Investor Quote of the Week

Quote Meaning

The quote refers to trying to protect yourself from big losses while still having the opportunity to make big gains.

It's a smart way to invest or make decisions because it keeps you safe but also lets you take advantage of favorable opportunities in the stock market.

A good example is buying shares of companies that already generate positive free cash flow without the need for more debt or share dilution in order to raise extra cash to fund loss-making businesses.

If you can find companies with a strong competitive advantage that produce free cash flow after all expenses are paid, and you happen to find the shares trading at a low multiple of their free cash flow, it could potentially be a good candidate to buy.

This lowers your downside risk and increases your upside gain.

Companies that produce high free-cash-flow margins include: Apple Inc., Microsoft Corp., Alphabet Inc., and Chevron Corp.

Nugget of Wisdom

Investing requires delayed gratification.

This means you choose to invest money rather than spend it right away.

For example:

Now: instead of spending $1,000 on a vacation, you buy shares of a reliable company.

Later: After 10 years, your $1,000 investment grows to $2,500 due to the company’s growth and dividends.

Or, how about this:

Now: Instead of dining out frequently, you save $200 per month in a retirement account.

Later: After 30 years, your regular savings and the interest earned can accumulate into a substantial retirement fund, allowing you to retire comfortably.

Be careful with your spending to raise as much capital as possible for investing.

Compound interest on your money does wonders over long periods of time.

Mistakes to Avoid

Don’t rely on school to teach you or your kids about investing.

Schools make one big mistake by not teaching us about investing or stocks.

Think about it: we spend years learning math, history, and science but barely touch on managing money.

We often overlook the importance of understanding how to budget, save, and invest for our future.

Investing is one of the best ways to build wealth, but without proper education, many people don’t know where to start.

They might avoid it altogether or make risky decisions without really understanding what they're doing.

Starting to invest early can make a huge difference because of compound interest. It's like magic, making your money grow more over time.

Plus, without this knowledge, people might fall for scams or get-rich-quick schemes, thinking they're good opportunities.

If schools taught us about the basics of stocks and investing, we'd be better equipped to make smart financial choices and build a secure future.

Even if you're an adult or now have kids that go to school, it's your job to educate yourself and your children about investing and being financially responsible.

So many of my classmates have never invested before.

They are “book smart” but terrible at investing.

I highly recommend that you start by reading this book:

The Intelligent Investor, by Benjamin Graham

You can find it easily on Amazon.

Stock of the Week

Visa Inc (Ticker: V)

Company Description

Visa, Inc. engages in the provision of digital payment services. It also facilitates global commerce through the transfer of value and information among a global network of consumers, merchants, financial institutions, businesses, strategic partners, and government entities. It offers debit cards, credit cards, prepaid products, commercial payment solutions, and global automated teller machines. The company was founded by Dee Hock in 1958 and is headquartered in San Francisco, CA.

Profitability Metrics

5-year average EBIT margin: 66%

5-year average net-income margin: 52%

5-year average return on equity: 41%

Growth Metrics

Revenue growth 5-year average (year-on-year): 10%

EBIT growth 5-year average (year-on-year): 11%

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Talk soon,

Sam