InvestED: The Rule #1 Investing Podcast Phil Town & Danielle Town

InvestED Episode #467: More Ulta Issues

As investors the world over grapple with the rapidly changing financial landscape, where ETFs, meme stocks, and cryptocurrencies are all carving out their own space in a well-established ecosystem, how do value investors gauge the future of a business?

While some might see these changes as a massive disruption to the market at large, there are others who, from a Buffett perspective, see the same cycle of boom/bust/reset playing out as it’s done so many times in the past.

This week, Phil and Danielle continue from their jumping off point of the cosmetics industry to tell us why the difference between growth and value stocks isn’t nearly as significant as establishing the value of the business in order to plan for the future.

For some great tips on what to do (and what not to do) when building your value investing portfolio, click here for your free copy of 10 Do’s and Don’ts of Successful Investing:  https://bit.ly/3XyEDbD

Topics Discussed:

P/E ratio

Wall Street vs value investing future outlook

Growth stocks

Intrinsic value

ETFs


Resources Discussed:
The Weather Matrix

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The digital age, with all of its monopolies and consolidation across various markets, has also seen a rise in innovation and small companies seeing success by having unprecedented access to consumers through new channels of commerce and communication.

With market stability and consumer confidence taking hits in recent years, small luxuries like makeup continue to do well despite the struggles of luxury brands in general.  With the success of some niche brands in this highly competitive and specialized sector of cosmetics, what does the weather look like for some of the more established players in the makeup industry?

This week, Phil and Danielle wrap up their discussion about the beauty industry and the way that boutique brands might affect the bottom line for the big names in cosmetic products.

If you want a huge clue as to whether or not you’re looking into a business that will deliver predictably strong returns, don’t miss out on your free copy of The Big 5 Numbers Guide:  https://bit.ly/3psMESQ

Topics Discussed:

ETFs

Augustinus Bader

Victoria Beckham Beauty

Ulta

Sephora

Kering

LVMH

D2C vs retail

Cosmetic science


Resources Discussed:
Lisa Eldridge

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How important is investing to the economy at large? While companies don’t see a direct increase on their bottom line from the secondary market, it can be very important in helping to determine the value of a business and the drive interest in the primary market.

For value investors, having a strong understanding of a business’s weather, i.e. their moat, competitive advantage, and other factors that determine their long-term success, is paramount to generating returns on a multi-year timeline. From the Rule #1 perspective, that’s the key difference between investing and simply gambling on the market.

After a few weeks’ break on the subject, Phil and Danielle return with part 1 of an extra long 2-part episode breaking down the weather of the makeup industry giant Ulta, and share some of their insights into their own weather analysis of their history with this business. 

For help identifying the durable advantage of a company you’re looking to invest in, click here for your free copy of The 5 Moats Investment Guide: https://bit.ly/3Kmb33J

Topics Discussed:

Primary market vs Secondary market

CFO CEOs

Ulta

Augustinus Bader

Victoria Beckham Beauty


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A crystal ball would be the ultimate tool for any investor, but given that we’re not living in a fantasy world, how do top investors prepare for an uncertain future?

With the inevitability of market downturns, finding a balance between generating returns and being ready to strike when the iron is hot can be a tricky position to navigate.  Discovering that equilibrium, along with the patience to hold on through the ups and downs once you’ve bought into a great company, can be what makes or breaks a portfolio in the long run.

On this week’s episode, the deep analysis of the 2023 Berkshire Hathaway shareholder letter continues as Phil and Danielle wring every ounce of wisdom from Buffett’s annual communiqué..

For help with future-proofing your portfolio, click here for a free copy of The Ultimate Stock Market Crash Survival Guide:  https://bit.ly/3xNXFlf

Topics Discussed:

Munger’s influence on Buffett’s philosophy

Investing in the information age

Mutual funds vs ETFs

Modern market volatility

Forgoing returns to prepare for downturns


Resources Discussed:

Berkshire Hathaway shareholder letter

Wilshire GDP ratio


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Here’s a scenario: you’ve identified a potential investment, you’ve gone through the checklist and done your research, and you decide that you’ve found a deal that other people seem to be overlooking.  You pull the trigger to buy into this company, and then the stock price begins to decline and you begin to wonder if you’ve made a mistake.

Knowing the difference between having confidence in your investing process and being arrogant or blindly confident in a position can allow investors to act on proven strategy as opposed to being driven by fear and emotion.  Having a long-term outlook and a diligent methodology is the way for capable value investors to find the deals and realize the returns that many others in the market get wrong.

This week, Phil and Danielle tackle another constant issue for investors as they dig into when, how, and why you should (or shouldn’t) stick with a purchase that doesn’t seem to be panning out the way you’d suspected.

For help finding businesses that you feel confident investing in, click here for the “3 Circles” Exercise Guide:  https://bit.ly/3LOexg2

Topics Discussed:

Patience and discipline in value investing

The dangers of hubris and confirmation bias

Informed assumptions vs speculation


Resources Discussed:
Berkshire Hathaway shareholder letter (2013)

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Free cash flow can be a golden ticket in the hands of a company with the right leadership. They can use it to supercharge innovation, expand their reach, or reward shareholders with dividends or buybacks, and for value investors, it’s like spotting a diamond in the rough.

After the growth and maintenance expenditures are accounted for, the way a company deploys its additional capital can signal the strength of management and the potential for future returns. As Buffett tells us in his recent letter, once you’ve got companies that check all of the boxes he’s looking for, this is the icing on the cake.

Join Phil and Danielle as they continue their analysis of this year’s shareholder letter from Berkshire Hathaway, pulling out key takeaways that might’ve been overlooked by some readers.

For help in crunching the numbers in your investment research process, click here to get your free Rule #1 Calculators for Investing Analysis: https://bit.ly/42dBHSn

Topics Discussed:

Individual values in investing

Entrepreneurship

See’s Candy

Operating cash flow

Growth/maintenance capital expenditure

Rare companies


Resources Discussed:
Berkshire Hathaway shareholder letter

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