Investing Unscripted Episode 130: November 2024 Mailbag

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​Jason Hall: Hey everybody. Welcome back to Investing Unscripted where we ask and answer the hard questions about investing. I'm Jason Hall joined as usual by my good friend, the voice of the people, Jeff Santoro, Jeff. Hey, how are you? Happy Friday.

Happy Friday, buddy. I am good. It's not often we record. Uh, just a regular podcast episode on a Friday. We do our first Fridays, occasionally the first Friday, usually not the first Friday. First Friday, sometimes. This is good. This feels a little more relaxing and, uh, it's, it's one of those actually really answering actual real questions.

Jeff Santoro: Yeah, it is weird recording on a Friday, but the vibe is nice, man. It's the weekend. We can, uh, let loose a little bit. I'm still drinking tea. Still. I'm still drinking tea. 

Jason Hall: So I'm, it's, it's the same, same shtick that I did last time. I'm also drinking [00:02:00] tea, the spend drift. Enough with 

Jeff Santoro: stop plugging this product that does not sponsor our podcast.

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Jason Hall: That's true. You're right. You're right. Hey, anybody else that's connected with spin drifts, we would be happy to, uh, to sponsor your product. Yes. On our podcast. Organic plug right there. Have your people call our 

Jeff Santoro: people, by the way, we're, we're our, our people. Yes, we are. Yeah, both of us are our people. 

Jason Hall: No, that's actually we have people.

Jeff Santoro: We're internet network. That's right. We do have people. All right. This is enough of this. Uh, it's our mailbag episode for November. Uh, if you are listening to this, thank you. And also, if you have a question for us, you can send it to us at any time. We. We just keep them from month to month and build them up for the next mailbag episode.

You can send them to us at social on social media. You can email them to us anywhere. You can find a way to reach us, send us your questions or comments. It doesn't have to be a question. We can talk about people's feedback and thoughts about the show. Uh, And we got so many in October that some of the [00:03:00] ones we're going to start with this week are actually last month's leftovers that we didn't get to.

Uh, but we got some new ones and, uh, we can dive right in. You want to start with the first one? 

Jason Hall: Leftovers, not leftovers, Jeff. So we have a plethora of riches. It's the surplus. Yeah. Surplus. Thank you. I 

Jeff Santoro: guess leftovers. Not a lot of people like leftovers. Probably not a good term to use. Well, but, but this is the Thanksgiving episode.

So fair point. Also, some food is. Just as good, if not better leftover. I'm just going to put that out there. 

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Jason Hall: Yeah, no, that's true. You know what we're going to do? We're going to get through these questions and we're going to have a B segment and we're going to talk about favorite Thanksgiving foods, what's the good leftovers and might even share things that we're thankful about. So Jeff, before we get into the questions on the mailbag, I do want to point our listeners. At some things that we're doing in social media, so everybody out there that's been involved in Twitter.

It's now X and a lot of people are becoming X [00:04:00] Twitter users. See what I did there. Um, so clever. I'm I'm witty. What can I say? So we were on blue sky now too. So we're, we're on all the socials. We're on Instagram. Tick tock blue sky. Uh, we're still on X and we're still, we'll still, uh, continue to contribute there, but for wherever you are in the social media, except for Snapchat, because we're way too old for that, 

Jeff Santoro: it just feels wrong.

Jason Hall: Yeah. You can find us. So please find us on, on any of the socials that you use, uh, engage with us and follow us. That'd be great. We want to try to build our social following as well. It's how we get a lot of questions on the mailbag. So please, um, Please keep them coming. 

Jeff Santoro: Absolutely. First question comes from ELC MSF on Instagram.

I'm not going to try to pronounce that as a word. I'm assuming it stands for something. Uh, and this one was hit me close to home, so it'll be fun to talk through. Uh, so the, uh, the comment is, or the question is financial education is non existent in public schools. How do we even the playing field? What [00:05:00] 10 stocks every 18 year old should have in a new portfolio?

So a couple of different directions to go in that one. So first I'll, I'll, and I will start with the, the financial education is not you're the 

Jason Hall: subject matter experts in this instance. 

Jeff Santoro: So I will say this it's not non existent in every state. More and more states are adding. Some sort of financial education requirement to graduate New Jersey where I live is one of those We've had it for a long time now more than probably about 15 17 years something like that I will say this this is this is just like a Slippery slope kind of question when you talk about anything that should be taught in a public school because the curriculums are pretty packed So the question is what are you taking out when you're putting something new in?

Jason Hall: Yeah, 

Jeff Santoro: right You You know, so like a challenge in New Jersey, if you add a financial education requirement to graduate high school, for example, like we did, well, that's one less other course a kid could take. So if your son or daughter [00:06:00] loves science and wants to take a bunch of extra science classes, That's one less spot to do that in and you can say the same for any other content area And then there's also the question of like should that be in schools?

Like we schools can't teach everything, you know, we teach a lot of things But it is coming around more and more and I do think it's important I just wonder if it should be pulled into something else or in place of something else Like do do you need to be? So many high school math classes that you're never going to use.

I don't know. Just throwing it out there as a question. Maybe one of those could be a financial education class. But I think, I also think a lot of that is stuff that you could or should maybe learn from just your parents. You know, there's a lot of stuff you learn from your parents that doesn't get taught in schools.

The question is, do your parents know enough? So, so we're trying to solve that problem here, Jason, we'll, we'll educate as many people as we can, and then they can tell their kids. 

Jason Hall: Well, I, I want to weigh in as a, as a parent, um, and Jeff, you, I think you know this about me. We haven't really talked very much about it, but I [00:07:00] come from, Actually a family of teachers too. I have seven or eight family members that have taught and, or been in administrative roles in public education, basically my entire life. I can remember my step mom has been involved in early education. I have an aunt that was involved in home economics.

I don't know if they call it that anymore. And then she moved into a counselor role for a long time. So, and that's one of the things that I've talked about with my family members is where do you fit in these things? And also, and I think this is a big thing. You don't really talk about it. I want to be careful here because I don't want this to come across as dunking on teachers.

 Who teaches it?

And what are the requirements for that person to be certified? However each state delineates that person being allowed to do it. Like, how do they get to do it? And who writes the coursework? Like, all of those things, right? Yeah. And I'll say this too. I think financial [00:08:00] education when it comes to personal finance, And then when it comes to more advanced things around, like investing are not the same thing.

And that's one thing to go 

Jeff Santoro: ahead. No, I was gonna say when, when people say that there needs to be financial education in schools. You have to be careful what that means. Right. And I, I know this just anecdotally, like, as I become more interested in this myself, I ended up finding myself in conversations with people I work with about investing in things.

Like they find out that I have a podcast and they ask me questions and I'm very, very, very careful to, I, I like having the conversation because obviously this is what I'm interested in, but I'm abundantly careful to not try to, to Come across at all. Like I'm giving any sort of advice, like even more. So I'm more careful than even I am here on the podcast, because there's a difference between like understanding what is a Roth IRA versus a traditional IRA I think that's something you could teach in a school.

Cause it's factual [00:09:00] what you should invest in. How often, how, when, at what age, that's personal, you know, like that's not something you can teach in a, in a, in a classroom, like in terms of a curriculum and things like that. So, you know, I, I, I, I think you could probably certify a teacher to cover like just the basics.

Right. What is this account? What is that account? What is a 403b? What is a 401k? But beyond that, it becomes, I could imagine there being pushback from, you know, certain communities in certain states who just have certain views about money. Money is a personal thing, you know, like people don't want to talk about it.

Think about how many people, you know, who would never tell you their salary, right? Like it's an intensely personal thing. So I don't know. It's just, you have to define what it is, you know, and, and is it personal finance? Is it just basics? Is it investing? Is it all those things? You know, it's tough. 

Jason Hall: Yeah, it's, it's, it's really a hard one to answer.

It is. And, but, but I do [00:10:00] think that there probably is more, like you were saying more than most people realize. Now there is some basic financial education in a lot more schools today than there was, uh, 2020 years ago. Um, and that is good. That is good because I think it is important to provide foundational steps.

Yeah. What is. What is money? What is debt? What is credit, right? What, what is a credit card versus a car loan, right? What is a student loan? Like, what do, what do those things mean? Like explaining how they work and then like showing the math of, you know, this is how much the thing costs. If you put it on a credit card, make the minimum payments.

This is how much you're actually going to pay for it, right? Like things like that, I think can be really, really valuable. To like those basic foundational things that young adult kids that were going to become young adults and walk out into the world need to know. But I mean, I almost kind of wonder if some of those things aren't programs, honestly, that really belong.[00:11:00] 

In the first year of university, first year of junior college and, and trade programs to should be teaching those sorts of things. When kids are actually starting to be in the real world and have to be responsible for themselves, when it's going to be, when it's going to leave a far more indelible mark because they're living it right.

And that's when you can really take those lessons and you're going to make mistakes. And it's before the mistakes are really costly, 

Jeff Santoro: right? Yeah, for sure. All right. Let's go to the second part of the question, which is, what are the top 10 stocks? Every 18 year old should have in a new portfolio. I'm going to, I'm going to have, I have a hot take here.

None. VOO. Yeah. I was just going to say, how about a SPY? How about an ETF that tracks the SFP 500? 

Jason Hall: Yeah, I would, I would say yes, but if they're interested in stocks, if they're, if they're starting to show signs that they're interested in individual and individual stock investing and making those decisions.

I, what I think would be interesting is to [00:12:00] maybe have some stocks that are businesses that that person can directly relate to Chipotle, Microsoft, Apple, you know, that sort of thing, but also some things that. Maybe that they're exposed to all the time that they have no idea exist as a business, but have been wildly profitable Brookfield renewable, right?

Everybody uses electricity, right? Just as an example of like, here's how you can make money in things that are behind the scenes as well. That's what I would, that's 

Jeff Santoro: what I would say. Yeah, I don't. I don't think there's a stock every 18 year old has to have. In fact, yeah, I think the way you framed it is the way I'm thinking of it too, which is it kind of depends if you're interested in it or not.

I think if you are not interested in this at all, you shouldn't have any individual stocks. You should just have an index fund or ETF and call it a day. I, I like the idea of if, if you're listening and you're a parent, this is what I did. And. I [00:13:00] don't know that I had this fully baked in my brain when I initially did it, but I think it's going to turn out.

Okay. I bought my kids a bunch of stocks. Uh, when I first got interested in all this, partially out of just being excited and wanting to buy stocks. And it wasn't a lot of money, like probably, I don't know, less than a thousand dollars for each kid in total, the whole portfolio. So it's like 0. 001 of Amazon, you know, it's like ridiculously small amounts.

I've not touched it mostly in years. It just sits there. I don't add to it. I don't sell things. It's just is what it is. And some of them are up big and some of them are down a lot. That's exactly what I think will end up being a good thing for them to just look at later when they're ready to just to kind of see like, Oh, this is what can happen if you buy something and don't, and leave it there for 10 years.

Right. I'm hoping. And so far it's heading in this direction. There's maybe 10 or 12 stocks in each of their little mini portfolios. And most are in the green. [00:14:00] I don't know, versus the S and P, but just. When, you know, stocks that have lost money or not, a couple are in the red big, but overall the portfolios are in the green.

So I feel like when they. Because it's like a pretty diversified, well rounded portfolio of stocks. And it is stuff they're interested in. It's like Apple and Chipotle and, uh, Amazon things. They know that when they're ready, if they're ever ready and interested, I can be like, Hey, look, here's a bunch of stocks I bought in 2021.

And now it's 2030. Here's what can happen. Look how this stock is up 300% and has covered all the losses on these. It can be like a, and it's yours. Here you go. Sell it. Keep it. You're an adult now. It's yours. I think that's probably a better way than just saying like, you're 18. Here's 10 stocks to buy, you know, right.

Inherit something where you can see the benefit of, Long term holding, if that makes sense. 

Jason Hall: It's, it's funny that is when you, when you started to [00:15:00] respond I flipped over, opened up a tab to my fidelity to pull up Tate's, uh, my son's, uh, very, very small trust account that we start U T M a, that we started.

And then you started talking about that. I'm like, this is exactly what. What we've started doing. My son, it's going to be more than 10 years before he before he has access to this and I will tell you this, I'm going to, here's, here are the here are the eight stocks. Cause we got to give a little bit of meat here. I'm going to give a little bit of meat here. Here are the eight stocks that I have bought in my son's UTMA alphabetically listed Brookfield Renewable, Brookfield Infrastructure, Boston Omaha, which will probably be sold at some point.

Uh, EPR Properties, Kinsale Capital, Lemonade, Live Oak Bank, and Upstart. 

Jeff Santoro: So I'm not surprised at any of those cause those are stocks you talk about a lot, but it's pretty. It's a pretty good mix of it's the barbell that you talk about. [00:16:00] It's a pretty good mix of stocks that have the potential to be huge and, and also some stalwarts that should provide ballast.

So that makes sense. All right. Let's move on to the next question here. Uh, This came from Alex via email and Alex says, I noticed that you've been emphasizing the strategy of adding to winners, which I think holds a lot of water as a concept, but I would appreciate some thoughts on how to balance out that concept against the risk of getting suckered into a hype cycle of multiple expansion or temporary earning spike that will reverse in the future.

I've come to feel that one of the most important things to ascertain as an investor is how long will this last for both good times and bad, but I The better we can approximate this, the better we can model long term growth and define a reasonable price window for good returns. Am I off base? How do you approach this question?

Jason Hall: Yeah, I love this question. And the simple answer is the way that I think about adding to winners is not, is the stock up from where it was at the beginning of the year. It says the stock up from where it was five years ago, right? You're, you're, you're reinvesting in [00:17:00] winning businesses, right? An example I've used on prior episodes, Jeff is tracks, right?

My first shares I bought, I don't know, 2012, 2013, it's been a pretty long time. And I paid a single digit price. I think it's split adjusted now, but it was a single digit price for the stock. I paid a lot higher multiple for the stock. It was a few years later before I bought more and then a few years after that, and then.

Four or five years before I bought again. And I was paying a higher price for the stock every single time Generally, I was getting a lower multiple Because the business was getting bigger and more mature but you know investing in winners When you fall into those like so that kind of that hype cycle echo chambery things Is when you're adding to the same stock?

Multiple times a year or every month or every pay period, right? The stock keeps going up. The stock keeps going up. You're definitely taking more risk of. Just multiple expansion and buying into a peak. That's, that's creating risk. And I'll tell you right now, because of the way the market's [00:18:00] gone this year, that's, we've seen some earnings growth, but there's been a pretty sizable amount of multiple expansion that's happened.

I mean, the market's really expensive. A lot of it's the mega tech. That's like a third of the S and P. I mean, it's this massive percentage of it that all have really high valuations. So there's opportunities and, and, and, you know, large cap and, uh, small and mid cap. But I think you have to just be disciplined and think about that process as a multi year, multi decade process, not from one quarter, one month to the next.

Jeff Santoro: Yeah. I have a question for you because I, I don't know how I think about this. When you hear the phrase add to your winners, do you think of it exclusively through Stock appreciation, or do you think of winners a little bit? It's the business 

Jason Hall: winning. 

Jeff Santoro: Yeah, this is what I'm getting at because I've added to Stocks that are not up or maybe they're up slightly, you know, like it's up 3% something like that But I still think the stock's winning, you know Like I think we know absolutely when [00:19:00] you hear add to your winners people immediately jump to Oh NVIDIA is up 400% in the past two years.

I'm gonna add to that. Well, you know, like that's an extreme example, but I think that that's where my mind used to go when I heard add to your winners. And to be clear, sometimes you can, right? If you find a stock that's going to go up 33, 000% over 30 years, yes, you can pay for it after it's gone up 400% because there's still a lot of gains coming.

Jason Hall: well, what you have to remember is that such a, such a, this is one of the most important things about investing, especially for us, individual retail investors that don't have. Special access to knowledge. And we don't have analysts that work for us that we can throw 20 people to scour the market and try to find the best opportunities, the alpha, like the, the, the, the percentage and gains of the market has only been produced by a very small number of companies.

But I was talking to Tyler Crowe about this, um, when he was passing through town a month or so ago. [00:20:00] And one of the things that he pointed out is that might be true because you have these giant winners, like the Amazon that went, that IPO for a few hundred million dollars, and now it's a multi trillion dollar company and Microsoft, that's a multi trillion dollar company, like they've soaked up so many dollars of market value that, yeah, it's a small percentage that have generated that, like that market value gain, but there's hundreds and hundreds and hundreds of small companies out there that have been massive winners.

They maybe haven't gained a ton of market cap, but they've been really smart about starting small and they've gotten bigger and bigger, but they do stuff like buy a ton of stock back, you know, they bought like 80% of their stock back over the past 30 years and they pay a dividend and you buy combined, you know, the stock price keeps going up, but the market cap doesn't go up as much because the share count gets smaller plus that dividend.

And there's lots and lots of big winners. But the point of that is, is you generally don't know the first year or even the first five years that you own a business. It's. Years and years and owning some of these companies before it becomes apparent, [00:21:00] like how, you know, their long, their long value, their value over multiple decades of creating a wonderful market meeting returns is so it has to, to me, it has to start with, with market beating.

Like with not, not the stock price, but the performance of the business. Right now, David Gardner has talked about stock price appreciation being a signal, and that's important to remember. And Peter Lynch talked about this too, is, is it's, it's a signal. It, it. Point you in the direction of something to explore.

And that's where you start to figure out, is this multiple expansion because the stock's caught up in the market's hype or AI hype or whatever the du jour is, and you can start peeling back the layers and saying, well, okay, how's the business actually doing? So I'll use SoFi as an example. The stock was not, did not do well for a very long time.

And I don't know, it's tripled this year, something like that, more than doubled. It's gone up a [00:22:00] tremendous amount because the business has gone through an inflection point of, of growth and losing money to now their gap profitable. And they're pointing to like five X ing their earnings in the next two or three years.

So, it's, it's losing stock price appreciation as a signal. That the business is doing well, but also understanding the business performance of everything you own for those opportunities that the market broadly might be missing, where you could, you know, buy more of that winning business. And eventually the market's going to catch on and the stock price is going to follow.

Jeff Santoro: Yeah. The last thing I would say is one thing that I'm trying to keep telling myself now, while the market is doing well, is to remember. The businesses I have high conviction in right now for when they drop 30% inevitably because I know when I look at that company after it's down 30% I will question You know, oh, is it down because the whole market's down?

Is it down because the business is struggling? And that's where, [00:23:00] to your point about knowing the business and understanding what makes the business tick, you can find that's when you can find those values, I guess the way I'd answer the question and then we can move on is if you're not sure if it's multiple expansion or.

Business results in your, you don't know how long it's going to last. I would, if it were me, this is not advice. I might just buy a little bit, right? Buy enough that it's beneficial to you if it does well, and not going to kill you if it doesn't. And then remember in the downturn, how you felt, what you were looking at, what you were tracking.

And take advantage of the buying opportunities that will inevitably come when and if the market crashes. 

Jason Hall: Yeah, you don't have to swing at every pitch. And also, every swing doesn't have to be the same. Right? Yeah. You don't have to buy a hundred shares every time. You know, you, you, you can elect, like you were saying, Jeff, to Start small or or wait to start 

Jeff Santoro: you have lots of choices.

Yeah, for sure.

Hey everybody, we'll be right back, but first a word from our sponsors. 

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All right. Next question comes from Andrew via email Hey guys, I just listened to episode 125 on the commute this morning really enjoyed the conversation Some reflections I had as you were talking about how much research is too much Is that I really don't know how much time I spend on this stuff in a given week or a given month I have a full time job outside of the professional investing space.

So the time I allocate here is in the evenings and on weekends. I do really enjoy the process of turning over rocks and [00:26:00] researching companies. So it's a good chunk of spare time, but I can't quantify it right now. Something I think I'll start doing is just logging my time over the next few months and then look to reflect on how much time I'm actually spending too much.

Not enough. Thanks for the thoughtful discussion. What do you think about that? 

Jason Hall: Yeah. I mean, there's, there's, there's a lot of, of, of good answers to this. And I think as individual investors, you, you need to do enough research to be comfortable with the decision that you make whatever that amount means.

Now from there, you have to start again because Andrew, you're like most of the people that listen to this podcast and 50% of the hosts of the podcast that it's not your full time gig. Uh, you have other responsibilities, friends, family. Spouses, uh, whatever else out there in your life that you have obligations for.

So your time is finite. And as long as what you're getting out of the time is worth it, and there's not [00:27:00] negative repercussions on the other side angry spouses, kids that miss sports events because, uh, you know, you didn't drive in there, you not being there at events for your kids because. Do you want her to read that 10k?

Yeah, thinking about the implications of that are really important. And if there's value to you and the time, in addition to, again, making sure that it's the right amount of time doing the research, and you should, you'll know the answer to that, right? Then, then it's the right amount. 

Jeff Santoro: Yeah. I, I agree.

I think you want to spend as much time as you need to make the right decisions, like you said. And if you don't have even that much time, you probably shouldn't be buying too many individual stocks. And then anything beyond that is like hobby time. if you like gardening because you enjoy it, gardens lies, garden as much as you have the time to do.

And then stop when your kid needs to go to baseball or whatever the thing is that you have to do to like get your family, you know, obligations taken care of. That's how I would think about it. I don't know that I would [00:28:00] quantify it. If it were me, I don't know that I would track the specific time. I would just be thinking more about, I guess, return on that, that investment.

I guess, here's the other thing that I've noticed over time. I actually probably do a little less of the tracking my companies each quarter than I used to, but I don't know, I know him better and I'm a more experienced investor to just generally, right? Like I know more this quarter than I knew last quarter than I knew the quarter before that.

When you're optimizing what you're looking 

Jason Hall: for, yeah, probably spending less time looking for. Opinions that support your thesis on social media and more time actually reading like a 10k, right? You know once a year instead of other people's crappy opinions, 

Jeff Santoro: right or asking you what you think and then doing the opposite It's a terrible thing to do.

Yeah, that's well. No, you should know you that's that's correct do the opposite all right next question we got from joe via email. Now. This was a really long Really well written email, but I'm going to summarize it because it would be too, too long to read. [00:29:00] So essentially, Joe bought his first stock in 2018 at the age of 54.

So congratulations Joe for getting into it when you did. I always, I feel like I was late to the party buying my first stock at age 40. And he gave two examples and then he has a question. So example one, he talks about Square, uh, ticker symbol SQ, which is the digital payments network. He said it's an older position and it has lagged the market, but he keeps waiting for what he called the quote, untapped potential of the stock.

So hasn't done what he wants, but he's waiting for it to turn around. His second example is C limited, which is a. Asian e commerce fintech company gaming company as well, which he held onto. It did really poorly. He just kind of left it alone and it tripled, right? Still in the red, but obviously a lot higher than it was at its bottom.

His question is how, when, or how do The two of you, he's asking us get to the point of deciding the remaining dollars in any losing holding would be better put somewhere [00:30:00] else. So I think this is like the age old investing question, right? You have, you have that stock. It's not done what you want it to.

It's not done what you expect. Do you hold, do you sell, what do you do? 

Jason Hall: Jeff, I wish I could remember who it was that said this, but somebody recently pointed out to me that, the first thing of the selling and moving on is admitting you, admitting when you were wrong, right? Acknowledging when you were wrong. And because of how humans are wired with each of those examples that you provided, each of those companies, you can do this with any company.

There's always reasons to support a bull thesis. You can always find reasons. Why you eventually are going to be right. The problem is that you can have a hundred reasons that you're right. And all it takes is one to be wrong and you get what you get. And I'll use Square as an example of a business that has grown a lot and has added a ton of features and grown its cash flows, [00:31:00] but they've increased their share count at a higher rate than they've increased their earnings.

So all of that excess value that's been created right back to uh, insiders, right? Because of stock based compensation. So the thesis was probably right there, but where you were wrong was fully understanding on a per share value where the value goes. Right? So things like that, I think are really important that we often miss in our analysis.

And that's why I tell people it's so important. This is the, that was the most important lesson that I've learned as a, as an investor. I've got like nine most important lessons, but this is definitely one of them. That instead of looking for reasons why you're right, figure out why you've been wrong so far, right? What's wrong, where are you going to be wrong? And what is, what's good. What's it going to take for that to change for you to actually be right? Because you're going to sit there and you're going to stare at that number.

It's down and you're going to anchor on it. The number where you [00:32:00] bought for, and you're like, it's going to get there. It can do it. There's potential. There's tons of potential, right? Ryan leaf had potential as a, NFL quarterback. It didn't work out too well as a deep cut. 

Jeff Santoro: That was deep. Right? That was, that was deep.

Yeah, I, one of the things I think about a lot is the idea of never selling, right? The idea of if you, if you don't go crazy on an initial buy, right? If let's just say you always decide the first time I buy a stock, it's going to be whatever this dollar amount, this% that I know I can lose and be okay.

And you just always start there. And then only add when your conviction grows or when the company shows you they deserve more of your capital, but then just never sell your losers. Like at some point, you might get to a point where if you add all the losers together, it is a significant amount of money, 

Jason Hall: right?

Jeff Santoro: But if you just have one or two or a handful of losing stocks in your portfolio, and it's not this life changing amount of money, [00:33:00] And you can afford to lose it. I, I don't, I kind of understand why people want to hold on and, and see if things can turn around because for some companies they do turn things around.

C limited is a good example. If you bought it at the peak of the 2021 mania, I'm, I'm not looking at the chart right now, but I'm assuming it's still not anywhere near that high. If you bought it any other time and it tripled, you might be in the, you might be beating the market with that stock. And I don't know where it's going to go from here, but they, stocks do turn around and sometimes it takes so far 

Jason Hall: so far.

I know, I know she's done really well this year. So far this year, it's up 180% right this year, but it's, I mean, a good, 

Jeff Santoro: another good example is Tesla before it started to run up in, I guess what, 2019 it went sideways for like five years. It did nothing. So, you know, 

Jason Hall: I beginning to end, it did nothing.

Right. I mean, there was a roller coaster along the way, but you did not like, it wasn't a consistent. Yeah, yeah, yeah, yeah, yeah, yeah, yeah, [00:34:00] absolutely. It didn't 

Jeff Santoro: just, it wasn't like a 0% gain every day. That's not. Yeah. But over the course of that five years, it had gone basically nowhere. And right.

But some stocks never will recover. So it's there's no, there's no easy answer to it. 

Jason Hall: I think that to me, the, the, the simplest answer. And again, like you said, it's not easy. There's no easy answer, but the simplest answer is at some point you have to say, okay, why are these people not delivering value to me?

And if they're, if they're not doing it now, why do you think it's really going to change? Why would it change if it hasn't so far and you don't see signs? So the sea lemon is a good example, right? There's, they've done some great things inside that business that have created value and they're starting to growing earnings and cashflow and things that we want to see.

But for the other ones that it looks like, there's just no sign that the stock is going to start appreciating in value, figure out why they're not creating value for you. And why do you think that's going to change? Right? Why do you think that's going to change? It's not move on, go, go, go invest more money.

And the people that have created value for you. 

Jeff Santoro: I think the last thing I'll say is you can [00:35:00] avoid, and this is stuff you just have to do and figure out. And like kind of lessons you have to learn when you're a newer investor at whatever age that is. At some point you have to get to the point in your investing process where you don't buy things.

You don't sell things. Until you know why you're buying them. Yeah. You know, when I look back at, I've sold hundreds of stocks just because I bought little bits of everything when I was brand new. And when I go back and I have a spreadsheet of all the things I've sold just so I can go back and see if I made massive mistakes.

Right. And I go back and I look at 90% of those stocks are stocks that I just, I had no, I didn't know why I bought, I, I owned it. Yeah. I just bought it 'cause it was a shiny thing and I, it was going up or something. Like, just dumb reasons. Right. I, I'm at a point now where I feel like everything left in my portfolio, whether it's up or down, I at least know why I bought it and or still own it.

And if it's in my portfolio at the way bottom, down 60, 70, 80%. It's there [00:36:00] because I know why it's there. Like I know the reasons and I'm, I'm holding onto it for, you know, a variety of reasons to seeing if, seeing if it can turn around and the stuff, like you said, where I, there are a lot of stuff I sold where I, I just came to the inclusion that like, I don't see how, I don't see the path forward.

Like, I don't understand how this is a differentiated business or how it's going to be advantaged over its competitors. So I want to say one more thing. This is a question and this is a question for.

Jason Hall: Joe, I'm asking you directly and I'm asking everybody that's not Joe this same question too. Are you continuing to hold those stocks because you are afraid you're going to sell them and then they're just going to go on a run?

Because being afraid to make that decision because it's going to be the wrong decision. And then you're just going to see the stock go up is a terrible reason to continue holding the stock. I think it's a good time to look in the mirror and really think about that. Yeah. If that's the case, again, not an individual advice, but if that's the case, it's probably time to move on because that stock is holding you back from doing better in your portfolio 

Jeff Santoro: and in your life.

All right. But let me play [00:37:00] devil's advocate. On behalf of Joe and all other listeners, the most common refrain in investing seems to be the biggest mistakes I've made have been selling stocks too soon. 

Jason Hall: Yeah. And that's usually selling winners that have gone up too soon. Not losers. Fair point. 

Jeff Santoro: Fair point.

Jason Hall: Yeah, that's, that's my only counter to that. 

Jeff Santoro: Yeah. All right. Uh, we got two more questions here. I think we can get through them fairly quickly as we near the end of this part of the show. Uh, so this is from Gorsk four Oh two, three on Twitter. Uh, and Gorsk says, I am meandering thoughts. Maybe you can discuss.

I have been thinking about the slugging percentage comment you made about Travis Williams approach, which I largely follow. I'm a sports fan and have been thinking about three point field goal percentage. So just for some context here, uh, I believe we were talking about slugging percentage in terms of, you know, getting hits that count for more versus like a batting average where maybe you're not scoring as many runs.

Slugging percentage is extra base hits, right? Yep. Right. So the first thing that. When I think about that [00:38:00] idea of like having a high batting average or having a high slugging percentage, to me, I think the way to think of it is how much of your portfolio What are you talking about? So for example, for me, and I've said this a bazillion times, my individual stock portfolio is somewhere less than 15% of my overall investing portfolio.

So I probably should be trying for a little bit more of a high slugging percentage versus a high batting average because it's such, it's a smaller portion. But if I were a hundred percent in individual stocks, just knowing me and my risk tolerance, I would be perfectly happy batting 300. Or, you know, that's the baseball term, but having a decent batting average and just getting those singles and doubles.

Yeah. I don't need to crush the market. I'd like to beat the market, but ultimately I just need enough money to retire. You know, if I can retire and lose to the market. Okay. Yeah, I'll take it. That was my goal, you know, so I think it [00:39:00] depends. Yeah, how much how much of your portfolio are you talking about?

Yeah, I like that. Um, wait one more thing I wait hold on before you I would also say if you are fully in stocks you can You can also think of it the same way, segmenting your stock portfolio, right? So you can say to yourself, if I'm a hundred percent in stocks, I have X%, 15% that are my swing for the fences, try to get a home run stocks.

And then the rest are Tony Gwynn. That's the baseball player. He, 

Jason Hall: he, he was a great baseball player. Yeah. He was a great baseball coach to coach San Diego state, I believe may rest in peace. Moment of silence. Moving on. Lefty. All right. So thinking about the three point field goal percentage, I, I like this a lot, uh, Gorse, kind of for the same reason.

So, and I think this is important because we've talked about it before. So you think about the market's average of 10% Annualized returns. If you get 12% annualized returns, a lot of people think immediately well, that's only 2% [00:40:00] better. No, it's 20% better, right? It's, it's a substantial increase.

If you get 10% of returns on a thousand dollars, you hav1,, 100. If you get 12% in returns off 1,000, you have 1,120 alpha is 20% more, right? It's, it's, it's substantial. You think about, uh, two point shots versus three point shots in basketball. Sure. You can say it's one point more.

It's 50% more productive, right? And I think that's the key. But what I wanted to stress here, which I think really matters, is in the NBA, we've seen this big shift towards a lot more teams are shooting, uh, three point shots, uh, more, more three point shots than ever, right? And it's gone up every year for most of the last decade and the teams are getting better at it, right?

So you don't have. Uh, whatever the modern [00:41:00] equivalent of Shaquille O'Neal is heaven up three pointers that he can't hit. You have people that have developed the skill and they've created the plays to optimize for being able to do that, right? So three point field goal percentage that you highlight Gorsk, that's the key, right?

Is that. It's worth more, but you're not yoloing it, right? You're not taking on excess risk. You're still managing risk by trying to optimize to get the best outcome you can while also still trying to make, make the big shot, right? To make the biggest shot that you can. So that's important. And I think that's really important because that's what keeps people from making the mistake of chasing, uh, a plug power, for example, with the idea that, well, it's a, it's You know, 2 stock, it can go up a lot more than a 200 stock can.

Right. If you understand that that 200 stock is a company like CrowdStrike that they could five X their business over the next decade or whatever, [00:42:00] 15 years. You know, it's a different, different mentality that you take. That's where you're optimizing and that's where your three point field goal percentage is moving up is by taking higher quality shots.

That's really, really important. And I'm glad you brought that up because if you want to get big winners, if you want to buy disruptors, if you want to invest in that style, taking high quality shots is far more important than taking a lot of garbage shots. 

Jeff Santoro: That's a good point. 

Hey everybody. We'll be right back. But first a word from our sponsors. Heads up folks, interest rates are falling, but you can still lock in a 6% or higher yield with a diversified portfolio of high yield and investment grade corporate bonds on Public.com. You might want to act fast because your yield isn't locked in until the time of purchase.

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Jeff Santoro: All right, our last question before we get to our spam comment of the month comes from Cyrus GR on blue sky.

We got our first blue sky question. Excited about that. And, uh, Cyrus says, I know you guys own a [00:44:00] couple of REITs, which is a real, real estate investment trust, which we can explain in a second. They seem to move hand in hand with interest rate changes. Curious if the possibility of tariffs and a fed pause has shifted your outlook for them at all going forward.

Jason Hall: Yeah, this is a really good question. And it's actually pretty salient too, because it's something that Jeff, you and I we're, we're talking about cause we're coming up to do our next investment on our savvy trader portfolio. Yes. I'm plugging the savvy trader portfolio right now. Good job. Good organic plug.

Well done. And, uh, it's, there's, there's a couple of reads in there. One of our worst performing stocks in there so far as a read that's really taken a hit since the election. And so the two things that are affecting a lot of reads, you mentioned, uh, a fed rate pause. It's interesting you bring that up because one of the things that, um, president elect Trump has done.

Talked about a lot was wanting to have more influence over the fed and wanting to send rates down. And now the markets are expecting the rates are not going to go down. Right. For, for various reasons. So, and then the tariffs thing, [00:45:00] that's a big one because one of the hottest, Jeff, one of the hottest areas in REITs over the past couple of years, is.

Is industrial reads like warehousing, logistics, light manufacturing facilities, all that stuff. The reality is that all that stuff still comes from China, right? Whether it's, even if it's being light manufacturing in the U S they're assembling components that were probably some percentage came out of China, right?

So that's certainly a threat. And I just, I will, here's some, here's a little free thing. One of the stocks, like I said, in our savvy trader portfolio I'm making the buy for, for November. And we have a read there that I've chosen to wait until the administration comes in and we get more information before I do anything, I think in the longterm, it's going to be fine, but I'm definitely in a wait and see mode.

For a lot of those retail rates are the same way. So like realty income to a certain extent, like they're like auto parts retailers and Costco and, [00:46:00] uh, things like that. Yeah. Yeah. The big retailers are going to be affected. EPR has a little bit of exposure there, not too much. So, uh, Tangier factory outlets is, you know, one of it's been the great winners over the past four years, uh, is exposed to that.

So. It's definitely. It's definitely got me thinking more about if not reducing my exposure right now, because again, the REITs that I own, my ownership of them is not based on stock price appreciation over the next four or five years, their longterm growing their dividend income investment. So I'm willing to wait out any volatility, but yeah, I think for a lot of like Rexford as an example has a lot of like direct exposure to that.

Like they own warehousing in Southern California. So that's an example of one that. Yeah, I think investors right now would be, would be 

Jeff Santoro: best to just kind of wait and see. So just real quick, real estate investment trusts are, it just basically means that the company is structured in a way where it has to pay out 90% of its.

Earnings in dividends to its shareholders. [00:47:00] So a lot of people pick them up for the dividend yield. Yeah. And I agree with you on part of what you said, but not all of it. So, I don't know that I would be pouring money into them right now because there's so much uncertainty. That's 

Jason Hall: what I said. 

Jeff Santoro: But here's what I would say.

This, this kind of ties to an earlier thing we were talking about, about Understanding why you own a business and, and, and what's important for it. I have a couple of REITs in my portfolio. You named a couple of them. And the way I'm looking at it is, well, two things. I have no idea what's going to happen with tariffs and with all that other stuff.

We'll just have to wait and see. That could be a lot of bluster. It could actually happen. The truth is probably somewhere in between that I imagine would be. Either a short term thing or one that the economy would eventually. Adapt to if it were long term and I'm just thinking to myself, well, if my REITs are negatively impacted by policy decisions over the next four years, I'm just going to buy more of them buying opportunity [00:48:00] because I'm not selling them in 2028 or 2032 or 2036.

Like I'm, I'm holding onto that for a long time. So, yeah I absolutely 

Jason Hall: agree with that. We could see, we very realistically could see what happened with bank stocks. Last year when we had a couple of bank failures, right? And we had a lot of residual damage Yeah, exactly for no reason 

Jeff Santoro: for no right. 

Jason Hall: Well, I mean, I don't know A 

Jeff Santoro: lot of stocks that weren't really in any trouble.

I took a hit. 

Jason Hall: Yeah, right I mean, I think it's a situation where it could be Material and meaningful to some of these businesses but not permanently harmful and it creates an opportunity to buy jeff You're 

Jeff Santoro: spot on 100 agree All right, wrapping up the mailbag, Jason, and you have not seen this yet, is our spam comment of the month.

We haven't gotten as much spam, so it's a little disappointing, nothing super fun here. But of course the spam comes from Twitter because Twitter is mostly spam at this point. Thanks Elon. So I'm going to take this in a little bit of a different direction. So the actual message we got is join us. [00:49:00] Here is a paradise for men.

And there's a link that I did not click on, but my question for you, Jason, is if you did click on that link and got to visit a website that is a paradise for men, what would you expect to see there? What is your paradise for men? 

Jason Hall: Bloomberg terminals, acres and acres of Bloomberg terminals.

it's funny, a golf course. It would be a golf course and there would be a Bloomberg terminal at the tee box and there would be a. Bloomberg terminal at the green. So there'd be 36 of them on an 18 hole course. Yeah, you're, you're, you're 

Jeff Santoro: yeah, 

Jason Hall: I think 

Jeff Santoro: that would, 

Jason Hall: that would be good. Right. 

Jeff Santoro: I was on a college visit with my son last week, and we were looking at the part of the university that he was interested in, but we passed by the business school and there was a room for the business students that had 36 Bloomberg terminals in it.

And I really wanted to go in there. And uh, my son was like, just shaking his head. And he said [00:50:00] to me, You can't go in there. You don't have your finance bro vest on because I have a Patagonia vest that he, he makes fun of me for wearing. So, but that was a good joke.

Hey Jeff, you, uh, hungry for some leftovers? So we did not plan this, but you wanted to talk about good leftovers and also what we're thankful for, if I remember from the beginning of the episode. That's right, 

Jason Hall: that's right. 

Jeff Santoro: Any Thanksgiving food is good leftover. Tell me I'm wrong. Is that true, though?

You can, you can eat leftover turkey slices. They're good leftover. You just have to keep the, you have to keep the microwave powered down so they don't dry out. But if you can keep them from getting too dry. I think stopping and mashed potatoes are fine. Leftover. They're pretty good. No. Yeah. No, I 

Jason Hall: put potatoes can be questionable.

It can be questionable when they're, uh, when they're not. So look, okay, I want you to rank, I want you to rank your top three Thanksgiving leftovers and you can't pick the 

Jeff Santoro: desserts. That that's not, yeah, no, [00:51:00] that's cheating. I mean, look, I I'm a pretty standard, like basic Thanksgiving guy. I was listening to a podcast, uh, and the person.

On it was saying how their, their Thanksgiving dinner looks the same as it did in like 1952. It's like nothing has changed. That's kind of how my Thanksgiving vibe is. It's just sliced turkey, mashed potatoes, stuffing, green beans, cranberry sauce, which I don't eat, but it's always there. Here's the question.

Is it still shaped like a can? Like little, Oh, absolutely. It's gotta be shaped like a can or else. I make it fresh. 

Jason Hall: I make it from 

Jeff Santoro: berries. Oh, no, no, no. It's got to be disgusting. Can shaped. I don't touch the list. It's not disgusting. It looks disgusting, but so I, I'm going to, I guess if I rank them, I would just say like turkey stuffing and mashed potatoes, or maybe like one of the vegetables to go along with it.

Jason Hall: That's such a weak answer. I'm really, I know. I 

Jeff Santoro: I'm telling you, there's not a lot of. Variety or exciting foods in my Thanksgiving diet. I'm going to go with rolls [00:52:00] ham. I should do ham on Thanksgiving. Of course. See where, like I'm more answer. We'll do ham and turkey. I'm more likely to have ham for one of the other big holidays, like Christmas or Easter or something like that.

That's more ham. I'll do roast duck at Christmas. I've never had roast duck. 

Jason Hall: We'll have to 

Jeff Santoro: change that. No, I think I'm okay not eating a duck. Do you think anybody is still listening? All right. So let's, let's pivot here. This is being recorded a little bit before Thanksgiving. It's going to drop the day before. What are you most thankful for? Jeff, I am most thankful for you, buddy.

That's really nice. I would agree. I'm, I'm most thankful for me as well. Well played. 

Jason Hall: Very, very well played. Perfect place to end it. That is good. That is good. I think our listeners, Jeff, are most thankful that this segment is now over. For both of them that are still here, I would agree. Text me, Seena. Let me know what you think. [00:53:00] All right, everybody. Thank you again for listening. Hope you're having a wonderful Thanksgiving wherever you are. And as always, these are our answers.

They're not your answers, but they are your questions. Now figure out your answers to your questions. You can do it. I believe in you. Jeff does too.

All right, Jeff. We'll see you next time. See you next time. 

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