Welcome everyone. Thanks for joining. We have a lot to get to in this episode of the drill. So Carlson show, of course, I'm going to be doing a portfolio update. So I'll show you what I'm buying, what companies, I think are good value. I'll give you a quick update of what's going on with the portfolio, but we also have some other important subjects to get 241 inflation. Seems to be out of control.
It's going higher and higher and we've now entered into a very difficult situation where the FED has to raise interest rates without Causing a recession and that's a pretty difficult thing to do. It's so difficult that a lot of forecasters are now increasing their chances and their forecasts predictions of a recession and this has generated a lot of Buzz, a lot of talk over time.
So in this episode we're going to go through and actually assess the probability of a recession and see how that plays in to our investing strategy. And then we have another topic I want to discuss that I think is very important. In fact, I actually think it's more important than all. Is macro events and that is the principle of discipline.
This is something that frankly looking around on on YouTube and Twitter and with individual investors and investors in general discipline is lacking and I think that this is an incredibly important topic. So I'll be discussing how I think discipline plays into every other form of investing and how you can actually develop discipline with your investing strategy. So we have a lot to get into a lot to go over if you want to subscribe To the channel. You can do so on Fall along for free.
I get frequent updates with my portfolio at least once a week, and I do so with complete transparency. So if you want to see how real money invested in real companies, turns out over a long period of time, you can follow along for free. Now let's go ahead and quickly start off with the portfolio update. This is my personal portfolio, it's real money. I have three hundred and thirty-five thousand dollars and thirty-five thousand six hundred and gains.
The first thing that I want to mention is it's difficult. Especially as somewhat of a public Financial figure to give updates on your portfolio when it's basically doing nothing but losing more and more money going down in value month after month and week after week. If I look at my portfolio right now I look at thirty five thousand six hundred dollars in gains and that's okay but just three months ago we are at 80
thousand dollars in gains. So we've given up a lot of gains over the past three months and if I just go to the past one month, And we're down twenty five thousand dollars in the past one month that's a lot of money. And when you're looking at this, it's very easy to become discouraged to feel like you're a bad investor to feel like you should give up, but I don't think that's the right attitude to have. Keep in mind that this money
right here is not actual money. I don't have money in my brokerage, I own equity and companies and this is basically a bid of what people are willing to pay for those equities. He's right now, this minute and this bid can change over time. In fact, it changes every single day. It's the equivalent of looking at your home on Zillow and seeing what the current value of it is, does it really matter what your home is valued at right now? If you don't intend on selling is your home value.
Even relevant to you if you don't intend on selling right now. Well not really and that's the way that I look at my portfolio right now. The price has gone down but I don't plan on selling my positions in fact, when the price is Down that gives you the opportunity to buy more and that's all I've been doing with my portfolio. I've been buying a little bit more every single week as stocks drop further.
And further, I just recently highlighted and my previous video of how I thought JP Morgan was good value so I bought an additional 2,000 dollars of this company. It pays above a 3.1 percent, yield Starbucks. Also continue to trade down into the high 70s, which I think is incredibly good value for this company.
So I dollar cost average further down, lowering my Cost basis and buying an additional thousand dollars of this company and I remain very bullish on it. Despite the fact that the price currently isn't looking good, you know it's going down in price and that's discouraging but really, I remain very bullish on this company. So overall, all I've been doing with my portfolio is keeping my Holdings, and great companies and buying ones that I think are offering particularly good value
right now. So, as we go throughout the next couple of months, it's becoming an increasingly emotionally and difficult. Time to invest, we can look at days like today. My portfolios up two percent. Six thousand six hundred dollars today. When you look at these big numbers going up, you can become optimistic and that's something that amateur investors and new investors often. Do you get Hope on the up days? Then on the downturns, you get very discouraged.
I don't think that's the way that you should look at it. We shouldn't be very happy when stock prices go up and we shouldn't be super sad. When stock prices go down, you should try to only disconnect from your portfolio, not have that play a factor realize that you're buying high quality, equities cash, producing assets and regardless. If the stock market goes down or up, these companies are still producing a return on their investment Capital.
They're still growing their revenues and growing their sales. So over time whether the market realizes it my portfolio is growing. Now big part of the reason why investing is so difficult right now is because of the ongoing macroeconomic events, like inflation. Malaysian seems to be getting
out of control. We're now in a situation where it seems like it's on the verge of a death spiral where inflation goes higher employers, start paying their employees more to adjust for inflation employees have more money, creating more demand, which causes more inflation. That seems like the route we're headed down now luckily the FED has a tool to curb inflation. They have a tool to completely stop, it called interest rates, if they higher interest rates
that will stop inflation. The problem is the in Interest rates are a blunt tool and they have side effects. One of the big ones is that if you raise interest rates too much, history shows that has a good chance of causing recession. So the FED has a tool to deal with inflation but they have to deal with the recession possibility as well and forecasters believe that this is getting to be a tougher situation for the fed and they're raising their forecasts of a chance of a recession
caused. By the FED hiking interest rates. So if we actually look at the situation we're in right now, it's pretty complex. Basically, before Russia invaded Ukraine, the outlook for the US economy was stressed but hopeful pandemic pressures appear to be
peeking. Inflation was widely, expected to normalize and the FED stood, a credible chance of engineering, a soft Landing meaning, they lower inflation without causing a recession, but they note the situation has changed an enormous amount of carrying atrocity in Europe has triggered an unpredictable Global Financial and economic conflict. That will see Sequences Ricochet though, new risks have emerged and uncertainty is higher at present the main impact on the crisis.
On the US economy is the exacerbation of existing pressures and risks. The path of inflation and the policies to contain it remain the main threat to the cycle. So they're basically sing the biggest threat to causing a recession right now is a misuse of fed policy. Them going to aggressive with raising interest rates and they say, while the risk has gone up, it need not be a Real come.
So they're saying that even though there is an increased risk of recession, it's still not entirely necessary. Now, I'm still in the camp that even though I think there's a decent chance of a recession in the u.s., I still believe there's a good chance. We will get through this without causing a huge recession. First of all, a lot of the things that were causing inflation seem to have peaked and are now actually leveling off the demand for retail sales
is actually going down. This is a good thing. This will put less pressure on inflation retail. Inventories are recovering meaning stores now have more stuff to sell which again lowers inflation. The labor market demand is actually stabilizing, it's not skyrocketing anymore. This is another positive development in terms of lowering inflation and the labor force participation rate is starting to recover which again is a very
good thing for the economy. Another graph that we can look at is the economist forecasts of inflation over the next two years. They break it down into these different colors. That mean, different things that are causing Inflation, you can see the mustard. One here is Supply, constrained durable goods and that one has really spiked inflation and they see that one actually minimizing over the next year. It'll decline pretty steadily. Then we have other Goods, which is also contributing to
inflation. That's supposed to go down naturally, as well. So a couple of the biggest causes of inflation are actually supposed to be transitory. They're supposed actually decline over the next year, even with the FED not raising interest rates. Rates. And that makes the situation a lot easier for the Fed. So, really, this comes down to a
game of probabilities. There is a chance we will go into recession because of policy error because we raise interest rates too fast or not enough to handle inflation. If that happens, we go into recession and the market may not like that but there's also a percent chance that we don't go into recession. Now, luckily for me, the way that I invest either of those outcomes is. Ok, I invest in every single company looking historically.
Berkeley at how they do during recessions and trying to do analysis on. If these companies will hold their own during recession, and I believe that every company in my portfolio Will Survive a recession. Now, having said that all the talk about recession and all the predictions do have a side effect of causing investors become increasingly emotional and increasingly fearful. And I can see this happen all over online.
I see so many investors, becoming fearful and changing their entire stance on investing one video. That I remember watching a few months back, this was three months ago. December 13th Was Won by chicken genius. Singapore. This is one titled. Quit your job. That's the name of this video. Let me go ahead and just play a little bit of this. Hello, friends. Took me one minute to make hundred and six thousand four hundred dollars. This covers my entire year's
expenses. Is he just said that this took him one minute to make a hundred and six thousand dollars in this covers his entire year of expenditure. Sit, that's the claim. This took him one minute. He made a hundred six thousand dollars and a one-year of expenses is covered. Hence the title quit, your job, call those my entire year's expenses is super life-changing and in Sharing what I do, hopefully, it changes yours.
I'm not asking you to quit your job and work is good, but at least be happy working in this video again because I do what I preach. But please note it may look difficult. But I assure Assure you. My donkey can do this with his eyes closed. All I did was by January 20, 23 roughly a year from now, if Tesla stock drops below 1000, I'll buy it means by January 20 23. If Tesla's stock is $900, I will need to buy at 1000. I simply wrote a guarantee, so I got paid for it. That's all I did.
He wrote a guarantee for Tesla. Now the guarantee was that Tesla would stay at a certain stock price by 2023 and by writing that guarantee of that stock price he's compensated by one hundred and six thousand four hundred dollars that he gets paid an upfront credit that's how he's saying he made a hundred six thousand dollars in one minute. Now again this is December 13th of last year just three months ago and he goes on to explain how risk-free this strategy is
is quite stupid. If testosterone drops with $900, Hours. Here's the Met I'm still in profit and if there's a stock drops to $800 steering profit $750. I'm still in profit. Let's say it drops to $600. I'll sell another years guarantee and I'm break even and this point it becomes stupid to us. If this is risky, in fact, I think whatever I do, this is the safest strategy. How here is he explained to me? He says it's stupid to ask how
this is risky. In fact, if it is risky explain to him, he'll this was the attitude. Just three months ago that you could basically have hundreds of thousands of dollars of risk free money. Now of course markets can change very quickly. From that video just year-to-date the S&P 500 is down, eleven point five seven percent, the QQQ is hit, even harder it's down. 19% year to date and Tesla, what you guaranteed, the price of is already down 34 percent to seven
hundred and ninety five dollars. Now, since that video, 3 months back of quitting your job and having risk free money. I've noticed a change in tone and his videos. The most. Recent one is, I believe a recession is Nair, has flames in the background, doesn't look So Rosie anymore and just recently a couple days ago he came out with a video called I'm selling frowny face.
And in that video he highlights what he's selling, he's selling out of pound here at a fifty one thousand dollar loss and he's selling out of that same Tesla position that same Tesla guarantee at a forty nine thousand, six hundred and ninety Eight dollar loss. Now, when you sell out of this early, the premium that you are paid up front that one hundred and six thousand dollars he was paid. You also lose that He's out that one hundred and six thousand
dollars. It was basically risk free money on top of losing an additional forty. Nine thousand six hundred ninety-eight dollars in. This was just three months ago, it seems like things can change so quickly, one moment, everything is easy. Money is easy to come by money, seems risk-free. And the next moment we're selling out of fifty thousand dollar loss now, I'm not trying to single out chicken genius, but I think it's a good example of how quickly things can
change. One moment we have something that seems like a sure plan. Ask free. And the next moment, it becomes very difficult when the market takes a turn. This is why sticking to a well-thought-out, methodically driven plan is very important investing. And one of the key things that I think separates amateur investors and new investors from professionals, and the best investors in the world is discipline. I think this is the key element that separates the two groups. Warren Buffett.
Defines this level of discipline is having emotional separation from your Investments. Keeping a level head. Don't need You don't need a lot of brains in this business. I mean, I've always said if you got an IQ of 160 give away 30 points or somebody else, cause you don't need it Investments. What you do need is emotional stability, you have to, you have to be able to think independently.
And they have to be, you have to be, when you come to a conclusion, you have to really not care what other people say, and just follow the facts and follow your reasoning. And, and that's, that's tough for a lot of people. At that part, I think I was just lucky with, I was born that way. This is what Warren Buffett refers to as as one of the Disadvantages. He has as an investor as being emotionally detached from your investments in this is something in common with every great investor.
Think about this, for a minute, you can name off every single great investor and no matter what strategy they pursue. If they're a great investor, they have a high amount of discipline. You can take Warren Buffett as an example. You can take Sir, John Templeton one of the best investors of the past hundred years. He's extremely disciplined. He says, that's one of his best.
Heuristics, you can look at Nick sleep and Zakaria and their fund that they ran where they invested in three companies Berkshire, Costco, and Amazon, and they made Market beating returns. They attribute part of that to not getting distracted by the market and the constant news they remained disciplined in their investing strategy.
You can look at Michael burry he's always looking for Pure value with his Investments and he doesn't make decisions emotionally you can go across the board to any great investor whether or not you're doing. Analysis or growth, investing whether you're doing, momentum, investing or technical analysis, having discipline is key. And, in my opinion, no matter how good you get at this stuff, no matter how good you are at momentum investing, or fundamental analysis or value
investing. Or even if you're just ETF dollar cost averaging, you're not going to have good returns if you lack discipline if your portfolio is driven by emotions. So, I may not be the best investor in the world, or even the best stock picker, I'm sure there's better. Doc, Pickers are investors out there than me. But one thing that I do plan on continuing to have with my investment strategy, is a high amount of discipline. I am not going to let emotions and fairs change.
My investment strategy. I'm going to continue to buy and dollar cost average into high-quality compounding companies that I think will offer significant value for the future. And I look at these type of dips in the market as buying opportunities not issues to be concerned about, I think, if you have this type of attitude, you'll have much better returns. So that's my thoughts today.
I hope you enjoyed the episode and if you want to follow along, I'll have more out this week so subscribe and you can follow along for free other than that. I'll see you in the next one.