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Learning from mistakes you narrowly avoid $MCLDF
Mental Models discussed in this podcast: Confirmation Bias Skin in the Game 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.
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Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode116
mCloud Technologies - $MCLDF SaaS company Trading at just 1x expected revenue Energy efficiency (Oil and Gas Plant efficiency) Green Energy (Wind Turbines, HVAC efficiency) Uses AI Problems: Cash flow negative (Presumably in the name of growth) Regular ongoing stock issuance and dilution Both shares and warrants "An assumption that this is the last time." Very promotional management (with skin-in-the-game?!?) "Uplisting to the NASDAQ" talk A lot of examples of SaaS names going from 1-2x revenue while on the Canadian TSX market to 10x+ revenue on the NASDAQ in the US Still hasn't occurred many years later Mergers and acquisitions using stock (Not cash, because they don't have any) Growth targets include non-organic growth (REALLY BAD) Dilution is required, but it makes it impossible to model per share returns Exit: Liquidity event needed for the payoff (Either sell to another company or an uplisting) Lessons Learned: Don't buy promotional companies Don't buy companies that dilute Don't buy companies that can't self-fund growth Insider ownership does not equal skin-in-the-game Be wary of 'uplisting' as a catalyst Summary: Investors need to constantly be wary of confirmation bias and stay alert for possible red flags. mCloud Technologies stock $MCLDF taught me this lesson. Don't buy promotional companies that dilute shareholders and can't self-fund growth.
How to rebalance a concentrated portfolio
Rebalancing a portfolio should be based on four key principles: Occam's Razor, rank every position in your portfolio, price matters, and default to inactivity. Too often rebalancing makes a portfolio worse by taking action.
Investors should be wary of using set rebalancing rules based on time or set portfolio allocation percentages. Anytime you rebalance your portfolio while ignoring price and valuation, you may be making a mistake.
Solitron Devices Stock Thesis (SODI)
Solitron Devices is a high-quality niche manufacturing company in the defense industry. This Solitron Stock Thesis focuses on SODI stock which I believe will become a ten-bagger in ten years or less.
Solitron Devices is poised for massive stock outperformance due to the key factors of a high-quality business, double-digit revenue growth, operating leverage, and a skilled management team focused on shareholder-friendly capital allocation.
Never Buy or Sell Options! (Investing Rules)
You should never buy or sell options because options can cause you to be stupid and lose money. You don't need to be smart to make money investing. You just need to be consistently not stupid. Investing rules improve your future performance and returns by limiting your mistakes.
Focus on finding high-quality companies at good prices and harness the advantages of an individual investor. Options destroy these advantages and you should avoid them accordingly.
Never Short Stocks! (Investing Rules)
Investing rules improve your future performance and returns by limiting your mistakes. You don't need to be smart to make money investing. You just need to be consistently not stupid. Shorting stocks is stupid.
Investing is about aligning the odds in your favor. Shorting is the exact opposite. Everyone wants you to fail. It is impossible to have a margin of safety. You pay interest costs and you could lose everything. Never short stocks!
Eliminate your investing mistakes
A focus on eliminating your investment mistakes is the easiest way to improve your investment returns. Don't repeat the same mistake twice by making sure you learn the right lessons. Signal vs Noise. Process vs Outcomes.
Like treys very detailed look and tactical explanations.
Really like his engineering way of looking at investing and his analysis of companies
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.
Best investing podcast
This is the best investing podcast in the market.