Hello.
My name's Santasha Nabananga Bamblet. I'm a proud yr the
Order Kerney Whoalbury and a waddery woman. And before we get started on She's on the Money podcast, I would like to acknowledge the traditional custodians of the land of which this podcast is recorded on a wondery country, acknowledging the elders, the ancestors and the next generation coming through as this podcast is about connecting, empowering, knowledge sharing and the storytelling of you to make a difference for today and lasting impact for tomorrow.
Let's get into it. She's on the Money.
She's on the Money.
Hello, and welcome to She's on the Money, the pod cast for people who love Green Flags.
Oh that sounds like a good podcast.
I'm kind of excited for this one being well me too.
Let's get into it.
My name is Beck Side and as usual, I'm joined by Victoria de Vine.
Hello.
I'm excited about this because I love a green flag. I mean a lot of my girlfriends seem to love red flags.
I mean, that's the issue.
What my friends said the other day, I was like, that is such a red flag. I was like, I feel like we're talking about relationships, Like all he's doing is showing you red flags, and she's like, yeah, I love the carnival. I was like, Aha, you're doing this to yourself. Today we're going to talk about green flags. And I hope she's listening because it's about investment, not relationship advice, which apparently she wasn't going to take from me anyway.
It's transferable, but we will talk about why green flags are the ones to walk out.
They're the best kind.
They're the best kind of flags. You are well aware that I am trying to fix up my finances. Yes, probably not doing a great job right now, but that's.
Because we still have to sit down. I'm going to like, sit you down and I'm going to take you through the money masterclass and be like and then do this, and then do that. Honestly, if it comes to it, I'm taking your money off you.
I think that's probably where we're gonna get it.
Like, it's just going to end up with me being like, that's not yours. Sit over there in the corner.
I need that. But no, today we're talking about investing. I've never invested in a company or bought shares, and I don't really know what companies should I invest in. I know you can't give like personal advice right now for sure. I mean maybe you can't.
No, I can't. Damn.
I was kind of excited.
I was like, no one can legally like you won't shine a podcast that is Australian that will come out and say, oh this share this share in this share perfect for beginners because that is personal advice and it's actually illegal to do that. So if that's what you're looking for, I'm just going to burst the bubble now and be like, h nobody can legally provide that. And if they are and they have said something like that, you kind of go, that's a red flag, red flas
you should know you shouldn't be doing that. And I can almost guarantee that they have absolutely no license to be having that conversation anyway, so you shouldn't be taking their advice. To begin with this episode today, I'm going to talk a little bit more technically, so we're going to talk about per ratios. We can shook about PB ratio.
We're going to talk about the PS ratio, what they mean, what is an ipo, how does all of that work, and what does it mean, when it comes to green flags, we're not so much talking about your ethics and your values and what is a green flag in that perspective, Because if we want to talk about my ethics and values, obviously, if you know me well enough, you've know that I'm looking for sustainable, ethical businesses that are relatively environmentally friendly,
that care about their staff and all of that stuff. Will do a whole episode on that. That is fine, But that's more ethics than it is going, Hey, Beck, how do we value a company? What I can do is help you get the right information so that you can choose the right investments for you. And it's not as hard as people think it is. Like, and I think that we all get analysis paralysis when it comes to picking shares. You're like, well, I don't know what
one I pick. And I'm like, well, why are we talking about what share you're picking, Beck, when you don't even have a shared trading form? Like there's so much we need to set up first, Like why are we talking about investing Beck when I know your budget's not on track? No, And like that's not a bad thing.
There's nothing shameful or awful about it. It's more beck, let's get your financial house sorted so that then we know how much we can invest comfortably, so that you're not shooting yourself in the foot later and going, oh my god, Via, I actually needed that money, and you don't have to pull it out because you go, well, actually, v I reckon, I can afford thirty bucks a month, and then I go, oh, great, well let's work with that. Whereas other people might go, I'm so excited to start
my investment journey. I'm just going to really prioritize this. And then they're like picking one thousand dollars or something and then realizing that they can't afford their current insurance or like groceries aren't happening in the same way that they were before, and they're like transferring money out of their savings to make this other thing. Like it becomes
an absolute mess, a carnival. You could say, oh, we like it okay, but it could become like that, and then you become overwhelmed and you're like, investing's not for me. It's all too complicated, it's too hard. It's not like that.
Hmm.
Okay, Well, before we go too far into this episode, can you just remind all of us why we should consider investing in.
Companies because we lack money. I see, you know what I love? Compound interest.
Yeah.
Compound interest is the money that your money made because it was invested, and then that money that your money made it starts making more money. And then when your money that the money made starts making money, that's free money, Beck, and I love free money.
WHOA, Okay, there's a few steps to get there. But once you're there, do you like free money?
Beck?
I don't hate free money?
Oh, you don't hate it? Like just the partial though I'm not sure you know, I could take or only like it if there's no catches exactly.
That's yeah.
Yeah, Like why are you trying to offer me fifty bucks?
Ye? Sir?
What's going on here?
Yeah?
Exactly. So today I want to touch on I guess the importance of investing. You can start investing today. You actually don't need a lot of money to do it. We've spoken about this on the podcast before. There still seems to be this I guess myth that you need a lot of money to become an in And nowadays we have platforms and I'll plug share Z's because obviously we work with them. We adore them. A lot of our community adore them. If you want to sign up, use the code SotM and you'll get ten bucks in
your account to start, which is very sexy. Guess what that is free for any But with Sharez's you can invest with as little as one cent.
That's pretty good.
Like, I can't think of something more accessible.
Mm.
I like that actually because they do what's called fractional investing. So beck if you went to a normal share trading platform, you're like, I really want to purchase a share. I've decided it's going to be an individual company. Let's say it's beach p. I don't know why that one came into my head, but that was the first one that came into my head. Maybe because it's like a spicy
it's got green flags, it's got red flags. Like I don't know this would divide people, right, But if you went to your normal share trading platform, for you to buy one share in VHP, it's going to be about forty six bucks and you might go will be I just said that I had thirty dollars a month to invest. I can't even buy one VHP share. What Shares's offers, and this is not me trying to sell their product, it's me trying to explain fractional investing. They go, ah, well,
how much money have you got back? And you might go I've got thirty bucks. So you might go, actually, I've got ten bucks, and they go, yeah, no worries, how but we give you ten dollars worth of BHP shares and they do what's called fractional investing, So instead of you having to buy a whole share, you still
get exposure to that asset. You can purchase that asset, but for what your budget is, not what the share price is, which is really nice because a lot of people want exposure to particular companies and you might go, oh, but that one's too expensive for me to buy, like one off. So it's kind of nice to be able to build your portfolio in a way that suits you. And that's one of the reasons why I really love
this concept of fractional investing. Is it safe, Yes, absolutely, Everything's still held in the same way an ETF would be held, So like, you are absolutely fine. I know a lot of people like, oh, but is it risky. I'm like, it's not more risky than any other type
of investment, so don't stress too much. Right, So it's very unlike property, where you know, I can't be like, hey, Beck, do you want to buy property and you'd be like, yeah, but I've only got enough money for the bathroom, So can we just buy the bathroom now and by the rest of the house later. Now it doesn't work like that.
That would be nice though.
You also don't have to be like a night trader to make money in the share market. I feel like there's this massive misconception that, like, to be a good investor you need to sit in a dark room with like three computer screens in front of you trading shares. That's not what HAPs I pictured. Yeah, like you know, I invest, There's no way I would be doing that. I want to sleep at night, not trade at night. And the risk of trading is actually incredibly high because
you're making consistent, calculated decisions. You've got to be educated on that, and like most people are not. Do I sometimes have a little bit of a play in the trade market, of course they do. I'm an ex financial advisor. That was my bread and butter, Like I love it, but like, you don't do that to make lots of money.
You do that from my perspective because it's fun, because research tells us that you're going to get worse returns if you do that than if you put your money into a stable investment over the long period of time. Because what we know to be true, Beat is that time is what matters most in your investment journey, not how smart you are or how impressive the investments that you've purchased are, but more how long you're exposed to
an asset class. Also, the sexiest part of the money that your money makes making money, so compounding interest back is that it becomes passive, so you're no longer having to trade your time, so the hours that you work each week for money, but money is still coming in the door. You want to get paid for staying in bed Beck. Yeah, that's how with investing. Yeah, So what happens in the future is let's use my favorite example, which I've used a lot on the podcast before, and
it's that one point two million dollar investment portfolio. So we know that if you started at the age of twenty one investing five hundred dollars each and every single month up until your retirement age of sixty five, you at an average rate of return of seven and a half percent, will very likely have an investment portfolio worth one point two million dollars. Right, so you go, We'll be that makes sense because I was exposed to the
market for that long. Well, no, because if you've just saved it instead, Beck, you'd have two hundred and forty thousand dollars.
Right.
So you're making by giving yourself exposure to the share market over a long period of time. When million dollars in free dollar.
Ruse, that's free money back to me free right?
But Beck, what does that mean once you retire, do you just start spending that one point two million dollars? The answer is no, No, no, because the money that your money has made is still invested and it's still making money. And if we be a little bit cautious, so let's pretend that once you retire, your portfolio is only returning five percent because we're being a bit more conservative. Is that what the Australian share market returns back?
No, it's not.
The share market in Australia or average over a thirty year period of time returns close to ten percent. We're going to be super conservative and pretend it only returns five percent. Okay, a one point two million dollar investment portfolio each year at a rate of return of five percent conservative is going to give you an income of sixty thousand dollars. Wow, without diminishing that one point two million dollars. So that one point two million dollars will
consistently sit there and it will just work. It will be invested, but the money that your money is making will be sixty thousand dollars a year, and in retirement that becomes your income.
So you've taken the cream off the top.
So you just taking the cream off the top, and then you know what happens like And I don't want to be too dramatic about it, but I just think it's so exciting to be in a position where you then have that one point two million dollars, right because we can't live forever, so we can make plans and leave legacies and go, oh, well with that one point two million dollars when I have kids, like, I would love it to go to my kids. And you can
make as many rules as you want. You could be like they can't spend the one point two million dollars, they can just have an income for the rest of their lives that they share between themselves of sixty thousand dollars. Isn't that sexy? Yeah, that's they can add to it
and do the same thing. And that's how Obviously there's a lot of other ways that family wealth starts and need to generational wealth starts, but this is one of the ways that intergenerational wealth can start and you can set your entire family lineup for success in the future. And I just think that's so exciting because I'm definitely one of those people that is passionate about leaving a legacy. Yeah, like I want to do good, be good, have a good time, but I also want everybody to be in
a better off position. You're telling me I could do that? Yeah? Is that attractive?
And we can start today, right here, right now, exactly with as little as one said. That is very impressive. Okay, So tell us what green flags should we be looking out for that tell us a company is actually a good investment all the.
Green flags, right, So first we're going to start with the profitability green flags. So that's basically the first thing you should look at. Are you investing in a business that actually makes money? Because I can almost guarantee that you're not going to make any money personally. If they don't make any money, sure, where's it coming from to be given to you? So then we're going to delve a little bit deeper later. The first green flag is
that it's profitable and the profits are stable. So this is where I go back and I go, hey, remember that time that everybody in the media was talking about after pay shares. Every man at his dog in the office was like, I bought after pay shares and I've made so much. This happened like just pre COVID, and I remember just looking at people being like cool, Beck,
You're not being paid to own that share. You bought that share, and that share increased in price, and the only way for you to get your little mittens on that extra money is to sell that share you have while the market is high. If the market dips and your share becomes worthless, you haven't actually made any money.
Yeah.
Whereas if we went and bought like a NAB share. And I often use that as an example just because it comes to mind. I used to be a financial advisor, so I had like literally things that were wired into my brain. Bitch P and NAB or two of them. Right, So if you went and purchased a NAB sharing comparison, your friends aren't going to jump up and down in the same way they did about after Pay. Right, They're gonna be like, cool, Beck, you bought a bank share
and you'll be like, yep. For every single share I have, I get paid eighty four cents. Oh, I get paid to own that share. And that's what's called a dividend. So that's pretty sexy, yeah, because that's a share that pays you to own it, because it's a dividends share. And we know that NAB over the last you know, fifty plus years, they've made money. They're a bank. You're really good at making money. I mean, we're pretty salty at the moment because they're making money off our mortgages
that are sky high. And we could have these really big conversations. But at the end of the day, if you are making an investment, it pays to make one that is going to put you in the best possible position, even if it is a little boring.
Right.
So, Beck, do you want to be paid to own something that you own over the long term or do you want to buy something that increases in value, but never pays you. It's just valued higher because of market demand, and then it could go down later when it maybe isn't as shiny as a product or as new of a product. It's like bitcoin.
Yeah, I see what you mean, like doge coin train.
You were on the dose coin train.
So you're telling me you've never gought shared on the share market. A little BECKSI ed has gone out and bought doge coin.
I was not very willing.
You know, I don't even know how I would buy doge coin.
I know, I don't know how I got there. Where is your doge coin? Now it is gone and I have lost some money? So interesting, I recommend.
So which side of the table should we be taking?
I guess ideally get paid?
All right, get paid? So we like that. But you don't have to delve into a company's financials to do this, Like you don't have to go read an annual report. I will I have like the banks they like post them on their websites, and they're beautiful, like they must have a really good graphic designer, because like their annual reports are so sexy, like they have like lots of very bright, colorful graphs and charts, a letter from their CEO explaining what they did that. I just get so
excited reading reports. I'm like, oh, boushie, I understand that I want to be like you one day. You could like it's a waste of time because you don't actually need to do that, right. I used to do that a lot more when I was a financial advisor because I could sit down with you and you might go, oh, well,
why is that off this year? Like last year it performed really well, and I could go, well, I've read the report, here's what the CEO says, here's what the market says, here's what you know is going on, and this is what the future looks like. And you would go I feel so much more confident. So that was
a part of my job. You don't need to do that because all you have to do is look on your trading or investment platform because it will usually provide you with a really easy report of like where they are, where they're at, where they've been historically. You can also google it really easily, like it's very easy to google. Let's use NAB again as an example. If you're buying a direct share, what has NAB's performance been like over the last two years, five years, ten years, fifty years.
Ago, come up back, gotcha?
Okay, so you don't need to be too specific.
Yeah, okay, but to be a little bit specific what exactly what you're looking for in these reports?
All right?
Strap up?
This one's big. So there are a few ratios that we're going to talk about, and these are free financial indo caters that are used by financial advisors, but they're also used by people who invest. And I have an investing course coming out early next year which is really exciting, so I'll be able to delve into it a little bit deeper and really explain. Okay, well this is how you'd get it. Sure, you can google it as well.
Like I hate the fact that I could basically make myself redundant and be like, you can google it back. I'll tell you what you need, but you can always google free pe ratio calculator and you just put the numbers in and it will spit it out so you don't have to do the calculations, right, Okay, Like, I don't want you to feel overwhelmed because you're like they assigned up to cheese on the money because it was approachable and now you're making me do basically complex algebra.
I'm like, you can sit down. Sorry, I've been waiting for this moment. But the first thing is a pee ratio. So that is a price to earnings ratio. Okay, so we're comparing the price of the share to how much that company makes makes sense, right, So this is the company's share price divided by its earnings per share. So someone have earnings per share. If a company has a high peer ratio, they might be overvalued. So if you come out with a number that is deemed to be high,
one of two things. One it was a really goodbye, or it could be overvalued. Sure, so you might look at something again. Let's pretenders I have to pay. We know that that company was overvalued because of market hype. We know that people were really excited about it because they were getting on the train. It's like dogecoin. Why was it so expensive when you bought it because everybody
was talking about it? Was it actually because their annual report came out and they're providing a lot of value when you know they've invested a whole heap of time, energy, and resources and you know they're going places. Or was it because people in the market were excited about the opportunity. When people in the market are excited about the opportunity, often things will be overvalued, which means you're paying more
than you should for that asset. So this ratio tells you are you paying what you should for this or is it a bit speno right now?
How do we know if it's high? Does it tell you on the thing?
So on average, when you're talking about PE ratios, to make sure it's kind of on track, it's not overvalued and it's not undervalued. You're looking at a number between twenty and twenty five. Usually obviously I can delve into this a lot deeper later, but about twenty to twenty five. But when you see a low PE ratio like it comes out like five, that could actually indicate that the stock is undervalued. So this is where traders start to go, Hmmm,
my ears are pricked up. I've done all my calculations in this share. It's actually got a low pee ratio. So either there's something wrong with it beck or the market doesn't see its value.
Okay.
Often you might see a share with a low PEE ratio if they are involved in any kind of drama at the time. So you know, if something happens in the share market, or if something happens in social media and you know, the CEO has gotten in trouble for something, and then market sentiment has gone down. So that just basically means that people trust them less. When people trust
assets less, they might sell them off. And as you're selling off, obviously the share price is decreasing because there's less demand for it, and that could result in an undervalued share. And do you know what we like? Hmmm, we love drama.
We love we loved your drama.
It was up to me, Beck, I would have an entire drama podcast in addition to this podcast, Like I don't want to talk about like popular drama or like other people like that's just like stuff you'd hear on the train, Like you know what I mean, Like a podcast where people are like calling in being like this is anonymous, but like I heard on the train that such and such did such and such and we'll just like anonymize it. I'm here for the drama, Like I just want the story.
Let's do it.
Anyway, back to investing, that's what we're trying to get good at right now. We love a bit of drama because it doesn't mean it's true, but it also doesn't mean that the business is impacted at all. Right, so you could seize the opportunity. Can be like, they're undervalued right now, but are they a stable business? Yeah, they look pretty good. That could be an opportunity to seize.
And I love when a company is undervalued. Doesn't happen often, and when it does, other investors, especially professional investors, are on top of it. So can you, as a lay person go and you know, pick an undervalued share?
Not that easily, sure, but it's nice to talk about.
Why it's important because how many times at school were you told do this maths problem? Here's this ratio you need to learn. You're like, well, I would I ende with that?
Yeah?
Why we would do it because it could benefit us.
I can.
Next, is a pb ratio and it's nothing like a PBNJ right, so it is a price to book value ratio. Sounds complex? Let me break it down. So this is essentially a company's share price divided by its book value share price, very straightforward. I'm assuming you could tell me what that is right now. It's basically how much a share costs for you to purchase individually book value. You don't want the heck can do they sell books? No, they don't sell books. It's when you look at their
balance sheets. So you might look at their profit and loss, and it's basically the cost of carrying an asset on a company's balance sheet. So how much is the actual business worth. So a business might be in significant debt, so they might be really good at making profit, but they might also be in significant debt. And we need to take all of these things into consideration when making an investment decision. Right, So you don't want to go, oh, this is the best business ever, like, look how much
turnover they've got cough what after pay did? But then they're also running in the red because they are trying so hard to invest so much into their business in the hope that it will be successful. But if it's not, they actually have so much debt and that's really bad for shareholders.
Okay, Like, we.
Don't want to date people who are millions of dollars of debt back spread flat.
It could be perceived as a red flag. You're right about it.
About especially if they're trying to be in the media. But you're like, I looked under the covers and.
I saw what you've got.
I see what's going on.
I see what's going on, and it's not that hot red black.
And that's where people can be all talk, and that will tell you if they're all talk or all right.
Sure.
Number three, we're going to talk about price to sales ratio. That's a good ratio. It's got the PS ratio, and this is the company's share price divided by its sale price per share. So you determine a PS ratio by dividing the company's total market capitalizational value. So how much is that business worth by it's trailing twelve month revenue. So essentially, this shows how much investors are willing to pay for a share in the current market. So what
does that actually look like. You need to have a look at it, because it's not just what the share price is. It's a bit deeper than that. But those are the three that I want you to kind of consider. For me, the first one that I would learn if I was a brand new investor would definitely be that peer ratio. That first one we talked about. It's the easiest to calculate, it makes the most sense mentally and
it'll give you a bit of confidence. I don't want you jumping in and being like I need to do all three at once, Like, just start with one, because that's essentially the company's share price by how much you make from it. So Beck earlier, we were talking about NABS, so let's use them as an example. So the NAB share price is twenty eight dollars and forty two cents, So that's how much it would cost to buy one
share in National Australia Bank SLAG. We know as well that for each share that you own in NAB, they pay about eighty two to eighty four cents a year in dividends, so they do pay you to own their asset. If we then plug that in and look at their price to earnings ratio, NAB right now, at the end of November had a PE ratio of eleven point seven
three percent. Okay, in Australia the average is fifteen. So if we compare that to the fifteen Obviously, like we gave different numbers because we're looking at an international mone, but the average in Australia is fifteen. A low number can indicate that the stock might be undervalued. If we have a little bit of a think about the market right now? Back, do people like banks right now?
Like, maybe they're disenchanted.
They're not that happy with them, are they? Because they're increasing their mortgage rates. People are like banks absolutely screwing us over. So you're right, people are disenchanted. Is it still a good business unfortunately? Yeah, Like banks make the world go round to run, so people might be a little bit disenchanted. And I'm not saying that this is
completely accurate, It's just an example. But what I'm now seeing is that the average PE ratio in Australia fifteen NABS is about twelve, So right now they're a bit undervalued, and it would make sense because people aren't that excited about banks. Does it make it about investment?
No?
Does it make it a good investment No, can't say. Can't say. But what we can say is that we would not want to buy a bank that had a PE ratio of thirty If the average Australian PE ratio is fifteen?
Gotcha?
Does that make sense? And go, oh well, maybe now it might be a not too bad time to buy. However, the important thing to remember about when the right time to buy is you can do your PE ratio. You can do p B ratio, you can do PS ratio, you can do all these ratios. But the best time bag for you to invest is not when the market is ready. It's when you are personally ready. And I would personally love for you to overpay slightly for a share that you'd then hold for a really long time
that pays off for you. Because I can almost promise that everybody listening to this podcast can't time the market. Yeah, I can't time the market. Warren Buffett can't time the market. I'd be so flipping rich if I could time the market. It's just good to make us feel confident in the decisions that we are making to understand these things. It's not the be all, end all. You don't even have to do it.
Okay, So if I was listening to this, yes, I would go back and listen to maybe like the last ten minutes. So baby, let's take a quick break.
Yeah, and you can like rewind and listen to it again. I feel like I've overwhelmed you. This is why we need to get course out sooner so I can do it in video and like have my little whiteboard and be like this and this and this is what this looks like.
Hotally, No, you are great at explaining. I'm trying. Mom, You're doing great job.
Thanks, honey.
Let's go for a little break on the flip side. We'll take a deeper dive into green flags that a company is actually a good investment.
Don't go anywhere, guys.
Okay, v we are back. Hey feeling I'm so excited.
Nobody else is. They're like pe bp e ps.
What Hey, I'm excited. Let's be excited together. But let's talk about green flags again.
I love talking about green flags. Do you want to know another one?
I would love to know another one.
I thought you might. That's why you're here today. So another green flag. No debt, load debt or well managed debt because you know how, in like our lives, when we talk about debt, we're like there's good, bad, and okay debt, Like if we talk about it that way, kind of same for business, Okay, Like good debt mean that they're invested in the business and it was going to grow because of the debt that they're taken on.
Bad debt would be they are having creditors chase them because they have, you know, a bit off more than they can chew, and then probably not a good business to invest in.
Right, that's traumatizing.
In a perfect world, a business would have no debt. Yeah, it's very sexy. She's on the money, has no debt. Oh yeah, we're also not on the ax, so you can't buy us as a share and norm will we ever be because I'm the boss now.
Ah, I'm the captain now.
But ideally a company has no debt. But that's not a deal breaker if there's like low debt, or you can see that it's being well managed, like they might have taken on an investment loan to you know, purchase some assets that are going to further the income of the business. If a company does bring in a lot of money but it has a lot of debt to pay off, that actually decreases your dividends because they've got to pay their debt back before they pay the shareholders.
And that makes sense, but you don't really think about that when you're looking at share price. So we always want a company that has like low debt or debt that's going to get lower over time. That makes sense for the business.
Beck, Okay, I'm hearing you all right, do.
You want my final green flag. Yes, okay, So final green flag when it comes to profit is that the company is consistently raising dividends for a few reasons. One, we always want to make more money, but like, is this business keeping up with inflation? Beck ah, Yeah, because if they're not, we're actually going backwards by owning them over the long term. Right, that's not very sexy. But you can check past dividend payouts on the ASEX website
or my favorite google it. What have NABS dividends been like over the last thirty years? Have a look at it. I promised, there's charts everywhere on the internet about every share. It's not just NAB of just clung to that example.
Today we like transparents.
I don't even own nabshares at the moment.
What is wrong with me?
Anyway? I think that is probably where I will leave it when it comes to green flags. I hope you're feeling a little bit more confident and comfortable.
Yeah, okay, so I think right now we can't see a single red flag, no red flag in sight, no profitability, red flag.
No profitability, that's what we're talking about, remember.
But what else should we be looking for before we invest in a company.
All right, So no more green flags, but we're just talking about things that you should be looking for in general. Can only have so many green flags. Have you seen the TikTok trend of beige flags?
Yes, so we're talking beige flags now.
No, no, no, we're not talking beige flags. I just wanted to talk about TikTok again.
She loves talking about TikTok.
I love TikTok.
That's why I don't do any work anymore. Anyway, I guess the next few tips they require a bit more research, so they're like not just like immediate green flags where you go go yep, tick P ratio, that's easy. Does the company have debt?
Yes?
No easy answer. Does that make sense? Yeah, So it requires a bit more research, but they're worth it, and we'll take you from a novice to a pro investor in no time. I could sell a sham well with this energy.
Seriously.
So, one of the things we want to look at is whether there is a future in the product or the service that that company is selling. So will this actually be a profitable and competitive business in the next ten years is a question you need to be asking. So, for example, am I going to run out and buy shares in a company that makes DVDs or CDs M.
Maybe they're coming back.
Maybe they're coming back. You're like, their vintage is like records. Like I don't want to hear your justification, but like that's my example I have come up with on the fly, and you're gonna be like maybe no, no, no, You're.
Meant to say no, Beck, that's impressive.
That's impressive, but probably not because that's not where technology is at right now, and in another ten years, that's probably not going to be the dominant technology that the market is using, in which case your share price is probably going to decrease. Gotcha, their profit is probably going to decrease. You're right, there could be a vintage market, but like, are we buying vintage market things on the ax?
No?
No, exactly? Are they recession resistant? Is the next thing we want to talk about.
That's a good one, especially.
Of the pandemic, Really good question to ask. So like, for example, during the pandemic, supermarkets did so well, right, Like, I don't think people expected that, but it kind of makes sense. But because regardless of what's going on in the economy, VEC we all need to buy food. In fact, when the economy is put we're actually spending more money at the supermarket than we are on takeaway and stuff like that. So that's a pretty good business when it
comes to recession. Preferably, the customers for a particular business are from more than one source. So like imagine if the business was propped up because you know, it's probably not going to be on the ASEX. But you get my example all right, Instagram. So it's a really big Instagram account and they have an Instagram shop. That's risky. Sure, So if all of your customers are coming from one platform, what happens if that single source is wiped out or
that single source is changed. It's not actually in your hands that entire customer source has been wiped out, whereas a company that might be on all social media platforms might be different. That is just an example, but for bigger businesses it's obviously very very different. But that's one I think we can all wrap our heads around.
Yep, very risky to just be on Instagram.
It's why so many businesses, especially small business it is now we're just talking about something completely different, no, but it's why they want to diversify their customers. So it's why you know, once TikTok happened, they were trying to promote TikTok from Instagram to push you over to another platform, because if something happens to their main platform, at least
they can communicate with you on there. It's why if you go on any website, they are always trying to collect your email address because in the marketing world, Instagram's good, TikTok's good, any social media is good, but what is golden is your email address because they have direct contact to you. They might not have the Instagram platform that could connect with your profile, but they could send you an email being like, hey, sorry, our Instagram got completely wiped.
Here's a new link to our new Instagram. So they've got direct communication with you, which is why so many companies really promote they go, oh, ten percent of your first order if you sign up to our newsletter, like they put so much value on essentially owning the customer because there's no rules around it in the same way there would be around having a follower on Instagram or having a follower on Facebook. So okay, you want diversification of customer sources.
That makes sense everything's really checking out. I'm like thinking back to my life and I'm like, oh, that's why you ask me, this is why you email me all the time. Blah blah blah blah blah. But okay, let's move on. What else are we looking for?
So we're looking for a company that has ipo'ed and has done so for a while. You look confused.
IPO.
So an IPO is an initial public offering, and it basically refers to the process of offering shares of a private company or corporation to the public in a new stock insurance for the first time. So the first time they're put on the market. Right, So a lot of people get hung up on like, oh, this company's about to IPO and I'm going to invest in them. That's risky. How do you know how they're going to stabilize and what their actual share price will settle to.
You're right.
You might have an IPO that happens and that company is completely undervalued and it's skyrockets and you make lots and lots of money. But here it she's on the money. We're about making money over the long term. I'd prefer you to be stable and secure over the long term as opposed to get rich quick. Yep, we can't time the market. I've said it a million times. If I could, I already would have and I wouldn't even have this podcast because I'd be too rich because I'd be on an island.
That's fair.
Do you have a companies to island?
Yeah?
Actually, if I ever I ever get a successful IPO, I'll let you know. So essentially that means that they are a publicly listed company on the stock market and anyone can now buy shares in them. So once a company has entered into an IPO, it's actually a much safer investment because there's much lower risk now because we actually can see what the market is willing to pay for them, so before we're guessing what the market is going to pay for them, Like everyone's kind of been like, Oh,
they're ipoing Beck for fifty bucks a share. That's so undervalued. The business is worth more than that because I love it. You don't know what that dude who's saying that actually knows, or they could be saying it's overvalued. Can't believe they'd expect fifty dollars a share. How do you know what
that dude actually means right. So essentially, once they've put themselves on the market, you can measure or you can see what the market's actually willing to pay for them, and it's a much safer investment and usually leads to larger dividends. We like large dividends in this we do.
We like big d's.
Yeah, we like the big dividend.
Stop it.
Sorry, But the longer.
It has been iPod for, so the longer it's been on the market, ye, usually the less risky the investment because it's been through a number of different phases and cycles. So that's why we talk about blue chip stocks. So you can't just become a blue chip stock overnight. You've got to earn that with time. So new chip stock is kind of those tried true investments that have performed well over time. They're a bit boring. If you had grandparents who were into investing, they definitely.
Care about the chip stocks.
Okay, so you might be talking about coals and woolies and HP and the big four banks and stuff like that. Nothing exciting like transurban so like transport and like toll roads and stuff. You kind of go, there's nothing sexy about them.
Yeah, but we need them, but we need them.
And have you seen how much tolls are recently? Oh my lord, now the back way to get to the studio every time we record because tolls now to get from where I live, which is probably giving away too much personal information to where the studio is. It's like twenty two.
Dollars, I know what the heck in them Onnash So.
I would much prefer to buy everybody coffee when I get to work, And it took me fifteen minutes longer, OKAYV So I feel like I've learned a lot today and there's a few things I have to go and google price to earnings ratio of me.
I had that off my head.
I did, Honestly. I'm really proud of you because at the end of the day, I feel like you've been on the show for like a year now, which is wild to me. Like January is going to be our anniversary, whichuld we do. I don't know, yes, dounning, I'll think of something really cute, okay, But I feel like you've gone from being like, oh, no, investing's not for me.
I bought doge coin one time, to being like, oh, I kind of understand it like I'm not that intimidated by it, Like you haven't done it yet, which is so fine. Like we invest in our own time, not when the market tells us to invest. Yes, but like I feel like you might be a little bit more confident than you used to be around going oh no, like investments something I want to do, but I just haven't done it yet.
Yes, I absolutely feel like you know, baby step So thank you so much. I have learned so much today and over this year. I don't know about you, but I think it's a really good place to leave it.
For that, I think it's a brilliant place to leave it. So we will see you guys on Friday for a little bit of a recap. But we love you and we hope you have a good day. And sorry that I overwhelmed you. I didn't mean it. Listen to the.
Episode again, my guys.
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