That's it guys, it's over. I'm completely done with dividend investing. I give up. I really, I just really don't enjoy it. I don't enjoy looking at the gains that I'm making in capital
appreciation and earn dividends. I don't like being able to go over to my activity feed of my brokerage and see the constant stream of income coming into my brokerage just adding to my cash balance, allowing me to constantly contribute more and more to my portfolio and I especially don't like looking at the upcoming dividends, how I'm going to earn a hundred and twenty dollars in a few days. From one of my Holdings, I'm
going. To earn another nine dollars from Nike store capitals going to pay me a hundred and thirty six dollars on the 15th of next month. I don't like seeing all this money coming in and I especially don't like seeing my yearly dividends the amount of money that I'm growing. A passive income go up from $300 to $1700 to 3200 dollars almost doubling every single year year over year and then over the course of months, just having it go up month after month after month.
You know, it's just something I get tired of after a while. I don't enjoy it. More. So I'm completely given up. Okay, obviously, I'm joking. Happy April, Fool's Day. Everybody, happy, April 1st, I hope you've had a good first quarter in the market were three months in. We finally made it. Now, there are some things I do want to go over in this episode regarding dividend. Investing investing.
In these more conservative boring, free cash flow companies with predictable reliable incomes that pay you out dividends. I want to address some of the claims being made because there's been some claims that this style of investing, although it might be fun and it Provides you with constant income, it really doesn't give you good total returns. That's what people are saying. It's not good for total returns, I think that this is very false.
In fact, I think a lot of the data shows that this is false and that this form of investing, buying low value companies trading at low multiples, that provide constant stream of incomes and have high amounts of free cash flow. They provide Superior returns to the overall market. So I'll be showing examples of this will be going over this and examining it. This type of investing first, the S&P Hundred. So we'll look at that in this
episode. Now, we also have some big news stories, we're going to be getting to, in this episode, Microsoft has won this massive US Army contract. That could be up to 22 billion dollars in value over the next 10 years. That is a lot of money, even for Microsoft. So we'll be looking at this news. We're also going to be looking at news that Discord the chat application. It's one of the main features of a lot of patreons and my patreon to get access to a community Discord.
Well the implemented a new feature. That's basically a ripoff of Clubhouse. In fact, it functions identically. We did one impromptu Clubhouse. On the Discord already, it was a lot of fun, but I'm going to share my thoughts on this whole idea of different companies like Discord ripping off Clubhouse. Now, before we get into all of this, be sure to check out the
patreon. You get access to that Discord, you'll be invited to do lots of fun things like participate in the clubhouse meetings, we have there's lots of exclusive content. You get access to every buy and sell I do as well as just daily discussions. We're having a party over there so you can join in if you want to In that party. Now, other than that, another thing we recently released to the patreon members is this beautiful portfolio tracking spreadsheet.
So you get this as well, it gives you visualizations on all different things regarding your portfolio, the P/E ratios of your company's, the market cap your incoming, dividends your year-over-year growth and so on and so forth. So this is another perky get. And again, this is completely risk-free. You can try it out, patreon.com/crashcourse have Carlson or there's a link in the
description. Okay now, jump and right in we have finally made it past the first three Months of the year where past q1 of 2021 before we jump into the future and my kind of predictions my Outlook of the future. I want to take a look at the past and what we've gone through the Wall Street Journal says that the past quarter was defined by meme stocks and ft, is in the tech rotation and I
think they're accurate. But they highlight something else that I think is even more defining of the first quarter. They say, for instance, meme stock such as Gamestop surge, celebrities, dived into blank check companies. Those are specs, those went up like crazy before they came crashing back down. These auction off, a non fungible token attached to a digital image 469 million
dollars. So there is an N FP, which is something I've really I've heard knew about it was something new to me over the past couple months and now people are paying 69 million dollars form. This is how quickly things are changing. And then they say and just before the quarters end a fire sale stock of our kegels Capital Management had bet on caused well-known companies like Viacom CBS and Discovery to Tumble. So this is a hedge fund that put a lot of money into Viacom CBS and discovery.
By pumping up the stock price and then when they are margin called both, those stocks can crashing down. So there's a lot of things that have happened over the past three months. And then they, finally say if there's any unifying theme to all of this, it is an Investor's big and small showed no fear of risk-taking to start 20 21. In fact they embraced it. That's what investors are doing
is they're embracing risk. Now I think that part's a little bit concerning investors, big and small showed no fear of risk-taking to start 2021 there. Bracing risk. They're not fearful, they're not being risk cautious or they're not being conservative with their Investments. It's a little bit concerning when I hear talk like that. In fact, it goes on to say that quote, there's a lot of money just swishing around in the market.
And that's true. We can look at basically any investment anything that can be considered investment from Bitcoin to real estate to the Dow Jones to the S&P, 500 to the QQQ, everything is close to all-time highs. Every single type of asset is close to all-time highs. Investors are taking on more and more risk.
Seeking returns Warren Buffett has warned against this type of investor Behavior many times cautioning investors to actually care about risk to view their Investments is investing, in actual productive assets, that will grow and produce things over time, rather than just ticker symbols. And he says, if you do just view them as ticker symbols, you're eventually going to be scared out of your Investments when other people become scared that is normal investment Behavior.
If you have a temperament that when others are fearful, you're going to get scared, Yourself. You know, you are not going to make a lot of money and security over time in all probability that he says, if you have the temperament that when others are scared, you're going to become scared yourself. You're not going to make a lot of money with Securities. You shouldn't be investing in individual stocks, and I think that he's absolutely correct with that.
One of the most popular Investments to have struggled recently, are the ark ETFs, for instance, the arc Flagship fund is down about 22% 23% from its all-time highs from just a couple months ago. From February.
Now this is normal for these type of funds to go up and down like this, overall, the performance has been very good, but if you look at what Warren Buffett is warning about an investment Behavior, you can see that clearly Illustrated in the fund's assets under management, the amount of assets that go into this fund as it was making money, steadily raced up until it hit a peak in February, 12. And then if we zoom in a little bit, we can see what's happened over the past month.
The amount of assets under management has steadily declined with the declining performance of the fund. Jurors were buying in when things were going up and the ticker symbols were all moving up. And as soon as things started to decline investors started to sell out of the fun. This is the exact behavior that Warren Buffett. Cautions against chasing returns moving into whatever's, moving up and price and then selling out as soon as it starts to move down in price.
And I'll people really if they didn't look at quotations. But of course, the whole world is urging them to look at quotations and more than that. Do something based on small changes in quotations, but if you didn't think I much, More rational we've talked about it before, but think how much more rational investing in a farm is than the way many people buy stocks, them needed to buy a farm to get a quote next week.
Get a quote next month. If you buy an apartment house to get a quote next week or month, no, you look at the apartment house or the farm and you say I expected it at produce so many bushels of soybeans and corn, and if it does that it meets my expectations, but they buy a stock and they think of it goes up. It's wonderful. And because now it's bad. We think just the opposite when it goes down we love it because we'll buy.
Or and if it goes up with it, kills us to buy more Warren Buffett. Of course, is spot-on. He always looks for value and low priced companies that produce goods and he views his Holdings as Farms. He looks at Coca-Cola as a productive company that produces goods and it gives them a return and dividends over a decade after decade after decade, that's the type of investing that he's done. He doesn't race into whatever is a popular meme stock, whatever the next.
SPAC, whatever thing is new and shiny on the market. Warren Buffett has been very Upland and following this investment style his entire career. His most recent purchases are into companies that other people would consider really boring. He sold some Apple stock because that company race so much up in price that he used that money to buy Verizon and Chevron a telecom company and an oil company. They've both been very unloved
by the market for a long time. Both of them are high yielding dividend paying stocks that people know about. He also bought a slew of other value companies trading at very low multiples. We're talking about pharmaceutical companies here, Merc Bristol-Myers, Squibb AbbVie Pfizer. These are the very big pharmaceutical companies that trade out low valuations and these are the things that Warren Buffett are buying into. Now, in my portfolio, the passive income account.
There's a link in the description if you want to look at this. But I've been trying to do the same thing as Buffett I've been trying to buy into the companies. I've been ignored by the rest of the market, and I think that I found some that have traded down to unreasonably, low valuations, AT&T is one of them. It's that A9 forward, P/E ratio, when the rest of the market on average, the S&P 500, It, is that a 26 P/E ratio that's really expensive in historical terms.
So AT&T is trading at a much lower PE ratio and has a huge amount of free cash flow. That's a company that I have a margin of safety when I buy it at these prices so AT&T will offer me a lot of cash flow. And another company that I've been buying that will increase my cash flow as well is Dominion Energy. This company I now have about 5,000 dollars in and it has a 4% dividend yield.
I think that it's an undervalued company, it'll give moderate Of gains over the next 10 years with capital appreciation, and consistent dividend payments, that's a company. I like having in my portfolio adding to that cash flow. I've targeted pharmaceutical companies that have a higher dividend yield like Johnson & Johnson and app-v. I've reinstated the position. In these companies just to increase the amount of cash flow.
I'm getting with my portfolio with companies trading at a low P/E ratio that again, provide a lot of cash flow and then to even increase that cash flow further. I have the income fund I have now around 20 thousand dollars worth of jet. AP which is a covered call ETF. It sells covered calls on the S&P 500 as well as it does. What's called eln? Switch is equity-linked notes. I should get at least a hundred dollars, a month.
With this holding Justin dividend income, not counting any type of capital appreciation. So that's another way that I'm increasing. The amount of income that I'm getting is by buying into this income fund JP. So I'm trying to do what Warren Buffett says. And by companies that I consider to be Farms, they just sit there, they produce me cash flow over long periods of time and I have to About them, I buy him one time and then I can sit there and earn money from now.
A lot of people say that this type of investing targeting these boring, dividend-paying companies, these telecom companies and the more conservative dividend-paying free cash flow companies. It won't provide you with the best returns, it's good for constant income and if you need cash, but it's really not good for total returns. That's what people tell you, but it's really not accurate. You can compare the fund. For instance, the SC HD Schwab's u.s. dividend Equity ETF. That's an ETF.
That only Holds dividends against the S&P 500. In fact, let's go ahead and look at some of the companies in sdhd. We have Home Depot, Texas, instrument, and Ambien as a top three Holdings. So we don't have apple Google and Facebook. We don't have a Dobby. We don't have all those type of companies. We have Home Depot, Texas instrument, am Jim Cisco, Pepsi, IBM, broadcom, Pfizer, Coca-Cola, Merc Verizon 3M. BlackRock we have a bunch of
boring companies, right? These are old boring companies. That pay Ends. And this is what this portfolio of SCH D is made out of a bunch of these type of companies. Well if you actually compare the returns to the S&P 500 with dividends reinvested over the past year, s CH D has outperformed the S&P 500, it's outperformed the broader Market
67.8% to 56.3. Then we can look at a three year period for the past three years, sdhd has outperformed the S&P 500, sixty four point three, eight percent to fifty nine point two. Five percent, we can even look at the past 10 years, the past decade and surely SC HD during a time where the tech companies have taken off. We're all these Cloud companies have really accelerated seh. Di couldn't have outperformed, the S&P 500 over the past 10
years. Well, it has two hundred and eighty-six percent returns to two hundred and sixty seven percent s CH D with companies like Home Depot, Cisco, Verizon has outperformed the S&P 500. If you include dividends reinvested back into it, the Dividends are huge part of total returns and a People don't include them when they're looking at graphs comparing the returns.
If we switch this to only look at Price return and we exclude dividends obviously the dividend-paying companies have not outperformed, the S&P 500. For instance, seh, di would have returned only one hundred and ninety-one percent while the S&P 500 return, the two hundred sixty seven percent, but with total returns with dividends included, the dividend fund has
outperformed the broader market. So I'm not saying to only invest in dividend-paying companies and any dividend-paying companies, a good investment but I am Saying that companies that trade at low valuations compared to the rest of the market that have highly predictable businesses with large amounts of free cash flow usually tend to be good Investments over long periods of
time. And we've seen that proven time and time again over the past 50 years over the past 10 years and over the past five years, these type of companies perform. Well if you have the patience to hang on to them even when they're not the popular investment, Charlie Munger talks about this very type of thing in a shareholder meeting. He talks about two different types of investors. One of That's a very active type of investing where you're
constantly looking for. Whatever is a deal right now, you buy in a different companies and sell out of them after they run up in price and it's a very active labor, some type of investing, he likes the type of investing, that's the alternative, buying good companies, trading at low valuations, and holding them for a very long time, and doing nothing. That's the type of investing that he likes. Well, I agree that all intelligent investing is value investing.
You have to Acquire, more than you really pay for, and that's a value judgment. But you can look for more than you're paying for in a lot of different ways you can use filters to sift the investment universe. And if you stick with stocks that can't possibly be wonderful to just put away in your safe deposit box for 40 years butter
underpriced. Then you have to keep moving around all the time as they Closer to what you think the real value is, you have to sell them and then find the others. So, it's a, it's an active kind of investing. He's saying, he doesn't like to invest in companies that you have to be active with the you have to constantly be moving in and out of different companies. That's a way to find Value.
There's some people that like doing that they can buy into companies and hold them for short time periods. Most people aren't really successful doing that but that's not the type of investing that Charlie Munger likes. He describes the type of investing that he really enjoys the investing where you find a few great companies. And just sit on your ass because you've correctly predicted the future. That is what it's very nice to be good at the movie was G-rated even a come on Charlie.
This is a this is a family show here. The Joseph Carlson shows a family show, sorry about the language there. But Charlie's correct finding a few good companies that you can invest in. And then you can just sit on your butt for decade after decade and watch the money poor in. I think, is the preferable way of investing. That's why I invest in these Type of companies. I know, I can hold Disney for the next 10 years. I can hold onto the stock for the next 20 years.
Probably I have Costco. This again is a company that I can hold on to for 10 or 20 years at a minimum and then Home Depot and Nike and Comcast and Target. These are companies that are not short-term plays, I never intend to sell out of them. I plan on holding them, watching them pay, me dividends watching them grow their business. Disney will grow their streaming? Empire Costco will open new locations?
Home Depot will benefit from a And millions of new people looking to buy houses and constantly doing projects and different things to upgrade their homes. Nike has long-standing Brand value, that can't be replaced by other brands, Comcast will continue to grow peacock, and it's different cable services, and CNBC and target, of course, is one of the best retailers. All these are companies that I really don't concern myself with the day-to-day. I don't look at these that often.
The only point that I really look at them is to see if they've traded down a little bit, so I can accumulate more shares. That's the only time that I really look at these companies is to see if Our trading down in price so that I can pick up shares at a cheaper price point. But other than that, the growth path is clear for all of them.
And I can say the same thing about my tech companies with apple and Microsoft or my fintech companies with JPMorgan and MasterCard I can say the same thing about real estate. I don't do anything with that other than watch the dividends role in the same thing with the income fund and so on and so forth. That's what my portfolio is based on, is exactly what Charlie Munger describes sitting there and letting a couple good companies work for me, over the
long term. And I think, I think that this is a preferable way of investing. It's the way that I really enjoy and I think it will lead to better returns. If you're too concerned about the day-to-day price swings, we have drastic volatility in the market right now. There's a lot of new investors that buy and sell things all the time. A lot of hedge funds are very short term. Don't worry about them just worry about your company's and
what they're doing. If your companies are good companies and their growing over time, your returns are going to follow eventually. Just invest in good companies, stay out of them, don't worry about them and let them grow. Time and watch the Returns come in. That's what I plan on doing with this portfolio. Now again, if you want to look in each of these categories and see which companies, I hold, there's a link in the description, you can look at that for free.
Now, moving on a half to mention this news of this deal, with Microsoft in the US government, they reached an agreement to have a twenty one point nine billion dollar contract over the next 10 years. This is a massive deal, even for Microsoft and they've been doing these government contracts, more and more with the win of cloud hosting for the Pentagon. Now, they're working with the US Army. Me and they're building augmented reality headsets.
These are apparently what they look like, which is something that I didn't really realize that Microsoft was that big into. But the article says that the US Army said on Wednesday, Microsoft has won the contract to build more than custom hololens augmented reality headsets. So these custom Holo lens augmented reality, headsets. They're building a lot of these 120 thousand to be exact and it could be worth up to twenty one point, eight billion dollars over a ten-year period.
So it's not exactly a contract for Exact amount of money but that's what this deal could be worth up to for Microsoft, they go on to give different prices for things. They say Microsoft shares moved up higher after the announcement, the stock was up 1.7 percent to two hundred
thirty, five dollars a share. I'm at the end of Wednesday's trading session and they say the deal shows that Microsoft can generate meaningful revenue from a futuristic product resulting from years of research beyond their core areas such as operating systems and productivity software. That's exactly right. That is the takeaway from Microsoft people talk about companies like palantir and how they're big into data and they're going to do all these
things at other companies. Can't but Microsoft is now doing huge government, contracts building, augmented reality headsets with the US Army. This is stuff way outside of their core Suite of Office Products. So, Microsoft is a company. I'm glad to have is one of my top Holdings. This is a company that has everything going for it. It has a reliable consistent stream of Revenue with its office suite and its core product base, but then they're venturing out into social media.
There's talks of Buying Discord. Now, they're doing big contracts with the government on a more routine basis. This is a company that I think has everything going for it, it's very difficult in my mind. Is Microsoft struggling over the next 10 years now. Moving on to the next piece of news, we know that Discord copied Clubhouse. They build a clubhouse. Like feature, it's basically the exact same thing. They just built it out and Discord. They probably did it in one
weekend. I've already done one of these audio Clubhouse meetings on Discord on our patreon. It was a lot of fun. It worked really well. It was already a natural. Fit for this platform. So discords added this sin. I think it's a great feature. I think it's going to get a lot of use. We plan on using it on our Discord, a lot more frequently now, but this shows you what type of moat technology companies have their feature set is not their mode.
The amount of features that they can build out, does not create a moat. In fact, if you look at Clubhouse, for example, it's a good example of how many times it can be ripped off. We know that Discord ripped it off. We can also go to slack, the slack CEO was so bold with how he's going to rip it off. That he literally went into a clubhouse meeting on clubhouse, with the clubhouse, CEO and announced to his face. That he's going to copy Clubhouse in slack.
That's not body. Was he said that, we're going to copy your application and just build it out and slack. And they can do that and get away with it. And we know that Twitter is basically done the same thing as well. They built out Twitter spaces which again is a copycat of Clubhouse. So we look at companies like Clubhouse. You ask yourself, what is the moat of this company? What prevents competitors from being able to still Lll market share. Well, it's definitely not the
feature set. What really prevents competitors from stealing market. Share is the network effect of already having massive scale. The question is, how much scale do they have? Lots of developers? Could build a copycat of Facebook but they can't get any users because Facebook already has global scale. You have to ask yourself what technology companies have the scale to keep their market share. So we'll see how this continues to develop what new companies.
Continue to copy Clubhouse. I think that Spotify will be like that. Next big one to do it. They're the biggest audio platform in the world and they've already signaled that they're going to be building something similar to clubhouse. I think that Spotify will try to get it right because there are massive audio platform. They're really going to want to get this, right?
But interesting nonetheless, it goes to show how quickly these different features from these startup companies and new tech companies can quickly be replicated by all the already existing technology companies. There's really no mo and my mind outside of the network effect, having lots of users. Now, that's all for today. I hope you guys enjoyed the episode. Episode.
I'm going to give frequent updates in the future of all the different stocks I'm buying as well as my growth and passive income and the growth of this portfolio so far. It's going good. I'm very satisfied with it and I plan on continuing to do this style of investing, I very much like buying these conservative companies sitting back and watching them, make me money over and over again, quarter after quarter, it's a really fun style of investing. So I appreciate you guys for listening.
I'll check in with you next time. Episode. I'm going to give frequent updates in the future of all the different stocks I'm buying as well as my growth and passive income and the growth of this portfolio so far. It's going good. I'm very satisfied with it and I plan on continuing to do this style of investing, I very much like buying these conservative companies sitting back and watching them, make me money over and over again, quarter after quarter, it's a really fun
style of investing. So I appreciate you guys for listening. I'll check in with you next time.