April 1, 2025 • 35 mins
Ever feel like the investment world is just one big emotional rollercoaster? Well, you’re not alone! We’re diving into the nitty-gritty of why the average investor is at a serious disadvantage and how to flip the script.
We kick things off by addressing the emotional rollercoaster that is the stock market, likening it to an emotional teenager throwing tantrums over price fluctuations. It’s all about understanding that while the market might be throwing a fit, we don’t have to join the chaos. We dive deep into the common pitfalls that trap everyday investors, highlighting the lack of knowledge about their own investments and the emotional decision-making that often leads to financial disaster.
Our conversation shifts to the practical side of investing, where we share Travis' top-ten actionable tips that folks can implement right away to regain control over their investment strategies. We’re talking about understanding what you own, looking past the price tag, and recognizing the real value of your investments
Takeaways:
- Investing is more than just buying stocks; it's about owning a piece of a company that should generate future profits, and knowing how to evaluate that is key.
- Understanding your investment statements is crucial; they should tell you not just the price, but the value of what you own and the story behind it.
- Don't let price fluctuations dictate your investment decisions; focus on the underlying value and long-term potential of the companies you invest in.
- If you're not confident in a company's future, or the leadership behind it, it might be time to reconsider your investment strategy altogether.
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About Your Co-Hosts:
Travis Maus has been in financial services for over fifteen years. He is a Senior Wealth Manager and Chief Executive Officer at S.E.E.D. Planning Group. Travis also hosts the Unleashing Leadership Podcast, where he dissects some of his favorite books on leadership and how you can apply it to your business or life.
Steve Campbell has over a decade of industry experience and is a Senior Marketing Director at S.E.E.D. Planning Group. Steve also hosts the One Big Thing Podcast, an interview-style show meant to inspire and encourage 30 and 40-year-olds going through difficult seasons of navigating marriage, raising kids, and growing personally.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Foreign.
Welcome to Ditch the Suitspodcast, where we share insights
nobody in the financialservices industry wants you to know
about.
We're here to help you get themost from your money in life.
So buckle up and welcome toDitch the Suits.
(00:21):
All right, so we're going toget back into this a guide to buying
Investments.
And we're still talking aboutwhy the market acts like an emotional
teenager or even a childyounger than a teenager sometimes
with its tantrums.
But in this episode, we'regoing to discuss what most people
are getting wrong about theirinvestments and why the average investor
(00:42):
is at a huge disadvantage.
So I think.
I think we talked a lot abouthow people get things wrong in the
last episode.
We're going to talk about whyyou're at a disadvantage right now
and what you can actually doabout it.
We're going to give you a listof about 10 things by the end of
this episode that you can dotop 10 with Travis to get control
(01:04):
of your investments.
Love that.
So that's kind of cool.
I don't know if we want tomake that a PDF that somebody can
download or something.
Hey, we will.
We do things on the fly.
We are going to make that a PDF.
Go to ditch the suits.com,send us a.
Send us a comment, and we willget you Travis's Top 10 Things, a
guide to buying Investments.
How about that?
Oh, sure.
And it'll be free.
We'll make it free.
What a time to be alive.
(01:25):
Yep.
Let's go.
Okay, so we talked about theYYY syndrome last time and going
on this kind of picking on the kids.
We're gonna do na na na I'mnot listening syndrome today.
And, and how you may, youknow, again, how you may be sabotaging
your investments in general.
Well, and we had briefly,briefly touched on it at the conclusion
(01:46):
of the last episode, talkingabout individuals not really understanding
what they're invested in.
And that go, like, how do youactually read these investment statements?
So when you have a Fidelity, aCharles Schwab, a 401k, an IRA, like,
how should you actually lookat an investment statement?
And I'm super excited becauseyou do such a great job of not only
helping clients understandstatements, positions, what things
(02:08):
mean, but also just trainingour newer planners on the importance
of what to look at, you know,why do we receive these statements
as investors, you know, andwhat's the important thing to look
at?
So this is Ditch the Suits.
I'm Steve Campbell, yoursenior marketing director at Seed
Planning Group.
This guy is Travis Moss, ourCE co at Seed and co host to Ditch
the Suits.
Seed, if you're new to Ditchthe Suits is a fee only financial
(02:29):
planning firm where we have afiduciary obligation to work in all
our clients best interests inthis show is Travis and I just bringing
the things we talk about everysingle day with clients, with staff
members to empower you as alistener to get the most with your
money in life.
So this is an exciting onebecause we're going to talk about
in the first one kind of wheremindsets come from fear and uncertainty.
But this is actually funbecause it's a buying a guide to
(02:52):
buying investment.
So let's get right into it today.
Travis, let's take a break tohear a word from our sponsor.
This episode is brought to youby the Unleashing Leadership Podcast.
Join Travis Moss, seasonedentrepreneur and business leader,
on a transformational journeyof leadership exploration.
In this thought provokingpodcast, Travis shares his invaluable
(03:12):
insights and experiencesgained from two decades of managing
diverse businesses whichinclude small family enterprises,
Fortune 500 companies and hisown successful startups.
Through candid storytelling inreal life examples, he unveils the
profound truth that success orfailure ultimately rests upon a leader's
ability to recognize andunleash the potential in others.
(03:34):
Start listening to theUnleashing Leadership Podcast today,
available on all major podcast platforms.
Do you want more of Ditch the Suits?
Well, let's take a break totell you about our Patreon channel.
If you're wanting moreannouncements, notifications, even
access to prior seasons, youcan head to patreon.com search ditch
the suits and subscribe to our channel.
(03:55):
You'll get notifications ofall episodes right in your inbox.
So visit patreon.com searchditch the suits or head to our show
Notes where we got links toour channel.
Yeah, so this will be fun.
A little bit off script alittle bit.
In the last episode I hadmentioned you were we were kind of
laughing about it afterwards.
Yes, I used to carry coal whenI was a kid.
(04:16):
We had a cold so we lived outin the country.
Even back then the electricbill was ridiculous.
I don't know how the publicutilities would calculate it, but
I mean this is like 40 years ago.
The electric bill was stilllike 400 plus a month.
So we got a coal stove when Iwas a kid and one of my jobs when
(04:36):
I started to get a little bitolder so I was like a young teenager,
was to carry the bags of coalinto the house and we would get bags
of coal delivered in 100 pound bags.
So my dad would order a ton ofcoal, it would get dropped off on
a pallet and you'd have 100pound bags of coal.
And for some reason, you know,and I weighed all of 120lbs soaking
(04:57):
wet.
So I was about a senior inhigh school and then I weighed about
130 pounds soaking wet.
My job was to carry the 100pound bags of coal from the garage
to the coal stove and thenpick them up and dump them in the
coal stove.
And, but that, the reason whyI'm saying this is if you bought
20, 20 bags of 100 pound coaland had them at a pallet at your
(05:18):
house and they are to heatyour house, you pay a price for them.
You now have inventory, youhave 20 bags of coal, you don't care
what the price does after that.
You've already got the coal.
So you're going to heat your house.
You use, let's say you use abag every three days.
You know that you have 20 bagstimes three days.
You can get through 60 days.
So for the next 60 days youhave what you need.
(05:39):
Now the only reason why youcare about the price of coal and
what the price of coal isdoing is if you need to buy some
coal or if you bought too muchand you want to sell some of your
coal to somebody else, that'sthe only reason you care.
Otherwise you're just movingalong and using it.
So if you were to look at yourinventory of coal, your 20 bags of
coal, and look at how theprice was changing every week depending
(06:02):
on what's going on with theprice of coal, you'd be freaking
out because you'd be like,don't use that coal over there.
It's only worth X or it'sworth Y today.
Let's not, let's not use somuch coal.
But no, you heat your houseand, and, and you kind of move along
with your life and you don'tworry about the price shocks, you
know, the ups and downs untilit's time to buy coal again.
(06:22):
Same thing with your investments.
You have an investment, thereason why you care about the price
is if you want to sell it orbuy more of it.
If you want to buy more of it,you want a good price.
If you want to sell it, youwant a good price, right?
So if you want to sell it, youhope that it's up.
If you want to buy it, youhope that it's down.
If you go and you go and yousay, I'm going to buy some Coal.
You never root for the priceto be up.
(06:43):
You always root for the priceto be down.
If you want to sell your coalto, let's say, your neighbor or back
to the store, what do you want?
You want the price to be up.
However, what we tend to do isbuy investments when the price is
up and sell investments whenthe price is down.
Do exactly the opposite.
I'm just really blown awaythat a line about if you had Cole
(07:06):
on your bingo card or you'redoing a power hour.
Every time the word Cole wasmentioned, you're doing a shot.
You are absolutely hammered atthis point.
That was, who knew?
You're doing a shot for everytime I say who knew.
Just a simple line from theprevious episode about Cole would
become such a powerful exampleabout the power of.
Let's talk about the statement then.
Let's talk about the statement.
Yeah, we're not going to talkabout churning butter.
That was.
(07:27):
We never turned butter.
We weren't like.
We weren't that.
Talk to us then about thepower of.
I mean, that was a high school project.
We would do.
Oh, God.
We're ready to move on.
So you got an investment statement.
All of you, if you're in a401k, if you have IRAs, if you have
brokerage accounts, you've.
This has been what we've hearda lot from people calling in, I've
inherited money from agrandparent or a parent.
So maybe you're seeinginvestment statements for the first
(07:47):
time in your life.
Maybe these have been unopenedenvelopes that sit on your island
kitchen because you just don'tknow what you're looking at.
Travis, help us understand thepower of understanding the components
of an investment statement.
And when we educate clientsand our staff, what are the key components
that we think investors shouldbe looking at?
I want every.
Every person listening just tothink for a hot second.
(08:10):
When you look at yourstatement, what do you actually look
at?
What's the first thing thatyou look at, the second thing you
look at?
Third thing you look at, like,what do you look at when you look
at your statement?
Some people will say, well, Idon't look at my statements at all.
Which is good and bad, right?
It's good because you're notgetting stressed out about the ups
and downs all the time.
And it's bad because you knowwhat's actually going on in there.
And if somebody's ripping youoff, right?
(08:30):
Like, so you.
You can't be, like, willfully blind.
But certainly, you know, youdon't Want to overdo it.
But when you look at yourstatement, what do you look at like,
Steve, what do you think thatwould be the most common things people
would look at?
I would say probably theimmediate balance fluctuation.
That's what they put in bigbold letters.
Yeah, it's either green orred, which is terrifying or exciting.
(08:51):
Right.
And so maybe a great exampletoo, if you're at your computer,
pull up a statement, because Ithink it'd be cool if you had one
of your statements in front ofyou as Travis talks through these
things to actually in realtime look at it.
But I would say probably thebiggest thing most investors look
at is just intraday moves andwhat the ending balance is each day.
So the balance, definitely the balance.
The second thing that youprobably have is some kind of performance
(09:13):
metric.
So a starting value and endingvalue, maybe a percentage returned
over a time period, which isincredibly arbitrary because what
does it mean?
Right.
You know, if you're aconservative investor and you made
5% and an aggressive investormade 10%, who won?
Right.
Which one was good?
If you're a conservativeinvestor and you made 5%, but because
(09:35):
of the dynamics in the bondmarkets and stuff, you probably should
have made seven.
Did you do good or not?
That's not going to be on your statement.
What's going to be on yourstatement is normally you're, you're
ending in your, your, yourstarting ending balance for a time
period and maybe your averagereturn over the time period or maybe
even since, like ourstatements will put, since inception
and stuff like that.
So you might get a little bitof a longer time period, but that's
(09:56):
what you get.
Basically you have, you'retracking the balance over time.
So you have the currentbalance and then you're kind of tracking
it over time.
Some statements might actuallyget into the underlying investments.
And so they'll list yourinventory, kind of like your coal
in my example, it'll list yourinventory and what you've got.
And you know that for a lot ofpeople can be overwhelming because
it's an awful lot of numbers.
(10:18):
And you know, you have costbasis in there, you'll have where
or purchase price and thencurrent price and then, and then,
you know, the, the gain orloss, whether or not it's long term
or short term yield, number of shares.
I mean, there could be allkinds of things in there.
And that's so a great questionbecause we get this a lot.
Is there a difference then byhow mutual funds, ETF stocks and
(10:41):
bonds are reported on statements?
Yes, so one of, one of thechallenges that people have is a
mutual fund is an actualportfolio, or an ETF is a portfolio
all by itself.
So when you buy mutual fundXYZ, you're actually probably buying
anywhere from 30 to 2,000 stocks.
(11:02):
Yep.
You just don't know it becauseyou don't see them.
See the five letters?
Yeah.
So, so when you, when you buyone of them, you're getting a cut
of every investment that wouldmake that up, some of which are up
today and some of which are down.
But when you look on yourstatement, all it shows you is the
mutual fund.
Same thing with an etf.
An ETF is just kind of like afancy mutual fund.
(11:23):
If you want to oversimplify it.
You can buy and sell the ETFwithin the day.
Mutual funds you buy or sellin the evening.
But when you look at, if youhad stocks on your statement, you
would see what each and everystock has done.
And so you might have a stockthat's down 20% and a stock that's
up 20%.
And you might say, well, Ishouldn't own these things that are
(11:45):
down.
Almost guaranteed that stockwas also in your mutual fund.
So that mutual fund ownsstocks that are up and down every
day.
And this is one of the hardestthings for investors to get to, especially
if they transition into, like,retirement and they go From a generic
401k type of portfolio to areal portfolio that, you know, you
buy the mutual fund becauseyou're essentially buying a middleman.
(12:09):
You're saying, look, I don'tknow any investment managers, so
I'm going to hire somebody orI'm going to pick myself.
Mutual funds, which areessentially investment managers,
are going to manage my moneyfor me.
They're going to build me a portfolio.
When you have more money, youneed to just get your own portfolio
manager.
You need to get somebody whomanages a portfolio specifically
for you.
Cut out the middleman becausethat mutual fund's taking a fee.
And the person who's sellingyou, the mutual fund's taking a fee,
(12:32):
are telling you you should bein the mutual fund's taking a fee.
Right.
So you have two portfoliomanagers you're paying for.
You're paying for theportfolio manager who's managing
your other portfolio managers,and then the portfolio managers who
are actually buying andselling the stocks.
Even if you have indexes,there's a layering there.
So, you know, we need tounderstand what, what we actually
own.
But on a statement, if youhave mutual funds or ETFs, you're
(12:55):
seeing what the portfolio did.
If you actually have aportfolio that's built for you with
individual securities, you'regoing to see what every underlying
investment is doing.
And people will say, well,I've never seen so many things that
have made or lost me money on there.
But that's just because you didn't.
You never looked at the, atthe underlying positions of the portfolio
(13:15):
from the portfolio managerthat you actually hired.
Let me throw in the Steve'sself Help guide here.
So, so one we didn't mention,which is kind of confusing if you
do have your statement out infront of you.
So you got the mutual fund,which is typically five letters large
cap blank of whatever companywhere you don't see the underlying
holdings, you just see thename of it.
You have an etf, which one wetalked about, QQQ or vgi, three letters,
(13:39):
you know, something like that.
Again, you don' see theunderlying holdings.
You have individual stocks,Microsoft, Facebook, Tesla, Nvidia.
You're going to see those, theshares, individual bonds.
You're going to have, youknow, where the bond was, the ultimate
maturity.
All of those things.
Again, very different thanwhat a mutual.
Fund'S going to, differentthan a bond fund.
And then the wild card wouldbe an SMA or a separately managed
(14:00):
account.
This is where if you hire amoney manager, they might show you
the stocks.
Yeah, but it doesn't mean thatyou as an investor can call that
money manager and say, heySteve Campbell, I do not want to
own that stock.
Because you're just, it's likea larger.
Mutual fund that you're doingadvanced statements right now or
ditch the suits.
People are Advanced Payments 102.
(14:20):
Well, so when people see it,you might have five separately managed
accounts by money managersshow all of your stocks.
But that doesn't mean that youhave full authority to just remove
stocks you don't like versusowning actual time.
People in an SMA don't knowthey're in an sma, so they don't
know they're in a separatelymanaged account.
Because what happens is it'ssold like this.
(14:41):
We pick the money managersthat manage the money for you.
So what's really happening isthe person that you're paying to
manage the money is chargingyou a fee and then they're going
out into the universe andthey're hiring some larger money
manager a lot of times like JPMorgan Chase or BlackRock or something
like that to manage aportfolio for you where you see all
(15:04):
the guts of the portfolio, butit's not the person you Hire, that's
managing it.
It's some other companysomeplace else.
And there is a little bit ofinput you can sometimes have on those.
Sometimes you can't have anyinput on that, but it does.
Basically what it is, is it'slike a personalized mutual fund,
but it's not a personalizedportfolio necessarily.
(15:24):
And it lets you see all theguts within it.
But one of the issues there isyou still got two middlemen.
Mm.
Right.
You haven't eliminated any middlemen.
So your cost structure isstill going to get hit twice.
You still, you got, you know,guy you've hired to.
Because you won't.
You can't buy an SMA by yourself.
As far as I know.
You're always going to gothrough, call them up and say, so
(15:45):
there's going to be.
Because they're institutional.
So there's going to be aninvestment manager kind of as a conduit
between you and the otherinvestment manager.
Norm.
Or a company finance, somefinancial company is going to make
money for brokering this to you.
Yeah.
So sometimes you'll seepeople, they pay 1% overall fee to
their advisor and then theypay a half a percent to a money manager.
So they're all in rate as aone and a half percent.
So the fee structure is verysimilar to a mutual fund.
(16:06):
It's just, it's kind of hidden.
But let's talk about what'snot on the invest on the statements.
Right.
Because, you know, we, we, wemaybe talk very technically about
some things here.
But what is not on your statement?
You, when you look at yourstatement, you see the balance.
So go ahead and look at your statements.
If you have them in front of you.
How much money do you have inyour account?
(16:28):
Right.
That's your balance.
That's a representation of the price.
It has nothing to do with thevalue of your underlying investments.
Right.
If I can heat my house withthe coal that I've purchased for
the next 90 days, I have 90days worth of value.
That is what it is.
Right.
It doesn't matter if the pricegoes down between now and the end
of the 90 days.
(16:48):
All I care about is at the endof 90 days when I have to buy more,
what the price is going to be.
So the value is, is so important.
But it's a number I havenever, ever, ever seen on a statement.
In fact, every now and then Ihear like on a tv, like a news show
or something like that, themscrew up and somebody will come in
(17:09):
and argue that yes, themarket's down, but the Value of companies
has overall gone up andthey'll actually, and normally you
see it more in a white paper.
So the people out there whoare peddling financial news or other
financial companies that aretalking, oh, the market lost $2 trillion
of value today, they know darnwell that that's not what happened.
They know that that's a pricefluctuation and that no value is
(17:32):
probably lost because valuehas to do with, go, go to back to
your house example that weused in the last one.
If nobody wants to move ontoyour street this week.
So the price of your housegoes down by $10,000.
It doesn't mean you have tosell it for $10,000 less.
It doesn't mean that it'sgoing to appraise for $10,000 less.
It just means you don't have abuyer today that will pay you the
(17:54):
full value of it and you haveto wait for the next buyer to come
along.
Right?
So price and value are twodifferent concepts.
Value is not on your statement.
It's not going to be on your state.
Closest you're going to get.
The value on your statement iswith bonds.
Bonds will actually, if youhave individual bonds, not bond mutual
funds, if you have individualbonds, they will kind of roundabout
(18:14):
get you to value becausethey'll, they'll say you have $1,000
bond and they'll show you whatthe sale price is today.
So you have a thousand dollarsbond, the sale price is, you know,
95, which means $950 and youryield to maturity is 3%.
So it gives you the equationthat you need to figure out what
(18:36):
the real value of the bond is.
It still doesn't normally showyou that real value.
The real value would beexactly what will I, you know, with
the bond?
Exactly what will I make withthis contract?
What's the value of that contract?
So it does.
Your statement doesn't showyou value, which if you're an investor,
that is one of the mostimportant tidbits of information
(18:56):
is what the hell did what I buy?
What is it actually worth?
If I, if, if the stock marketgoes down and I buy Meta for $0.50
on the dollar, isn't itimportant that I know that I bought
it for 50 cents on the dollar?
If it goes up a hundredpercent because I bought it at 50
cents on the dollar, right.
If I make 100% on it, did Imake 100% because Meta's making more
(19:18):
money or did I make 100%because the price just reverted to
where it should have been inthe first place that represented
its value.
I'm going to look at thatinvestment very different than if
I think, oh my gosh, Meta isgoing to double their revenues and
therefore I could double my,my, the value of the investment because
I bought it for fair market value.
It's, you know, like themental equation is very different
(19:40):
on how you would look at the investments.
There's no long term trend orprojection relative to value.
There's no way to look at yourstatement and understand the value
of Valero after Covid went upor did the price just go up when
you look at your state, if youhad Valero during COVID what you'd
see is a very deep V where theprice plummeted and the price after
(20:04):
Covid shot way back up.
Right.
It'd be a very deep voice.
And so if you looked at that,you would.
There's no way to know that.
Well, geez, did Valero justnot make any money and, and become
less valuable of a company andthen they started making a lot more
money, become more valuable?
Or was it because everybodywas panicking?
Right?
Nobody wanted to buy it,everybody wanted to sell it.
(20:24):
So the price plummeted andthen everybody realized that that
was childish and foolish andthey were acting like teenagers.
So they decided, you knowwhat, let's put all our money back
into it.
So it went back up and itequalized the price to the value
that's more realistic to what happened.
Well, that's a very differentstory than this thing isn't worth
the paper that it was printed on.
And that's a huge challenge.
(20:45):
The moat of a company.
So the moat of a company isthe economic advantage.
So when you look at a moat,this is a term I think popularized
by Morningstar, but basicallythat's the economic advantage of
the company versus its peers.
So does that company have along term Runway and is likely going
to be able to protect theirprofit margins because of their unique
(21:08):
position in the economy, inthe world.
And so when a company has astrong MO even though their prices
fluctuating, you're like, butwe know it's making a lot of money
and we know the long termprospects are that it's going to
continue to make that money.
So if the price is down,that's a buying opportunity.
That's coal being cheap.
I want to buy more coal whenit's cheap.
(21:30):
Right.
Versus oh my gosh, the priceis down.
This company must be failing.
And it's like, can you reallytake Visa or MasterCard out of the
world economy?
Right?
Now, who's going to replace them?
How would that work?
You know, can you even createa competitor for them, a real competitor
for them?
Take Apple, right?
(21:50):
Like, how easy would it be totake Apple out of the world?
Half the world uses Appleproducts and half their life is tied
into Apple.
It doesn't just disappear overnight.
It would take a periodicdecline for that to particularly
happen.
So understanding how thecompany is making money and how it's
kind of ingrained into societyis a really important thing.
(22:13):
It doesn't say that at all.
And you're never going to openup your statement.
It's going to tell you themoat of your company that you own
or the real value of thecompany versus the price.
You don't put that on statements.
Leadership team of the company.
Who's opened a statement andseen who's running their company
or that they have a new CEO.
Yeah, most people, when theybuy an investment, they don't know
(22:33):
who the CEO is.
They don't know where theycame from.
They don't know what theirtrack record is.
Right.
They don't know anything about them.
They don't know anything aboutthe leadership team of the company.
Think about how silly that is.
If you wanted your kid, ifyour kid was a great athlete and
you wanted your kid to prepareto go to the, you know, some kind
of professional sports teamand you were shopping schools for
the best possible coach, wouldyou care who.
(22:57):
You know what I mean?
Like, for the best possiblesports team, would you care who the
coach is?
Yeah, you're going to movethem to a district where they get
primo coaching and development.
Why wouldn't you be concerned?
Who's running a company?
When somebody comes in andsay, we should buy this company,
Tell me about the company.
How's the mo.
You know, what's the value ofthe company?
Two questions.
(23:18):
Normally people can't answer that.
The third question is, who'srunning the company?
What do you know about who'srunning the company and the leadership
of the company.
And like, people can't answer that.
They don't know.
And it's never going to be onyour statement how much money the
company made or reinvestedinto their business.
Does the company take everydollar out of the business?
So you could have a small company.
(23:40):
You have two small companies.
One company is really, really profitable.
They make a ton of money andthey cash all that out in dividends
and send it to all their,their, their little shareholders.
And we love it because we geta 5% dividend in this company.
The Second company, same exactsize, not nearly as profitable, so
they don't give the dividendsand you go, well, that must be a
(24:01):
worse company.
Except for the fact that theyreinvest that 5% they were sending
to their shareholders.
They reinvest it back into the company.
In fact, they do it in a waythat they get a tax deduction for
it.
So if they could send you 5%,they're reinvesting 7% actually.
And they are building for the future.
They are trying to become thenext Amazon.
This is how Amazon did it.
They just reinvest, reinvest,reinvest, reinvest.
So one, you're getting instantgratification of the big dividend,
(24:24):
but the second one, you'regetting long term growth potential
there.
And that's again where you goand look at the leadership team and
you look at the moat, the longterm economic advantage.
But you want to take intoaccount that they're putting money
back into the company to makethis a long term investment, not
a short term dividend play.
So instead of a short termgamble, we're looking at something
that is trying to be around 20years from now as a big time player.
(24:47):
That's where all the big moneycomes with investing is holding onto
an investment long enough forit to pop right to actually like
most of the time, it's likemost things in your life, if you
can just gut it out, you'regonna win.
Most of life is a war of attrition.
Everybody else is going toquit before you quit.
And if you can outlasteverybody, you're going to win.
(25:09):
And then same thing.
Like people don't look at howdid a company's competitors fare?
You know, did the company dowell or bad?
Well, if company did well, butall of its competitors did well.
In fact, all of itscompetitors did better than that.
I don't know how good yourinvestment really was.
And people say that all the time.
That was the best investment Iever made.
I made x percent per year.
And then you look at, then youcompare it to other things and you're
(25:31):
like, yeah, but other thingsdoubled the return.
So that was the bestinvestment you ever made.
But it wasn't a goodinvestment, comparatively speaking.
So we got a lot of room thatwe can make some significant improvements.
That was really good.
I was, you know what I wasactually thinking about because you
had said the housing analogy,people will go out to find the best
(25:52):
real estate agent so they canget the most out of the home that
they sell.
An extra $10,000 means a lotto you as a seller.
People that we speak to fromditch the suits, have a million,
2 million, 5 million, $8 million.
And there isn't the same levelof accountability.
Would you write a five milliondollar check if I gave you five million
(26:14):
dollars, Travis, and said, Iwant to make money, I want you to
be accountable, Find companieswith wide moats and.
But we don't do that when itcomes to our investments.
We do it when we pick schoolsfor our kids.
We do it when we want to sellour home to get an extra turn.
How many people?
How many people?
Well, I'm not gonna put myhouse on the market till, till the
spring.
Yeah.
You know, I'm not going to putit on the market in November.
(26:34):
So we, we intuitively know notto hurt ourselves with our houses
and with.
Our kids, but I think withinvestments because it's such a far
off thing that we're not yettapping into.
There isn't that same kind oflevel of accountability.
So I hope this guide so far.
Paper, you know, you no longerget anything in your hand when you
buy stocks.
Yeah.
You know, you used to actuallyget something so it was tangible.
(26:55):
You'd get a certificate in the mail.
Now you don't get anything, Steve.
So one of the things thathappens is it's not people's fault.
They're pushed into thisgambling mindset.
They're pushed into, I need tohave an answer for everything.
Why didn't it go up?
Why didn't it go down?
What's going to go up?
What's going to go down?
And everything's just a numberon a computer screen or a piece of
(27:15):
paper.
And so what's the connectionbetween something being real and
being just cyber?
So then before we get intoyour top 10 that we want to go through,
why don't you hit us with thisnext part?
Because I.
Yeah.
So your investments have astory to tell you.
I think that we've talkedabout that.
I mean, it's when people wantto know what's going, what's going
(27:35):
to happen in the market.
You know, nobody knows forsure, but we can look at investments
and give you a pretty darngood idea what the potential is.
And because you can look atprice and value, you can look at
a neighborhood and say, wow,the prices are down, you know, X
percent compared to the value.
That means developers aregoing to come in and buy everything
up.
Right.
(27:55):
Because once it gets so cheap,people can come in and make a lot
of money flipping the housesor turning them into rentals.
So you can kind of see wherethings are going to be going by understanding
some of these principles.
It doesn't mean that you knowexactly when they're going to happen,
but it means you can, you canpretty much guess what direction
things are likely to go.
You know, and again, it's overmore the long term.
You can't guess next month,but you can guess, you know, over
(28:16):
the next year or two years orthree years is probably the direction.
Well, and even just you'vetouched on this, and I'll let you
run with this last part here.
We say things like the marketis good, the market is bad, but within,
within the market arecompanies, and some companies are
doing extremely well.
So the market overall could bebad, but some companies are flourishing.
Wouldn't you want to know whatthose individual companies are?
(28:38):
So that if you're going to putyour hard earned money to work, that's.
Like saying the grocery storeis good or bad.
Yeah, you know, the grocerystore isn't good or bad.
The grocery store has thingsthat are good and things that are
bad.
Right.
There's any store you go toare going to have good things and
things that you like andthings that you don't like, things
that are good for you andthings that aren't good for you.
That's a great point.
So basically the Nana nah, I'mnot listening syndrome.
(29:01):
This is when people revert tojust looking at balances and price
movements as an indicator offinancial health.
I mean, we talked to, we'reblue in the face about this, this
stuff.
Yep.
Right.
We talked.
Somebody asked me yesterday,well, you're probably getting a lot
of calls from clients becauseof the market volatile.
I said no, honestly, we don'tget a lot of calls because we work
with clients to understandthese principles.
But yet there, there are stillsome people that this doesn't kind
(29:22):
of set in with because you'reso conditioned to think different
than this.
It's when people refuse toaccept that each, every single investment
that you have represents areal institution.
And we've talked about this indifferent episodes.
Do not buy an investment thatyou don't understand.
Do not buy an investment thatdoes not have a purpose to your portfolio.
(29:44):
People buy a lot of stuff anda lot of products that they think
are investments that I thinkthey're products.
Right.
They're not, they're morecontracts than they are investments.
You buy things you understand.
If you don't understandinvesting, you hire somebody who
buys things that they, thatyou understand.
(30:05):
Right.
But every single investment isa Real institution that you're putting
money into, make sure thatthat's an institution that you trust
and believe is going someplace.
Great examples as Apple TimCook CEO, they sell phones.
(30:25):
You see phones, you seecomputers, like that's a real company.
But when you see Apple tickeron your statement, we sometimes think
these are just things that goup and down when it's real companies,
real leadership boards, peoplemaking decision decisions.
And the na na na syndrome isalso when people allow so called
financial advisors to justconvince them that all investments
(30:48):
are the same and that theprice is all that matters and all
investments are not.
I mean we've buried this now.
All investments are not thesame and.
Not all advisors are all the same.
Yeah.
And, and, and the price is notall that matters.
If you overpay for a company,but they're a really great company
and you can own them for 10 or20 years because they're a solid
(31:10):
business with good leadership,you'll recover from that.
Yeah.
If you overpay for a junkiecompany, you may not recover for
that.
If you have an opportunity tobuy a really good company at a low
price, you're going to makeeven more money.
That's how you beat the average.
That's the way that you beatthe average.
You buy a great company for alow price.
And if you're new to digitalsuits, when you hear Travis and I
(31:32):
say so called financialadvisors, we like to expose our industry.
Not saying that there's notgood people out there, but because
you are interested in gettingthe most from your money in life.
Just because someone has abusiness card or a shop down the
street or a name on a titledoesn't mean that they're necessarily
the best professionals for you.
So, so what do we do about this?
You have an awesome quote andthis is where we're going to get
into your top 10 takeaways,buying guidelines.
(31:56):
Give us the quote and then let's.
I'm just going to let you walk through.
All right.
You know, okay, they're yours.
I'm not going to read.
All right, well whatever.
I'll do all the hard work today.
Thank you.
You keep me in line, I'll dothe 10.
All right, so what do you doabout this?
I saw this quote from mlk.
Nothing in the world is moredangerous than sincere ignorance
and conscientious stupidity.
(32:17):
And I think that there's a lotof people out there who just want
to pretend like they justdon't want it.
They're not interested.
I want, I'm going To take whatsomebody else says.
I'm going to roll with thatbecause it's easier just to roll
with it.
Yep.
And we're challenging you tothink a little bit for yourself and
to kind of push back a littlebit to get more for yourself.
(32:40):
Every time I see a financialadvisor who's buying big houses and
big cars and taking bigvacations, the first thing in my
head that I think of is, whopaid for that?
You paid for that.
So if you're gonna pay forthat, make sure you're getting something
that you get as much as theadvisor gets out of it.
That's my thought.
But, well, here's what I'mgonna do just in case.
(33:02):
We got people checking with us.
I'll give you the number, yougive me the statement.
We got 10 of these.
That way people can check them.
We'll get them done.
All right, folks, TravisMoss's 10 buying guide investment
statements.
Give us number one.
When you make an investment,you are buying property that is supposed
to make money in the future.
You get a cut of that futureprofit based on how much of the company
you own.
(33:23):
Number two, when you buy acompany, you are hiring the management
team.
Make sure you pay attention tothe team's track record.
Three, make sure youunderstand the companies and how
they make money that youinvest your money into or hire somebody
who does.
Four, don't buy and sell acompany because of the price alone.
(33:47):
Five, don't sell a companybecause the price is down.
Six, don't buy a companybecause the price is up.
Seven, buy a company becausethe price is a good deal for the
value you are getting.
Eight, don't think you knowwhere the world is going or what
is going to be the next greatcompany or the next Amazon or Apple.
(34:08):
Number nine, price changesevery moment.
Material changes in value tendto take time, with very rare exceptions.
Be patient and don't overreact.
And number 10, if you don'tbelieve in where a company will be
in 10 years, don't buy it.
As we said, you might bedriving in your car.
(34:29):
Don't be trying to write thesedown on your phone while you're driving.
We will create a PDF and ifyou're interested, you can head to
ditchthesuits.com.
there's a little contact usbutton up in the top corner.
Send us a note, Travis.
Steve, can you send me that PDF?
We'd love to get it in yourhands for free again.
Put it on your fridge.
Put it wherever you make trades.
Just remember, this is aguideline line from Travis's years
of experience of not onlyhelping clients, but helping our
(34:52):
other planners.
Understand that you have anunbelievable opportunity in the free
capitalistic society.
We have to buy into companies.
You get to own a piece of companies.
How cool is that?
Understand the opportunity infront of you.
Don't throw your money to a wind.
Don't guess it.
Don't hire so called financialadvisors that that.
Just say everything's all the same.
There's real opportunities.
(35:12):
People are making money every day.
Use this buyer's guide to helpempower you.
So as always, thanks forstopping by Ditch the Suits thanks
for checking out Ditch the Suits.
Be sure to write a review ordrop a comment about this episode.
And if you want more likethis, head over to ditchesuits.com
you can send us a message andget in touch.
Let us know how we can helpand be sure to share any topics you'd
(35:33):
be interested in having uscover on the show.
We're here to help you get themost from your money in life.
Thanks for being our guest andchecking out Ditch the Suits.
Foreign.
Welcome to Ditch the Suitspodcast, where we share insights
nobody in the financialservices industry wants you to know
about.
We're here to help you get themost from your money in life.
So buckle up and welcome toDitch the Suits.
(00:21):
All right, so we're going toget back into this a guide to buying
Investments.
And we're still talking aboutwhy the market acts like an emotional
teenager or even a childyounger than a teenager sometimes
with its tantrums.
But in this episode, we'regoing to discuss what most people
are getting wrong about theirinvestments and why the average investor
(00:42):
is at a huge disadvantage.
So I think.
I think we talked a lot abouthow people get things wrong in the
last episode.
We're going to talk about whyyou're at a disadvantage right now
and what you can actually doabout it.
We're going to give you a listof about 10 things by the end of
this episode that you can dotop 10 with Travis to get control
(01:04):
of your investments.
Love that.
So that's kind of cool.
I don't know if we want tomake that a PDF that somebody can
download or something.
Hey, we will.
We do things on the fly.
We are going to make that a PDF.
Go to ditch the suits.com,send us a.
Send us a comment, and we willget you Travis's Top 10 Things, a
guide to buying Investments.
How about that?
Oh, sure.
And it'll be free.
We'll make it free.
What a time to be alive.
(01:25):
Yep.
Let's go.
Okay, so we talked about theYYY syndrome last time and going
on this kind of picking on the kids.
We're gonna do na na na I'mnot listening syndrome today.
And, and how you may, youknow, again, how you may be sabotaging
your investments in general.
Well, and we had briefly,briefly touched on it at the conclusion
(01:46):
of the last episode, talkingabout individuals not really understanding
what they're invested in.
And that go, like, how do youactually read these investment statements?
So when you have a Fidelity, aCharles Schwab, a 401k, an IRA, like,
how should you actually lookat an investment statement?
And I'm super excited becauseyou do such a great job of not only
helping clients understandstatements, positions, what things
(02:08):
mean, but also just trainingour newer planners on the importance
of what to look at, you know,why do we receive these statements
as investors, you know, andwhat's the important thing to look
at?
So this is Ditch the Suits.
I'm Steve Campbell, yoursenior marketing director at Seed
Planning Group.
This guy is Travis Moss, ourCE co at Seed and co host to Ditch
the Suits.
Seed, if you're new to Ditchthe Suits is a fee only financial
(02:29):
planning firm where we have afiduciary obligation to work in all
our clients best interests inthis show is Travis and I just bringing
the things we talk about everysingle day with clients, with staff
members to empower you as alistener to get the most with your
money in life.
So this is an exciting onebecause we're going to talk about
in the first one kind of wheremindsets come from fear and uncertainty.
But this is actually funbecause it's a buying a guide to
(02:52):
buying investment.
So let's get right into it today.
Travis, let's take a break tohear a word from our sponsor.
This episode is brought to youby the Unleashing Leadership Podcast.
Join Travis Moss, seasonedentrepreneur and business leader,
on a transformational journeyof leadership exploration.
In this thought provokingpodcast, Travis shares his invaluable
(03:12):
insights and experiencesgained from two decades of managing
diverse businesses whichinclude small family enterprises,
Fortune 500 companies and hisown successful startups.
Through candid storytelling inreal life examples, he unveils the
profound truth that success orfailure ultimately rests upon a leader's
ability to recognize andunleash the potential in others.
(03:34):
Start listening to theUnleashing Leadership Podcast today,
available on all major podcast platforms.
Do you want more of Ditch the Suits?
Well, let's take a break totell you about our Patreon channel.
If you're wanting moreannouncements, notifications, even
access to prior seasons, youcan head to patreon.com search ditch
the suits and subscribe to our channel.
(03:55):
You'll get notifications ofall episodes right in your inbox.
So visit patreon.com searchditch the suits or head to our show
Notes where we got links toour channel.
Yeah, so this will be fun.
A little bit off script alittle bit.
In the last episode I hadmentioned you were we were kind of
laughing about it afterwards.
Yes, I used to carry coal whenI was a kid.
(04:16):
We had a cold so we lived outin the country.
Even back then the electricbill was ridiculous.
I don't know how the publicutilities would calculate it, but
I mean this is like 40 years ago.
The electric bill was stilllike 400 plus a month.
So we got a coal stove when Iwas a kid and one of my jobs when
(04:36):
I started to get a little bitolder so I was like a young teenager,
was to carry the bags of coalinto the house and we would get bags
of coal delivered in 100 pound bags.
So my dad would order a ton ofcoal, it would get dropped off on
a pallet and you'd have 100pound bags of coal.
And for some reason, you know,and I weighed all of 120lbs soaking
(04:57):
wet.
So I was about a senior inhigh school and then I weighed about
130 pounds soaking wet.
My job was to carry the 100pound bags of coal from the garage
to the coal stove and thenpick them up and dump them in the
coal stove.
And, but that, the reason whyI'm saying this is if you bought
20, 20 bags of 100 pound coaland had them at a pallet at your
(05:18):
house and they are to heatyour house, you pay a price for them.
You now have inventory, youhave 20 bags of coal, you don't care
what the price does after that.
You've already got the coal.
So you're going to heat your house.
You use, let's say you use abag every three days.
You know that you have 20 bagstimes three days.
You can get through 60 days.
So for the next 60 days youhave what you need.
(05:39):
Now the only reason why youcare about the price of coal and
what the price of coal isdoing is if you need to buy some
coal or if you bought too muchand you want to sell some of your
coal to somebody else, that'sthe only reason you care.
Otherwise you're just movingalong and using it.
So if you were to look at yourinventory of coal, your 20 bags of
coal, and look at how theprice was changing every week depending
(06:02):
on what's going on with theprice of coal, you'd be freaking
out because you'd be like,don't use that coal over there.
It's only worth X or it'sworth Y today.
Let's not, let's not use somuch coal.
But no, you heat your houseand, and, and you kind of move along
with your life and you don'tworry about the price shocks, you
know, the ups and downs untilit's time to buy coal again.
(06:22):
Same thing with your investments.
You have an investment, thereason why you care about the price
is if you want to sell it orbuy more of it.
If you want to buy more of it,you want a good price.
If you want to sell it, youwant a good price, right?
So if you want to sell it, youhope that it's up.
If you want to buy it, youhope that it's down.
If you go and you go and yousay, I'm going to buy some Coal.
You never root for the priceto be up.
(06:43):
You always root for the priceto be down.
If you want to sell your coalto, let's say, your neighbor or back
to the store, what do you want?
You want the price to be up.
However, what we tend to do isbuy investments when the price is
up and sell investments whenthe price is down.
Do exactly the opposite.
I'm just really blown awaythat a line about if you had Cole
(07:06):
on your bingo card or you'redoing a power hour.
Every time the word Cole wasmentioned, you're doing a shot.
You are absolutely hammered atthis point.
That was, who knew?
You're doing a shot for everytime I say who knew.
Just a simple line from theprevious episode about Cole would
become such a powerful exampleabout the power of.
Let's talk about the statement then.
Let's talk about the statement.
Yeah, we're not going to talkabout churning butter.
That was.
(07:27):
We never turned butter.
We weren't like.
We weren't that.
Talk to us then about thepower of.
I mean, that was a high school project.
We would do.
Oh, God.
We're ready to move on.
So you got an investment statement.
All of you, if you're in a401k, if you have IRAs, if you have
brokerage accounts, you've.
This has been what we've hearda lot from people calling in, I've
inherited money from agrandparent or a parent.
So maybe you're seeinginvestment statements for the first
(07:47):
time in your life.
Maybe these have been unopenedenvelopes that sit on your island
kitchen because you just don'tknow what you're looking at.
Travis, help us understand thepower of understanding the components
of an investment statement.
And when we educate clientsand our staff, what are the key components
that we think investors shouldbe looking at?
I want every.
Every person listening just tothink for a hot second.
(08:10):
When you look at yourstatement, what do you actually look
at?
What's the first thing thatyou look at, the second thing you
look at?
Third thing you look at, like,what do you look at when you look
at your statement?
Some people will say, well, Idon't look at my statements at all.
Which is good and bad, right?
It's good because you're notgetting stressed out about the ups
and downs all the time.
And it's bad because you knowwhat's actually going on in there.
And if somebody's ripping youoff, right?
(08:30):
Like, so you.
You can't be, like, willfully blind.
But certainly, you know, youdon't Want to overdo it.
But when you look at yourstatement, what do you look at like,
Steve, what do you think thatwould be the most common things people
would look at?
I would say probably theimmediate balance fluctuation.
That's what they put in bigbold letters.
Yeah, it's either green orred, which is terrifying or exciting.
(08:51):
Right.
And so maybe a great exampletoo, if you're at your computer,
pull up a statement, because Ithink it'd be cool if you had one
of your statements in front ofyou as Travis talks through these
things to actually in realtime look at it.
But I would say probably thebiggest thing most investors look
at is just intraday moves andwhat the ending balance is each day.
So the balance, definitely the balance.
The second thing that youprobably have is some kind of performance
(09:13):
metric.
So a starting value and endingvalue, maybe a percentage returned
over a time period, which isincredibly arbitrary because what
does it mean?
Right.
You know, if you're aconservative investor and you made
5% and an aggressive investormade 10%, who won?
Right.
Which one was good?
If you're a conservativeinvestor and you made 5%, but because
(09:35):
of the dynamics in the bondmarkets and stuff, you probably should
have made seven.
Did you do good or not?
That's not going to be on your statement.
What's going to be on yourstatement is normally you're, you're
ending in your, your, yourstarting ending balance for a time
period and maybe your averagereturn over the time period or maybe
even since, like ourstatements will put, since inception
and stuff like that.
So you might get a little bitof a longer time period, but that's
(09:56):
what you get.
Basically you have, you'retracking the balance over time.
So you have the currentbalance and then you're kind of tracking
it over time.
Some statements might actuallyget into the underlying investments.
And so they'll list yourinventory, kind of like your coal
in my example, it'll list yourinventory and what you've got.
And you know that for a lot ofpeople can be overwhelming because
it's an awful lot of numbers.
(10:18):
And you know, you have costbasis in there, you'll have where
or purchase price and thencurrent price and then, and then,
you know, the, the gain orloss, whether or not it's long term
or short term yield, number of shares.
I mean, there could be allkinds of things in there.
And that's so a great questionbecause we get this a lot.
Is there a difference then byhow mutual funds, ETF stocks and
(10:41):
bonds are reported on statements?
Yes, so one of, one of thechallenges that people have is a
mutual fund is an actualportfolio, or an ETF is a portfolio
all by itself.
So when you buy mutual fundXYZ, you're actually probably buying
anywhere from 30 to 2,000 stocks.
(11:02):
Yep.
You just don't know it becauseyou don't see them.
See the five letters?
Yeah.
So, so when you, when you buyone of them, you're getting a cut
of every investment that wouldmake that up, some of which are up
today and some of which are down.
But when you look on yourstatement, all it shows you is the
mutual fund.
Same thing with an etf.
An ETF is just kind of like afancy mutual fund.
(11:23):
If you want to oversimplify it.
You can buy and sell the ETFwithin the day.
Mutual funds you buy or sellin the evening.
But when you look at, if youhad stocks on your statement, you
would see what each and everystock has done.
And so you might have a stockthat's down 20% and a stock that's
up 20%.
And you might say, well, Ishouldn't own these things that are
(11:45):
down.
Almost guaranteed that stockwas also in your mutual fund.
So that mutual fund ownsstocks that are up and down every
day.
And this is one of the hardestthings for investors to get to, especially
if they transition into, like,retirement and they go From a generic
401k type of portfolio to areal portfolio that, you know, you
buy the mutual fund becauseyou're essentially buying a middleman.
(12:09):
You're saying, look, I don'tknow any investment managers, so
I'm going to hire somebody orI'm going to pick myself.
Mutual funds, which areessentially investment managers,
are going to manage my moneyfor me.
They're going to build me a portfolio.
When you have more money, youneed to just get your own portfolio
manager.
You need to get somebody whomanages a portfolio specifically
for you.
Cut out the middleman becausethat mutual fund's taking a fee.
And the person who's sellingyou, the mutual fund's taking a fee,
(12:32):
are telling you you should bein the mutual fund's taking a fee.
Right.
So you have two portfoliomanagers you're paying for.
You're paying for theportfolio manager who's managing
your other portfolio managers,and then the portfolio managers who
are actually buying andselling the stocks.
Even if you have indexes,there's a layering there.
So, you know, we need tounderstand what, what we actually
own.
But on a statement, if youhave mutual funds or ETFs, you're
(12:55):
seeing what the portfolio did.
If you actually have aportfolio that's built for you with
individual securities, you'regoing to see what every underlying
investment is doing.
And people will say, well,I've never seen so many things that
have made or lost me money on there.
But that's just because you didn't.
You never looked at the, atthe underlying positions of the portfolio
(13:15):
from the portfolio managerthat you actually hired.
Let me throw in the Steve'sself Help guide here.
So, so one we didn't mention,which is kind of confusing if you
do have your statement out infront of you.
So you got the mutual fund,which is typically five letters large
cap blank of whatever companywhere you don't see the underlying
holdings, you just see thename of it.
You have an etf, which one wetalked about, QQQ or vgi, three letters,
(13:39):
you know, something like that.
Again, you don' see theunderlying holdings.
You have individual stocks,Microsoft, Facebook, Tesla, Nvidia.
You're going to see those, theshares, individual bonds.
You're going to have, youknow, where the bond was, the ultimate
maturity.
All of those things.
Again, very different thanwhat a mutual.
Fund'S going to, differentthan a bond fund.
And then the wild card wouldbe an SMA or a separately managed
(14:00):
account.
This is where if you hire amoney manager, they might show you
the stocks.
Yeah, but it doesn't mean thatyou as an investor can call that
money manager and say, heySteve Campbell, I do not want to
own that stock.
Because you're just, it's likea larger.
Mutual fund that you're doingadvanced statements right now or
ditch the suits.
People are Advanced Payments 102.
(14:20):
Well, so when people see it,you might have five separately managed
accounts by money managersshow all of your stocks.
But that doesn't mean that youhave full authority to just remove
stocks you don't like versusowning actual time.
People in an SMA don't knowthey're in an sma, so they don't
know they're in a separatelymanaged account.
Because what happens is it'ssold like this.
(14:41):
We pick the money managersthat manage the money for you.
So what's really happening isthe person that you're paying to
manage the money is chargingyou a fee and then they're going
out into the universe andthey're hiring some larger money
manager a lot of times like JPMorgan Chase or BlackRock or something
like that to manage aportfolio for you where you see all
(15:04):
the guts of the portfolio, butit's not the person you Hire, that's
managing it.
It's some other companysomeplace else.
And there is a little bit ofinput you can sometimes have on those.
Sometimes you can't have anyinput on that, but it does.
Basically what it is, is it'slike a personalized mutual fund,
but it's not a personalizedportfolio necessarily.
(15:24):
And it lets you see all theguts within it.
But one of the issues there isyou still got two middlemen.
Mm.
Right.
You haven't eliminated any middlemen.
So your cost structure isstill going to get hit twice.
You still, you got, you know,guy you've hired to.
Because you won't.
You can't buy an SMA by yourself.
As far as I know.
You're always going to gothrough, call them up and say, so
(15:45):
there's going to be.
Because they're institutional.
So there's going to be aninvestment manager kind of as a conduit
between you and the otherinvestment manager.
Norm.
Or a company finance, somefinancial company is going to make
money for brokering this to you.
Yeah.
So sometimes you'll seepeople, they pay 1% overall fee to
their advisor and then theypay a half a percent to a money manager.
So they're all in rate as aone and a half percent.
So the fee structure is verysimilar to a mutual fund.
(16:06):
It's just, it's kind of hidden.
But let's talk about what'snot on the invest on the statements.
Right.
Because, you know, we, we, wemaybe talk very technically about
some things here.
But what is not on your statement?
You, when you look at yourstatement, you see the balance.
So go ahead and look at your statements.
If you have them in front of you.
How much money do you have inyour account?
(16:28):
Right.
That's your balance.
That's a representation of the price.
It has nothing to do with thevalue of your underlying investments.
Right.
If I can heat my house withthe coal that I've purchased for
the next 90 days, I have 90days worth of value.
That is what it is.
Right.
It doesn't matter if the pricegoes down between now and the end
of the 90 days.
(16:48):
All I care about is at the endof 90 days when I have to buy more,
what the price is going to be.
So the value is, is so important.
But it's a number I havenever, ever, ever seen on a statement.
In fact, every now and then Ihear like on a tv, like a news show
or something like that, themscrew up and somebody will come in
(17:09):
and argue that yes, themarket's down, but the Value of companies
has overall gone up andthey'll actually, and normally you
see it more in a white paper.
So the people out there whoare peddling financial news or other
financial companies that aretalking, oh, the market lost $2 trillion
of value today, they know darnwell that that's not what happened.
They know that that's a pricefluctuation and that no value is
(17:32):
probably lost because valuehas to do with, go, go to back to
your house example that weused in the last one.
If nobody wants to move ontoyour street this week.
So the price of your housegoes down by $10,000.
It doesn't mean you have tosell it for $10,000 less.
It doesn't mean that it'sgoing to appraise for $10,000 less.
It just means you don't have abuyer today that will pay you the
(17:54):
full value of it and you haveto wait for the next buyer to come
along.
Right?
So price and value are twodifferent concepts.
Value is not on your statement.
It's not going to be on your state.
Closest you're going to get.
The value on your statement iswith bonds.
Bonds will actually, if youhave individual bonds, not bond mutual
funds, if you have individualbonds, they will kind of roundabout
(18:14):
get you to value becausethey'll, they'll say you have $1,000
bond and they'll show you whatthe sale price is today.
So you have a thousand dollarsbond, the sale price is, you know,
95, which means $950 and youryield to maturity is 3%.
So it gives you the equationthat you need to figure out what
(18:36):
the real value of the bond is.
It still doesn't normally showyou that real value.
The real value would beexactly what will I, you know, with
the bond?
Exactly what will I make withthis contract?
What's the value of that contract?
So it does.
Your statement doesn't showyou value, which if you're an investor,
that is one of the mostimportant tidbits of information
(18:56):
is what the hell did what I buy?
What is it actually worth?
If I, if, if the stock marketgoes down and I buy Meta for $0.50
on the dollar, isn't itimportant that I know that I bought
it for 50 cents on the dollar?
If it goes up a hundredpercent because I bought it at 50
cents on the dollar, right.
If I make 100% on it, did Imake 100% because Meta's making more
(19:18):
money or did I make 100%because the price just reverted to
where it should have been inthe first place that represented
its value.
I'm going to look at thatinvestment very different than if
I think, oh my gosh, Meta isgoing to double their revenues and
therefore I could double my,my, the value of the investment because
I bought it for fair market value.
It's, you know, like themental equation is very different
(19:40):
on how you would look at the investments.
There's no long term trend orprojection relative to value.
There's no way to look at yourstatement and understand the value
of Valero after Covid went upor did the price just go up when
you look at your state, if youhad Valero during COVID what you'd
see is a very deep V where theprice plummeted and the price after
(20:04):
Covid shot way back up.
Right.
It'd be a very deep voice.
And so if you looked at that,you would.
There's no way to know that.
Well, geez, did Valero justnot make any money and, and become
less valuable of a company andthen they started making a lot more
money, become more valuable?
Or was it because everybodywas panicking?
Right?
Nobody wanted to buy it,everybody wanted to sell it.
(20:24):
So the price plummeted andthen everybody realized that that
was childish and foolish andthey were acting like teenagers.
So they decided, you knowwhat, let's put all our money back
into it.
So it went back up and itequalized the price to the value
that's more realistic to what happened.
Well, that's a very differentstory than this thing isn't worth
the paper that it was printed on.
And that's a huge challenge.
(20:45):
The moat of a company.
So the moat of a company isthe economic advantage.
So when you look at a moat,this is a term I think popularized
by Morningstar, but basicallythat's the economic advantage of
the company versus its peers.
So does that company have along term Runway and is likely going
to be able to protect theirprofit margins because of their unique
(21:08):
position in the economy, inthe world.
And so when a company has astrong MO even though their prices
fluctuating, you're like, butwe know it's making a lot of money
and we know the long termprospects are that it's going to
continue to make that money.
So if the price is down,that's a buying opportunity.
That's coal being cheap.
I want to buy more coal whenit's cheap.
(21:30):
Right.
Versus oh my gosh, the priceis down.
This company must be failing.
And it's like, can you reallytake Visa or MasterCard out of the
world economy?
Right?
Now, who's going to replace them?
How would that work?
You know, can you even createa competitor for them, a real competitor
for them?
Take Apple, right?
(21:50):
Like, how easy would it be totake Apple out of the world?
Half the world uses Appleproducts and half their life is tied
into Apple.
It doesn't just disappear overnight.
It would take a periodicdecline for that to particularly
happen.
So understanding how thecompany is making money and how it's
kind of ingrained into societyis a really important thing.
(22:13):
It doesn't say that at all.
And you're never going to openup your statement.
It's going to tell you themoat of your company that you own
or the real value of thecompany versus the price.
You don't put that on statements.
Leadership team of the company.
Who's opened a statement andseen who's running their company
or that they have a new CEO.
Yeah, most people, when theybuy an investment, they don't know
(22:33):
who the CEO is.
They don't know where theycame from.
They don't know what theirtrack record is.
Right.
They don't know anything about them.
They don't know anything aboutthe leadership team of the company.
Think about how silly that is.
If you wanted your kid, ifyour kid was a great athlete and
you wanted your kid to prepareto go to the, you know, some kind
of professional sports teamand you were shopping schools for
the best possible coach, wouldyou care who.
(22:57):
You know what I mean?
Like, for the best possiblesports team, would you care who the
coach is?
Yeah, you're going to movethem to a district where they get
primo coaching and development.
Why wouldn't you be concerned?
Who's running a company?
When somebody comes in andsay, we should buy this company,
Tell me about the company.
How's the mo.
You know, what's the value ofthe company?
Two questions.
(23:18):
Normally people can't answer that.
The third question is, who'srunning the company?
What do you know about who'srunning the company and the leadership
of the company.
And like, people can't answer that.
They don't know.
And it's never going to be onyour statement how much money the
company made or reinvestedinto their business.
Does the company take everydollar out of the business?
So you could have a small company.
(23:40):
You have two small companies.
One company is really, really profitable.
They make a ton of money andthey cash all that out in dividends
and send it to all their,their, their little shareholders.
And we love it because we geta 5% dividend in this company.
The Second company, same exactsize, not nearly as profitable, so
they don't give the dividendsand you go, well, that must be a
(24:01):
worse company.
Except for the fact that theyreinvest that 5% they were sending
to their shareholders.
They reinvest it back into the company.
In fact, they do it in a waythat they get a tax deduction for
it.
So if they could send you 5%,they're reinvesting 7% actually.
And they are building for the future.
They are trying to become thenext Amazon.
This is how Amazon did it.
They just reinvest, reinvest,reinvest, reinvest.
So one, you're getting instantgratification of the big dividend,
(24:24):
but the second one, you'regetting long term growth potential
there.
And that's again where you goand look at the leadership team and
you look at the moat, the longterm economic advantage.
But you want to take intoaccount that they're putting money
back into the company to makethis a long term investment, not
a short term dividend play.
So instead of a short termgamble, we're looking at something
that is trying to be around 20years from now as a big time player.
(24:47):
That's where all the big moneycomes with investing is holding onto
an investment long enough forit to pop right to actually like
most of the time, it's likemost things in your life, if you
can just gut it out, you'regonna win.
Most of life is a war of attrition.
Everybody else is going toquit before you quit.
And if you can outlasteverybody, you're going to win.
(25:09):
And then same thing.
Like people don't look at howdid a company's competitors fare?
You know, did the company dowell or bad?
Well, if company did well, butall of its competitors did well.
In fact, all of itscompetitors did better than that.
I don't know how good yourinvestment really was.
And people say that all the time.
That was the best investment Iever made.
I made x percent per year.
And then you look at, then youcompare it to other things and you're
(25:31):
like, yeah, but other thingsdoubled the return.
So that was the bestinvestment you ever made.
But it wasn't a goodinvestment, comparatively speaking.
So we got a lot of room thatwe can make some significant improvements.
That was really good.
I was, you know what I wasactually thinking about because you
had said the housing analogy,people will go out to find the best
(25:52):
real estate agent so they canget the most out of the home that
they sell.
An extra $10,000 means a lotto you as a seller.
People that we speak to fromditch the suits, have a million,
2 million, 5 million, $8 million.
And there isn't the same levelof accountability.
Would you write a five milliondollar check if I gave you five million
(26:14):
dollars, Travis, and said, Iwant to make money, I want you to
be accountable, Find companieswith wide moats and.
But we don't do that when itcomes to our investments.
We do it when we pick schoolsfor our kids.
We do it when we want to sellour home to get an extra turn.
How many people?
How many people?
Well, I'm not gonna put myhouse on the market till, till the
spring.
Yeah.
You know, I'm not going to putit on the market in November.
(26:34):
So we, we intuitively know notto hurt ourselves with our houses
and with.
Our kids, but I think withinvestments because it's such a far
off thing that we're not yettapping into.
There isn't that same kind oflevel of accountability.
So I hope this guide so far.
Paper, you know, you no longerget anything in your hand when you
buy stocks.
Yeah.
You know, you used to actuallyget something so it was tangible.
(26:55):
You'd get a certificate in the mail.
Now you don't get anything, Steve.
So one of the things thathappens is it's not people's fault.
They're pushed into thisgambling mindset.
They're pushed into, I need tohave an answer for everything.
Why didn't it go up?
Why didn't it go down?
What's going to go up?
What's going to go down?
And everything's just a numberon a computer screen or a piece of
(27:15):
paper.
And so what's the connectionbetween something being real and
being just cyber?
So then before we get intoyour top 10 that we want to go through,
why don't you hit us with thisnext part?
Because I.
Yeah.
So your investments have astory to tell you.
I think that we've talkedabout that.
I mean, it's when people wantto know what's going, what's going
(27:35):
to happen in the market.
You know, nobody knows forsure, but we can look at investments
and give you a pretty darngood idea what the potential is.
And because you can look atprice and value, you can look at
a neighborhood and say, wow,the prices are down, you know, X
percent compared to the value.
That means developers aregoing to come in and buy everything
up.
Right.
(27:55):
Because once it gets so cheap,people can come in and make a lot
of money flipping the housesor turning them into rentals.
So you can kind of see wherethings are going to be going by understanding
some of these principles.
It doesn't mean that you knowexactly when they're going to happen,
but it means you can, you canpretty much guess what direction
things are likely to go.
You know, and again, it's overmore the long term.
You can't guess next month,but you can guess, you know, over
(28:16):
the next year or two years orthree years is probably the direction.
Well, and even just you'vetouched on this, and I'll let you
run with this last part here.
We say things like the marketis good, the market is bad, but within,
within the market arecompanies, and some companies are
doing extremely well.
So the market overall could bebad, but some companies are flourishing.
Wouldn't you want to know whatthose individual companies are?
(28:38):
So that if you're going to putyour hard earned money to work, that's.
Like saying the grocery storeis good or bad.
Yeah, you know, the grocerystore isn't good or bad.
The grocery store has thingsthat are good and things that are
bad.
Right.
There's any store you go toare going to have good things and
things that you like andthings that you don't like, things
that are good for you andthings that aren't good for you.
That's a great point.
So basically the Nana nah, I'mnot listening syndrome.
(29:01):
This is when people revert tojust looking at balances and price
movements as an indicator offinancial health.
I mean, we talked to, we'reblue in the face about this, this
stuff.
Yep.
Right.
We talked.
Somebody asked me yesterday,well, you're probably getting a lot
of calls from clients becauseof the market volatile.
I said no, honestly, we don'tget a lot of calls because we work
with clients to understandthese principles.
But yet there, there are stillsome people that this doesn't kind
(29:22):
of set in with because you'reso conditioned to think different
than this.
It's when people refuse toaccept that each, every single investment
that you have represents areal institution.
And we've talked about this indifferent episodes.
Do not buy an investment thatyou don't understand.
Do not buy an investment thatdoes not have a purpose to your portfolio.
(29:44):
People buy a lot of stuff anda lot of products that they think
are investments that I thinkthey're products.
Right.
They're not, they're morecontracts than they are investments.
You buy things you understand.
If you don't understandinvesting, you hire somebody who
buys things that they, thatyou understand.
(30:05):
Right.
But every single investment isa Real institution that you're putting
money into, make sure thatthat's an institution that you trust
and believe is going someplace.
Great examples as Apple TimCook CEO, they sell phones.
(30:25):
You see phones, you seecomputers, like that's a real company.
But when you see Apple tickeron your statement, we sometimes think
these are just things that goup and down when it's real companies,
real leadership boards, peoplemaking decision decisions.
And the na na na syndrome isalso when people allow so called
financial advisors to justconvince them that all investments
(30:48):
are the same and that theprice is all that matters and all
investments are not.
I mean we've buried this now.
All investments are not thesame and.
Not all advisors are all the same.
Yeah.
And, and, and the price is notall that matters.
If you overpay for a company,but they're a really great company
and you can own them for 10 or20 years because they're a solid
(31:10):
business with good leadership,you'll recover from that.
Yeah.
If you overpay for a junkiecompany, you may not recover for
that.
If you have an opportunity tobuy a really good company at a low
price, you're going to makeeven more money.
That's how you beat the average.
That's the way that you beatthe average.
You buy a great company for alow price.
And if you're new to digitalsuits, when you hear Travis and I
(31:32):
say so called financialadvisors, we like to expose our industry.
Not saying that there's notgood people out there, but because
you are interested in gettingthe most from your money in life.
Just because someone has abusiness card or a shop down the
street or a name on a titledoesn't mean that they're necessarily
the best professionals for you.
So, so what do we do about this?
You have an awesome quote andthis is where we're going to get
into your top 10 takeaways,buying guidelines.
(31:56):
Give us the quote and then let's.
I'm just going to let you walk through.
All right.
You know, okay, they're yours.
I'm not going to read.
All right, well whatever.
I'll do all the hard work today.
Thank you.
You keep me in line, I'll dothe 10.
All right, so what do you doabout this?
I saw this quote from mlk.
Nothing in the world is moredangerous than sincere ignorance
and conscientious stupidity.
(32:17):
And I think that there's a lotof people out there who just want
to pretend like they justdon't want it.
They're not interested.
I want, I'm going To take whatsomebody else says.
I'm going to roll with thatbecause it's easier just to roll
with it.
Yep.
And we're challenging you tothink a little bit for yourself and
to kind of push back a littlebit to get more for yourself.
(32:40):
Every time I see a financialadvisor who's buying big houses and
big cars and taking bigvacations, the first thing in my
head that I think of is, whopaid for that?
You paid for that.
So if you're gonna pay forthat, make sure you're getting something
that you get as much as theadvisor gets out of it.
That's my thought.
But, well, here's what I'mgonna do just in case.
(33:02):
We got people checking with us.
I'll give you the number, yougive me the statement.
We got 10 of these.
That way people can check them.
We'll get them done.
All right, folks, TravisMoss's 10 buying guide investment
statements.
Give us number one.
When you make an investment,you are buying property that is supposed
to make money in the future.
You get a cut of that futureprofit based on how much of the company
you own.
(33:23):
Number two, when you buy acompany, you are hiring the management
team.
Make sure you pay attention tothe team's track record.
Three, make sure youunderstand the companies and how
they make money that youinvest your money into or hire somebody
who does.
Four, don't buy and sell acompany because of the price alone.
(33:47):
Five, don't sell a companybecause the price is down.
Six, don't buy a companybecause the price is up.
Seven, buy a company becausethe price is a good deal for the
value you are getting.
Eight, don't think you knowwhere the world is going or what
is going to be the next greatcompany or the next Amazon or Apple.
(34:08):
Number nine, price changesevery moment.
Material changes in value tendto take time, with very rare exceptions.
Be patient and don't overreact.
And number 10, if you don'tbelieve in where a company will be
in 10 years, don't buy it.
As we said, you might bedriving in your car.
(34:29):
Don't be trying to write thesedown on your phone while you're driving.
We will create a PDF and ifyou're interested, you can head to
ditchthesuits.com.
there's a little contact usbutton up in the top corner.
Send us a note, Travis.
Steve, can you send me that PDF?
We'd love to get it in yourhands for free again.
Put it on your fridge.
Put it wherever you make trades.
Just remember, this is aguideline line from Travis's years
of experience of not onlyhelping clients, but helping our
(34:52):
other planners.
Understand that you have anunbelievable opportunity in the free
capitalistic society.
We have to buy into companies.
You get to own a piece of companies.
How cool is that?
Understand the opportunity infront of you.
Don't throw your money to a wind.
Don't guess it.
Don't hire so called financialadvisors that that.
Just say everything's all the same.
There's real opportunities.
(35:12):
People are making money every day.
Use this buyer's guide to helpempower you.
So as always, thanks forstopping by Ditch the Suits thanks
for checking out Ditch the Suits.
Be sure to write a review ordrop a comment about this episode.
And if you want more likethis, head over to ditchesuits.com
you can send us a message andget in touch.
Let us know how we can helpand be sure to share any topics you'd
(35:33):
be interested in having uscover on the show.
We're here to help you get themost from your money in life.
Thanks for being our guest andchecking out Ditch the Suits.
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