100 episodes

Do you want to learn how to manage your own investments? Are you ready to stop paying investment management fees and start building wealth? The DIY Investing Podcast is dedicated to providing you with the knowledge, skills, and resources you need to be a better investor. Learn how to make investments through the use of fundamental analysis, mental models, and business management insights.

Please visit our website and subscribe to our mailing list at DIYInvesting.org for guides, videos, and resources to help make you a better investor.

The DIY Investing Podcast Trey Henninger

    • Business
    • 4.8 • 37 Ratings

Do you want to learn how to manage your own investments? Are you ready to stop paying investment management fees and start building wealth? The DIY Investing Podcast is dedicated to providing you with the knowledge, skills, and resources you need to be a better investor. Learn how to make investments through the use of fundamental analysis, mental models, and business management insights.

Please visit our website and subscribe to our mailing list at DIYInvesting.org for guides, videos, and resources to help make you a better investor.

    122 - Are you the next Warren Buffett?

    122 - Are you the next Warren Buffett?

    Mental Models discussed in this podcast: Second-Order Effects Passive vs Active Investing Standing on the Shoulders of Giants Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience. 
    Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger
    YouTube Channel: DIY Investing
    Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron.
    Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode122
    Key Observations I have seen many writers, presentations, and discussions around this idea that YOU are NOT the next Warren Buffett, therefore...X "Don't concentrate" "Don't buy individual stocks" "Buy Index Funds" "You won't outperform...etc..." What is the impact of this? Is it true? How many future Warren Buffett level investors will never arise because we've convinced them it is impossible? Imagine if we treated scientists like this. "You aren't the next Einstein (or Bezos or Zuckerberg)" The lesson: Don't even bother trying How many future inventions would we lose out on? Summary: Are you the next Warren Buffett? This question discourages potential investors from attempting to outperform. I discuss the second-order effects this has on the investing landscape and your personal financial situation. 

    • 33 min
    121 - Q/A: Questions for Management, Due Diligence, Share Issuance

    121 - Q/A: Questions for Management, Due Diligence, Share Issuance

    Mental Models discussed in this podcast: Capital Allocation Due Diligence Share Dilution Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience. 
    Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger
    YouTube Channel: DIY Investing
    Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron.
    Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode121
    Questions: Sourced from this Tweet: https://twitter.com/TreyHenninger/status/1431243068662067204  Best questions to ask management and/or investor relations When would you be happy to see management raise capital by issuing shares? How much time do you put on initial vs maintenance due diligence? What are some of your preferred research resources for due diligence? Favorite company filing and why is it the proxy statement?

    • 29 min
    120 - Philosophy of Concentrated Investing

    120 - Philosophy of Concentrated Investing

    Mental Models discussed in this podcast: Concentration vs Diversification Hurdle Rate Circle of Competence Conviction Opportunity Cost Satisficing Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience. 
    Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger
    YouTube Channel: DIY Investing
    Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron.
    Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode120
    How many stocks should you own? As many as you can that meet your hurdle rate? Only the best opportunities available? Optimal vs Satisficing Constraints on Holdings: Time Circle of Competence Conviction Additional Thoughts Collector of Businesses Hypothetical: What is the highest level of concentration an individual investor should be willing to place into a single stock (when buying?) Specifically, asking about non-special situations, more long-term holdings. Presumably, at some point, cat-risk is too high even when you have an edge. Imagine you own a 5-10 stock portfolio. Over the weekend, it is announced that all 10 companies are merging and will be subsidiaries under a single capital allocator that you like. Do you make any portfolio changes? You still own the same companies, but now 1 stock, not 10. What are you buying when buying a stock? Concentration: " The number of stocks you own is dependent on how you view yourself as an investor."  Is it possible to produce alpha? If yes, concentrate If no, diversify Are you a good investor? If yes, concentrate If no, diversify Conviction If yes, concentrate If no, diversify Summary: How many stocks should you own? This is a critical question without a single answer. Your portfolio concentration is constrained by time, circle of competence, and conviction. 

    • 52 min
    119 - How to become a Self-Made Millionaire

    119 - How to become a Self-Made Millionaire

    Mental Models discussed in this podcast: Self-Made Millionaire Cumulative Advantage Compounding Power of Habit Privilege Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience. 
    Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger
    YouTube Channel: DIY Investing
    Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron.
    Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode119
    Inspired By Joshua Kennon Article https://www.joshuakennon.com/who-is-the-future-self-made-american-millionaire/ Book Recommendation: Millionaire Next Door https://amzn.to/3wDVPy3 Summary: Self-Made Millionaires are created by the choices and habits under your control, not your starting point in the world. Focus on the slow accumulation of advantages and ignore anything outside of your control. 

    • 51 min
    NACCO Stock Post-Mortem $NC

    NACCO Stock Post-Mortem $NC

    Mental Models discussed in this podcast: Durability Post-Mortem Resulting Capital Allocation Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience. 
    Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger
    YouTube Channel: DIY Investing
    Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron.
    Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode118
    Timeline NACCO spun off Hamilton Beach Brands in September 2017 I first bought shares in March 2018 at a price of $40 per share I averaged down in May and June 2018 with shares at a price of $34 per share. Averaged down in September 2018 at $32 per share and October 2018 at $29 per share Within a year, the stock doubled to over $65 per share in October 2019. This is the recent peak. Instead of selling, I held because I valued the company at $75 per share at the time. It wasn't yet at fair value. May and June 2020, I averaged down again at $26 per share and then $22-24 per share. In March 2021, I recognized that holding $NC was a large opportunity cost on my portfolio and I shifted some money to other stocks while the stock was around $24-25 per share. In May 2021, I exited my stake in $NC completely at a loss around $25-26 per share. Some lots were sold at a gain and some at a loss. Overall, the position was a net loss and a much bigger loss on an opportunity cost basis. Thoughts and Key Questions I should have sold or trimmed after the stock doubled in less than a year. $65 per share was within my error margin for my $75 fair value estimate. Even simply reducing my stake by half would have been a good decision. The main reason I didn't do this was that it would have had to sit in cash. I didn't have many other good ideas at the time. My biggest mistakes are often made when I'm in cash or when I would be creating a cash position. (Always do research for new ideas!!!) Was buying $NC in the first place a mistake? No, I don't think so. My theory was sound. I expected positive news from NACCO and it was cheap at $40 per share. It was the best idea I had at the time, I was also running a diversified 10-15 stock portfolio when I bought NACCO.  My thesis was correct, but I had thesis creep as news flow came out. My original valuation placed the stock as worth between $50-65 dollars. I only upped my estimate after high natural gas income. I should have recognized that was temporary and sold.  I thought NACCO was a 3-5 year hold business, but it probably should have been sized as a last puff cigar butt. When that puff came within a year, I should have sold.  Did I accurately assess NACCO's business model quality? Yes. NACCO's service model of earning money from unconsolidated subsidiaries allows it to earn high returns on capital as the customer puts up all of the capital. Did I accurately assess the durability of NACCO's business? No. I misestimated the likelihood of a coal mine closure. I did assess that coal mine closures were likely and I accurately predicted the degree to which they would harm the business. However, I underestimated the degree to which NACCO's stock would decline. I thought the decline was overdone.  Did I accurately assess management/capital allocation? Partial yes, Partial No. I accurately predicted that management would NOT dedicate new capital to new coal mines. I accurately predicted that free cash flow would be dedicated to growing the North American Mining business. However, I underestimated the maintenance CapEx needed for the MLMC consolidated coal mine. This sucked up a large amount of cash flow for the 3 years I owned the stock. Future

    • 48 min
    What risks are you willing to underwrite?

    What risks are you willing to underwrite?

    Mental Models discussed in this podcast: Operational Leverage Risk Management Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience. 
    Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger
    YouTube Channel: DIY Investing
    Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron.
    Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode117
    Business Risks Stock specific Acceptable: Price - I'm willing to compromise on my price target of less than 10x earnings in recent days. Now I'm willing to accept up to 15x earnings per share for high-quality businesses Growth Rate Estimates - I'm willing to accept being wrong on my estimate of growth. I'm usually targeting businesses that grow revenue/earnings at double-digit rates. If my pricing is right, I can be wrong on my growth rate assumption and still do fine. Operational Leverage - I'm willing to bet on and be wrong about operating leverage Unacceptable: Balance Sheet Liquidity - I want a liquid cash-filling balance sheet Self Funded - I don't want to buy a company that has to be funded by debt Bankruptcy Risk - No bankruptcy risk of any kind, which means I am unwilling to accept highly leveraged companies. Commodity Risk - I'm not willing to accept exposure to commodity prices.  Portfolio Risks Related to your overall strategy or investment portfolio Non-stock or business-specific Acceptable: Illiquid stocks - I'm willing to accept lower liquidity in my stocks than other investors. I'm willing to spend months building my positions instead of just days or hours.  Concentration Risk - I'm willing to hold fewer stocks than other investors. (3-5 companies) Tracking Error Risk - I'm willing for my results to be dramatically different from the results of an index like the S&P 500 or the Russell 2000.  Unacceptable: Unwilling to underperform inflation for long periods of time. (5-10+ years) Unwilling to underperform a 10% baseline absolute return over time Brings in decisions like how to address cash drag I have realized while preparing for this show that I don't really know what my "unacceptable risks" should e on a portfolio-wide basis. So let me know what I'm missing. You can send me an email or DM me on Twitter.  Summary: As an investor, the risks you take can be categorized as either business risks or portfolio risks. In order to earn a return, you must take some risks from each type. In other words, how are you willing to fail? 

    • 35 min

Customer Reviews

4.8 out of 5
37 Ratings

37 Ratings

Deezeezy ,

Great

Like treys very detailed look and tactical explanations.
Really like his engineering way of looking at investing and his analysis of companies

Steve 972 ,

Informative!

Trey does a good job of explaining value investing. This podcast is a great and informative addition to your learning experience of investing in the stock market.

AyberkYilmaz ,

Best investing podcast

This is the best investing podcast in the market.

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