Investing For Beginners - How To Become A Successful Stock Market Investor

Hey, it's Mark Podolski, the land geek with your favorite niche real estate website, thelandgeek.com and on this week's podcast we got a young guy who is going to help us with, oh, I don't know, investing. But before we talk to our guests, I'd be remiss if I didn't properly introduce my co host. You know him, you love him. Your flight school Sherpa, the brain, the professor. Scott Todd from scotttodd.net landmodo.com Learn anything about anything. Investorninjas.com Scott Todd how are you, Mark?

I'm great, how are you?

I feel old, feel slow when we get a young sort of.

Figured it.

Out real early guests, I just feel old. But let's talk about our guest, Andrew Sather. If you don't know Andrew, he is a self taught investor since 2012. He specializes in identifying value traps and avoiding stock market bankruptcies. And he didn't see a resource to walk beginners through investing step by step. So he went out and made it. Andrew, welcome.

Yeah, thanks for having me. My back's been sore for like a week. So does that qualify me to be on the older side today?

Congrats. Yes.

Yeah, it's downhill from here, man.

It's all downhill. Yeah, for sure. When you just start like talking and then you can't remember what you're saying, then you've really made it to the other side.

Well, that's me every other week on our show. So that's perfect.

All right, fantastic. See, you're precocious in every way. So Andrew, let's just rewind the tape. Let's go to 2012. What made you want to become an investor?

Yeah, I guess I got really lucky because I had an internship and then I got put on full time at my first job out of college and I had a mentor there who taught me everything I knew at my job but also was really adamant in helping me with thinking about personal finance, thinking about investing and thinking about the stock market because these are all concepts that were so foreign to me at the time and I'd never even known to even think about it. I've always just thought, okay, let me just get through high school, all right, let me get through college. Barely limped through college. Let me figure out how to do this job. It was nothing that was ever on my radar. And so I think really it was nothing I did. I just was fortunate to have a guy who started telling me about it early on. And then when I started to see tangible Results. So in his case, he was a much older guy. And so I always like to remember how he came into work one day with a brand new, brand new Corvette. And I was like, oh, that's pretty cool, because, you know, I know you're also driving a Lexus. I was like, how are you doing this? Like, you're much older than me. And, you know, but we're. It's not like we're doing millionaire stuff at their job here. And so he told me, he was like, yeah, I sold some stocks and bought this Corvette. I was like, okay. That's when it clicked in my head, and I was like, I got to learn about this stuff. You know, Turns out that the stock market and investing is not about buying Corvettes or Lexuses. But it's a very long, drawn out, kind of patient process that you have to have. But I still find it fascinating. And I think when most people learn about the potential of it, especially over the long term, I think it's easy to get excited about it. And so that's what we try to do all the time on our blog and on our podcasts. So it's definitely been a long journey. And I just started. When I first started my blog, I didn't really know much about anything, so I figured, why don't I just kind of track my progress and just start writing about stuff as I learn them? And so people kind of caught onto that from that beginner perspective. And now I've been blessed to be able to do it for so long.

I love it. It's got time with your thoughts.

So what are some of the. What's some advice that a new investor should consider or like, first? What are the first steps you think a new investor should take in order to kind of educate themselves on where to even begin the process?

I love that question. The way I would think about it is I think the number one important thing is to understand compound interest. And so the way I've been trying to think about it lately is I almost want to picture, like, a big tree. So I'm over here in Raleigh, North Carolina. We've got trees all over the place. Makes it super easy to look at trees. But if you look at trees during the winter, when all the leaves have fallen, you can see all of these branches. And if you really look at them closely, you'll have the tree trunk, you'll have these branches, but then each branch will have its own kind of network of branches. And so the branches just continue extending out and a branch will turn into a branch will turn into a branch. So you have these layers of branches, and really, that's how wealth starts out. But it really starts out small, too. It starts out like these little seeds that you're planting into the ground. And so it's not about, you know, picking the best stock in the world. It's not about picking Tesla or GameStop before they. Before they skyrocket to the moon. What it's really about, if you want to think about investing in the right way, is you want to find. You want to just plant these little seeds and let that grow, and it. It really grows on itself. So again, going back to the tre, these branches will come from other branches. And so those are like your returns in your investments. And so if you're able to continue to let your investments ride and you continually reinvest whatever you make back into that tree, that's where the branches continue to grow, other branches, and you'll start to get compounding interest. And it's also been explained as like a snowball. So if you think about rolling a snowball down a hill, the longer it rolls down the hill, the more and more snow it accumulates. So it could start very, very small. But as it gets bigger and bigger in size, you're getting massively more amounts of snow. And so the exact same thing happens to wealth if you do it in the right way, in the sense that you're going to do things that we like to teach, like diversification. So, you know, you're not putting all of your eggs in one basket. You're not building a tree that's going to fall down in half before it can even grow to a decent size. So you're doing that, and then you're just letting time do its thing. And so as your portfolio grows, it's able to earn higher and higher amounts of money. You keep funneling that back in, you're going to multiply your money, and it grows exponentially, which I get really excited about.

That's like the Warren Buffett model a bit.

Yeah. I mean, I guess he has a book out there called Snowball. Somebody wrote about his life. He's definitely been somebody who, over a very, very long time, has just accumulated wealth. I mean, I think he started when he was like, 10 years old. So it's hard for any of us to really imagine having that kind of a snowball effect, but we can all do our own little things. Something I find inspiring for new generations of investors is if you take something as small as $150 a month and Just that, I mean, it's like, it's like a little bit more than what we pay for cell phones these days every month. So if you were to just take that and you start maybe when you're first out of college, maybe like 25 years old, and if you could, if you could keep that habit for 40 years and you get just 11% stock market returns, which would just be 1% above the average over the very long term, you'd have a million dollars, you'd be a millionaire. So I think that's a message that if we could get across to more people to get, just get started, it doesn't need to be much and just the effect of starting early and letting that snowball start to build earlier than later, it can really pay dividends down the road.

So, Andrew, what's some of the worst advice you see or hear given in getting started with stock market investing?

I mean, I don't want to call out any sort of strategies. I think there's a lot of ways that you can make money with it. But I think overconfidence is probably the worst thing you could have because if you just start to think that you have it all figured out, and I think it's something every investor falls into when they first start. But if you could just try to like contain that overconfidence and just really be curious and have an open mind and try to learn everything that you can. So, you know, I like if you're on TikTok or something and you see these people who are pitching stocks within like a 10 second time span, you know, is that really a smart use of my, of my mental bandwidth? Is that a smart use of my hard earned savings, or am I going to keep more of an open mind and try to examine the different advice that's out there and try to sift between what's good and what's bad. The beauty of the Internet is that there's so many great ideas that can be shared so easily. I mean, we have a crazy amount of podcasts out there. There's been blogs out there for a long time. The bad thing about the Internet is there's a lot of bad advice that's potentially out there. So I think somebody can, they can find the good sources of information, but it's not going to be from, hey, we can get you to a millionaire tomorrow, billionaire in a year. That kind of stuff doesn't happen. But it's really slow and steady over time. And so if you start to listen to different sources of information, you'll hear that the ones grounded on the same kind of principles all start to sound the same. And so if you can latch onto those principles, you'll do much, much better than if you just think you have it all figured out and try to go to the moon with a Tesla or a GameStop and get completely wiped out.

Todd, wait, I can't hear you. On mute. So, technical difficulties, he's saying, Mark, you're an incredible podcast host. I feel so blessed.

He's got. I want to know how. What this video setup is, because his is coming across really clear on my end.

No, it's. It's insane.

And somehow it's not ruining our bandwidth.

Yeah, okay. I still can't hear you now. I think he's punking us. No, it's. This is. If you're watching on video, it's really fun to watch.

Hear me now.

Now we can hear you.

Yeah, I don't know what happens. The strangest thing. All right, a couple things there. One, I mean, it's. We're talking about, like, you know, picking that winner, GameStop or whatever and going to the moon, you know, Mark, it's a lot like what we do in our business, right? It's. Our business is not made up of a lot of home runs. Our business is made up of a lot of singles. And it's just getting up to bat and hitting singles. Maybe you get a double from now. Now from time to time. But most of the properties that I sell, I would term them as singles. They're not. They're not huge, you know, numbers, but they add up. These singles, they keep adding up. You get on base, next thing you know, you hit a double. Next, you know, you're hitting home runs.

You hit.

You hit a big deal. And it's not all about home runs. There's the consistency just showing up. And I think that when you can show up, even it doesn't matter what type of investing you're doing, whether it's the stock market or, you know, stock market or whatever it is, just show up and that's half the battle. And then be consistent with whatever this. Whatever investment principles you go to execute on. It's just consistency, I believe.

No, I totally agree. And, Scott, we talk about this all the time because when we're coaching our clients, it's so easy to have this shiny object syndrome. And we constantly keep going back to what we love to do, which is raw land investing. It's simple. We can get these singles or these doubles. We can start building up our passive Income and the knowledge and the expertise that we're doing in this keeps compounding just like a stock return. And so when we keep doing it, we keep doing it. We get better and better and better at it through the years. But what happens is, so it's like, you know, like you're building a bridge and it's a brick and a brick and a brick and you're building this bridge, but then all of a sudden you're like, oh wait, I like that bridge over there. And then you've got to start all over. So I think, you know, when, when Andrew was saying in the beginning to just start early and be consistent, I think that's really great advice. And I think some of the biggest mistakes we see people make is they keep switching back and forth. If you're going to become a great stock market investor, then become a great stock market investor. Really dedicate the time. Don't split your focus. Andrew, what are your thoughts on that?

I love those thoughts. And really the idea of setting a habit versus trying to hit a home run I think is super, super key. And this idea just show up, right? So let's just get to the batter's box and let's make sure we're getting enough opportunities to even have success. And to your point, nobody became a world class at anything overnight. This takes time and it takes improvement. And when it comes to your stock portfolio, it's a very similar thing too, where, you know, maybe you could be this one in a million type investor and find the absolute best stock pick. But I think for the majority of people, we're going to pick some stocks that do well. We're going to pick some stocks that don't do so well. So I think where somebody can get in, in a bit of like a very discour disouraging kind of thing would be if you had a bunch of money and you just threw it all in the market at once rather than focus on, you know, if you're, if you're focused on what is my money going to do in the next three months versus how can I build a habit that I'm going to sustain over the long term? It's that habit and those little pieces that will compound over a long period of time versus any one investment could go up or it could go down. Obviously we always hope for the best and that's what all the effort's for. But the reality of business and investing is that things are uncertain. So, you know, if you want to set yourself up for failure, go ahead and take These huge swings. I would rather do something that I know has worked. Not just even, you know, yesterday or 10 years ago. We're talking about decades, centuries. This is how, this is how wealth has been built. There's this great book, the Richest man in Babylon. And so it takes you kind of back to ancient days and it's. They spin a little bit fictional, but it really integrates a lot of these great principles. And, you know, one of the, a lot of them is just kind of all of the things that we're honing in on today and just that idea of continuing to put more money in the stock market and make that a habit. I've always had that as my first priority. Whether I was making a ton of money at a job or whether I was unemployed, I was always making sure, sure that I'm at least putting $150 per month. And that's actually done more for me than a lot of other kind of times where it's like, hey, I have a bunch of money. Let me put a bunch extra. You'd be surprised how those small amounts build up much, much greater than, like huge chunks. I mean, it's hard to. It's hard to catch up if you feel like you're behind. And even when you're making a lot of money, it's hard to put a bunch of money in. You really can't beat the idea of a little bit compounded over a long time.

Absolutely. Scott. Todd, how old were you when you. When you bought your first stock?

First stock? I got to think back. That was a long time ago. I might have been. I might have been in my early 20s. Honestly, like the challenge for me back in the day, and I know it's different today, but I mean, we had a. I must say we had a rough mark because I tried to open up a brokerage account and they're like, okay, initial balance was $3,000. And this is way back when you had to plop down $3,000. Today you can, you know, you could do it with almost next to nothing. So, yeah, I'm going to say I was in my 20s before I bought some stock. Even though I did paper trade for a long time, I'd get the. Trying to perfect my little system there. And I paper traded a long time before I bought that first stock.

Yeah. Andrew, do you remember your first stock?

Yeah, it was 2012. It was a few months before I started the blog. And I just picked Microsoft because I was like, you know, I know they're coming out with an Xbox Next year. And I know that company. And that was the extent of what I knew. So I just bought one share. And it's funny, because that's been my best investment ever.

The first stock I ever bought was Apple. Two shares of it when I was 13.

Nice.

And for sentimental reasons, I never sold the stock. So the second stock I bought after Apple was Intel.

Wow.

And the third one was Genentech, and I'm 13, and I was trading intel and Genentech and I was making money and I thought, oh, I'm so clever. But I would never sell Apple because I was just enamored with the stock certificate. And I thought, oh, this is really cool. And then the 90s came, and I still wouldn't sell the stock when it looked like, oh, the company could go under. And now today, that $32 investment is worth over $32,000.

It's incredible.

Still have it.

I still have it. I'm never going to sell it. And it's just fun for me to just tell that story. But it illustrates, and I tell this to my kids that think about what company would you want to buy that you think will be worth more 30 years from now? And then don't look at it and just keep. My biggest mistake, obviously, was not putting more money into Apple. Now, that being said, I do ETFs, and I do diversify a little bit from raw land, but mainly I'm always buying and selling raw land. But when I was interested in the stock market when I was younger, that was what I would do. And it was a huge mistake, because if I just held on to intel and if I just held on to Genentech like I did Apple, well, then it would be a very different story. Or if I had done what you kept saying to do, if I just kept putting $150 a month into Apple. Can you imagine?

Yeah. I mean, it wouldn't have had to necessarily been Apple, too. You could have been picking and choosing different stocks. There's this great book called 100 Bagger by this guy Christopher Mayer. He talks about this coffee can portfolio. And it's kind of like the same concept where you just. You have these certain stocks. And back in the day when, like, you were saying you had paper stock certificates. So they've had, like. There's a story of. It was like a husband and wife, and so the husband was like following the trades of their financial advisor. And then the wife did all the exact trades, but she never sold any of them. She just basically kept them in a coffee can. And so her portfolio outperformed his portfolio. He was following the smart financial advisor. Her portfolio outperformed by like a factor of five to one because she just had a bunch of companies, you know, a lot of them maybe didn't work out, but every once in a while you had like that Apple kind of an investment and those just continue to compound to crazy amounts. And that's really what's possible with the stock market. It's tough because it's so tempting to really want to tinker with your portfolio all of the time. That's probably one of the worst things you can do. And so this buy it and forget it mindset, something I try to pound in all the time, and it really goes hand in hand with that idea of the whole compounding tree type of deal. I mean, even you wonder if we took all of our brain power that we do on Wall street with all these companies and if we took it to nature, and I imagine if we could try predicting which branch would go where, if we would have a similar kind of craps table of outcomes. And you just really wonder with how random nature can be. And so sometimes you just need to have a decent sized portfolio that's diversified and you got to let the winners run. And those are the ones that can compound and make great wealth.

No, absolutely, absolutely. Well, Andrew, we appreciate your mentorship, it's been great. But now we're at that point in the podcast where we're going to ask you for your tip of the week, a website, a resource, a book, something else actionable for the art of passive income listeners to go improve their businesses, improve their lives. What do you got?

So I've been listening to this book called the Psychology of Money by Morgan Housel and it's just such a fascinating book and it's really unique to a lot of the other kind of books that are out there. So I just love how he talked about. There's just so many great takeaways. But one of them, as an example is just this idea that depending on what generation you were born in, you have a completely different outlook on money, not to mention what country you were born in or anything like that too. It's just super, super fascinating. It really makes you think about these preconceived biases that you have about money that you don't even realize you do. And I haven't gotten to the end of the book yet, but everybody who has told me they've read it have said they have loved it. And I love it so far, and I Think it's a great overall mindset book to personal finance and investing.

Yeah, it's, you know, Scott and I, I think that was our book of 2020.

Really, Scott?

Yeah. Love that book.

That's about time I get on the train then.

Yeah, it's, it's. It's a phenomenal book. Before we get Scott Todd's tip of the week, I just want to give a shout out to our sponsor, which is flight school. Learn how the next 16 weeks can literally transform your life. Go up that mountain of land investing with Scott Todd as your Sherpa. He's going to take you up there quickly, safely, efficiently. And not only that, the tuition investment, we guarantee you're going to make it back 180 days or less, so it ain't going to cost you nothing. Just show us your work, learn more. Go to landgeek.com training schedule, a call with Mike or Scott and go from there. All right, Scott Todd, what's your tip of the week? Mark?

Sometimes you have a picture and you just need to, like, get. Get the background out of it, right? Like, you just got to get it back to something generic. And so check out photoroom.com and they have a background remover tool. You upload your picture and with AI, it makes the background just go away so you don't have to worry about learning Photoshop to do it. AI can do it all for you.

Wow, that's pretty cool. PhotoRoom.com? as cool as that is, it's not going to help make you wealthy. And my tip is learn how to start getting involved with the stock market and listen to the podcast. So you can go to Investing for Beginners podcast or e investingforbeginners.com and learn more. Andrew Sather, are we good?

Yeah. I really appreciate the time. Those are some great questions and thanks for having me on.

Right, Scott Todd, are we good?

Good, Mark.

All right, well, I want to thank the listeners. Just remind them the biggest compliment you can give us is if you just do three little favors. Follow us. Rate. Review the podcast, Send us a screenshot of that review to supportelandgeek.com I'm going to send you a copy, a signed copy of Dirt Rich, if you do that. So please do it my way of saying thank you. I'll really sign it. I won't be like Scott Todd and get one of his vas to do it. I'm really going to do it, so please do that. It really helps us. It's a big compliment. All right, we ready to do this.

Yeah.

One, two, three. Let.

Let freedom, Freedom ring.

All right. Andrew's like, I didn't know you guys are going to end like that. Thanks, everybody. Thanks for listening to the Art of Passive Income Podcast.

Start your journey at www.www.thelandgate.com and www.scotttod.

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