Why Does the Stock Market Go Up with Brian Feroldi

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This is the no Closer show where you get the latest developments in distressed note investing and learn the secrets of how you can control millions of dollars worth of property for panties on the dollar. Get educated and entertained by someone who has closed thousands of deals and lives to support you in achieving the same. Now, here's your host, CEO of We Close nodes, Scott Carson.

Good morning, good afternoon, good evening, everybody. Welcome to this episode of the Note Closer Show. As always, Scott Carson jacked up. Today we've got a very special guest that I've been excited to get on here, another fincon friend, somebody who is, he's known as a financial educator, he's a YouTuber author. He has been has a passion for money, personal and financing ever since he graduated from college, you know, with a great thing. His mission statement, I love this when you have somebody as a mission statement is to spread financial wellness. And he loves to help people just like I do with their money investments and things like that. So we're really honored to have the man, the Myth, the legend, Mr. Brian Feroldi join us here on the Nutclosure show today. What's going on, Brian? How's your day going?

It's going great. Thank you for the warm introduction, Scott. Thrilled to be here.

Hey, anytime, man. I'm available for like birthdays. Barbitza, next time you speak, I can get up there. Good stuff, man. But talk a little bit kind of about what your focus is with our, for our audience out there. So they have a bit of an identifying factor of kind of where your expertise or where your, what should we say, your superpower lies in the finance industry.

Sure. So for whatever reason, I was born with a natural interest in everything related to money. So finance, investing, personal finances, like the topic of money, how it works, how to make it, how to grow it, all of that just for whatever reason naturally fascinates me. So I've been deep diving into that topic essentially for the last 20 years. The interesting thing about that is that was all post college. Right. So nothing to do with that. When I was in school, it was all on my own outside of school. And I have a particular passion for investing in the stock market. One thing that I really like doing or one of the best ways to teach yourself or reinforce things to yourself is to teach other people what you already know. So I absolutely love taking things that are complex so that I had to learn and codify over a period of years, doing whatever I can to simplify them down to their core principles and then present them to other People in as easy to digest of a manner as possible. So all the content that I create today is really about taking complex topics related to money, simplifying them and expressing them so that anyone can understand them.

Yeah, I love that. And for the guys that are listening out here watching this, I mean Brian's got over 3,000 articles on a Motley fool fool full. So do a really great job and like you said, simplifying the complicated. And as an ex financial advisor and banker, I was always amazed at the, like Wall street and the finance markets, they have a tendency to want to make things complicated. So people don't understand it in a lot of cases. And I'm like, no, no, no, it's, it's not, that's not that difficult. We can make it very simple if you want to. I think part of, I think of a lot of people's fears about investing out there is this unknown or the, the overcomplication I think happens a lot of times. Would you agree with that, Brian?

100%. When it comes to investing in particular, most people have absolutely zero financial knowledge about what investing is. They don't know about just the basics of compounding or compound interest or. I know for myself, I had no idea what the stock market was, how the stock market work. I didn't know what the Dow was. I didn't know what the s and P500 was. And yet I vividly remember my first day on the job after graduating college. Right? You're given like the 401k packet. It's like, okay, time to sign up. And I was like, I don't know what any of this means.

Nothing.

I don't know what any of this means. And like I was making decisions for myself based on like the, the intuition that I had at the moment. But I couldn't tell you anything about, about the market. So I did. With a lot of people, do they look at the returns of the things they're asked to be invest in and they just circle whichever one's the highest? They're like that, give me that right.

Without any knowing what it's in or the risk or what's going to happen. And we always know that past performance is an indicator of future performance, right? Not.

Yeah.

But you're exactly right with so many people out of college. But even as people change jobs or all the craziness of what's happened in the last couple years, especially what's going on market right now, there's a lot of fear driving people's decisions out there right now. Right Brian?

Oh, that. Well, fear and greed are the two things that drive the markets at all time. We just happen to be right now driven at the stage of the market where fear is overriding everything.

What do you see when you're talking with your clients and folks out there that follow you? Where are you kind of focusing your focus at these days or things that you're watching or teaching people out there where they, what they need to be paying attention to right now?

So the thing that I like to focus on is long term investing. I'm pretty boring investor in that way. I have done everything in my power to make myself immune to volatility in every way that I can mentally and financially make myself as immune to volatility as I can. Because if you're not prepared for volatility once it comes your way, you're going to make dumb decisions because you are hardwired at birth to be bad. And with money and bad at investing. Right. It takes training to not be bad at investing. So when it comes to, and when you think about what the markets have done over the last three years, they've been extraordinary in both directions, right. In 2020, it didn't matter what you bought, you made money. In fact, the, the worst the thing that you bought, the more money you made, right? So it seemed completely crazy to focus on free cash flow or balance sheets or anything that makes a business or an investment good because the riskier the thing you bought, the better you did. What we've seen over the last, call it 18 months or so is the exact opposite of that where it doesn't matter what you bought, you've lost money, including the highest quality things that you could buy, right? Bonds. Bonds have been a horrific investment over the last year because at the macro level, what's happened with interest rates, the Federal Reserve, with supply chains, with war, with everything, with inflation, everything that's bad that is going on in the world right now has just wrecked every financial financial asset throughout this entire dress, this entire timeframe. And ever since I've started creating content, the thing I try to hammer home to people is focus on the business. Focus, focus on the thing you are buying. Don't focus on the price of the thing that you are buying. And boy, is that hard to do.

Yeah, price is something that always people look at because I think, as you said, we don't have financial education most of the time out there. Unless you're going to school for that aspect of it, we will highly, probably one of the most financially uneducated countries out there. When you think about things, especially as our wealth and being a major power, stuff like that, it's a sad thing, but we are so budget mindset in a lot of cases of what can I afford? Or how, what's the max I can afford? That takes away from a lot of this smart thinking, long term investing, it's all about me, mean at me now. Keeping up with the Joneses versus hey, I need to think about how this is going to affect me long term versus just the instant gratification. What are some things that you did to kind of overcome that need, that need for greed or the need for speed?

Well, I think it's important to understand what drives you as a human, what motivates you as a human. Personally, I've never been driven by material possessions. Fancy clothing has never appealed to me. Fancy cars have never appealed to me. What has appealed to me is living in a house that I thought was attractive, in a safe neighborhood with a good school system, and taking vacations that were extremely fulfilling and rewarding, but didn't cost that much, that much money. Now all of those things, as basic as they are in today's society, still cost quite a bit of money, right? But I don't desire things that are like super fancy. I have no desire to ever buy a bigger house than I have right now. I have no desire to own a second home. I have no desire for a fancier car, although I do have a Tesla. So I guess it doesn't get any fancier than that when I'm saying that out loud. But, but I was never driven by, I was never driven by those material things. What's driven me was keeping myself immune to the economic up and downs and providing maximum financial freedom for myself and my family. So once I discovered that becoming financially independent was a realistic thing that people with good incomes could achieve in their lifetime, that became my driving. I think if you've ever had a job or a boss that you hate, when you get up in the morning and you're like this is awful, the idea of financial independence suddenly becomes extremely attractive to you. But if you're like most people, I initially thought financial independence was a pipe dream. Impossible, right? Just, just completely impossible. And it was only after educating myself, after I left college that I realized it's damn hard to do, but you can do it if you really focus on it.

Yeah, that's the thing. I think so many folks are dismayed with the idea of working, working for a company for 40 years, especially something they dislike, that they're Kind of just plugging into. On an 8 to 5, can't wait to get the hell out of Dodge, get home. I'm gonna have a retirement or a 401k and then I'm gonna basically retire and die in a short period of time because I'm not, I'm not motivated, I'm not. There's no passion to life. And so many people are like that right now. Right. Brian, what was some of the biggest things that you did when you started? Okay, I need to do this, you know, 1, 2 and 3 that you've implemented in your life that made the biggest bang for your buck for you?

Well, the smartest thing that I did is when my wife, my wife and I were just out of college. We both lucky enough to get really good jobs and we both worked really, really hard, we didn't have any kids. So our focus was on our careers. And because we focus so intensely on our careers, our incomes inc. Increased pretty substantially right out of college. Marrying with that, the fact that we lived very, very inexpensively, right. We rented the cheapest places that we could find. We never went out to dinner except for on special vacations, special events. We cooked food at home. We were very budget minded. So when you marry that with two incomes that were rapidly increasing, our savings rate just exploded. It was very, very high when I was my 20s. And we used 100% of those savings to build to make our personal balance sheet debt free. So we neither of us had any debt to our names and we used all of our excess capital to build an adequate emergency fund and then invest. And my passion became investing in the stock market. I did so as well as I could. I made tons of mistakes, especially early on when I had no idea what I was doing. And I lost a whole bunch of money many, many times over. But those expensive, those mistakes were very expensive at the time and super painful. But they have made me a better investor. So I wouldn't trade those mistakes that I made for anything. But it wasn't anything special. It was just both of us enjoy working, both of us enjoy making money, both of us enjoy a certain level of lifestyle and we have no aspirations to go above and beyond that. So once you, once you do that for a period of a couple of decades and you save aggressively and invest aggressively, you couple that with the accommodating market that we've had over the last 20 years since I started investing and good things have happened.

Yeah, I love what you said about there. Not even fancy clothes. I was cracking up thinking about Clark Howard and what he mentioned in fincon. I don't know if you heard his keynote, but hey, I got a $5 shirt from Sam, $6 shorts from Walmart, and $29 sneakers from eBay and they look just as good. I don't need, I don't need to put on errors or make anybody impress anybody. I'm impressive in myself, you know, and a lot of people these days out there, you need to take into consideration what you just said. You were doing smart, budget, friendly things, saving money, not getting crazy. Most people, they have too much month at the end of the month. At the end of the month you're initially doing, hey, we're doing the smart things to save. And tightening, not really tightening your belts because you, when it's an actual practice, it becomes good habits versus a lot of folks that are struggling now because they've got these expensive habits and they haven't been tight on the front end. Right.

Yeah. One other thing that I think has really helped me is I have a more attuned idea to what things actually cost than most people do. Because when most people hear the word cost, what they think is price, right? What they think is what is the upfront dollar amount that I have to forego to get the item. I personally have adopted the mindset that price is a component of cost and there are big time costs that go well and above that. If you're a homeowner, you know how much cost is in upkeep, is in the ongoing cost to own something. So that's one reason why I have no desire to own a bigger home. When I see a bigger home, that means more vacuuming to do, more cleaning to do, more clutter than I'm going to have to deal with less, more taxes to pay, more insurance to pay. And if I do all those things, what's the upside to that? Slightly more space that I'll probably rarely, if ever, use. When I think about that as the total cost, buying a bigger house or buying a second house makes no sense at all. I feel the same way about buying a second home, about buying a boat, about buying an rv, an RV by buying any sort of fancy, fancy toys. While the price that you have to pay is a deterrent in its own everything, above and beyond that, with storage within insurance, with maintenance, just doesn't appeal to me at all. So because I think I have a pretty good sense of the true price and the true cost of things that also helps me to keep my lifestyle inflation in check.

Yeah, that makes a lot of sense there because inflation is definitely affected everybody's bottom line, especially those that have bought toys and may not have the money to go use them or the time to use those. In a lot of cases, I make the running joke that, you know, so many folks have taken their profits or their equity and appreciation of house and cash that out and spending on toys. Well, now that the market's in a downturn or free fall, in a lot of cases, they're having to. They had to pay the bills. They're having to sell their toys off. I call it a garage sale economy in a lot of cases. So see a lot of stuff. Now I want to come back to something you mentioned a minute ago about the lessons you learned from losing money when you're trading. What are some of the core habits or the core things that you've took from those lessons that you apply today?

Oh, so. So many. So again, I've lost. So I'm a big fan of individual stock investing. That's something that really appeals to me as an investor. And I think that 99% of the population should never touch individual stocks. They should just buy index funds and call it a day. The reason I say that is because I know from my own experience that 99% of people have no interest in doing the actual work that needs to be done to own individual stocks the right way. That's not because they're not smart enough or it's too complex or anything like that. It is just they're not interested in learning about individual stocks. So if you're not interested, fine, don't own them. Just, just concentrate. Spend your time on other things. I'm one of those weird people that enjoys digging into SEC filings, enjoys listening to conference calls, thinking through business models, researching companies so that the process literally gives me joy. So that's why I choose to invest in individual stocks. But I don't think that most people should. Now, if you invest in individual stocks, not only do you have to learn all of the important lessons about managing your temperament and everything that you have to learn from investing in the stock market in general, but you have to learn a whole bunch of lessons that go well beyond that because you're taking on risks at the individual company level. So some of the biggest mistakes that I've made is one I bought. I bought stocks with the hope of flipping them a day, a week, two weeks later. And I did zero research on the company other than to look at the share price itself, right? So I said, this is a $2 stock. If it goes to 3, I make a 50% return, right? End of due diligence. That was it, right? It was like if that is your mindset, which that was my mindset in 2004, you deserve to lose money. You deserve. So I paid stupid tax, as Dave Ramsey calls it, stupid investment tax, many, many times over. So I didn't know what I was doing or my thinking was very flawed, or my time horizon was too short. And I just bought, I bought plenty of stocks that have plunged 70% plus in value from after I purchased that. Now the good news is, despite making tons and tons and tons of mistakes, the magic of investing is that if you occasionally get a mega winner into your portfolio, the gains that you have from that mega winner dwarf all of your mistakes combined. All of them combined. My number one winner of all time is Tesla. I bought Tesla. I started to buy Tesla in 2011 or 2012, around that timeframe. It's over a 50x return for me. Despite being down, however much is down from its recent high, it's been a massive, massive, massive winner for me. And that one I got, I got semi lucky on, right? I mean it was such a risky investment 10 years ago that just happened to work out. But because I got in on Tesla so early, the gains on my Tesla have dwarfed all of the horrendous investments that I've made over the years. Which by the way is exactly the same way that the index funds work. That is something that is a very little known about index funds. The majority of stocks that make up an index funds fail to deliver positive returns to their investors. They lose to the market over time or go down. However, there are a handful of stocks in the, in the stock market that derive such enormous returns that they literally drag the entire index up over time. That's how markets work. If you only index funds, you don't see that that's all hidden from view by one number. But if you own individual stocks, you see the pain of owning a whole bunch of stocks that go down a lot and just a handful that go up a ton time.

Now do you, when you look at buying individual stocks, are you targeting companies that you, I mean yes, you're doing due diligence, but is there any, any method to your mats, things that you believe in, things that you're using, things that you're companies that you're a fan of in a variety of ways that helps you kind of guide your, your path?

Yes. So what I've done, the way that I, that I research stocks is I have Developed a pretty intricate checklist for myself. And this is something that I recommend to anybody that's interested in individual stocks. It's a three step process. Step one, write down every attribute that a business could have that is positive in your mind. If a company had that attribute, you would say, yes, I like that. For me that is things like a high gross margin, more cash than debt in the balance sheet, positive net income, positive earnings per share, positive free cash flow, a moat that's expanding, high optionality founder led business, high insight ownership, a history of beating the market, et cetera. Like there's like, there's like 30 things that I wrote down right that are positive. Same time made another list. What are all the bad things that an investment can have if a company had that you are not interested? For me, that's losing money. A handful of customers make up an outsized portion of revenue. The company is dependent on some outside commodity force for success, like the price of, of gold or the price of silver or the price of oil or interest rates, something like that. I don't like it when a company is like diluting investors like crazy. I don't like it when the company gets a lot of its revenue outside the US and it has currency problems, et cetera. So I make these two lists, good things, bad things. Then I forced myself to rank them from most important to least important. And then once I had these rankings, I, I assign 100 points to the positive attributes and 50 points to the negative attributes. And having a fixed number is incredibly important because it's easy to keep assigning points to attributes, but when you have a fixed number, you force yourself to make tough decisions. So I've developed a checklist and I've put it out for peer review multiple times and it's been updated on version three currently. But what this allows me to do is take any company out there that I randomly stumble across and within a period of about an hour I can research that company, knowing nothing about it. Fill in my checklist as I go. And the outcome of this process is I get a number that says how highly does this investment match my investing style? And then I've done this now hundreds and hundreds of times. So I have a list of dozens of companies that are really good fit for my investing style. And then I buy the ones that are the most, that are the best match what I'm looking for at the most attractive valuations. And I avoid the ones that don't.

There's there been any companies or stocks that you bought that you thought was one way based on your checklist, and it turned out to be the opposite.

Oh, often. Very, very often. Right. I mean, so the one downside, one thing about investing is all the information you have on a company is backwards looking. Right. All of it. Right. And that information can be incredibly useful to you. But all the returns that you're going to get from the investment are forward looking. Right. It's how is this, how well does this company execute from the day I buy it? Moving forward, if the company execute better than my most optimistic projections, I'm going to make a ton of money. If this company underperforms my modest injection of my modest expectations, I'm going to lose money. So investing in a company is always an act of faith that what you have seen up until that point is going to continue or even get better from there. But the world is dynamic, right. We don't know what's going to happen next. Just like In January and January 2020, how many people were seriously concerned about COVID A handful of people. Right. And how much did the world change in March of 2020, in January of this year, how many people were worried about Russia starting what could be a nuclear war?

Yup.

Very, very few. That turned out to be the only thing that mattered in 2022 was that news story. So how do you predict that? How do you predict that with any investment? You can't. The world is unpredictable and it's folly, in my opinion, to try and predict what the market's going to do or what's going to happen. Because there's always going to be these events coming along that no one can predict that are the only things that matter. So knowing that, I still think investing is a worthwhile endeavor. But you have to know that I'm going to do everything that I can to put myself in a position to succeed. But then there is a matter of luck with whether I succeed or not.

Well, but you also too. I think a big thing that I want to throw out there for you is you're, as you said in the very front, long term investing so many people out there, as the market goes up or down or things are going up, they flip out because they're constantly watching on a regular basis and they cash out or sell it off at a loss without realizing, hey, this is a small trend. This is, you know, with the way the world is working, it'll probably come back up if you just give it some time and play with it. Right now, one of the things I heard the other day and I kind of Chuckled about this. You think about all the companies are in the s and P500. The thing that concerned me was that there's such a huge amount of them that is they call them what zombie companies, right? Zombie stocks where they're constantly have to borrow money to stay in business. What's your thought about that?

Or they're companies that their prime is in the past, permanently in the past. I mean one zombie company of the last 15 years was once considered the bluest of the blue chips. General Electric, General Electric's peak was in 2006 or 2007. The company looked on top of the world, unstoppable, all these wonderful assets. That company has been a train wreck, train wreck for investors over the last 15 years. And I would now is in that zombie state. It's been selling off asset, has massive pension obligations, it has billions of dollars in debt. It's brand name has lost its luster and it is a shell, is a shell of its former self. So a lot of the great companies from 20, 30, 50 years ago failed to innovate and have been disrupted by, by new, new, new incumbents, right? I mean Kmart used to be a massive retailer. Sears used to be an incredibly important company. Kodak was a beloved brand name. Right? This is how markets, this is how markets are work. So the companies that pass their prime and are essentially in a permanent state of decline can continue to exist for years, sometimes decades. But to your point, they become zombie companies. They become permanent value traps when their inevitable outcome is zero, barring some incredible turnaround, which is very, very hard to pull off. And there are companies like that out there in the Dow, in the S&P 500, et cetera. So companies like that I try and do everything I can to, to avoid. I'm far more interested in buying the companies that are best positioned to become the Amazons, the Googles, the Netflixes of tomorrow. But that's really hard to do.

Yeah, it's hard to do. I was going to ask you how do you find that information? Are you constantly doing research? Are you, is there somebody that's a mentor that you follow, that you kind of keep up with and see what they say or thought leader like yourself.

Oh, there's dozens of ways to get investment ideas. It's never been easier for investors to do so. My top sources of ideas are social media. So Twitter, believe it or not, can be a wonderful place to connect with other investors to source ideas. The Motley Fool. I've been a contributor there for years. And if you are A member of theirs. You get more stock ideas than you could possibly imagine that are well researched and, and grounded in reality. Another one is just copying, borrowing ideas from investors that you respect, that you, you align with their, their thesis. So there are websites like WhaleWisdom.com where you can go in, type in fund managers that you respect and every 90 days they report their holdings to the SEC, look through them, what have they been buying, what are they interested in? You don't buy those companies blindly, but that can be a starting point for companies that you could potentially start doing research on. I also scan the IPO markets. So in 2020 the IPO markets were red hot and there were new companies coming online constantly. Today they've been closed. So that can be a hit or miss thing. And then you can also look at exchange traded funds, for example. If a big, if a macro idea comes along, like cyber security, there are exchange traded funds that own every single cybersecurity company out there. And if you pick through those funds, holdings, which you can do for free online, you can come up with a, of a dozen cybersecurity companies that are out there and then you start researching one at a time. So coming up with ideas is never hard and it's never been easier.

Yeah. What's your opinion on what's happened in the crypto markets? Has that been something you've looked into and invested in or kind of stayed away from?

Crypto is something I didn't understand for a long, long, long time and I thought was just going to be this like Ponzi scheme that was going to go away. I think we're well beyond that stage of the game and I do own a tiny, tiny bit of Bitcoin myself and a tiny, tiny bit of Ethereum. I. My mind has changed dramatically on crypto in the last two or three years and I do think so. The thing that got me to change my mind was this. I asked myself a simple question. Should there be a global currency of the Internet? Should there be that thing?

Right.

I think the answer is yes.

I think it is too.

And if the answer is yes, what is the leading contender to be that thing moving forward? The answer is Bitcoin. Right. That is the leading contender to be that thing moving forward. Will it be the thing that ultimately wins out? It's still too early to tell. But if you want to, if you want to take a small amount of your capital, risk it on doing that. I don't think that that's a dumb idea right now.

I wouldn't Be like Odell Beckham and my entire salary for the year to.

Be a big different story.

Different story. Not smart. He's still trying to figure out what he got paid as an LA ramp.

I think he had more in taxes than like his. Yeah, I don't even know how, how that works out. So I'm not a bitcoin maximalist of any of any kind, but if you wanted to vote a portion of your portfolio to crypto, I say go for it.

Well that's the question and ask you that how much your portfolio are you putting divvying up into different buckets and stuff that hey, I got my blue chips here. The stuff that I really know do a little research on and I'm willing to put a little bit of this aside way in, I don't want to say riskier, but unknown companies or stuff that you think is going to take off. Is there a percentage you look at your portfolio?

Sort of. So the way that I view asset allocation is kind of two extremes. So first off I consider my personal finances and my investment finances to be two completely different things. Two completely different walled gardens. So my personal finances are hyper conservative. Hyper conservative. We have zero debt of any kind. We have multiple income sources, we have a high savings rate, we have a six month emergency fund. Right. It's been called a nuclear winter personal finance situation. Right.

That's something that everybody should do. I think that's one of the best advice you can have is be prepared.

Yes.

For that, that opportunity stock cash away. So great, great counsel there.

So that's my personal balance sheet because of that. Because what the market does or what my investment portfolio does has no effect on my day to day life. I can be hyper aggressive with my investments. So I'm essentially 95% stocks, zero bonds. Although for the first time in my investing career, bonds might actually become an attractive asset class if rates continue to rise and I have sub 1% crypto. The rest is just cash for strategic deployment and investments. I try and keep about 40% of my capital in high quality growth companies. So those are your Amazons, your Googles, your Netflixes, etc. Profitable businesses with dominant positions. 40% in riskier, higher growth companies that could become those next businesses. And I set aside about 20% roughly for more speculative positions. So those are swinging for the fences, high likelihood of striking out. But occasionally I'll be correct and if true, then the, the, the gains on my winners from that category will offset all of my losers in perpetuity. But those are rough guidelines. I don't pretend to exactly match up with them, but I think it's a decent framework for thinking through how to allocate capital.

Yeah, no, it's great council there for you for definitely. And everybody's, everybody needs to meet with their advisors. Everybody needs to take some time to figure out their own personal strategy. With goes that who's on your, who's on your all star team? Like who's, who's some folks that you have on your team that you're reaching out to, your accountant, your attorney, lawyer, anybody like that you run your decisions by before you make them. I mean, no, you're a bright guy for investments. Yes. Huh.

So I have, I have an accountant that I use for like, you know, tax stuff. But I make my investment decisions on my own. On my Mount Rushmore of investing is of course Warren Buffett, Charlie Munger, I've learned a ton from them. Phil Fisher, another one that is less known is David Gardner. He's the co founder of the Motley Fool. He's changed my mindset about investing more than most people. A hedge fund manager for the Motley fool named Jeff Fisher, I think is one of the best investors that I've ever made. Met a random guy in Kentucky named Tom Engel. He's unknown, but he is someone that is such a good investor. He retired in the 1980s after working for seven or eight years and has lived off his portfolio ever since. So this guy was fire before like financial independence. Retired early was a word. Right. He lived it for 30 years before it was even popular. And he shares tons of of financial lessons on the Motley Fools discussion boards. And then there's Pat Dorsey. He's a wonderful investor. He's written several books about investing that I really like. He's now a fund manager so you can see his holdings for free. Terry Smith of Fundsmith, Ian Castle of Micro Cap Club. I mean there's dozens of people in that investment community that I look up to.

I love it. I love it. That's definitely a who's who there for you. Now you had a book that came out earlier this year called why does the Stock Market Go Up? You want to talk about that, Share a little bit? What brought upon you writing that book and sharing with everybody?

Sure. So I started investing in 2004 and I got my start by studying all the best investment books that I could find. So all the classics I've studied everything about and by Warren Buffett, Peter Lynch, Jack Bogle, the Motley fool, et cetera. I was insatiable thirst for reading books about how to invest properly. All of those books do a fabulous jobs about covering the basics of investing. They all say the same thing, right? The stock market builds wealth, invest in it. It goes up over time. Yes, it's volatile in the short term. In the long term, it's not right. All of that made sort of sense to me, but the thing that never made sense to me was why the stock market was this endless machine that constantly went up, that constantly hit new highs. Yes, there were trades, we had to wait a long time to get to the next high. But these, these investment gurus were like, it will, it will keep hitting new highs. And I was like, I don't understand, I don't understand why that happens. Why am I financial future is riding on the stock market continuing to go up over time. And I never found a book that was that. I came across a book that explained why the stock market continually went up and why it should continue to go up indefinitely. Which to me is the most important thing that anybody could know about investing in the market. If I thought that the market was never going to hit a new high again, I wouldn't invest in it. I would look for other things to invest in. But I now believe that the stock market will continue to hit new highs for the rest of my life. So since I never came across a book that explained that, why how the stock market works in really simple terms, I kind of decided, well, maybe I'm supposed to be the one that writes it. So I embarked on that journey about two years ago. It's very painful to write a book, as you can imagine. But yes, it came out earlier, earlier this year.

That's awesome. And we'll put the links to that book in the description and on everything for everybody so they can take a look at it and grab a copy of it there for you. Now, with the market being where it's at, you mentioned, we mentioned briefly about bonds, maybe think things are, what are some things you're keeping an eye out for right now with the market where it's at, Anything specific that you're kind of watching, keeping your eye out for his opportunities.

I'm always watching the earnings of the companies that I, that I hold, I check. I care deeply about the business performance of those companies. I care very little about the stock performance of those, those companies. So earlier today, yesterday. Exactly, exactly. One of my bigger holdings, Netflix reported earnings and that stock has been very volatile recently. It's currently down 60ish percent from its 52 week high. Last year at one point down 70%, which is a drop that unnerves many people. I think this is my third time owning Netflix where it's dropped that much since I started holding it. So once you get inch invest for a while, you actually come to view these drops as just the cost of owning great innovative companies. So I reviewed the company's earnings, the subscriber growth, the numbers earlier today, and that's what I focus on earning during earnings season. I focus on the earnings of the businesses that I own. I always have an idea of the macro in mind, like where we are macro is. And I'm well aware that the answer is not in a good place. But I have no ability to forecast the macro other than to say, um, bad things happen and eventually good things will happen on a long enough timeline. So investing in the stock market is very unnerving. Dealing with the volatility is very unnerving. And if you don't, if you have a natural inclination to sell when things are going down, which a lot of people found out if they were that way in the last year, that's okay. Stock, the stock market might not be for you, but for me the volatility between the stock market never feels good, but I know it's just a part of winning in the long term.

I was watching a documentary on the GameStop. Everything that happened with them and how the different price of that went up and how it was really driven by Reddit threads and small investors out there.

Yeah.

Is there anything you've seen like that before take place or anything else that were specific?

The unique thing that is brand new and. But yet again that is something that is unpredictable. Yeah, right. That is the GameStop. The stock became completely detached from GameStop the company due to this new phenomenon of investor sharing on online. I see no way to predict that. I see no way to take that information and turn it into investing thesis. So I view that as a story that's interested to learn but in no way impacts anything that I do.

Yeah, well that's the thing you've talked about. You got basic and good knowledge, basic in results that they're sharing. Looking at that, having a good feel for what the company's invested in and their earnings, not their stock price or even their. Oh my God, what are they? What are they paying out? Money. I can't even think what it's called. Dividends. Yes, thank you very much there for you out there. So one of the great things out there is that you are sharing this wealth of knowledge and really doing this stuff on regularly. Motley Fool. But I love your Twitter account and I have to tell you, back at fincon, you had the most, most knowledge on how to properly use Twitter than I've seen from anybody else out there. And I've attended plenty of marketing things. You did a really great job sharing out there. What's the biggest surprise of what you share on Twitter and everything else that's come across your plate or somebody's reached out to you. That's been amazing for you, with you sharing your content.

Oh, Twitter's amazing. Twitter's absolutely amazing. Twitter's changed my life, which is weird to say about something that I signed up for and then ignored for nine years. Right. I didn't use Twitter at all from 2009 to 2018. Really, maybe even 2019. So I thought that Twitter was just a weird platform that people went to to complain about politics and tv. And by the way, if you use it the way most people use it, that's exactly what it is. It's a place to go and complain about bad things that are happening in the world or share what you're eating for for dinner. But Twitter has become the center of the financial, financial universe. People that are on there openly share information with each other about investments, about research. And if you follow the right people, the kind of quality information that you can get from Twitter is like on any other platform that I've ever seen. But you have to do a lot of work to, to find the right people to block the wrong people and to really share things in a. In a certain way. If you can learn to do that, the networking that you can do on Twitter is unlike any other platform that I've ever. That I've ever seen.

I totally agree that it's been a great way. We've made some really great relationships on there as well. And thank you for sharing your expertise at the event at fincon. About that as well.

I'm glad you enjoyed. I put a lot of work into that presentation.

I know you do. I know you did. It's been one of the most valuable ones that we go back to it on a regular basis for our stuff. One of the things that I love bringing folks on here is, is you're sharing your insights, you're sharing your experience, you're sharing the mistakes you've made as well, too. Not everything is always rosy, and I think a lot of folks have to realize the ups go with the downs or the downs go with the ups to make you more knowledgeable and stuff like that and you can't be a fair weathered investor because otherwise you're going to just lose your ass at some point. Right, Brian?

That is correct. Great quote. I heard Uncovered recently was experience is what you get when you didn't get what you want. What do I have a lot of experience because I've made a lot of investments where I didn't get what I want.

Good stuff out there. How can our audience connect you? What's the best way for them to reach out to you or follow you? What's the best way to connect with you?

Twitter is probably the easiest. I'm just Ryan Feroldi. My first name and my last name. If studying the stock market interests you. I'm also very active on YouTube, on my channel, which is Ryan Ferraldi, where we do earnings reviews, lessons, and we show people how we go about researching stocks from scratch.

That's awesome. We'll make sure to share those in the description. Everything for everybody. So, Brian, thank you so much for coming on the note close show. This has been so valuable. We gotta have you back on at some point to talk more about the markets later on.

Sounds like a plan. I hope that see you at fincon next year. Right?

Oh, I already got my ticket booked, baby, too. You and I need to have a beer and a cup of gumbo somewhere.

That sounds good. I've never had gumbo, so I'm really looking forward to it.

Oh, my God, it's a perfect spot.

I've never had crayfish. Like, that's a big thing down there, right?

It is. You can call it crawfish. Crawfish.

Okay.

Crayfish is kind of a different. But you know, it's supposed to be.

I'm from the Northeast. That's how we say it up here.

That's. That's normal up there. It's normal up there. It's a good stuff. Well, guys, take advantage of what Brian was mentioning. Check. Check out his book, why does the Stock market go Up? Follow him on Twitter. He's just a wealth of information. Straight black and white. Takes a lot of the emotional investment, but he shares. I said his YouTube channel is phenomenal with breaking down the stocks he looks at. So go out, take some action, buddy, and we'll see you at the top.

Bye.