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Green Flags a Company Is a Good Investment · She's On The Money

0:00
Speaker 1: Hello.
0:01
Speaker 2: My name's Santasha Nabananga Bamblet. I'm a proud Yr the
0:05
Speaker 2: Order Kerney Whalbury and a waddery woman. And before we
0:08
Speaker 2: get started on She's on the Money podcast, I would
0:11
Speaker 2: like to acknowledge the traditional custodians of the land of
0:14
Speaker 2: which this podcast is recorded on a wondery country, acknowledging
0:18
Speaker 2: the elders, the ancestors and the next generation coming through
0:23
Speaker 2: as this podcast is about connecting, empowering, knowledge sharing and
0:27
Speaker 2: the storytelling of you to make a difference for today
0:31
Speaker 2: and lasting impact for tomorrow.
0:33
Speaker 3: Let's get into it.
0:34
Speaker 1: She's on the Money.
0:36
Speaker 4: She's on the Money.
0:57
Speaker 3: Hello, and welcome to She's on the Money, the pod
1:00
Speaker 3: cast for people who love Green Flags.
1:02
Speaker 1: Oh that sounds like a good podcast.
1:04
Speaker 3: I'm kind of excited for this one being well me too.
1:07
Speaker 1: Let's get into it.
1:08
Speaker 3: My name is Beck Side and as usual, I'm joined
1:10
Speaker 3: by Victoria de Vine.
1:11
Speaker 1: Hello. I'm excited about this because I love a green flag.
1:16
Speaker 1: I mean a lot of my girlfriends seem to love
1:18
Speaker 1: red flags.
1:19
Speaker 3: I mean, that's the issue.
1:21
Speaker 1: My friends said the other day, I was like, that
1:23
Speaker 1: is such a red flag. I was like, I feel
1:25
Speaker 1: like we're talking about relationships, like all he's doing is
1:28
Speaker 1: showing you red flags, and she's like, yeah, I love
1:29
Speaker 1: the carnival. I was like, Aha, you're doing this to yourself.
1:35
Speaker 1: Today we're going to talk about green flags, and I
1:37
Speaker 1: hope she's listening because it's about investment, not relationship advice,
1:40
Speaker 1: which apparently she wasn't going to take from me anyway.
1:43
Speaker 3: It's transferable, but we will talk about why green flags
1:46
Speaker 3: are the ones to walk out.
1:47
Speaker 1: They're the best kind.
1:48
Speaker 3: They're the best kind of flags. You are well aware
1:51
Speaker 3: that I am trying to fix up my finances. Yes,
1:54
Speaker 3: probably not doing a great job right now, but that's.
1:56
Speaker 1: Because we still have to sit down. I'm going to like,
1:58
Speaker 1: sit you down and I'm going to take you through
2:00
Speaker 1: the money masterclass and be like and then do this,
2:02
Speaker 1: and then do that. Honestly, if it comes to it,
2:04
Speaker 1: I'm taking your money off you.
2:06
Speaker 3: I think that's probably where we're gonna get it.
2:08
Speaker 1: Like, it's just going to end up with me being like,
2:10
Speaker 1: that's not yours. Sit over there in the corner.
2:12
Speaker 3: I need that. But no, today we're talking about investing.
2:15
Speaker 3: I've never invested in a company or bought shares, and
2:17
Speaker 3: I don't really know what companies should I invest in.
2:20
Speaker 3: I know you can't give like personal advice right now
2:22
Speaker 3: for sure. I mean maybe you can't.
2:24
Speaker 1: No, I can't.
2:26
Speaker 3: N I was kind of excited.
2:28
Speaker 1: I was like, no one can legally, like you won't
2:29
Speaker 1: shine a podcast that is Australian that will come out
2:33
Speaker 1: and say, oh this share this, share in this share
2:35
Speaker 1: perfect for beginners because that is personal advice and it's
2:39
Speaker 1: actually illegal to do that. So if that's what you're
2:41
Speaker 1: looking for, I'm just going to burst the bubble now
2:43
Speaker 1: and be like, h nobody can legally provide that. And
2:46
Speaker 1: if they are and they have said something like that,
2:49
Speaker 1: you kind of go, that's a red flag, red flas
2:51
Speaker 1: you should know you shouldn't be doing that. And I
2:53
Speaker 1: can almost guarantee that they have absolutely no license to
2:56
Speaker 1: be having that conversation anyway, so you shouldn't be taking
2:59
Speaker 1: their advice. To begin with this episode today, I'm going
3:02
Speaker 1: to talk a little bit more technically, So we're going
3:04
Speaker 1: to talk about PE ratios. We can shook about PB ratio.
3:07
Speaker 1: We're going to talk about the PS ratio, what they mean,
3:10
Speaker 1: what is an ipo, how does all of that work,
3:13
Speaker 1: and what does it mean when it comes to green flags,
3:15
Speaker 1: we're not so much talking about your ethics and your
3:18
Speaker 1: values and what is a green flag in that perspective,
3:21
Speaker 1: because if we want to talk about my ethics and values, obviously,
3:24
Speaker 1: if you know me well enough, you'd know that I'm
3:26
Speaker 1: looking for sustainable, ethical businesses that are relatively environmentally friendly,
3:31
Speaker 1: that care about their staff and all of that stuff.
3:33
Speaker 1: Will do a whole episode on that. That is fine,
3:35
Speaker 1: But that's more ethics than it is going.
3:38
Speaker 3: Hey, Beck, how do we value a company?
3:40
Speaker 1: What I can do is help you get the right
3:43
Speaker 1: information so that you can choose the right investments for you.
3:47
Speaker 1: And it's not as hard as people think it is. Like,
3:49
Speaker 1: and I think that we all get analysis paralysis when
3:52
Speaker 1: it comes to picking shares.
3:54
Speaker 3: You're like, well, I don't know what one I pick.
3:55
Speaker 1: And I'm like, well, why are we talking about what
3:57
Speaker 1: share you're picking, Beck, when you don't even have a
3:59
Speaker 1: shared trading form? Like there's so much we need to
4:02
Speaker 1: set up first, Like why are we talking about investing
4:05
Speaker 1: Beck when I know your budget's not on track? No,
4:08
Speaker 1: And like that's not a bad thing. There's nothing shameful
4:11
Speaker 1: or awful about it. It's more Beck, let's get your
4:14
Speaker 1: financial house sorted so that then we know how much
4:17
Speaker 1: we can invest comfortably, so that you're not shooting yourself
4:20
Speaker 1: in the foot later and going, oh my god, Via,
4:22
Speaker 1: I actually needed that money, and you don't have to
4:23
Speaker 1: pull it out because you go, well, actually, v I reckon,
4:26
Speaker 1: I can afford thirty bucks a month, and then I go, oh, great,
4:29
Speaker 1: well let's work with that, whereas other people might go,
4:31
Speaker 1: I'm so excited to start my investment journey. I'm just
4:34
Speaker 1: going to really prioritize this. And then they're like picking
4:37
Speaker 1: one thousand dollars or something and then realizing that they
4:39
Speaker 1: can't afford their current insurance or like groceries aren't happening
4:42
Speaker 1: in the same way that they were before, and they're
4:44
Speaker 1: like transferring money out of their savings to make this
4:46
Speaker 1: other thing. Like it becomes an absolute mess, a carnival.
4:51
Speaker 3: You could say, oh, we like it okay, but it could.
4:55
Speaker 1: Become like that, and then you become overwhelmed and you're like,
4:57
Speaker 1: investing's not for me. It's all too complicated, it's too hard.
5:00
Speaker 1: It's not like that.
5:01
Speaker 2: Hmm.
5:02
Speaker 3: Okay, Well, before we go too far into this episode,
5:05
Speaker 3: can you just remind all of us why we should
5:07
Speaker 3: consider investing in companies because we lack money.
5:12
Speaker 1: I see, you know what I love compound interest.
5:14
Speaker 2: Yeah.
5:15
Speaker 1: Compound interest is the money that your money made because
5:18
Speaker 1: it was invested, and then that money that your money
5:20
Speaker 1: made it starts making more money. And then when your
5:23
Speaker 1: money that the money made starts making money, that's free money. Beck,
5:26
Speaker 1: and I love free money.
5:27
Speaker 3: WHOA, Okay, there's a few steps to get there. But
5:29
Speaker 3: once you're there, do you like free money? Beck? I
5:31
Speaker 3: don't hate free money?
5:32
Speaker 1: Oh, you don't hate it? Like, just be partial though
5:35
Speaker 1: I'm not sure you know, I could take or only
5:38
Speaker 1: like it if there's no catches exactly.
5:40
Speaker 3: That's yeah.
5:40
Speaker 1: Yeah, Like why are you trying to offer me fifty bucks?
5:42
Speaker 2: Ye? Sir?
5:43
Speaker 3: What's going on here?
5:43
Speaker 2: Yeah?
5:44
Speaker 1: Exactly. So today I want to touch on I guess
5:46
Speaker 1: the importance of investing. You can start investing today. You
5:50
Speaker 1: actually don't need a lot of money to do it.
5:52
Speaker 1: We've spoken about this on the podcast before. There still
5:55
Speaker 1: seems to be this I guess myth that you need
5:58
Speaker 1: a lot of money to become an in And nowadays
6:01
Speaker 1: we have platforms and I'll plug share Z's because obviously
6:04
Speaker 1: we work with them. We adore them. A lot of
6:06
Speaker 1: our community adore them. If you want to sign up,
6:08
Speaker 1: use the code SotM and you'll get ten bucks in
6:11
Speaker 1: your account to start, which is very sexy. Guess what
6:14
Speaker 1: that is free for any But with Sharez's you can
6:18
Speaker 1: invest with as little as one cent.
6:19
Speaker 3: That's pretty good.
6:20
Speaker 1: Like, I can't think of something more accessible. Mm. I
6:23
Speaker 1: like that actually because they do what's called fractional investing.
6:26
Speaker 1: So beck, if you went to a normal share trading platform,
6:29
Speaker 1: you're like, I really want to purchase a share. I've
6:30
Speaker 1: decided it's going to be an individual company. Let's say
6:33
Speaker 1: it's beach p I don't know why that one came
6:35
Speaker 1: into my head, but that was the first one that
6:36
Speaker 1: came into my head. Maybe because it's like a spicy
6:38
Speaker 1: it's got green flags, it's got red flags. Like I
6:40
Speaker 1: don't know this would divide people, right, But if you
6:43
Speaker 1: went to your normal share trading platform, for you to
6:45
Speaker 1: buy one share in VHP, it's going to be about
6:48
Speaker 1: forty six bucks and you might go will be I
6:51
Speaker 1: just said that I had thirty dollars a month to invest.
6:53
Speaker 1: I can't even buy one VHP share. What Shares's offers
6:57
Speaker 1: and this is not me trying to sell their product.
7:00
Speaker 1: It's me trying to explain fractional investing. They go, ah, well,
7:03
Speaker 1: how much money have you got back? And you might go,
7:05
Speaker 1: I've got thirty bucks. So you might go, actually, I've
7:07
Speaker 1: got ten bucks, and they go, yeah, no worries, how
7:09
Speaker 1: but we give you ten dollars worth of BHP shares
7:12
Speaker 1: and they do what's called fractional investing, So instead of
7:16
Speaker 1: you having to buy a whole share, you still get
7:18
Speaker 1: exposure to that asset. You can purchase that asset, but
7:20
Speaker 1: for what your budget is, not what the share price is,
7:23
Speaker 1: which is really nice because a lot of people want
7:26
Speaker 1: exposure to particular companies and you might go, oh, but
7:28
Speaker 1: that one's too expensive for me to buy, like one off.
7:31
Speaker 1: So it's kind of nice to be able to build
7:33
Speaker 1: your portfolio in a way that suits you. And that's
7:36
Speaker 1: one of the reasons why I really love this concept
7:38
Speaker 1: of fractional investing. Is it safe, Yes, absolutely, Everything's still
7:42
Speaker 1: held in the same way an ETF would be held,
7:44
Speaker 1: So like, you are absolutely fine. I know a lot
7:47
Speaker 1: of people like, oh, but is it risky. I'm like,
7:48
Speaker 1: it's not more risky than any other type of investment,
7:51
Speaker 1: so don't stress too much. Right, So it's very unlike property,
7:55
Speaker 1: where you know, I can't be like, hey, Beck, do
7:56
Speaker 1: you want to buy property and you'd be like, yeah,
7:57
Speaker 1: but I've only got enough money for the bathroom, So
8:00
Speaker 1: can we just buy the bathroom now and by the
8:01
Speaker 1: rest of the house later. Now, it doesn't work like that.
8:03
Speaker 3: That would be nice though.
8:04
Speaker 1: You also don't have to be like a night trader
8:07
Speaker 1: to make money in the share market. I feel like
8:09
Speaker 1: there's this massive misconception that, like, to be a good
8:12
Speaker 1: investor you need to sit in a dark room with
8:15
Speaker 1: like three computer screens in front of you trading shares.
8:18
Speaker 1: That's not what HAPs I pictured. Yeah, like you know,
8:21
Speaker 1: I invest, There's no way I would be doing that.
8:24
Speaker 1: I want to sleep at night, not trade at night.
8:26
Speaker 1: And the risk of trading is actually incredibly high because
8:30
Speaker 1: you're making consistent, calculated decisions. You've got to be educated
8:33
Speaker 1: on that, and like most people are not. Do I
8:36
Speaker 1: sometimes have a little bit of a play in the
8:38
Speaker 1: trade market, of course they do. I'm an ex financial advisor.
8:41
Speaker 1: That was my bread and butter, Like I love it,
8:44
Speaker 1: But like, you don't do that to make lots of money.
8:47
Speaker 1: You do that from my perspective because it's fun. Because
8:49
Speaker 1: research tells us that you're going to get worse returns
8:52
Speaker 1: if you do that than if you put your money
8:55
Speaker 1: into a stable investment over the long period of time.
8:57
Speaker 1: Because what we know to be true, beat is that
9:01
Speaker 1: time is what matters most in your investment journey, not
9:04
Speaker 1: how smart you are or how impressive the investments that
9:06
Speaker 1: you've purchased are, but more how long you're exposed to
9:10
Speaker 1: an asset class. Also, the sexiest part of the money
9:13
Speaker 1: that your money makes making money, so compounding interest back
9:18
Speaker 1: is that it becomes passive, so you're no longer having
9:20
Speaker 1: to trade your time, so the hours that you work
9:23
Speaker 1: each week for money, but money is still coming in
9:25
Speaker 1: the door. You want to get paid for staying in
9:28
Speaker 1: bed Beck, Yeah, that's how with investing. Yeah, So what
9:32
Speaker 1: happens in the future is let's use my favorite example,
9:35
Speaker 1: which I've used a lot on the podcast before, and
9:37
Speaker 1: it's that one point two million dollar investment portfolio. So
9:42
Speaker 1: we know that if you started at the age of
9:44
Speaker 1: twenty one investing five hundred dollars each and every single
9:47
Speaker 1: month up until your retirement age of sixty five, you
9:51
Speaker 1: at an average rate of return of seven and a
9:53
Speaker 1: half percent, will very likely have an investment portfolio worth
9:57
Speaker 1: one point two million dollars, right, so you go, We'll
10:01
Speaker 1: be that makes sense because I was exposed to the
10:03
Speaker 1: market for that long. Well, no, because if you've just
10:06
Speaker 1: saved it instead, Beck, you'd have two hundred and forty
10:09
Speaker 1: thousand dollars.
10:10
Speaker 3: Right.
10:11
Speaker 1: So you're making by giving yourself exposure to the share
10:15
Speaker 1: market over a long period of time. When million dollars
10:18
Speaker 1: in free dollar.
10:19
Speaker 3: Ruse, that's free money back to me free right.
10:21
Speaker 1: But Beck, what does that mean once you retire, do
10:23
Speaker 1: you just start spending that one point two million dollars?
10:26
Speaker 1: The answer is no, no, no, because the money that
10:29
Speaker 1: your money has made is still invested and it's still
10:32
Speaker 1: making money. And if we be a little bit cautious,
10:35
Speaker 1: so let's pretend that once you retire, your portfolio is
10:38
Speaker 1: only returning five percent because we're being a bit more conservative.
10:41
Speaker 1: Is that what the Australian share market returns back?
10:43
Speaker 3: No, it's not.
10:44
Speaker 1: The share market in Australia, or average over a thirty
10:46
Speaker 1: year period of time returns close to ten percent. We're
10:49
Speaker 1: going to be super conservative and pretend it only returns
10:52
Speaker 1: five percent. Okay, a one point two million dollar investment
10:56
Speaker 1: portfolio each year at a rate of return of five
10:59
Speaker 1: percent conservative is going to give you an income of
11:03
Speaker 1: sixty thousand dollars. Wow, without diminishing that one point two
11:08
Speaker 1: million dollars. So that one point two million dollars will
11:10
Speaker 1: consistently sit there and it.
11:11
Speaker 3: Will just work.
11:12
Speaker 1: It will be invested, but the money that your money
11:15
Speaker 1: is making will be sixty thousand dollars a year, and
11:17
Speaker 1: in retirement that becomes your income.
11:19
Speaker 3: So you've taken the cream off the top.
11:20
Speaker 1: So you just taking the cream off the top, and
11:22
Speaker 1: then you know what happens like And I don't want
11:23
Speaker 1: to be too dramatic about it, but I just think
11:25
Speaker 1: it's so exciting to be in a position where you
11:28
Speaker 1: then have that one point two million dollars, right because
11:30
Speaker 1: we can't live forever, so we can make plans and
11:34
Speaker 1: leave legacies and go, oh, well with that one point
11:36
Speaker 1: two million dollars when I have kids, like, I would
11:38
Speaker 1: love it to go to my kids, And you can
11:41
Speaker 1: make as many rules as you want. You could be
11:43
Speaker 1: like they can't spend the one point two million dollars,
11:45
Speaker 1: they can just have an income for the rest of
11:47
Speaker 1: their lives that they share between themselves of sixty thousand dollars.
11:51
Speaker 1: Isn't that sexy? Yeah, that's they can add to it
11:53
Speaker 1: and do the same thing. And that's how Obviously there's
11:56
Speaker 1: a lot of other ways that family wealth starts and
11:59
Speaker 1: need to generational wealth starts, but this is one of
12:02
Speaker 1: the ways that intergenerational wealth can start and you can
12:05
Speaker 1: set your entire family lineup for success in the future.
12:09
Speaker 1: And I just think that's so exciting because I'm definitely
12:11
Speaker 1: one of those people that is passionate about leaving a legacy. Yeah,
12:14
Speaker 1: like I want to do good, be good, have a
12:16
Speaker 1: good time, but I also want everybody to be in
12:18
Speaker 1: a better off position. You're telling me I could do that? Yeah?
12:21
Speaker 1: Is that attractive?
12:22
Speaker 3: And we can start today, right here, right now, exactly
12:25
Speaker 3: with as little as one said. That is very impressive. Okay,
12:29
Speaker 3: So tell us what green flags should we be looking
12:31
Speaker 3: out for that tell us a company is actually a
12:33
Speaker 3: good investment all the.
12:35
Speaker 1: Green flags, right, So first we're going to start with
12:38
Speaker 1: the profitability green flags. So that's basically the first thing
12:42
Speaker 1: you should look at. Are you investing in a business
12:44
Speaker 1: that actually makes money? Because I can almost guarantee that
12:46
Speaker 1: you're not going to make any money personally. If they
12:48
Speaker 1: don't make any money, sure, where's it coming from to
12:50
Speaker 1: be given to you? So then we're going to delve
12:53
Speaker 1: a little bit deeper later. The first green flag is
12:56
Speaker 1: that it's profitable and the profits are stable. So this
13:00
Speaker 1: is where I go back and I go, hey, remember
13:02
Speaker 1: that time that everybody in the media was talking about
13:04
Speaker 1: after pay shares. Every man at his dog in the
13:07
Speaker 1: office was like, I bought after pay shares and I've
13:09
Speaker 1: made so much. This happened like just pre COVID, and
13:12
Speaker 1: I remember just looking at people being like cool, Beck,
13:15
Speaker 1: You're not being paid to own that share. You bought
13:17
Speaker 1: that share, and that share increased in price, and the
13:20
Speaker 1: only way for you to get your little mittens on
13:22
Speaker 1: that extra money is to sell that share you have
13:25
Speaker 1: while the market is high. If the market dips and
13:28
Speaker 1: your share becomes worthless, you haven't actually made any money.
13:32
Speaker 3: Yeah.
13:33
Speaker 1: Whereas if we went and bought like a NAB share.
13:35
Speaker 1: And I often use that as an example just because
13:37
Speaker 1: it comes to mind. I used to be a financial advisor,
13:39
Speaker 1: so I had like literally things that were wired into
13:43
Speaker 1: my brain.
13:43
Speaker 3: Bitch P and NAB or two of them.
13:45
Speaker 1: Right, So if you went and purchased a NAB sharing comparison,
13:49
Speaker 1: your friends aren't going to jump up and down in
13:50
Speaker 1: the same way they did about after Pay. Right, They're
13:52
Speaker 1: gonna be like, cool, Beck, you bought a bank share
13:55
Speaker 1: and you'll be like, yep. For every single share I have,
13:57
Speaker 1: I get paid eighty four cents. Oh, I get paid
14:01
Speaker 1: to own that share. And that's what's called a dividend.
14:04
Speaker 1: So that's pretty sexy, yeah, because that's a share that
14:07
Speaker 1: pays you to own it, because it's a dividends share.
14:10
Speaker 1: And we know that NAB over the last you know,
14:13
Speaker 1: fifty plus years, they've made money. They're a bank. You're
14:17
Speaker 1: really good at making money. I mean, we're pretty salty
14:20
Speaker 1: at the moment because they're making money off our mortgages
14:22
Speaker 1: that are sky high. And we could have these really
14:24
Speaker 1: big conversations. But at the end of the day, if
14:28
Speaker 1: you are making an investment, it pays to make one
14:31
Speaker 1: that is going to put you in the best possible position,
14:33
Speaker 1: even if it is a little boring.
14:35
Speaker 4: Right.
14:35
Speaker 1: So, Beck, do you want to be paid to own
14:38
Speaker 1: something that you own over the long term or do
14:40
Speaker 1: you want to buy something that increases in value? But
14:43
Speaker 1: never pays you. It's just valued higher because of market demand,
14:48
Speaker 1: and then it could go down later when it maybe
14:50
Speaker 1: isn't as shiny as a product or as new of
14:52
Speaker 1: a product. It's like bitcoin.
14:54
Speaker 3: Yeah, I see what you mean, like doge coin train.
14:56
Speaker 1: You were on the dose coin train. So you're telling
14:59
Speaker 1: me you've never gought shared on the share market. A
15:01
Speaker 1: little BECKSI ed has gone out and bought doge coin.
15:05
Speaker 3: I was not very willing.
15:06
Speaker 1: You know, I don't even know how I would buy
15:07
Speaker 1: doge coin.
15:08
Speaker 3: I know, I don't know how I got there.
15:10
Speaker 1: Where is your doge coin?
15:11
Speaker 3: Now it is gone and I have lost some money?
15:13
Speaker 3: So interesting, I recommend.
15:16
Speaker 1: So which side of the table should we be taking?
15:18
Speaker 3: I guess ideally get paid?
15:20
Speaker 1: All right, get paid? So we like that. But you
15:22
Speaker 1: don't have to delve into a company's financials to do this,
15:26
Speaker 1: Like you don't have to go read an annual report.
15:28
Speaker 1: I will I have like the banks they like post
15:32
Speaker 1: them on their websites, and they're beautiful, like they must
15:35
Speaker 1: have a really good graphic designer, because like their annual
15:37
Speaker 1: reports are so sexy, like they have like lots of
15:41
Speaker 1: very bright colorful graphs and charts. A letter from their
15:44
Speaker 1: CEO explaining what they did that. I just get so
15:47
Speaker 1: excited reading reports.
15:48
Speaker 3: I'm like, oh, boushie, I understand that I want to
15:51
Speaker 3: be like you one day.
15:52
Speaker 1: You could like it's a waste of time because you
15:54
Speaker 1: don't actually need to do that, right. I used to
15:57
Speaker 1: do that a lot more when I was a financial
15:58
Speaker 1: advisor because I could sit down with you and you
16:00
Speaker 1: might go, oh, well, why is that off this year?
16:03
Speaker 1: Like last year it performed really well, and I could go, well,
16:06
Speaker 1: I've read the report, here's what the CEO says, here's
16:09
Speaker 1: what the market says, here's what you know is going on,
16:12
Speaker 1: and this is what the future looks like. And you
16:13
Speaker 1: would go I feel so much more confident. So that
16:16
Speaker 1: was like part of my job. You don't need to
16:18
Speaker 1: do that because all you have to do is look
16:19
Speaker 1: on your trading or investment platform because it will usually
16:22
Speaker 1: provide you with a really easy report of like where
16:26
Speaker 1: they are, where they are, where they've been historically. You
16:29
Speaker 1: can also google it really easily, like it's very easy
16:32
Speaker 1: to google. Let's use NAB again as an example. If
16:34
Speaker 1: you're buying a direct share, what has NAB's performance been
16:38
Speaker 1: like over the last two years, five years, ten years,
16:40
Speaker 1: fifty years.
16:41
Speaker 3: Ago, come up back, gotcha?
16:43
Speaker 1: Okay, so you don't need to be too specific.
16:46
Speaker 3: Yeah, okay, but to be a little bit specific, what
16:50
Speaker 3: exactly what you're looking for in these reports?
16:52
Speaker 1: All right?
16:52
Speaker 3: Strap up? This one's big.
16:54
Speaker 1: So there are a few ratios that we're going to
16:56
Speaker 1: talk about, and these are free financial inter caters that
17:00
Speaker 1: are used by financial advisors, but they're also used by
17:03
Speaker 1: people who invest. And I have an investing course coming
17:05
Speaker 1: out early next year which is really exciting, so I'll
17:08
Speaker 1: be able to delve into it a little bit deeper
17:10
Speaker 1: and really explain. Okay, well this is how you'd get it. Sure,
17:12
Speaker 1: you can google it as well. Like I hate the
17:15
Speaker 1: fact that I could basically make myself redundant and be like,
17:19
Speaker 1: you can google it back. I'll tell you what you need,
17:22
Speaker 1: But you can always google free pe ratio calculator and
17:27
Speaker 1: you just put the numbers in and it will spit
17:28
Speaker 1: it out so you don't have to do the calculations, right, Okay, Like,
17:31
Speaker 1: I don't want you to feel overwhelmed because you're like
17:33
Speaker 1: they assigned up to cheese on the money because it
17:35
Speaker 1: was approachable, and now you're making me do basically complex algebra.
17:38
Speaker 1: I'm like, you can sit down. Sorry, I've been waiting
17:40
Speaker 1: for this moment. But the first thing is a pee ratio.
17:44
Speaker 1: So that is a price to earnings ratio. Okay, so
17:48
Speaker 1: we're comparing the price of the share to how much
17:50
Speaker 1: that company makes.
17:52
Speaker 3: Makes sense, right, So this is the.
17:54
Speaker 1: Company's share price divided by its earnings per share. So
18:00
Speaker 1: someone have earnings per share. If a company has a
18:04
Speaker 1: high peer ratio, they might be overvalued. So if you
18:07
Speaker 1: come out with a number that is deemed to be high,
18:11
Speaker 1: one of two things. One that was a really goodbye,
18:14
Speaker 1: or it could be overvalued. Sure, so you might look
18:17
Speaker 1: at something again. Let's pretenders I have to pay. We
18:19
Speaker 1: know that that company was overvalued because of market hype.
18:23
Speaker 1: We know that people were really excited about it because
18:25
Speaker 1: they were getting on the train.
18:26
Speaker 3: It's like dogecoin.
18:28
Speaker 1: Why was it so expensive when you bought it because
18:30
Speaker 1: everybody was talking about it? Was it actually because their
18:33
Speaker 1: annual report came out and they're providing a lot of
18:35
Speaker 1: value when you know they've invested a whole heap of time, energy,
18:38
Speaker 1: and resources, and you know they're going places. Or was
18:41
Speaker 1: it because people in the market were excited about the opportunity.
18:45
Speaker 1: When people in the market are excited about the opportunity,
18:48
Speaker 1: often things will be overvalued, which means you're paying more
18:51
Speaker 1: than you should for that asset. So this ratio tells
18:55
Speaker 1: you are you paying what you should for this or
18:57
Speaker 1: is it a bit speno right now?
18:58
Speaker 3: How do we know if it's high? Does it tell
19:00
Speaker 3: you on the thing?
19:01
Speaker 1: So on average, when you're talking about PE ratios, to
19:05
Speaker 1: make sure it's kind of on track, it's not overvalued
19:07
Speaker 1: and it's not undervalued. You're looking at a number between
19:10
Speaker 1: twenty and twenty five. Usually obviously I can delve into
19:13
Speaker 1: this a lot deeper later, but about twenty to twenty five.
19:18
Speaker 1: But when you see a low PE ratio like it
19:21
Speaker 1: comes out like five, that could actually indicate that the
19:24
Speaker 1: stock is undervalued. So this is where traders start to go, hmmm,
19:29
Speaker 1: my ears are pricked up. I've done all my calculations
19:33
Speaker 1: in this share. It's actually got a low pee ratio.
19:37
Speaker 1: So either there's something wrong with it beck or the
19:40
Speaker 1: market doesn't see its value.
19:42
Speaker 3: Okay.
19:43
Speaker 1: Often you might see a share with a low PEE
19:46
Speaker 1: ratio if they are involved in any kind of drama
19:50
Speaker 1: at the time, So you know, if something happens in
19:53
Speaker 1: the share market, or if something happens in social media
19:56
Speaker 1: and you know, the CEO has gotten in trouble for something,
20:00
Speaker 1: and then market sentiment has gone down.
20:02
Speaker 3: So that just basically means that people trust them less.
20:05
Speaker 1: When people trust assets less, they might sell them off.
20:09
Speaker 1: And as you're selling off, obviously the share price is
20:11
Speaker 1: decreasing because there's less demand for it, and that could
20:15
Speaker 1: result in an undervalued share. And do you know what
20:18
Speaker 1: we like? Hmmm, we love drama.
20:20
Speaker 3: We love we loved your drama.
20:22
Speaker 1: It was up to me, Beck, I would have an
20:24
Speaker 1: entire drama podcast in addition to this podcast, Like I
20:28
Speaker 1: don't want to talk about like popular drama or like
20:31
Speaker 1: other people like that's just like stuff you'd hear on
20:34
Speaker 1: the train, Like you know what I mean, Like a
20:36
Speaker 1: podcast where people are like calling in being like this
20:39
Speaker 1: is anonymous, but like I heard on the train that
20:41
Speaker 1: such and such did such and such and we'll just
20:42
Speaker 1: like anonymize it. I'm here for the drama, Like I
20:45
Speaker 1: just want the story. Let's do it. Anyway, back to investing,
20:49
Speaker 1: that's what we're trying to get good at right now.
20:51
Speaker 1: We love a bit of drama because it doesn't mean
20:53
Speaker 1: it's true, but it also doesn't mean that the business
20:55
Speaker 1: is impacted at all. Right, so you could seize the opportunity.
21:00
Speaker 1: Can be like, they're undervalued right now, but are they
21:03
Speaker 1: a stable business? Yeah, they look pretty good. That could
21:06
Speaker 1: be an opportunity to seize. And I love when a
21:09
Speaker 1: company is undervalued. Doesn't happen often, and when it does,
21:13
Speaker 1: other investors, especially professional investors, are on top of it.
21:16
Speaker 1: So can you, as a lay person go and you know,
21:19
Speaker 1: pick an undervalued share? Not that easily, sure, but it's
21:23
Speaker 1: nice to talk about why it's important because how many
21:26
Speaker 1: times at school were you told do this maths problem?
21:29
Speaker 1: Here's this ratio you need to learn. You're like, wellhy,
21:31
Speaker 1: I would I ende with that?
21:32
Speaker 3: Yeah?
21:32
Speaker 1: Why we would do it because it could benefit us.
21:35
Speaker 3: I can.
21:36
Speaker 1: Next, is a PB ratio and it's nothing like a
21:38
Speaker 1: PBNJ right, so it is a price to book value ratio.
21:43
Speaker 3: Sounds complex? Let me break it down.
21:46
Speaker 1: So this is essentially a company's share price divided by
21:50
Speaker 1: its book value share price, very straightforward. I'm assuming you
21:54
Speaker 1: could tell me what that is right now. It's basically
21:56
Speaker 1: how much a share costs for you to purchase individually
22:00
Speaker 1: book value. You don't want the heckn do they sell books? No,
22:02
Speaker 1: they don't sell books. It's when you look at their
22:05
Speaker 1: balance sheets. So you might look at their profit and loss,
22:08
Speaker 1: and it's basically the cost of carrying an asset on
22:10
Speaker 1: a company's balance sheet. So how much is the actual
22:13
Speaker 1: business worth. So a business might be in significant debt,
22:17
Speaker 1: so they might be really good at making profit, but
22:19
Speaker 1: they might also be in significant debt. And we need
22:21
Speaker 1: to take all of these things into consideration when making
22:24
Speaker 1: an investment decision. Right, So you don't want to go, oh,
22:27
Speaker 1: this is the best business ever, like, look how much
22:29
Speaker 1: turnover they've got cough, what after pay did? But then
22:35
Speaker 1: they're also running in the red because they are trying
22:39
Speaker 1: so hard to invest so much into their business in
22:41
Speaker 1: the hope that it will be successful. But if it's not,
22:43
Speaker 1: they actually have so much debt and that's really bad
22:45
Speaker 1: for shareholders.
22:47
Speaker 3: Okay, Like, we.
22:48
Speaker 1: Don't want to date people who are millions of dollars
22:50
Speaker 1: of debt back spread flat.
22:53
Speaker 3: It could be perceived as a red flag. You're right
22:56
Speaker 3: about it.
22:57
Speaker 1: About especially if they're trying to be in the media.
23:01
Speaker 1: But you're like, I looked under the covers, and I
23:03
Speaker 1: saw what you've got.
23:04
Speaker 3: I see what's going on.
23:05
Speaker 1: I see what's going on, and it's not that hot
23:08
Speaker 1: red black. And that's where people can be all talk
23:11
Speaker 1: and that will tell you if they're all talk or
23:12
Speaker 1: all right.
23:13
Speaker 3: Sure.
23:13
Speaker 1: Number three, we're going to talk about price to sales ratio.
23:17
Speaker 1: That's a good ratio. It's got the PS ratio, and
23:19
Speaker 1: this is the company's share price divided by its sale
23:22
Speaker 1: price per share. So you determine a PS ratio by
23:27
Speaker 1: dividing the company's total market capitalizational value. So how much
23:31
Speaker 1: is that business worth by it's trailing twelve month revenue?
23:37
Speaker 1: So essentially, this shows how much investors are willing to
23:40
Speaker 1: pay for a share in the current market. So what
23:44
Speaker 1: does that actually look like? You need to have a
23:46
Speaker 1: look at it, because it's not just what the share
23:48
Speaker 1: price is. It's a bit deeper than that. But those
23:51
Speaker 1: are the three that I want you to kind of consider.
23:53
Speaker 1: For me, the first one that I would learn if
23:56
Speaker 1: I was a brand new investor would definitely be that
23:59
Speaker 1: peer ratio. That first one we talked about. It's the
24:02
Speaker 1: easiest to calculate, it makes the most sense mentally, and
24:05
Speaker 1: it'll give you a bit of confidence. I don't want
24:07
Speaker 1: you jumping in and being like I need to do
24:08
Speaker 1: all three at once, like, just start with one, because
24:11
Speaker 1: that's essentially the company's share price by how much you
24:13
Speaker 1: make from it. So Beck earlier, we were talking about NABS,
24:17
Speaker 1: so let's use them as an example. So the NAB
24:19
Speaker 1: share price is twenty eight dollars and forty two cents,
24:22
Speaker 1: So that's how much it would cost to buy one
24:24
Speaker 1: share in National Australia Bank SLAG. We know as well
24:29
Speaker 1: that for each share that you own in NAB, they
24:32
Speaker 1: pay about eighty two to eighty four cents a year
24:34
Speaker 1: in dividends, so they do pay you to own their asset.
24:37
Speaker 1: If we then plug that in and look at their
24:40
Speaker 1: price to earnings ratio, NAB right now, at the end
24:44
Speaker 1: of November had a PE ratio of eleven point seven
24:48
Speaker 1: three percent. Okay, in Australia the average is fifteen. So
24:54
Speaker 1: if we compare that to the fifteen Obviously, like we
24:57
Speaker 1: gave different numbers because we're looking at an international mone,
25:00
Speaker 1: but the average in Australia is fifteen. A low number
25:04
Speaker 1: can indicate that the stock might be undervalued. If we
25:08
Speaker 1: have a little bit of a think about the market
25:10
Speaker 1: right now? Back, do people like banks right now?
25:13
Speaker 3: Like, maybe they're disenchanted.
25:15
Speaker 1: They're not that happy with them, are they? Because they're
25:17
Speaker 1: increasing their mortgage rates. People are like banks absolutely screwing
25:20
Speaker 1: us over. So you're right, people are disenchanted. Is it
25:24
Speaker 1: still a good business?
25:26
Speaker 3: Unfortunately?
25:27
Speaker 1: Yeah, Like banks make the world go round to run,
25:30
Speaker 1: so people might be a little bit disenchanted. And I'm
25:32
Speaker 1: not saying that this is completely accurate. It's just an example.
25:35
Speaker 1: But what I'm now seeing is that the average PE
25:38
Speaker 1: ratio in Australia fifteen NABS is about twelve, So right
25:42
Speaker 1: now they're a bit undervalued, and it would make sense
25:45
Speaker 1: because people aren't that excited about banks. Does it make
25:49
Speaker 1: it about investment?
25:51
Speaker 2: No?
25:51
Speaker 3: Does it make it a good investment No, can't say.
25:54
Speaker 1: Can't say. But what we can say is that we
25:57
Speaker 1: would not want to buy a bank that had a
26:00
Speaker 1: PE ratio of thirty. If the average Australian PE ratio
26:04
Speaker 1: is fifteen, gotcha? Does that make sense? And go, oh well,
26:07
Speaker 1: maybe now it might be a not too bad time
26:09
Speaker 1: to buy. However, the important thing to remember about when
26:12
Speaker 1: the right time to buy is you can do your
26:14
Speaker 1: PE ratio. You can do p B ratio, you can
26:16
Speaker 1: do PS ratio, you can do all these ratios. But
26:18
Speaker 1: the best time bag for you to invest is not
26:21
Speaker 1: when the market is ready. It's when you are personally ready.
26:24
Speaker 1: And I would personally love for you to overpay slightly
26:27
Speaker 1: for a share that you'd then hold for a really
26:29
Speaker 1: long time that pays off for you. Because I can
26:32
Speaker 1: almost promise that everybody listening to this podcast can't time
26:36
Speaker 1: the market. Yeah, I can't time the market. Warren Buffett
26:40
Speaker 1: can't time the market. I'd be so flipping rich if
26:43
Speaker 1: I could time the market. It's just good to make
26:46
Speaker 1: us feel confident in the decisions that we are making
26:49
Speaker 1: to understand these things. It's not the be all, end all.
26:52
Speaker 1: You don't even have to do it.
26:54
Speaker 3: Okay, So if I was listening to this, yes, I
26:56
Speaker 3: would go back and listen to maybe like the last
26:57
Speaker 3: ten minutes. So baby, let's take a quick break.
26:59
Speaker 1: Yeah, and you can like rewind and listen to it again.
27:01
Speaker 1: I feel like I've overwhelmed you. This is why we
27:03
Speaker 1: need to get course out sooner so I can do
27:05
Speaker 1: it in video and like have my little whiteboard and
27:07
Speaker 1: be like this and this and this is what this looks.
27:10
Speaker 3: Like hotally, No, you are great at explaining.
27:12
Speaker 1: I'm trying.
27:12
Speaker 3: Mom, You're doing great job.
27:14
Speaker 1: Thanks, honey.
27:15
Speaker 3: Let's go for a little break on the flip side.
27:17
Speaker 3: We'll take a deeper dive into green flags that a
27:20
Speaker 3: company is actually a good investment. Don't go anywhere, guys, okay,
27:29
Speaker 3: v We are back. Hey feeling I'm so excited.
27:32
Speaker 1: Nobody else is. They're like pe bp EPs, what.
27:35
Speaker 3: Hey, I'm excited. Let's be excited together. But let's talk
27:38
Speaker 3: about green flags again.
27:40
Speaker 1: I love talking about green flags. Do you want to
27:43
Speaker 1: know another one?
27:43
Speaker 3: I would love to know another one.
27:45
Speaker 1: I thought you might. That's why you're here today. So
27:47
Speaker 1: another green flag. No debt, load debt or well managed
27:50
Speaker 1: debt because you know how, in like our lives, when
27:53
Speaker 1: we talk about debt, we're like there's good, bad, and
27:55
Speaker 1: okay debt, Like if we talk about it that way,
27:57
Speaker 1: kind of same for business, okay, Like good debt mean
28:00
Speaker 1: that they're invested in the business and it was going
28:02
Speaker 1: to grow because of the debt that they're taken on.
28:05
Speaker 1: Bad debt would be they are having creditors chase them
28:08
Speaker 1: because they have, you know, a bit off more than
28:10
Speaker 1: they can chew and then probably not a good business
28:12
Speaker 1: to invest in.
28:13
Speaker 3: Right, that's traumatizing.
28:14
Speaker 1: In a perfect world, a business would have no debt. Yeah,
28:17
Speaker 1: it's very sexy.
28:19
Speaker 3: She's on the money, has no debt.
28:21
Speaker 1: Oh yeah, we're also not on the ax, so you
28:24
Speaker 1: can't buy us as a share and norm will we
28:26
Speaker 1: ever be because I'm the boss now, ah, I'm the
28:30
Speaker 1: captain now. But ideally a company has no debt, but
28:34
Speaker 1: that's not a deal breaker if there's like low debt,
28:37
Speaker 1: or you can see that it's being well managed, like
28:40
Speaker 1: they might have taken on an investment loan to you know,
28:42
Speaker 1: purchase some assets that are going to further the income
28:45
Speaker 1: of the business. If a company does bring in a
28:47
Speaker 1: lot of money but it has a lot of debt
28:49
Speaker 1: to pay off, that actually decreases your dividends because they've
28:52
Speaker 1: got to pay their debt back before they pay the shareholders.
28:56
Speaker 1: And that makes sense, but you don't really think about
28:58
Speaker 1: that when you're looking at share price. So we always
29:01
Speaker 1: want a company that has like low debt or debt
29:03
Speaker 1: that's going to get lower over time. That makes sense
29:06
Speaker 1: for the business.
29:06
Speaker 3: Beck, Okay, I'm hearing you all right.
29:09
Speaker 1: Do you want my final green flag?
29:11
Speaker 3: Yes? Okay.
29:12
Speaker 1: So final green flag when it comes to profit is
29:14
Speaker 1: that the company is consistently raising dividends for a few reasons. One,
29:19
Speaker 1: we always want to make more money, but like, is
29:21
Speaker 1: this business keeping up with inflation? Back a yeah, because
29:24
Speaker 1: if they're not, we're actually going backwards by owning them
29:26
Speaker 1: over the long term. Right, that's not very sexy. But
29:30
Speaker 1: you can check past dividend payouts on the ASEX website
29:33
Speaker 1: or my favorite google it. What have NABS dividends been
29:38
Speaker 1: like over the last thirty years? Have a look at it.
29:40
Speaker 1: I promised there's charts everywhere on the internet about every share.
29:43
Speaker 1: It's not just NAB of just clung to that example.
29:46
Speaker 3: Today we like transparents. I don't even own nabshares at
29:48
Speaker 3: the moment. What is wrong with me?
29:51
Speaker 1: Anyway? I think that is probably where I will leave
29:54
Speaker 1: it when it comes to green flags. I hope you're
29:57
Speaker 1: feeling a little bit more confident and comfortable.
29:59
Speaker 3: Yeah, okay, so I think right now we can't see
30:02
Speaker 3: a single red flag, no red flag in sight, no profitability, red.
30:06
Speaker 1: Flag, no profitability, that's what we're talking about, Remember.
30:09
Speaker 3: But what else should we be looking for before we
30:11
Speaker 3: invest in a company? All right? So no more green flags,
30:13
Speaker 3: but we're just talking about things that.
30:15
Speaker 1: You should be looking for in general. Can only have
30:17
Speaker 1: so many green flags. Have you seen the TikTok trend
30:20
Speaker 1: of beige flags?
30:21
Speaker 3: Yes, so we're talking beige flags now.
30:22
Speaker 1: No, no, no, we're not talking beige flags. I just
30:24
Speaker 1: wanted to talk about TikTok again.
30:27
Speaker 3: She loves talking about tik I love TikTok.
30:30
Speaker 1: That's why I don't do any work anymore. Anyway. I
30:33
Speaker 1: guess the next few tips they require a bit more research,
30:36
Speaker 1: so they're like not just like immediate green flags where
30:38
Speaker 1: you go go yep, tick p ratio, that's easy. Does
30:41
Speaker 1: the company have debt? Yes? No, easy answer. Does that
30:44
Speaker 1: make sense? Yeah, So it requires a bit more research,
30:47
Speaker 1: but they're worth it, and we'll take you from a
30:49
Speaker 1: novice to a pro investor in no time. I could
30:52
Speaker 1: sell a sham well with this energy.
30:54
Speaker 3: Seriously.
30:55
Speaker 1: So, one of the things we want to look at
30:57
Speaker 1: is whether there is a future in the product or
30:59
Speaker 1: the service that that company is selling. So will this
31:02
Speaker 1: actually be a profitable and competitive business in the next
31:05
Speaker 1: ten years is a question you need to be asking. So,
31:08
Speaker 1: for example, am I going to run out and buy
31:10
Speaker 1: shares in a company that makes DVDs or CDs M
31:15
Speaker 1: maybe they're coming back. Maybe they're coming back. You're like,
31:17
Speaker 1: their vintage is like records. Like I don't want to
31:19
Speaker 1: hear your justification, but like that's my example I have
31:22
Speaker 1: come up with on the fly, and you're.
31:24
Speaker 3: Gonna be like maybe no, no, no, you're meant to
31:27
Speaker 3: say no, Beck, that's impressive.
31:28
Speaker 1: That's impressive, but probably not because that's not where technology
31:32
Speaker 1: is at right now, and in another ten years, that's
31:35
Speaker 1: probably not going to be the dominant technology that the
31:37
Speaker 1: market is using, in which case your share price is
31:40
Speaker 1: probably going to decrease.
31:42
Speaker 3: Gotcha, their profit is probably going to decrease.
31:44
Speaker 1: You're right, there could be a vintage market, but like,
31:47
Speaker 1: are we buying vintage market things on the ax? No? No, exactly?
31:53
Speaker 1: Are they recession resistant? Is the next thing we want
31:56
Speaker 1: to talk about. That's a good one, especially of the pandemic,
32:00
Speaker 1: A really good question to ask. So like, for example,
32:03
Speaker 1: during the pandemic, supermarkets did so well, right, Like, I
32:07
Speaker 1: don't think people expected that, but it kind of makes sense.
32:10
Speaker 1: But because regardless of what's going on in the economy,
32:13
Speaker 1: VEC we all need to buy food. In fact, when
32:17
Speaker 1: the economy is put, we're actually spending more money at
32:21
Speaker 1: the supermarket than we are on takeaway and stuff like that.
32:24
Speaker 1: So that's a pretty good business when it comes to receession, Preferably,
32:28
Speaker 1: the customers for a particular business are from more than
32:31
Speaker 1: one source. So like imagine if the business was propped
32:35
Speaker 1: up because you know, it's probably not going to be
32:37
Speaker 1: on the ASEX. But you get my example all right, Instagram.
32:40
Speaker 1: So it's a really big Instagram account and they have
32:43
Speaker 1: an Instagram shop. That's risky. Sure, So if all of
32:47
Speaker 1: your customers are coming from one platform, what happens if
32:50
Speaker 1: that single source is wiped out or that single source
32:53
Speaker 1: is changed. It's not actually in your hands that entire
32:58
Speaker 1: customer source has been wiped out, whereas a company that
33:01
Speaker 1: might be on all social media platforms might be different.
33:04
Speaker 1: That is just an example, but for bigger businesses it's
33:08
Speaker 1: obviously very very different. But that's one I think we
33:10
Speaker 1: can all wrap our heads around.
33:11
Speaker 3: Yep, very risky to just be on Instagram.
33:15
Speaker 1: It's why so many businesses, especially small business it is
33:18
Speaker 1: now we're just talking about something completely different, no, but
33:21
Speaker 1: it's why they want to diversify their customers. So It's why,
33:24
Speaker 1: you know, once TikTok happened, they were trying to promote
33:27
Speaker 1: TikTok from Instagram to push you over to another platform,
33:30
Speaker 1: because if something happens to their main platform, at least
33:33
Speaker 1: they can communicate with you on there. It's why if
33:35
Speaker 1: you go on any website, they are always trying to
33:38
Speaker 1: collect your email address because in the marketing world, Instagram's good,
33:43
Speaker 1: TikTok's good, any social media is good, but what is
33:45
Speaker 1: golden is your email address because they have direct contact
33:49
Speaker 1: to you. They might not have the Instagram platform that
33:52
Speaker 1: could connect with your profile, but they could send you
33:54
Speaker 1: an email being like, hey, sorry, our Instagram got completely wiped.
33:58
Speaker 1: Here's a new link to our new Instagram. So they've
34:01
Speaker 1: got direct communication with you, which is why so many
34:04
Speaker 1: companies really promote. They go, oh, ten percent of your
34:07
Speaker 1: first order if you sign up to our newsletter, like
34:09
Speaker 1: they put so much value on essentially owning the customer
34:13
Speaker 1: because there's no rules around it in the same way
34:16
Speaker 1: there would be around having a follower on Instagram or
34:19
Speaker 1: having a follower on Facebook. So okay, you want diversification
34:23
Speaker 1: of customer sources.
34:24
Speaker 3: That makes sense. Everything's really checking out I'm like thinking
34:28
Speaker 3: back to my life and I'm like, oh, that's why
34:30
Speaker 3: you ask me, this is why you email me all
34:31
Speaker 3: the time, and blah blah blah blah blah. But okay,
34:34
Speaker 3: let's move on. What else are we looking for?
34:35
Speaker 1: So we're looking for a company that has ipo'ed and
34:38
Speaker 1: has done so for a while. You look confused.
34:43
Speaker 3: IPO. So, an IPO is.
34:46
Speaker 1: An initial public offering, and it basically refers to the
34:49
Speaker 1: process of offering shares of a private company or corporation
34:54
Speaker 1: to the public in a new stock insurance for the
34:56
Speaker 1: first time. So the first time they're put on the market,
34:59
Speaker 1: right O. So a lot of people get hung up
35:02
Speaker 1: on like, oh, this company's about to IPO and I'm
35:04
Speaker 1: going to invest in them. That's risky. How do you
35:07
Speaker 1: know how they're going to stabilize and what their actual
35:10
Speaker 1: share price will settle to.
35:12
Speaker 3: You're right.
35:12
Speaker 1: You might have an IPO that happens and that company
35:16
Speaker 1: is completely undervalued and it's skyrockets and you make lots
35:19
Speaker 1: and lots of money. But here it she's on the money.
35:21
Speaker 1: We're about making money over the long term. I'd prefer
35:24
Speaker 1: you to be stable and secure over the long term.
35:26
Speaker 1: As opposed to get rich quick. Yep, we can't time
35:29
Speaker 1: the market. I've said it a million times. If I could,
35:32
Speaker 1: I already would have and I wouldn't even have this
35:34
Speaker 1: podcast because I'd be too rich, because I'd be on
35:36
Speaker 1: an island.
35:37
Speaker 3: That's fair.
35:38
Speaker 1: Do you have a companies to island?
35:39
Speaker 3: Yeah?
35:40
Speaker 1: Actually, if I ever I ever get a successful IPO,
35:42
Speaker 1: I'll let you know than you. So essentially that means
35:45
Speaker 1: that they are a publicly listed company on the stock
35:47
Speaker 1: market and anyone can now buy shares in them. So
35:50
Speaker 1: once a company has entered into an IPO, it's actually
35:54
Speaker 1: a much safer investment because there's much lower risk now
35:57
Speaker 1: because we actually can see what the market is willing
36:01
Speaker 1: to pay for them, so before we're guessing what the
36:03
Speaker 1: market is going to pay for them, Like everyone's kind
36:05
Speaker 1: of been like, Oh, they're ipoing Beck for fifty bucks
36:08
Speaker 1: a share, that's so undervalued. The business is worth more
36:11
Speaker 1: than that because I love it. You don't know what
36:13
Speaker 1: that dude who's saying that actually knows, or they could
36:17
Speaker 1: be saying it's overvalued. Can't believe they'd expect fifty dollars
36:20
Speaker 1: a share. How do you know what that dude actually
36:24
Speaker 1: means right. So essentially, once they've put themselves on the market,
36:28
Speaker 1: you can measure or you can see what the market's
36:30
Speaker 1: actually willing to pay for them, and it's a much
36:32
Speaker 1: safer investment and usually leads to larger dividends. We like
36:36
Speaker 1: large dividends in this we do.
36:39
Speaker 3: We like big d's.
36:40
Speaker 1: Yeah, we like the big dividend.
36:43
Speaker 4: Stop it.
36:44
Speaker 3: Sorry, But the longer.
36:46
Speaker 1: It has been iPod for, so the longer it's been
36:48
Speaker 1: on the market, ye, usually the less risky the investment
36:52
Speaker 1: because it's been through a number of different phases and cycles.
36:55
Speaker 1: So that's why we talk about blue chip stocks. So
36:59
Speaker 1: you can't just become a blue chip stock overnight. You've
37:02
Speaker 1: got to earn that with time. So new chip stock
37:05
Speaker 1: is kind of those tried true investments that have performed
37:08
Speaker 1: well over time.
37:09
Speaker 3: They're a bit boring.
37:11
Speaker 1: If you had grandparents who were into investing, they definitely.
37:14
Speaker 3: Care about the chip stocks. Okay, so you.
37:16
Speaker 1: Might be talking about coals and woolies and HP and
37:19
Speaker 1: the big four banks and stuff like that. Nothing exciting
37:22
Speaker 1: like transurban so like transport and like toll roads and stuff.
37:26
Speaker 1: You kind of go, there's nothing sexy about them. Yeah,
37:30
Speaker 1: but we need them, but we need them. And have
37:31
Speaker 1: you seen how much tolls are recently? Oh my lord,
37:35
Speaker 1: now the back way to get to the studio every
37:38
Speaker 1: time we record because tolls now to get from where
37:41
Speaker 1: I live, which is probably giving away too much personal
37:43
Speaker 1: information to where the studio is. It's like twenty two dollars,
37:47
Speaker 1: I know what the heck in them on ash, So
37:50
Speaker 1: I would much prefer to buy everybody coffee when I
37:52
Speaker 1: get to work, And it took me fifteen minutes longer,
37:54
Speaker 1: OKAYV So I feel like I've learned a lot today
37:56
Speaker 1: and there's a few things I have to go and
37:57
Speaker 1: google price to earnings ratio of me.
38:00
Speaker 3: I had that off my head.
38:01
Speaker 1: I did, Honestly. I'm really proud of you because at
38:04
Speaker 1: the end of the day, I feel like you've been
38:06
Speaker 1: on the show for like a year now, which is
38:08
Speaker 1: wild to me. Like January is going to be our anniversary.
38:12
Speaker 3: Whichuld we do.
38:12
Speaker 1: I don't know, yes, Dounning, I'll think of something really cute, okay,
38:17
Speaker 1: But I feel like you've gone from being like, oh, no,
38:20
Speaker 1: investing's not for me. I bought doge coin one time,
38:23
Speaker 1: to being like, oh, I kind of understand it, Like
38:24
Speaker 1: I'm not that intimidated by it, Like you haven't done
38:27
Speaker 1: it yet, which is so fine. Like we invest in
38:29
Speaker 1: our own time, not when the market tells us to invest. Yes,
38:32
Speaker 1: but like I feel like you might be a little
38:34
Speaker 1: bit more confident than you used to be around going
38:36
Speaker 1: oh no, like investments something I want to do, but
38:38
Speaker 1: I just haven't.
38:38
Speaker 3: Done it yet. Yes, I absolutely feel like you know,
38:41
Speaker 3: baby step So thank you so much. I learned so
38:43
Speaker 3: much today and over this year. I don't know about you,
38:45
Speaker 3: but I think it's a really good place to leave it.
38:47
Speaker 1: For that, I think it's a brilliant place to leave it.
38:49
Speaker 1: So we will see you guys on Friday for a
38:52
Speaker 1: little bit of a recap. But we love you and
38:54
Speaker 1: we hope you have a good day. And sorry that
38:56
Speaker 1: I overwhelmed you. I didn't mean it. Listen to the
38:58
Speaker 1: episode again, my guys. Yes, the advice shared on She's
39:07
Speaker 1: on the Money is general in nature and does not
39:10
Speaker 1: consider your individual circumstances. She's on the Money exists purely
39:14
Speaker 1: for educational purposes and should not be relied upon to
39:17
Speaker 1: make an investment or financial decision. If you do choose
39:20
Speaker 1: to buy a financial product, read the PDS TMD and
39:23
Speaker 1: obtain appropriate financial advice tailored towards your needs. Victoria Divine
39:28
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