April 6th

I said: " $TSLA is cheap!"

It's up 37% in the last week alone!

Is it still cheap?

My answer⤵️ First, we need to take into consideration that free cash flow is plunging.

Inventory is up (a very bad sign for a vertically integrated company)

And spending on AI has been huge.

Warren Buffett's favorite investing book:

Securities Analysis by Ben Graham

It's FILLED with timeless wisdom that still applies today.

Here are 12 powerful lessons every investor should memorize:⤵️ 1. Investing versus speculating

Investors make decisions based on the facts and value of the asset.

Speculators make decisions based on other participants' behaviors.

Know the difference:

📊 $TSLA valuation: Is the 65% dip a buying opportunity?

What today's price assumes about the future⤵️ Most only look at traditional ratios and say:

"This is WAY too expensive."

🔴 Price/Earnings (P/E): 33
🔴 Forward P/E: 59
🔴 Price/Free Cash Flow (P/FCF): 108
🔴 Forward P/FCF: 113

They aren't wrong, but it's incomplete.

What if we do a reverse DCF?⤵️

The P/E ratio sucks It’s a metric that easily deceives investors

Here are 5 reasons why the P/E ratio can be INCREDIBLY misleading (and what metrics to use instead):👇 What is the P/E ratio?

P/E stands for “price-to-earnings”

It’s a simple metric for determining a company’s current valuation

It divides the stock price by the last 12 months of earnings per share

I own 16 stocks

Here they are, from most to least "expensive": Most (13) of these stocks are roughly in STAGE 3/4

The Tool: modified Reverse DCF calculation

My inputs:
1️⃣ A 3% terminal growth rate
2️⃣ A 10% discount rate
3️⃣ An optimized Free Cash Flow margin

The output:
🟢 The assumed TOP LINE growth
🔴 Adjusted for share dilution

This might seem blasphemous, but I don't think $CRWD is *crazy* expensive right now.

Just *normal* expensive.

Here's why👇 Management has gone on the record saying $CRWD can reach 38% Free Cash Flow margins.

That's $0.38 of every $1.00 in sales going in the company's pocket.

The three cheapest stocks in The Antifragile Portfolio today, in reverse order⤵️ 3) Amazon $AMZN

Amazon is an odd beast. It can go on capex binges, then capex fasts.

I like to use Price/Operating Cash Flow (**real** cash from operations) to check valuation.

What it looks like now⤵️

Since December 2014, The Antifragile Portfolio has returned 17.7% per year.

That beats the market.

The main ingredient of success: Studying MOATS.

A quick primer⤵️ What do I mean by "Moat"?

Accounting is the language of business.

If you buy stocks, you MUST learn how to read a balance sheet.

Here’s everything you need to know:⤵️ The balance sheet is one of the 3 major financial statements.

It shows company’s:

▪️Assets: What it owns
▪️Liabilities: What it owes
▪️Shareholders Equity: It's net worth attributable to its owners

At a FIXED point in time

The ANTIFRAGILE PORTFOLIO owns 21 stocks.

Here's each one and the key metric to watching for each...⤵️ Mercadolibre $MELI

Since: 2015
Percent of port: 13%
Total Return: +1,100%

Mission: Democratize commerce & finance
Why: Infrastructure buildout & sticky payment solution
Key KPI: ⤵️

If you pay attention to P/E for stocks like $AMZN you shouldn't be buying any stocks

Here's why P/E is completely USELESS What does P/E stand for?

I own ~21 stocks

Here are:

📈 3 MOST EXPENSIVE

👇 Intuitive Surgical $ISRG

Assuming a 10% discount...

👉IF, the company's FCF margin in 2034 is 33%

👉THEN, it's revenue must grow at 21% CAGR

Right now, expectations are for ~17% revenue CAGR over next two years

(Note: Currently 2% position -- VERY Antifragile company)

15 timeless investing principles, visualized:

1: If you want to build wealth, you have to invest 2: Don't invest in stocks until you are ready

Focus on financial wellness first

Tesla's valuation $TSLA⤵️ First, we must ask ourselves:

"What could the FCF margin look like in 2034?"

The past⤵️

I first bought shares of $AXON in 2017

They are up 1,000% for me.
$AXON is now 8% of my portfolio

Is it time to trim / add/ stay put?⤵️ First, let's evaluate the company

1⃣Does it have a MOAT?

Yes -- Switching Costs

Probably widest I've ever seen.

Imagine re-training an entire police force on
⚫️TASERS
⚫️Body cameras
⚫️SOFTWARE that goes along with it

I first bought shares of $CRWD in 2020

They are up 400%+ since then

The company now accounts for over 10% of my portfolio.

Is it time to trim?⤵️ Let's start by evaluating the Antifragility of THE COMPANY.

1️⃣ Does it have a MOAT?

🟢 Yes!
👉 Network Effect: Each node on Threat Graph makes protection stronger. $CRWD was first-mover here
👉 Switching Costs: No one wants to implement an entire new platform for cyber-security

I've held $GOOGL for well over a decade.

10-Year Returns: 410%

But is it time to trim my position?⤵️ First, we evaluate the COMPANY.

◾️It is an ADVERTISING company
◾️Has ~10 tools with 1 billion+ users (Chrome, YouTube, etc)

📈 Threat of ChatGPT overblown...for now

📉 "Other Bets" have produced NOTHING

All-in-all, a solid company, but moat *could* be shrinking

Accounting is the language of business.

If you buy stocks, you MUST learn how to read a balance sheet.

Here’s everything you need to know:⤵️ The balance sheet is one of the 3 major financial statements.

It shows company’s:

▪️Assets: What it owns
▪️Liabilities: What it owes
▪️Shareholders Equity: It's net worth attributable to its owners

At a FIXED point in time

Some stocks are STRONG BUYS when they fall

Other stocks are SELLS when they fall

How can you tell the difference?

Here are 5 financial yellow flags to help you out... 1) GOODWILL

This represents the premium a company pays for an acquisition above its fair market value.

If there’s lots of goodwill on the balance sheet, that’s troubling

The morning of Feb 10, 2017

I made the most important financial decision of my life.

I sat at a table on a coffee farm in Costa Rica. There was no fanfare.

I bought $5,000 of stock in an expensive, money-losing company.

Why would I do such a thing? It was because I had a SUPER-POWER:

🦸I knew how to read financial statements.
🦹‍♀️I could see things I believed most were missing.

With this company, three things stood out:

Capitalism is brutal

If you pick stocks, you MUST know how to identify a moat

Here are 5 financial “rules of thumb” that Warren Buffett uses to tell if a company has one: 1) Gross Margin

Found: Income Statement

Formula: Gross Profit / Revenue

Moat: Consistently above 40%

No Moat: Under 40% & volatile