Folks, here are the highlights of our latest Money Concepts episode.

We met on Sunday via @getcallin. We talked about Financial Independence, diversification, value vs growth, and more.

πŸ‘‡πŸ‘‡πŸ‘‡
Highlight #1

The inspiring story of Mr. Ronald Read -- a janitor who amassed an $8M fortune by starting early, saving diligently, and investing responsibly.

With good planning and execution (and a bit of luck), Financial Independence can be within reach for most of us.
Highlight #2

There's a strong law of diminishing returns to diversification.
Highlight #3

Warren Buffett: The King of Diversification
Highlight #4

Even if we invest ONLY in US stocks, our portfolio may carry significant international exposure.
Highlight #5

"Value" is NOT just "Low P/B" or "Low P/E".

In fact, such simplistic definitions of value may partly explain why "value" has been under-performing "growth" lately.
Highlight #6

"Blue Chip" stocks may not stay that way for long.

The longer these businesses are able to safeguard their "moats", the more cash they can return to their owners before death eventually strikes.
If you liked these highlights, and want to listen to the full ~1 hour, 45 minute recording, here it is:

callin.com/link/BVNfekhqZh
About Money Concepts

We're a virtual investing club. Our goal is to help each other become better investors.

We meet Sundays at 1pm ET via @getcallin, to discuss all things investing.

Join us. Get the app. Subscribe. Tell your friends.

It's FREE.

callin.com/?link=DftUtOET…

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More from @10kdiver

1 Jan
Get a cup of coffee.

Let's kickstart 2022!

To that end, here are 22 key concepts to help you appreciate and achieve Financial Independence.
Concept #1.

What is Financial Independence?

It's a state of *self-sufficiency*. It's when you have enough money, and enough income-producing assets, that you and your family can live comfortably for the rest of your lives -- WITHOUT needing a job.
Concept #2.

Financial Independence is not really about spending MONEY how we like -- although, to an extent, that becomes possible.

It's about being FREE to spend our TIME how we like.
Read 25 tweets
28 Dec 21
Teaching People The Basics Of Investing

A short thread featuring my friend @Gautam__Baid, and his approach to this difficult problem
Suppose your friend Bob is new to investing.

He has just opened a Robinhood account.

But he has no knowledge of the fundamental concepts of investing -- how to analyze companies, how to pick stocks, etc.

Over time, Bob wants to learn these things.

How would you help him?
Well, there are tons of good resources that Bob can use to pick up the basics of investing.

There are excellent books.
Buffett's shareholder letters.
Lots of great YouTube videos.
Blogs.
Twitter threads.
Podcasts.
Etc.
Read 14 tweets
27 Dec 21
Folks, here's a recording of our latest Money Concepts episode -- where we discussed "Inflation" for an hour and a half.

If that's too long for you, no worries. Just scroll down. We've created a few ~2 minute "highlights" you can listen to.

callin.com/?link=tURmKhwt…
Highlight #1

The purpose of investing is NOT to grow our money.

It is to grow our *after tax purchasing power*.
More on this idea of growing after-tax purchasing power -- from Warren Buffett's 1980 Berkshire letter:
Read 17 tweets
18 Dec 21
1/

Get a cup of coffee.

This is a joint thread; Sahil Khetpal (@skhetpal) and I wrote it together.

In this thread, we'll walk you through various "Return Ratios" -- ROA, ROE, ROIC, ROCE, etc.

This will help you judge business quality better, and hence invest better.
2/

Businesses generally work like this:

a) Raise *capital* -- equity, debt, float, etc.

b) Turn this capital into *assets* -- new products, software, inventory, factories, etc.

c) Generate *cash* from these assets. And,

d) Over time, *return* cash back to owners.
3/

*Owners* of such businesses have 2 main concerns:

One: How much cash do they have to PUT IN?

And,

Two: Once they PUT IN this cash, how much cash can they TAKE OUT over time?

The *less* they have to PUT IN, and the *more* they can TAKE OUT, the happier they are.
Read 34 tweets
11 Dec 21
1/

Get a cup of coffee.

In this thread, I'll walk you through a simple way to compare the effectiveness of *dividends* vs *share buybacks*.
2/

In a capitalist society, businesses are supposed to work their magic like so:

Step 1. Get capital from owners.

Step 2. Earn a return on that capital through business operations. And,

Step 3. Over time, give back MORE capital to owners than what they put in.
3/

Publicly traded companies have 2 main ways of doing Step 3 (giving back money to the owners):

(a) Dividends, and (b) Share Buybacks.

Which is better?

Well, that depends on the circumstances.

And this thread will help you evaluate these circumstances.
Read 29 tweets
4 Dec 21
1/

Get a cup of coffee.

In this thread, I'll walk you through some key concepts related to Survival, Resilience, and Aging:

- Conditional Lifetime Probabilities,
- The Force of Mortality,
- The Lindy Effect, and
- Taleb's Turkey.

(h/t @nntaleb)
2/

Suppose a restaurant, on average, stays open for 8 years before shutting down.

And suppose Bob has a restaurant -- that has been open for 3 years now.

How much longer should we expect Bob's restaurant to stay in business?
3/

We may be tempted to answer: 5 years.

After all, restaurants last 8 years on average. And Bob is already 3 years in. So, on average, he has 8 - 3 = 5 years left, right?

Not necessarily.

This 8 - 3 = 5 logic may lead us very far off the mark.
Read 24 tweets

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