Warren Buffett took advantage of them because they're green. 438 00:21:05,600 --> 00:21:06,600 They don't know what they're doing. 439 00:21:06,600 --> 00:21:10,100 And Warren Buffett is a super experience with this, which is 440 00:21:10,100 --> 00:21:12,000 kind of what happened. Warren Buffett really got a 441 00:21:12,008 --> 00:21:14,800 great deal with this. The common shareholder did not 442 00:21:14,800 --> 00:21:17,600 get a great deal with this and neither did mr. 443 00:21:17,600 --> 00:21:20,000 Icahn, who owns, one point six billion dollars. 444 00:21:20,000 --> 00:21:22,800 So he's Furious about it. I think he's going to try to 445 00:21:22,800 --> 00:21:25,400 stir things up and you know, he's obviously doing a lawsuit. 446 00:21:25,500 --> 00:21:27,700 I don't think he's going to be successful at stopping this deal 447 00:21:27,700 --> 00:21:29,100 though. I think it's going to continue 448 00:21:29,100 --> 00:21:31,000 to go through so we'll see what happens. 449 00:21:31,300 --> 00:21:32,800 We'll see what happens but I thought it was interesting. 450 00:21:32,900 --> 00:21:35,400 To mention that anyway. Well, I hope that you guys have 451 00:21:35,400 --> 00:21:37,400 a good weekend. I will see you next time.