How This Investor Keeps Beating The Market (Strategy Explained) | Ep. 262

[@JosephCarlsonShow]

If you want to view a similar video to this one check out this video here: kzbin.info/www/bejne/j2ikdH5jj9mmqck It covers Bill Ackman and him buying chipotle stock in 2015. Sign up for FTX and use the referral code "carlson" to get $10 when you do your first $100 trade. FTX Mobile: link.blockfolio.com/9dzp/iyvwqrcp FTX Desktop: ftx.us/home/#a=carlson Also, if you haven't already, check give the Patreon a try, it's $10/month and comes with a free trial: www.patreon.com/josephcarlson You gain access to qualtrim.com which just had a major update, it's received very good feedback so far. Try it out risk free.

[@Gary65437]

Just watched the video you did on Chipotle, it was awesome. Wish I had one in my town, but I hate waiting in line...lol

[@JosephCarlsonShow]

This video took a bit more time than normal to put together. I hope it’s thought provoking and entertaining. If you enjoyed the video, a free and easy way to help me is is giving it a thumbs up! Thanks everyone!

[@stevenupton7825]

top quality video

[@Allen-L-Canada]

very insightful! My quantitative metrics: ROIC, Intrinsic valuation, Debt/Equity, CAGR of Revenue, Equity, EPS, FCF; qualitative assessments: circle of competence, duration moat, management incentives and skills.

[@Allen-L-Canada]

I think we can summarize the video in a Buffett's quote:"It's better to buy a wonderful business at a fair price, than a fair business at a wonderful price."

[@daarom3472]

Definitely thought provoking but easily could've been a 5-10 min vid as the message is quite simple: Don't just look at PE ratio/value, look at the rate on capital and other business metrics that create free cash as well.

[@andyholloway5799]

Absolutely loved this video! Very thought provoking. Love your stuff and definitely going to be digging into this more on how I research companies.

[@borgopiave1233]

Joe please keep covering on Terry Smith... more details, more tactics, more practical examples on how makes his decisions... You are golden Man!

[@vnilla2921]

Read my post just below this one.

[@ryanhart7591]

💯

[@eduardoarocha2078]

Amen 🙌🏼

[@NoRegertsHere]

You can watch his annual investor meetings on KZbin. “Fundsmith annual investor meeting”

[@gammafighter]

Very well done. With every video, I have to resist the urge to say "You've outdone yourself this time, Joseph". But I can't resist this time. You really have outdone yourself. This is yet another incredible video. I'm saving it to a playlist that I will send to friends/family/coworkers/etc. when I talk to them about investing.

[@JosephCarlsonShow]

Glad you enjoyed it!

[@ruiamaral6128]

Hey gammafighter! Would you mind to send me your playlist ? If you find this vídeo só good (like me) your content should be interesting

[@yourstruly5706]

Terry Smith is a legend, I'm glad you're covering him😁

[@zoltantoth1566]

You are confusing 'value' with P/E. Value investing is not just choosing low P/E. Simply because P/E is a very inexact indicator of value. "Value" includes every information about the firm, the "quality" of it too.

[@jefferywinchester5830]

Or else it wouldn't truly be a value......

[@robertthurmond8161]

I like to keep a small "in case the market crashes" fund to try and take advantage of the low prices. When the market goes south, I use that money spread out over the following months buying my targeted stocks on low days. on top of my usual DCA, They keep dropping and I keep buying. I'm still in on Renewable Energy, EV, Tech, Health.coins too gotta be greedy when others are fearful. At this point I'm grateful for my FA Susan Kay Mack. Already with a 7 figure portfolio but I have no doubt investing more.

[@emilyhowe3359]

Same. I teetle on the premise that the market can and will crash at some point, as well as the notion that many individuals miss out on gains due to actually NOT being in the market and waiting for the chance of a crash. Perhaps it's wise to do both partially

[@donaldlocher2537]

out of curiosity I did read about Susan Kay Mack on the web.,she has a great resume.

[@walter.dlawson2580]

An everyday millionaire. kudos

[@mitchsapastein5593]

I googled the lady you mentioned, and left a mail after going through her credentials. I'm willing to make consultations to improve my portfolio

[@andreynazarouk]

always happy when Joseph uploads, makes my day

[@Riggsnic_co]

I'm not kidding when I say that the market crash and high inflation have me really stressed out and worried about retirement. I've been in the red for a while now and although people say these crisis has it perks, I'm losing my mind but I get it Investing is a long-term game, so focus on the long run.

[@usieey]

I can’t focus on the long run when I should be retiring in 3years, you see I’ve got good companies in my portfolio and a good amount invested, but my profit has been stalling, does it mean this recession/unstable market doesn’t provide any calculated risk opportunities to make profit?

[@maga_zineng7810]

There are a lot of strategies to make tongue wetting profit especially in a down market, but such sophisticated trades can only be carried out by proper market experts

[@Mohaimam316]

I agree, my profit has been consistent no matter the market situation, I got into the market early 2019 and the constant downtrends and losses discouraged me so I sold off, got back in Dec 2020 this time with guidance from an investment adviser that was recommended by a popular economist on a subreddit, long story short, its been 2years now and I’ve gained over $850k following guidance from my investment adviser.

[@usieey]

I’ve been down a ton, I’m only holding on so I can recoup, I really need help, who is this investment-adviser that guides you

[@Mohaimam316]

Definitely! All of this happened in less than a year after Natalie Lynn Fisk told me what to do. I started with less than $100,000, and now I'm about 17,000 short of having a quarter million dollars.

[@simulatethat6099]

I would point out we don't know what the P/E was when he added to his MSFT positions. Does he regularly DCA or when did he build his position in MSFT?

[@JosephCarlsonShow]

He just recently purchased Adobe which is at a higher PE than Microsoft.

[@rajibear77]

He has held Microsoft since fund inception in 2010. Of course as it’s an open ended fund he may have added at various points as people invested in the fund.

[@Ph0neutria]

If you mean what is average price Fundsmith paid for MSFT then it's 74.40$ which is pretty good.

[@Pietro5557]

I just looked into this He has added since 2013 to 2019-2020 He has began to unload by alot recently

[@Foxyfreedom]

@@JosephCarlsonShow yea because Adobe has a massive monopoly on PDF’s. Try to find a reliable free pdf product, you can’t. Adobe P/E is irrelevant for that exact reason

[@markarnoldsfinance2765]

10/10 video! This will add more metrics for me to look at before buying a stock. Thank you Joseph!

[@dyingpentas]

One of the best videos I've ever watched by Joseph 😄 thank you!

[@soup100]

free cash flow yield is HUGE. Overtime, Free cash flow used for dividends re-invested and/or stock buybacks can dramatically improve portfolio performance over time.

[@pennguino9137]

Great content. These types of metrics videos are highly appreciative. As a new investor, I can read a 10K or read a tech manual, and still have no idea what I am reading. I see these metrics and a value associated with them, but have no basis on what they actually mean. ROE, ROIC, PE, EPS... are meaningless unless you have a way of determining if that value is good or bad. A company has a high PE (> than 25). But if their ROIC, FCF, Rev and profit are all doubling every 4-5 years the 25 PE is a cheap price to pay. A lot to learn and I am sure the price of tuition will be worth it in the end. Basically the PE is worth the ROI. I might not be profitable in the first year or two but it will turn around and I will be a growth stock as long as I stick with it and learn.

[@ryanlitzinger1270]

This might be the most straightforward and informative video I've seen in a long time. I'm not sure what you decided to do differently, but the entire commentary and style of this was incredibly easy for me to understand and absorb. Great work! I appreciate you putting this type of content out.

[@KieC.]

He starts his fund around 2011 during an era of insane QE, cheap debt and euphoria in the US economy and averages 18.4% returns. Buffet started his fund in 1965 with annualized returns of 20.1%. I still am in the camp that value investing is the proper way to go and I think during the next leg down we’ll see who was swimming naked.

[@jameswalker366]

50% BERK.B /50% Fundsmith. Done.

[@KieC.]

@@jameswalker366 Not for me fam, I see a lot of those high flyers dramatically coming down in share price. The long term average PE is 15 and we haven’t seen many large cap blue chips sell off like the small and mid caps. A decade is too short of a performance pattern for me to believe in.

[@fatihsenguel]

Whats QE?

[@KieC.]

@@fatihsenguel QE is an acronym for Quantitative Easing. Basically it’s when the Federal Reserve prints new money and buys government bonds/ mortgage backed securities as a way to artificially stimulate the economy/GDP growth. It’s a huge contributing factor for the decade long bull run we’ve just had.

[@alfiesaunders7410]

Your claim attributing his returns to QE is nonsense. Terry run the Tullet Prebon pension fund from 2003-2012: moved pension scheme from £31B deficit to £68B surplus by compounding at 14% p.a. All this during the lost decade for stocks. His strategy is quite simply back by children’s level mathematics. You buy businesses with superior operating metrics to the market at similar or better valuations, you will outperform the market.

[@shellywhite2145]

I am new to the stock market. Every stock that I bought so far, I was out of luck because I bought them when they were expensive. I feel I missed out on all the stock opportunities so far for the tech stocks.I believe having 75K yearly income would be a good investment so I want to plug all my savings into the stock market. I know this sounds a bit dull but I would like to know if I should learn investing or let somebody else (more capable like a FA) do it for me? Please share your thoughts. I am kind of tired of searching for a good stock to buy and losing all the good opportunities .

[@shellywhite2145]

@Jack Whittaker Hi , please who is the expert assisting you and how do I reach out to them?.

[@shellywhite2145]

@Jack Whittaker Thanks for sharing, I just looked her up online and I would say she really does have an impressive background on investing.

[@kevinbingham3241]

This is a spectacular video. Your walk through of the five key metrics was exceptional. Thank you.

[@LawdDemRangz]

Terry Smith: “Right, well, I’m not saying that I’m better than you, I’m just saying that everything I do is superior to everything you do, in every way.” *lights joint, makes 20%*

[@amid_invests]

Your storytelling style is the best !

[@saikrishnas4117]

I really feel excited and practical approach to investment. All the best...

[@brooksaugust4380]

I'm in my late 50s and I'm more interested in investments that could set me up for retirement , I mean I've heard of people that netted hundreds of thousands during these crash, I listened to someone on a podcast who earned over $350K in less than a year, what's the strategy behind such returns?

[@jefferysfishing8190]

The market is volatile at this time, hence i will suggest you get yourself a financial-advisor that can provide you with entry and exit points on the shares/ETF you focus on.

[@griffinford1988]

Having an investment adviser is the best way to go about the market right now, especially for near retirees, I've been in touch with a coach for awhile now mostly cause I lack the depth knowledge and mental fortitude to deal with these recurring market conditions, I nettd over $220K during this dip, that made it clear there's more to the market that we avg joes don't know

[@griffinford1988]

Sure, the investment-advisor that guides me is Frances Annette Batista, she popular and has quite a following, so it shouldn't be a hassle to find her, just search her

[@torytripp5108]

Thanks, her website popped up on the first page immediately I searched her, I read through her resume and seems pretty interesting, so I booked a call to discuss with her.

[@tommacdonald_official]

The strategy behind those returns are manyfold. 1. Luck. 2. High level of risk-taking like Options Trading can net alot of money. ( and lose 100%) 3. Margin trading. ( see risk-taking) 4. Trading with a multiple of the returns. ( $350k may have been a 10% return on a $3.5 million portfolio in which case it's peanuts) 5. Insider trading. ( See Nvidia, Nancy and Paul Pelosi for insight here) 6. Angel Investing (See items 2 and 5) 7. Specialty derivatives not Options. ( Shorting, SPACS, CDOs, Futures Contracts, Credit Default Swaps. etc...) 8. Lottery Winner. So I was cheeky on the last one. But for a regular guy, DCA, Regular Dollar Cost Averaging into Broad based market ETF's like SPY, QQQ, TQQQ, DIA and TECL every week is your move. Boring and unspectacular. But SOLID over time. Every time. 100%. Don't just buy and hold.... Buy and Buy. Things that don't work out well over time? Hot tips. Hot stocks and new Cryptos. Timing the market. Swing trading analysis, Technical Analysis, Stock picking and value investing ( unless you are prepared to deep dive into that stock and it's business metrics, like a Warren Buffett would.) and KZbinrs that tell you they can make you $350k but don't show you what and how they did, like our buddy Joseph Carlson does every week! Outside of the market? Buy and own SIX properties that will cash flow positively after financing and base costs and then rent them out. Set for life.

[@bobbygunz9254]

If you were to look at the long-term history of some of the BIGGEST winners from the last 10, 15, 20, 30 years in the stock market, every single one of them have been down at least 50% from their peaks at one point in time. Volatility is the price you pay for great returns.

[@claradidi7573]

Making money from stocks look deceptively easy. The reality is that stock market is one of the toughest mental games in the world.

[@zbighi]

Being a value investor doesn't mean you choose low P/E over high P/E. You can buy Tesla at P/E=100 and still consider yourself a value investor as long as the assumptions regarding future cash flow growth are realistic. If you think it can grow hundreds of % a year, then maybe it's even a bargain. You don't assess value of a stock based on a simple metric. Investing in high quality stocks is a great strategy but I would argue that price still matters.

[@absw6129]

Exactly. Value investors may sometimes look at PE as a first screen, but the process is usually more along the following lines: 1. Estimate future cash flows 2. Use a discount rate to figure out what those future cash flows are worth today 3. Add them up and compare to the price of the company. Looking at PE ratios is what a lot of people think value investing is.

[@drdrjr13]

@@absw6129 Would you consider Josef Carlsen to be a value investor?

[@absw6129]

@@drdrjr13 Kinda. In the end, all investors are trying to get more value than what they pay, but that's too loose of a definition. If we define value as someone who is more focused on price than quality (kind of like an old school Benjamin Graham style investor), then no. I don't think Joseph is the kind of investor who is trying to buy say, a dying company for less than its liquidation value (not sure how viable that style of investing is these days). I think I would put Joseph in the GARP (Growth At a Reasonable Price) category. He seems to favor high quality growth companies like Microsoft, and is willing to pay a slight premium for them.

[@drdrjr13]

@@absw6129 I actually wouldn’t consider him a value investor. I think he focuses almost only on quality and pays too little attention to price. It will not lead to satisfactory returns in my opinion.

[@angelcovarrubias3418]

@@drdrjr13 He is basically doing his iteration of GARP - Growth At a Reasonable Price, that's a tough way to generate alpha - Peter Lynch did it but not anybody else consistently. Picks like AMZN are not high quality - just GARP.

[@davec3974]

Terry Smith's fund is heavily tilted toward the 'quality' factor. When this factor goes through a period of underperformance, as 'value' has over the last 10 years, his fund will also underperform.

[@Zynnovation]

Just as an example, IDXX traded at an average P/E of almost 29x from Jan 2002 to Dec 2007. Hardly cheap back then, but buying in 2002 and holding thru 2007 would have generated returns of almost 28% per year. I don't think valuation should be ignored but there's something to be said about buying high quality companies, even at elevated valuations.

[@NoRegertsHere]

Cool story brew. Over an investment time horizon, TS’ strategy will outperform by a long way. And even if it underperforms during some of that time, it is so far ahead, the market wouldn’t catch up

[@davec3974]

@@NoRegertsHere what's the evidence that his strategy will heavily outperform over an investment lifetime? And what will it outperform, the market or a risk-apprpriate benchmark with the same factor exposure?

[@ryanmocerino7698]

one of my favorite videos you have ever done. incredible information. thank you

[@arejay00]

Smith makes it sound so simple and he follows an elegant strategy. Invested back in 2016 and sticking with him for the long-haul.

[@InfoRanker]

That why i like ETFs, I don’t have to worry about these metrics.

[@wattsinvesting1679]

Great discussion!

[@SlowBrewFinance]

But Joseph, alpha doesn't mean "you beat the market", it means that controlling for factors (value being dead the past decade and quality having flown high) you measure how stock picks performed compared to the adjusted benchmark. Unfortunately, the time period presented is so short and so favorable to these factors that they should not be considered "historical" by any stretch. Good video though. 👍🏽

[@739jep]

I agree that that’s a more useful definition of alpha , properly controlling for risk makes sense , but people are free to use their own definitions. It’s not uncommon to hear people refer to alpha as a simple over performance of a relative index. That said , if achieving alpha is as simple as outperforming an index then all you’d need to is leverage your position in the respective index fund and you’d be golden.

[@rtfunn]

I’m glad to see your thought process evolving. You admit your earlier limited thought process. Not many people admit such things. I look forward to watching your future growth. Thank you

[@thetradersam6157]

Joseph, can filters be added to the Qualtrim page?

[@timdog1863]

Another great episode Joseph! Thank you!

[@orginaleinstein]

Hey Joe. Quick question. I don’t know if you have mentioned this but do you keep your dividend portfolio in a TBA or a Roth? Etc? Thanks.

[@Sojourner88]

This is an excellent video and discussion of metrics and why they are important

[@IXIFrostIXI]

He bought FANG around the recession , incredible

[@cg219]

Nice vid Joseph. In addition to adding ROCE to Qualtrim, could you also add EBIT, Total Assets and Current Liabilities ?? 👀

[@conormehaffey]

For anyone concerned about the “valuations” in Terry Smiths portfolio I would recommend you watch the Fundsmith equity annual meetings. As a UK investor Terry Smith is my second favourite investor after Buffet. If you look at FCF yield currently that doesn’t tell you everything. He shows real life examples of how the companies they have invested in have performed over the last 5 decades and shows what PE you could have paid 50 years ago if the PE fell to the bench mark index level and still outperformed by 0.25% a year. A good chunk of these companies were 100+ PEs 50 years ago and 50+ and you would have still beaten the index. Current yields don’t tell you everything and considering these examples were over periods of 10% plus yields and low yields I’d tend to agree with Terry over traditional value investors

[@angelcovarrubias3418]

There are also plenty of companies at high PE/low yields that have underperformed such as CSCO which is still below it's all time high despite growing much more since then. So Terry Smith is doing some nice data mining given that academics consistently show that high PE stocks, as a group, underperform.

[@conormehaffey]

@@angelcovarrubias3418 if you think Cisco is a high PE then I would revalued your understanding of what a high pe is

[@conormehaffey]

@@angelcovarrubias3418 not all High PE means that the companies are good there are plenty of terrible companies with low growth low returns in capital terrible balance sheets that are high PE probably more than the other. The point is PE doesn’t tell you everything in the long run a company follows it’s fundamentals good businesses perform well poor business don’t good business become bad that’s why you need to assess all of these over a period and just because you have a business which has all these great metrics doesn’t mean it will definitely perform well but you put the odds in your favour

[@conormehaffey]

@@angelcovarrubias3418 additionally Cisco was clearly highly overpriced in the tech bubble if you actually understand Terry smith he still won’t pay too much and sells companies when they get overpriced priced. 28/30 PEs for companies flgrowing at 20% isn’t a bubble if he was investing in SPACs and EVs like Cathie wood I would get your point he is very much a Munger style investor.

[@angelcovarrubias3418]

@@conormehaffey CSCO in 1999 wasn't a high PE? It was sky high.

[@btphillips79]

I found this to be the most informative of your videos this far. Very nicely done! 👍

[@RyanStronach]

I think you're giving a lot of weight to a fund that is only 12 years old. The past 12 years have been massively bullish and multiples have consistently expanded. I disagree with the fundamental idea that PE ratio doesn't matter, because it clearly does determine how much earnings the company will bring in every year for every dollar invested. Microsoft, for example, requires an extremely high future growth rate to justify it's PE ratio. It's just simple math. If Microsoft continues to bring in such a meager percentage of the overall market cap year after year then it will not return a high percentage to shareholders. If Microsoft grows by 20% for the next 5 years, on the other hand, then earnings will naturally increase relative to market cap and the returns will be great. In other words, PE ratio matters but net income growth rate matters much more.

[@rkem1000]

Great content! I continue using this exact strategy for years! It’s been great! Less headache 🤕

[@TheRustyLM]

Great video! But where does one find a company’s return on capital?

[@lailaatallah1857]

I LOVED this video. Very educational. I hope you will do a lot more in this vein. Thanks.

[@massafelipe8063]

Systemic value, meaning investing in broad value index which has roughly the same sector composition like broad market has shown excess returns over the long term. Value stocks are riskier and tend to drawdown harder and investors tend to overpay for growth. Ideally you should combine value and profitability factors.

[@stefanh.3880]

Thank you for this video, I usually go with ETF’s but the approach of this fund is very interesting.

[@andrewwhitcomb4857]

I feel like TPL fits all these perfectly. No Debt. Return on Assets of 49%. 97% profit margin (practically no capex to run the business, hardly any employees). FCF Margin of 48%. 5Yr revenue growth rate of 45% annually. I'd be interested in you doing analysis on it. It seems like a unicorn to me.

[@NoRegertsHere]

Just looked. Yikes…Water and oil royalties?

[@andrewwhitcomb4857]

@@NoRegertsHere Yeah, but take a look at its growth over time. Obviously the biggest risk is oil crashing, but it's limited with TPL because it has no debt and owns the land itself outright. It could very well repurpose its land.

[@ruiamaral6128]

Pls never stop to make videos !!! You are my teacher for a long term ! You are changing lifes mate

[@squishtomar1676]

God bless brother

[@Jakobiey]

Joseph I love this video and love all of your other videos. Terry seems like an amazing investor. My question to him would be even though he looks for higher cash flows or high net margins. Which sounds great but what are the working conditions in this company? How are the Employee wages and working conditions? How well are they treated? Usually companies with higher cash flows or higher net margins usually means they cut corners on products or cheaper quality or don’t hire good quality employees. So I hope that he is doing his full research like you said by going to the house and looking through at everything. Otherwise it doesn’t seems ethically sound. I would not want to invest in a company that doesn’t treat employees well.

[@brad265]

Thanks for this. Totally changed my view on PE ratio

[@akkjuly17]

Another great video Joseph! In learning about proper company valuation I've gotten into the habit of saying "company" instead of "stock" because I think it has a psychological effect. The language we use has a significant effect on the way we think.

[@theambassadorllc6598]

FTNT in his portfolio. Like 70-90x PE. One of my best companies I've been long on! Buy solid companies

[@thecapone45]

I actually loved this video. Reminds me of your earlier videos that were more informative and longer!

[@rightangletriangle3188]

It's a very informative video. Now I can add a few more criteria to screen for companies.

[@supaflydann]

Fantastic insights!

[@andrewwatson9495]

Terry Smith is excellent and his shareholder letters are so good that he has made a book out of them. They are very insightful. He also criticises a couple of Warren Buffett's decisions.

[@GarciaCapital]

“Yeah lemme get uhHh……double compounder with cheese” “Sir this is a McDonald’s”

[@RussAbbott1]

Very interesting analysis. Excellent video!

[@TukTukElephant]

You are giving a rather simplified view of value investing. Growth is an essential component when calculating what the future cash flow is worth today. Its not as simple as looking at a P/E number. In my opinnion to value investing is making conservative estimation of future cash flows and NOT overpaying for it.

[@TheBallers102]

This is so good and I’m only halfway through!

[@ftakenouchi1464]

I’m learning so much from you Joseph, thanks for your time and effort and know that you are truly helping ppl all over the world good karma will accrue to you.

[@stephenlaverty6266]

Great vid, obviously a lot of time on this. I'm a UK based investor and have looked at Terry Smiths work for a long time, he is very impressive as are his numbers no doubt. But 11 years is a relatively short time frame, many factors have been favourable to his approach in this section of time. We are possibly seeing cracks appear now, very high PE's need very high long term performance, its a big ask for already massive companies. On a similar vein from that, as his fund has grown in sheer size it will be impossible to get those last 11 year results going forward. All that being said we could learn so much from him. Brilliant work on your part.

[@guy16991]

Hello, can you explain how ROCE is being calculated?

[@TooAjit2Quit]

Joseph, this was great

[@dialogsemiconductor2039]

Joseph, you have one big misconception. The biggest holdings in his portfolio are stocks, which are way above there historical mean. He profited from a positive shift away from the mean. He never bougfht these stocks with these high multiples. Let's take another look at his fund when he holds and the valuation reverts to the mean.

[@p.c.h.6721]

Good video Joseph 👍

[@jamespollard8090]

Amazing video!

[@e.manuel]

I like the message you are trying to convey. Nonetheless, correct me if I’m wrong but you didn’t seem to talk about specific dates when this guy you talked about bought stocks and/or trimmed his positions. Would’ve been good to add to your research, since you seem to be talking about today’s valuations when giving stock examples he bought, yet he could’ve bought a long time ago (i.e. covid crash) when prices were cheaper. Recently, some of the best quality growth stocks fell a ton (i.e. Paypal) from their highs which is why you still want to pay attention to valuation. It’s smart to buy little by little when talking about individual stocks, and trim positions when they become too overvalued. You also gotta know when to throw in the towel when your thesis changes. When a thesis changes in a quality stock that’s when you are glad you bought the stock at proper value. Also, there’s different schools of value investing: 1. B. Graham’s “cigar butts” focuses more on buying stocks for under liquidation value. This approach is basically all about buying cheap and selling at a specific price target. Gotta understand the historical time frame when he wrote his book in order to understand this approach. It made sense for the time to buy such stocks for less than a 15 p/e. Tech stocks didn’t exist at that time and Value investing has failed to adjust more recently in this regards. 2. Buffett focused on Moats that could grow over time and generate future cash flow. If you take a look at some of Buffet’s buys (Coca Cola and Apple) you find out that some might have thought that he paid a fair price or even overpaid a little bit for some of his plays back when he bought them, but what made them value plays is that he estimated that present value of future cash flow and rarely sells out completely of a core position. Quality tech stocks can’t be valued using the same 15 p/e metric from B. Graham and rather need to be assessed through different accounting measures different than GAAP Earnings (which are liked by Wall Street) which tend to penalize them, and rather support Industrial Dinosaur companies. Tech stocks might look expensive on a p/e metric when in reality they are reinvesting profits into the business for future growth (Amazon). Everyone , please do your own research and don’t buy a stock because you heard it was a good one from a friend or youtuber. I would rather DCA into a low cost ETF than do that.

[@bgwinn]

Good video - food for thought

[@rubyus7332]

Great content, Thank you!

[@rajibear77]

Terry uses free cash flow yield as his main valuation metric and combined with their estimations of free cash flow growth and return on capital employed they base their decisions. A company with an increasing coupon is better than a fixed coupon

[@drdrjr13]

It really depends. You can definitely overpay for growth, especially if you are looking for high returns. If someone is looking for 15% annual returns, the present value of $100 in earnings that will come 10 years from now, is $25. I would bet that the S&P 500 will beat stock pickers who don’t pay enough attention to valuations over the next 10 years. Terry Smith, Cathie Wood and Josef Carlsen fall into this category.

[@ramseyluca2054]

I think all this year many things are going wrong.. Gas is outrageous, food goes up to is and rent is increasing constantly... I think people are starting to be selective in what they spend, the economy is crazy right now!.. I read about people who grab multifigure monthly as investment income even these crazy days in the market, any advice on how to make substantial progress in the profit? I would appreciate it..

[@lucasbennett5087]

I agree with you and I believe that the secret for financial stability is to have the right investment ideas to enable you earn more money, I don't know who agrees with me, but either way I recommend real estate or crypto and stocks...

[@homesanderson6893]

I also diversify other financial instruments but mainly crypto... I don't really trade, I only invest with a professional assigned by a crypto company that trades for people and returns profits weekly for me and you can invest your capital and earn weekly returns of investment (ROI) without any additional fee attached...

[@homesanderson6893]

The Professional is Cynthia Watson

[@friedarogers7715]

The rule of identifying the right time to buy and know the basic rule of knowing when to sell is where the work is and is more complex than it seems, so I had to check cynthia watson and I have won at least $12,460 in the last month...

[@richardaleksandra6298]

The rule of identifying the right time to buy and know the basic rule of knowing when to sell is where the work is and is more complex than it seems, so I had to check cynthia watson and I have won at least $12,460 in the last month...

[@fundrisefanfam]

Best content on KZbin!

[@goon5544]

I'm going to look into these picks. He's definitely picking winners.

[@jochemtb99]

Another motivating video Joseph. Thank you for your consistent high-quality videos! (Just like the stocks in Smithfund😉)

[@XMan-mi6gs]

Thanks for these lessons! Very good video. Gives a lot of value. Keep up the good work!

[@vnilla2921]

From 2011 to today the TR of S&P 500 is up 400% - isn’t this the same for your graph for Fundsmith not including fees ?

[@thegreatgrumpus4841]

Joeseph Carlson? More like Joseph DANKinson SHEEEEEEEEESH

[@tom19_06]

Could you give an example of a stock buyable in his Opinion at the moment?

[@Corrander]

Great vid

[@tiathetraderdog9404]

Hi Joseph, very nicely done here. I watch the videos every week to help keep me grounded. although I have to say from November I was mostly in cash and yet also missed the last 2 weeks pump proving as you say you cant time the market. Can you include a screener in your system of the ratio for companies of that find the highest earnings yield vs the highest Return on capital? And show how your portfolio compares to the screener stocks from the magic formula?

[@demri123]

Lots of Value Traps out there! Peter Lynch says you want a PE that is around the annual growth of the business. So, for example, its fine to buy a 40PE stock, if the company is growing at 40% annually. This is better than a 10PE for a company that is growing at 3%. The 10PE stock is overvalued, the 40PE one is not.

[@wise_one45]

Thanks this video was very informative and helped learn something new and different aspect to valuation which i tend to struggle at times. Thanks again.

[@georgestreng]

Here is a video that deserves repeat viewing.

[@Zynnovation]

Big fan of Terry Smith. Chuck Akre is another great investor too.

[@harikrishnanchandramohan4209]

Good businesses need not have to be good investments because markets are efficient and they are already priced in. That's the reason only 1.3% of the stocks contribute to 80% of the market returns and the rest offer returns equal to one month t-bill. Terry's still a relatively young fund and only outperformed MSCI world which is not popular for its returns. Value investor's returns usually beat the S&P. Also he changed his philosophy many times. Said Tech companies destroys value and then bought microsoft. Said Amazon is the Wall street's charity and then bought Amazon. Said no turnover, but he keeps buying and selling. 12 years for a fund is still dog years. Wait for the long term.

[@jaymesmean]

Great vid. But my question is, how do we know he didn't initially start investing in MSFT and others while they were undervalued?

[@elstonmendonca88]

As per him even cathywood is correct and tesla valuations is perfect, it has to be pe and the growth, higher pe with higher growth can be justified

[@shadowr6348]

Hi Joseph, I noticed you have covered Terry Smith before. Buying high quality is brilliant, but paying whatever is not. I have started to focus on ROIC and with the Magic Formula you can find low PE high ROIC stocks, although for better or worse this takes no account of a company's story. Perhaps you would offer an opinion on Joseph Greenblat's methodology. I started this a year ago and many of the stocks in this basket are down heavy, but I guess it's the long haul. The point is good fundamentals such as profitability, roc and where possible a lowish PE, over time we may beat the index. Regards Charlie

[@mozyrevo]

He holds European and Uk stocks as well such as Diageo Unilver, Novo nordisk, etc. So weightings are for US holdings in the portfolio only

[@vnilla2921]

Yes !!! That a good point. Seems like has match the S&P see my comment above.

[@mrsterling5306]

Enlightening, very good video!!!

[@azulsimmons1040]

I've read Return on Capital used by quite a few quality investors. I need to look at that metric more often.

[@nicknack2570]

Appreciate the video, quality video! 🤣

[@MyDreamside]

were they overvalued when he was buying?

[@triode2a3]

Hi Joe. Greetings from UK. All your content is great and wonderfully honest - thank you. I've been in Fundsmith since its launch. I liked the original philosophy behind the fund and had trust in Terry. This is, however, the first time I have got real insight into what is 'under the hood'. I may consider DCA more of my cash into the fund. Cheers!

[@NoRegertsHere]

Smithson is another one of his funds which does the same thing but with smaller market cap companies

[@bompingdatwomper]

Love the video, always love when you analyze the legends of the game! Could you look into Bruce Flatt? The ceo of brookefield, he's known as canadian warren buffet.

[@739jep]

Would need to know the factor regression of his fund to know just how well he’s doing I think. I can’t seem to find the info on their site to be able to do so.

[@cv0669]

Joseph, you are the initial reason I found Terry Smith. He is awesome and very direct. His book is okay but very repetitive and I think you can watch a shareholder meeting and your video and get a good idea of what he's about and his process.

[@MX4551]

I really don't understand the cash conversion point. Can someone explain again please? Cause Terry says, the the index has high cash conversion, because profits went down more than cash flow. So but why is his portfolio also has a high cash conversion? Shouldn't it be less than 95% to considered better? Thanks folks!

[@Vapor2062002]

JC, interesting you bring up the point of the PE ratio as most investors use that to determine if its a good deal or a bad deal.. They forget to check the engine or the inside of the roof for leaks.. does it have crazy debt.. most airlines do... is the rev growing? does it have a durable moat? are they diluting share count? As you have shared people see a stock go down and think its a great deal. If a house is at 3/4 to 1/2 of the houses around it.. do you just buy it without investigating... is their a foundation issue.. is there black mold... These same things exist in companies and drag down their performance... I would rather pay a fair to above grade price for a quality bender than deal with crap every time I want a smoothie...

[@miguelgois4542]

Joseph, hi like very much, what you do 😃 PS.where Can i find de site to see de portefeuille van Warren Buffet ?! thanks

[@miguelgois4542]

@♜̨҉̨ Pinned by Joseph Carlson hi Joseph, do you know how i find de Warren Buffet investissement on internet ? Thanks you very much