Investing Mastermind Podcast
In this new podcast "Investing Mastermind Podcast" Michelle Marki and I discuss our investing strategy and share everything we've learned with our audience. We release a new episode every Tuesday, so you can listen to it on your way to or from work. Please give it a follow on your preferred podcast platform.
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Episodes
Finding Companies In Your Circle of Competence (Part 1)
This podcast episode is the first in a discussion series about Warren Buffett and Charlie Munger's 4 principles of investing. We walk through these investing principles in the form of a checklist that you can download here: https://www.aahus.com/2021/05/one-of-most-important-artifacts-or.html
In this style of investing, we learn a lot about companies before we invest in their stocks. The 4 investing principles/steps we discuss in this series are: 1) Understanding the business (circle of competence), 2) Management (honest & competent), 3) Moat (favorable long term prospects), and 4) Margin of Safety (available at an attractive price).
Today's deep dive is focused on the circle of competence or working toward the point where we truly believe we understand the business. We provide new investors with ways they can brainstorm in getting to know a company they might wish to invest in. We also discuss how guru investors (the best investors) can give us ideas about potential investments we may wish to study.
One way that we learned how to figure out what businesses could be within our circle of competence is called the "Three Circles Exercise." Learn more about how this exercise works by watching Michelle's video: https://youtu.be/7HP5Ky__zso
Before we invest, we want to make sure the business matches our personal values and ethics. We also consider how the company impacts the world. It's also important to define the boundaries of our knowledge so that we don't invest in companies or industries that we don't fully understand.
How We Practice Investing
Today we want to give you glimpse into our lives behind the scenes of this podcast and share more of who we are and why we wanted to share our knowledge and passion about investing with the world. Both Signe and Michelle come from non-financial professional backgrounds and they discuss their investing learning journeys. We had been searching for an investing strategy that made sense to us. When we read and listened to the "Invested" book and podcast by Danielle and Phil Town, we finally found the Warren Buffett investing style that resonated with us. We discussed how many financial advisors are paid fees regardless of how their clients' portfolios perform, but sometimes professional financial help can be really helpful depending on the situation.
We explained our investing practices and how we live and breathe the investing lifestyle. We reminisced about our incredible experiences at the Berkshire Hathaway annual meeting in Omaha, Nebraska and seeing Buffett and Munger live at least once. We met amazing investors like Mohnish Pabrai and Guy Spier. It wasn't a "Wolf of Wall Street" kind of party but a "Woodstock for Capitalists," where a community of like-minded investors came together in the spirit of kindness and sharing. Michelle discussed how she uses practice shares (a concept from Danielle Town) to start having "skin in the game" when researching potential stock investments.
Signe's 12 month investing practice resource: https://www.aahus.com/2021/09/investing-practice.html
Signe's investing checklist: https://www.aahus.com/2021/05/one-of-most-important-artifacts-or.html
Why Now Is A Good Time To Learn To Invest
In today's episode we discuss why now is the perfect time to learn about investing in companies, especially in the way that Warren Buffett invests. You might be wondering if it's a good time to invest since the stock market has been down for the last year. Even though many people could be selling stocks, there could be significant buying opportunities if you find undervalued equities. Just as one would be excited to buy one's favorite food items for 50% off at the grocery store, the same framework applies to investing. We explain how high prices for stocks are not necessarily reflecting the quality of the underlying businesses. Buffett has said "price is what you pay, value is what you get," and it's important to know that a market price is not always equal to a company's intrinsic value. We started introducing Signe's investing checklist as a helpful resource, which you can check out here: https://www.aahus.com/2021/05/one-of-most-important-artifacts-or.html
Another resource is how we might come across potential investment ideas, and Michelle mentioned how helpful the "We Study Markets" newsletter is and it's totally free. Anyone can sign up to the Investor’s Podcast Network’s full daily commentary and expert insights in the We Study Markets newsletter: https://sparklp.co/p/9f8a748fff
Buffett and Charlie Munger's 4 Principles of Investing
Michelle Marki and Signe Lonholdt explain Warren Buffett and Charlie Munger's four principles of investing. Instead of blindly buying a stock, then waiting and hoping that the stock will go up in price, we carefully take the first step before we even buy the security. The difference is that instead of just hoping for an increase in the stock price, this first step will help you understand if the stock is trash or treasure since there are many aspects of a stock besides its price.
These investing principles are critical to understand if you would like to invest in stocks like the best investors of all time. The great news is these principles are not complicated to learn.
The first principle or the first step is what Buffett calls the "circle of competence," which is just a way of saying that you can understand the business. The second principle is "moat," which comes from the protective body of water surrounding a medieval castle. In the investing context, moat means a business's durable, competitive advantage(s). The third principle is "management," as in does the CEO have integrity and talent in running the company? The fourth principle is "margin of safety," which means to buy a wonderful company at a discount to its intrinsic value.
By buying the company at a lower price to its "real value," you would allow for some margin of error in judging what a company is really worth. While it's not easy, investing can really be this simple if you follow these steps diligently!
004 Holiday Greetings 2022
Since it's the holidays, Signe and Michelle at the Investing Mastermind Podcast just wanted to wish you and your families a wonderful holiday season!
We're so happy you're tuning in and listening to the show, and we're so grateful for your feedback! If you have a question that you would like us to answer, please send us an email at InvestingMastermindPodcast@gmail.com.
Please remember to subscribe to our podcast so you get the next episode right when it's hot off the press. We'll be back with new episodes in 2023! See you in the new year!
003 The Legend of Warren Buffett And Charlie Munger
We consider Warren Buffett and Charlie Munger to be the masterminds of investing. We tell the backstory of how Buffett and Munger became legendary investors at Berkshire Hathaway.
While Buffett's investing style was heavily influenced by his mentor, Benjamin Graham, his style evolved after he became best friends and partners with Charlie Munger. Many people associate Buffett with this notion of "value investing," but it might be best to think of this style in the way Munger put it: "all good investing is value investing."
Buffett's investing genius lies in his ability to adapt to changing business environments and re-allocate capital into better investments. Much of Berkshire's success stems from their ability to recognize undervalued, quality businesses and buy them at a discount to their intrinsic value.
When there is an economic downturn that causes the stock market to decline, then wonderful companies may be available for us to buy at fair prices. We explain how Buffett saw volatility not as a risk, but as an opportunity to buy wonderful businesses.
002 How We Learned To Invest Like Warren Buffett, The Greatest Investing Mastermind
Signe Lonholdt and Michelle Marki explain the meaning behind our Investing Mastermind Podcast. The word "mastermind" is powerful because it's a collective of minds who invest like our role models Warren Buffett and Charlie Munger. We consider our listeners to be part of this mastermind as we aim to foster a community of like-minded investors. By sharing our thoughts together, we can help each other become better investors.
We also have a conversation about which investors we like to learn from: Phil Town, Danielle Town, Guy Spier, Mohnish Pabrai, Ben Graham, Philip Fisher, Howard Marks, and other inspirational investors. We share what our investing practice is like to stay connected with these investing gurus and investing trends. At a high level, we discussed how we find great businesses that we then further investigate.
001 Why We Started This Investing Podcast
As individual investors, Podcast hosts Signe Lonholdt and Michelle Marki explain why we are doing this podcast. We share our learning journeys along a path toward investing in a way that makes sense to us. Both Michelle and Signe came across a way to invest in the stock market that was unlike anything we had seen before. A type of investing that had proven to give the best rates of return compared to other strategies and that didn’t require complicated models but a good portion of common sense. We are striving to reach our financial goals by investing like legendary investors Warren Buffett and Charlie Munger.
In this episode we discuss the money stories we grew up with in our families. We share the aspects of this investing style that really resonated with us, such as having a business owner mindset and the idea of investing for the long term. There was a realization about the powerful merits of having a concentrated portfolio compared to a highly diversified portfolio which is counter to everything we had learned before we discovered Buffett and Munger.
Since stock market investing financial concepts can be really confusing for beginner investors, we hope that our experiences can shed light on ways to invest and inspire others to pursue investing for generational wealth too. Now is a great time to learn how to invest because economic uncertainty is causing some of the stock market to go on sale in 2022. It's an exciting time because there could be opportunities to buy wonderful companies' stocks at a price that makes sense. So be sure to subscribe to the show and tune in when we release new episodes on Tuesdays!
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