A Guide to Deep Value Investing and Strategic Stock Selection w/ The Value Stock Geek (MI338)

Patrick Donley talks with Value Stock Geek about his journey into value investing, his unique philosophy, biggest influences in the value community, VSG’s journey out of debt, getting into the FIRE movement, the “weird portfolio,” and advice for younger investors.

Value Stock Geek is an anonymous blogger who blogs and tweets about his portfolio and value investing concepts. He investigates new companies every week and posts updates on his personal portfolio. He has also written up a unique approach to asset allocation.

IN THIS EPISODE, YOU’LL LEARN:
0:00:00 – Intro
0:00:37 – How VSG got interested in value investing and what his biggest influences were
0:02:05 – How the dot com bubble affected him
0:05:17 – How he worked his way out of debt after falling into some typical consumer traps
0:08:03 – When and how he got interested in the FIRE movement
0:09:37 – What value investors have influenced his current approach to stock selection
0:16:51 – How VSG has learned to think about moats
0:18:07 – What the “weird portfolio” is
0:22:07 – How and why he has selected the asset classes for the weird portfolio
0:30:05 – Why he writes weekly research reports
0:35:51 – How to use Dataroma to clone great investors
0:40:01 – What he’s learned from some of the guests on his podcast
0:42:27 – What his favorite money and investing movies are
0:44:47 – What his favorite stock is right now
0:46:58 – What he would tell a younger investor on how to get started investing

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▶️ RELATED EPISODES:
– The Lessons and Growth of a Value Investor w/ Kyle Grieve: https://youtu.be/jFrWDJqtmaI
– The Power of Alignment: Making the Best Decisions for Long-term Results w/ Jeremy Kokemor: https://youtu.be/9ZBVzdFIt58
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🖊️ Access the transcript and learn more about the guest here: https://www.theinvestorspodcast.com/millennial-investing/inside-mind-value-investor

📖 BOOKS MENTIONED:
– The Intelligent Investor by Benjamin Graham: https://amzn.to/3Pwd13U
– The Snowball by Alice Schroeder: https://amzn.to/49bM6Bs
– Early Retirement Extreme by Jacob Lund Fisker: https://amzn.to/43rOJ0E
– Deep Value by Tobias Carlisle: https://amzn.to/3IMMQ5d
– The Little Book that Beats the Market by Joel Greenblatt: https://amzn.to/3x2rUVj
– The Little Book That Builds Wealth by Pat Dorsey: https://amzn.to/3Trj0YV
– Money by Tony Robbins: https://amzn.to/3x8WgFJ
– Principles by Ray Dalio: https://amzn.to/4aqlJIY
– The Simple Path to Wealth by JL Collins: https://amzn.to/4cFCt15
– Tapdancing to Work by Carol Loomis: https://amzn.to/3VtpRDJ

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And then I started thinking well is this really how I want to do things do I want to obsess about macro and try to get out of things before they completely collapse and I said well if I’m going to continue to pick stocks I need to find basically businesses I’m more

Comfortable holding for a longer period of time and through sessions things that can actually perform well throughout an entire economic cycle hey everybody Welcome to the millennial investing podcast I’m your host today Patrick Don and joining me in today’s studio is the value stock geek BSG welcome to the show hi thanks for

Having me I am happy to have you on here I’ve been following you for quite a while it seems like on Twitter I love your content I’ve learned a lot from you so I just want to dive into your history I want to start off with your early

Years and specifically and just kind of hear about your journey into value investing like how you got turned onto it the books the teachers that influenced you things like that sure so I mean the main influence for me has been Ben Graham you know I think a lot

Of advanced investors tend to roll their eyes at some of the Ben Graham Concepts because they’ve become cliches but I think everything really goes back to that and you know discovering Ben Graham was a major moment for me I got interested in investing in the late 1990s during the internet bubble and the

Discovery of Ben Graham was a major Revelation for me so you know it was in 2000 when when I first came across the intelligent investor I was 18 at a my graduation party and a family friend said oh if you’re interested in investing this is the book you should

Read and then I checked it out and I kind of realized wow everything that’s going on right now is pretty insane and it was it was a major wakeup call for me and then just seeing the concepts of margin of safety the idea of thinking of

A value and the price as two separate things those were all kind of major wakeup calls for me and then that led me down the whole path of learning about Warren Buffett and value investing and everything else so yeah I wanted to hear a little bit about you’re 18 years old

That’s a pretty young age to get started in investing did you have a family member like a father or an uncle you mentioned a family friend but like how did you first get started you said it was like the dot era I presume you got in started investing prior to getting in

Like getting into value investing so tell me a little bit about that like your early years like at the dinner table for example and maybe talking about investing yeah so my parents are like 401K investors so but they were never picking stocks or anything like that so it was never something that was

Discussed around the dinner table during the internet bubble even if I even for a high schooler everything was just kind of in the air everybody was talking about the market like you would turn on the TV and everything was about that and then I was always a computer user so I

Was on the web you know when I was pretty young like 95 or so you know we were on that so I was very much in the mindset that the internet is going to change the world and you know maybe we should invest in this and then I had a

Little bit of money and my parents helped me open up a brokerage account to encourage this interest and I mostly bought internet stocks and I was you know very much into the bubble and I didn’t know anything about the market and one of the stocks I owned was Cisco

Systems and all I knew was hey it’s going up and this is great and it’s benefiting from the internet and then yeah and then people kind of heard that oh he’s really interested in the stock market and I learned what I could and yeah I had a family friend who did pick

Stocks and he kind of call window that at my graduation party and then he said hey you should check out the intelligent investor and I had never heard of it before and I said okay I’ll check that out and I thought it made a ton of sense

And it really spoke to me and then yeah from there I went on to read books about Buffett I read buffettology that was a good one from Mary Buffett who wrote that book talking about of his methods and then I started to get into the buffet letters and reading some other

Books so very quickly I was kind of indoctrinated with value investing and then as I saw the internet bubble implode throughout College it really resonated with me I’m like oh they were right about everything it definitely makes sense the people who looked at stocks as ownership shares of businesses

Did a lot better than people who were just kind of playing this gambling video game that was happening in the late 90s yeah so those early Investments did you end up losing money on them the cisos and the whatever other internet companies you ended up

Buying so by 2000 I was all in on Cisco Systems which was I had my little burage account in Cisco Systems and then I actually read the intelligent investor and that prompted me to sell Cisco Systems so you got out in time I got out

It was a few months after the fact I this was like June 2000 May 2000 something like that so it had already been down quite a bit but yeah I missed a bulk of the decline and with that said it wasn’t much money anyway so it’s not

Like I saved a fortune by getting out of Cisco one time it’s like I saved a couple Summers of longing money it sounds like it’s a great lesson though I mean I think early losses can be a great lesson to investors having a big win as your first investment can be

You know sometimes that can be you think like that’s to be expected and and that it’s definitely not the case but I wanted to hear a little bit about like getting out of college I understand you had a little bit of like debt I wanted

To talk about that kind of the how you worked your way out of debt started saving I know you’re into the fire movement which we’ll get into so talk to me a little bit about just graduating from college and having a little bit of debt and getting out of it sure so yeah

I struggled a lot getting out of college I had some financial debt a lot of that was related to just kind of a toxic relationship with life and money and a big part of that was drinking right now I’ve been I haven’t had a drink since 2008 I’ve been superber the whole time

That was a major part of cleaning up my my finances and things like that I got a good job out of school but I had a bad attitude about it I was like well I have a good job so I need to go get a cool

Car and oh and I need to go out tonight and oh well I’ll probably get a raise next year and get a good bonus this year so that’ll take care of that and yeah eventually that just led me to one day I realized oh my God I have this amount of

Debt that I need to get out under so at that point I discovered Dave Ramsey that was kind of my introduction so I went from learning about the market and I majored in finance in college and then it was well I need to learn about personal finance like because clearly

All of that head knowledge isn’t really helping me right now and I think the key thing that he gets is I mean he’s wrong about a lot of things but I think the core thing he gets is that personal finance is all about Behavior it’s not really about all that head knowledge and

All that math and I use the de snowball which I admit doesn’t make any mathematical sense but he’s right in terms of the way that it gives you kind of momentum going forward you list your debts smallest to largest and then you attack them one at a time and as you

Eliminate them you develop psychological momentum and you feel like oh I’m really making progress towards this and I did extreme things like he’s talking about like the rice and beans kind of thing like dramatically cutting your expenses I lived in like an unfinished finished basement for cheap rent I lived on like

$25 worth of food expenses a week so I went all out and then I was out of dead within a couple years and then I kept kind of that mentality going for a while and that helped me really save up the first when I started to have more

Substantial sums of money where I could get much more serious about this hobby I had when I was younger and that’s what led me to investing once I got all the debt cleaned up and I had some money and then I started inves that’s kind of when my second Journey

Began right were you into I mean you it sounds like you were pretty extreme in your cutting your costs were you into like Mr Money Mustache or there was another book called Early Retirement Extreme or something like that years ago that’s like kind of popular in the fire

Movement were any of those influences for you they weren’t around yet you know so I later on I discovered them but yeah for me like my late 20s was really about getting out of debt and then by the time I was 30 this was like 2012 that’s when

I started to get more into investing all over again like I I wanted to reawaken that Hobby and then around that time I did discover Mr Money Mustache and I have read Early Retirement Extreme that’s a wild book that takes it too far I think I do too yeah I think that guy

Lives on like seven or $8,000 a year something like that is what I want to say and it’s an older book but you know still pretty extreme yeah and for him I mean for his perspective to defend him a little bit for him it’s not just about like saving

Money and being financially independent for him it’s like a moral choice about the environment and that type of thing and then living a life that more reflects his values that said I can’t live like that so so I don’t do that but yeah I discovered the fire movement yeah

In my 30s and that’s when I started really pursuing that aggressively I wish I had gotten my Act much earlier and then you know and I’d be further along in that Journey but yeah I discovered it and I think they they make a lot of sense so you got yourself out of debt

You’ve been influenced by Ben Graham and Warren Buffett and these value investors when you started investing did you continue to apply value investing principles or did you kind of Veer off at all or I want to hear about that once you were out of debt and started your like investing journey in

Earnest yeah so at that point I decided to really start buying stocks again buying individual stocks and at that point I was more I’d say I did more of the Warren Buffett kind of thing and I actually started there and then I went more towards Ben Graham after that like

I started buying a lot of individual stocks and I would have a pretty concentrated portfolio and then I started to realize well this has some hits this has some misses some things are working pretty well some things aren’t and I said I really need to to

Get better at this so that really led me down to going deep into quantitative value investing and that’s when I first came across quantitative value by Wes gry and Toby Carlile and then I read deep value and then I started to apply and Joel greenblat and I started to move

Towards more of a quantitative value kind of strategy and I really started doing that around I’d say probably 2013 2014 something around that 2014 sounds about right and that’s when I started applying more of that and I started to and I had developed my own Approach at

The same time I also started to do a lot of my own back testing like I would use you know different screeners to develop my own strategies back testing them and what I ultimately decided upon was this quantitative strategy based on Ben Graham simple way methodology where you

Would buy stocks basically with low pees and low debta Equity ratios and you would form 20 stock portfolios based on that then I went in and I added some a lot of things like Enterprise multiples like Toby carile suggest I looked for earnings consistency and then I also

Started to dig into the companies a little bit and start to do some qualitative work to weed things out of there but for the most part it was kind of like a deep value quantitative approach and then around 2016 I decided I’d like to start interacting with some

Other people that are out there whoever is out there in in the internet out there in the you know value investing Community who maybe I could learn from and interact with with and then I started a little blog where I tracked my personal portfolio and that’s kind of

How this whole thing got started it was just a little blog where I was posting about my personal portfolio and then that’s when I really started to get on Twitter and and move on from there so were you in you mentioned Joel greenblat were you into his I forget what it’s

Called like the magic formula were you applying some of those it sounds like you to some degree you were applying some of his principles yeah that that was the first like quantitative oriented value investing book I ever read was the little book that beats the market and

Then I moved on to quantitative value and deep value and I I love the little book that beats the market and I think it’s a great way high level to think about investing but the there are serious limitations to the magic formula approach Toby carile has actually his

Books are all about how the roic metric actually detracts from returns and I think the reason that is when you mechanically buy stocks with high roic you find a especially if they’re in like a value kind of bucket you’re finding stocks that are in kind of a temporary

Cyclical boom especially if you’re only looking at things on like a trailing 12month basis and you wind up buying a lot of value traps and ironically pure value tends to work a lot better than combining value with roic So when you say roic that’s return on invested Capital correct for our

Listeners that might not be familiar with that term yes that’s correct cor yeah and I think so right now I look for businesses with higher roic my my Approach has evolved past quantitative oriented I’m what I’m much more qualitative now in the LA past few years but initially yes

I was trying to mechanically find those and I think what’s missing from that magic formula approach is that Warren Buffett like the idea is okay Warren Buffett buys value but he also buys quality which you’re defining as higher I but the thing that Warren Buffett is looking for is sustainable High roic

He’s not just mechanically buying stocks that have the highest roic in like a value bucket and that’s a much more difficult kind of qualitative Endeavor and I don’t think that you could really replicate that in a simple screen so you mentioned Toby Carlile are there other people in the value investing community

That have made a big impact on your current approach yeah absolutely so I did more of this quantitative value kind of thing where I’m looking at like very depressed value situations and yeah there was a lot of there was a lot of that going on

In like the late 2010s and then what I found was during covid it was pretty terrifying to own for instance a bunch of energy companies and Mall retailers during Co and I had to sell a lot of those and fortunately I avoided like a

60% draw down by getting out of a lot of those positions around March but then I didn’t get back in on time and then I started thinking well is this really how I want to do things do I want to obsess about macro and try to get out of things

Before they completely collapse and I said well if I’m going to continue to pick stocks I need to find basically businesses I’m more comfortable holding for a longer period of time and through sessions things that can actually perform well throughout an entire economic cycle so that led me into a lot

Of the work of Pat dorsy who’s written a lot who’s like the gold standard on notes that was a huge um influence on me and then I actually went back and I reread the buffet letters which I had hadn’t read since I was in college and

That made a huge impact on me where I started to realize oh well it started to give me more of back into that Warren Buffett mindset another one I read that was very influential was Robert hagstrom’s book which I thought was very interesting which one was that the hegr

Book was that the Warren Buffett way yeah yeah that is a really good one deep value I’m not familiar with a deep value book you mentioned tell me more about that like what was your takeaway from Deep value deep value is a great book because I think a lot of value investors

Tend to think of it more in terms of like you’re buying something with this intrinsic value and you’re buying below that intrinsic value and what that book is really all about is that mean reversion isn’t simply mean reversion in price it’s mean reversion in business performance so you so the whole idea

That he’s explaining in that book is that the reason that this works is because there’s fundamental mean reversion that’s happening there I don’t want to put words in Toby’s mouth but but if I were to take away like kind of the key lesson of that book that’s what

You’re looking for you’re not really looking for this perfect situation where it’s at a discount to intrinsic value and that’s a fixed amount you’re really trying to get situations where the business has been through some difficulty and then you’re trying to catch some mean reversion in the actual fundamental business

Performance I want to talk a little about Moes was it Pat dorsy is that who you you took a lot of your thoughts on Moes from yeah I learned a lot about Moes from reading his books and he has a very good one the little book that

Builds wealth that’s kind of like the cliffnotes version of a lot of his Moes research and there’s a lot to learn from that and basically what you’re really thinking about I’d say if I were to boil it down to this is how easily can this business be disrupted how easily can

This business’s Returns on Capital fall and if there’s some attribute to the business whether it’s you know it could be Network effects is one of them there could be regulatory things that keeps a business in a strong competitive position brands or obviously another source of Moe there’s all these little

Sources of Moes and but I think high level the way to think about it is to just consider how easily can this business be disrupted in five or 10 years and that’s really how I think about it so right now what I really do is I apply that all those things I

Learned from quantitative value investing I’m you still using those but I’m applying them towards a universe of companies that I’ve pre-selected and that I’m comfortable holding for a longer period of time so it sounds like you’re doing individual stock selection because you love it I can tell like you

Just love the research and learning but you’re also doing this idea of like the weird portfolio which I want to get into so tell me tell our listeners what the weird portfolio is we get into like the allocations of it but tell me just how you came about with that idea and

Started implementing the weird port folio yeah so weird portfolio is really my take on Harry Brown’s permanent portfolio so I learned about Harry Brown’s permanent portfolio and for those who aren’t aware what the permanent portfolio is it’s a portfol it’s a very simple portfolio 25% stocks 25% long-term treasuries 25% gold 25%

Cash when you back test this strategy it delivers a decent rate of return like you’re going to underperform obviously 100% stocks but it still gives you a pretty nice rate of return and then the incredible selling point is just the minimal volatility of it so for instance

In 2008 this portfolio was only down 2% so I said I want my own version of a permanent portfolio but I want to add some things to it so I added you know I made it a global portfolio so it’s not simply US Stocks it’s globally Diversified I got rid of the cash

Component because I have plenty of cash in for instance my emergency fund and I wanted to have more of a pivot to Value to small cap value a more systematic approach towards value investing I didn’t want as much exposure to large cap bubbles so that’s kind of the

Methodology behind that now why I developed that was really my growing frustration with macro so around 2017 2018 I started to realize macro was really unpredictable so going back through my own history I had some good macro calls and that gave me the the false sense of confidence that I had a

Knack for predicting macro like I told my family in 200 7 this real estate thing is a bubble you should probably underweight stocks right now and then when 2008 arrived I thought oh my God I did it then in 2009 I actually emailed my dad near the bottom of the market and

I’m like you should go all in because the Shiller peas at this level and I think the Market’s attractively valued so then I’m like okay I’ve got this nailed I’m great at macro so then but then the rest of the decade unfolded and I thought QE would cause inflation never

Happened I thought Fang was a bubble didn’t happen I thought um unemployment you know in 2010 would come down faster than actually did and over and over again I’m learning oh I actually suck at this and then as I started to learn more about like U macro Minds that are out

There and I started to research them I started to realize well they’re kind of full of crap too like they’re always wrong like they anytime you actually write down their predictions and then see what actually happened they’re almost always wrong so I said you know I

Needed an approach that for a portion of my money where it is just macro agnostic where I can really just set up a systematic approach put this to the side and know that I have some protections for different environments that was the impetus behind developing the weird portfolio and then finally I started

Investing that way in 2018 is around then 2017 for a portion of my money and then when I saw how wrong I was about covid where I thought for instance I’m like well obviously all these companies have all of this debt the economy is shutting down right now the buffet

Metric and the Shiller PE are at all-time highs obviously this is the beginning of the end and this is going to be just like 2008 and then that didn’t happen either so that’s when it I kind of like half believed mackar was unpredictable around 2020 and then Co

Happened and I’m like mackar was completely unpredictable and I need to process to insulate me from all of this and the weird portfolio was a key part of it and then with my stock picking a focus of companies that could be held for longer periods of time was

Another piece of the focus and the whole thing is to just get away from that kind of macro Prognostication right so how do you break it down with your own portfolio how do you delineate or what kind of allocation are you making towards individual stock selection versus what you allocate towards the weird portfolio so I don’t want to get into like specific percentages like I’m this percentage weird I’m this percentage

Stocks but basically I’ve taken my stock money and I’ve said hey I have it in a tax advantage account because with turnover you want to reduce taxes ETFs are a lot more tax efficient so I set that aside and I said I am going to buy businesses just because I love it so

Much I love researching companies I love learning about companies I love trying to figure out how a stock is going to turn around I love learning about businesses I didn’t want to give that up and then the rest of my money is in this weird portfolio situation and with that

It’s nice because it’s more mechanical I can just take for instance every you get paid it’s going into the weird portfolio and I’m expanding that and I can just buy systematically whatever ETFs are light every two weeks and both portfolios help me in different ways so the stock picking portfolio really gives

Me a way to scratch the itch so I don’t screw around with the weird portfolio and change the allocations based on what I’m thinking and then the weird portfolio kind of gives me confidence to take risks with my stock picking strategy where it’s like oh well I have

This money to the side that is like my Fortress of Solitude that is safe and that gives me some bandwidth to go out and really try to pick stocks and try to learn about them and try to learn about the market that completely makes sense let’s get more into the weird portfolio

How you break it down you know there’s certain percentages you have and I want to get into that a little bit and why you chose those specific asset classes sure so the weird portfolio is 20% us small cap value 20% International small caps 20% real estate 20% long-term

Treasuries and 20% gold so the idea there is basically taking Harry Brown’s Concepts like I discussed earlier increasing that stock allocation making it globally Diversified pivoting that to Value having some some gold in there and the gold is really there for inflationary environments or currency crises or things like that the long-term

Treasuries are there for recessions and depressions because during recessions and depressions the FED tends to cut interest rates and for instance in 2008 long-term treasuries were up 20% while the market was down 37% and my thinking there was I knew that small cap value and value investing in general helps to

Avoid major bubbles it tends to deliver a more consistent rate of return over the long run but at the same time it’s not immune to recessions and crises and things like that and having been you know so deep in the macro weeds when I was younger I think about that stuff way

Too much more than I should so I wanted some protections there and the key Protections in that portfolio are the long-term treasuries which like I said would perform well in an environment like 2008 or the early 1930s and then gold also helps and gold is

There kind of like a safe haven asset if things really go to hell but it also tends to perform well during long inflationary environments it doesn’t have an exact like tick for tick uh tracking of the CPI if anything’s going on like that but in environments like

The 1970s it did pretty well and it’s actually done okay since 2019 since we’ve had a you know a bad inflationary situation in the United States and then it’s also there is just kind of like a safe haven asset if everything else like if for instance say the US Treasury

Defaulted well I’m pretty sure my stocks would get annihilated my treasuries would get annihilated but gold would probably still be worth something and I would still be alive still be in the game so to speak and gold I mean gold you mentioned Harry Brown it’s also an aspect of Ray

Delio’s portfolio isn’t it yeah so Ray doio he has his own version of kind of a risk parody style portfolio like this that he outlined to Tony Robbins and a book money Master The Game and his version is the All Seasons portfolio that portfolio is so I mean I had issues

With both approaches with Harry Brown’s approach and with his approach I thought that Ray Alia’s portfolio was way too heavy in the long-term treasury bonds I think like 40% of the portfolio is in there I didn’t think Brown had enough in stocks so I kind of settled on my own

Interpretation of it how do you get started with Stock Investing I’ve put together a course to teach you everything I wish I knew when I first started investing in stocks let’s start at the beginning and ask what is a stock let’s zoom on in into what it’s actually

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Available in the description below see you there and you’ve chosen small cap value both in the US and internationally right yeah I thought Global diversification was very important I didn’t want to have a lot of Home Country bias I’m definitely in like the kind of Jack Bogle mindset

Where and this is ironic because Jack boel was only a US investor but that said his whole philosophy don’t buy you know the needle buy the Hy stack and just you’re going to everything’s going to work out if you just own so I think the same logic works for countries as it

Does for companies so you don’t know which company is necessarily going to outperform so you own all of them in an index fund for a global investor you really don’t know which country is going to perform the best you know it’s often the United States but it’s not always

The United States so I wanted some Global diversification there and then with the pivot to Value that’s really about avoiding major bubbles so small cap value while it draws down in a nasty way during the initial kind of bare Market it can still deliver a decent

Rate of return over say like a decade because it’s kind of more of like grinding out a return you’re selling companies that are depressed you’re selling them when they’re stronger you’re collecting dividends across the way so it tends to deliver a kind of more smooth rate of return than the boom

And bust that you see in like large cap growth and you saw the some places like Japan after the Japanese bubble imploded if you were a small cap value investor you still I mean it hurt you didn’t do great but you were way better off in kind of a systematic value strategy than

You were just buying like large cap stocks so are you also did you say like 20% of that is in real estate did I hear that correctly REITs yeah specifically REITs and that’s also about inflation protection so that’s more about like real estate values at the very lease

Should increase with the cost with replacement costs over time REITs can collect rents from you know whatever industry they’re in whether it’s an office re or whether it’s a residential reate and rents should increase over time with inflation if you plug it in to a back test REITs tend to just perform

Like small cab value but I thought it was important to have a very specific allocation to that to try to have an added layer of inflation protection in there outside of this the weird portfolio in your individual stock picking is there any other Investments that you do or you just primarily focus

On this that’s it so I have the weird portfolio which is my main asset allocation strategy and then I have cash which I keep in t bills in a high yield savings account account which is my emergency fund and then I have my stock picking which is my real you know my

Real passion Your Love yeah and you analyze a company a week right and write up a report on what on your findings is that right like looking at 10ks yeah that’s right and that was really inspired by Warren Buffett so Warren Buffett he said if I were you I

Would like he was I forget who he was talking to but he was talking to someone if I were you learn about every business in America he said that’s how you should start investing and they said well there’s a lot of companies and he said we’ll start with the A’s so that was

Warren Buffett’s advice so I really took that to heart and I said well if I want to really perform well as a stock picker that’s the direction I should take I should really stop trying to you know perfect a back test and I should really focus more on and then trying to figure

Out what’s happening with macro and I should really apply that I should really start learning about businesses consistently and then the nice thing about that substack is it forc me to do that every week I need to get out an article and whether I feel like it or

Not I spend a week researching that company learning about it and basically what I’m trying to determine first of all is like is this a wonderful company like is this actually a company with a boat that I think can sustain High Returns on invested capital and I learn

About them and the nice thing about that is in the past when I was more of like a deep value kind of investor during a big crash the screens would all change and I’d have to start from scratch and start oh here’s 20 stocks in a screen and I

Have to research all of them and I realized that was very limited because first of all that crash could end very quickly by the time You’ done all your research you could have missed out on all the opportunity so I wanted to say like I want a watch list of companies I

Like and they may not be an attractive price right now but you know what I’m going to understand them and if they ever are available at an attractive price I’m going to buy them and that’s been a great way of going about this and I’ve also learned so much just by going

Through a company every single week and digging into it and trying to figure out the economics of it I’m just learning so much about all of those businesses and just about the world in general by going through that practice every single week and doing that yeah it’s such a great

Practice I think I remember listening to a talk that leou gave and he it was I think at Colombia to some students and he recommended that they get value line and go same thing go through the started at a or I think it started at one you know like there’s like thousands of

Companies listed in value line and go through all of them and he did you know I think he actually did do that practice Buffett probably did is value line something that you utilize I’ve checked it out before it’s not the key thing that I use the main

Resources I use right now I use quick.net a lot that’s a great website where you can download like over 20 years worth of financials export it to Excel and then you can go through and you can that really tells you a lot about the company and then I will go

Into the public filings and then I start there check out the economics is there something about this that interests me does this look like it’s possibly an interesting opportunity and then I go into the SEC filings and I try to understand them and I try to find out

How does this business make money is there some kind of Secret Sauce that they have going on that is a source of moat that allows them to earn these high returns and then the last piece is valuation which is always in a state of flux often when I go through these

Companies if it is a good company it’s usually not at a good price and then I’ll add it to a watch list and move on and lot of situations I thought when I was looking at the company there’s no way this is ever going to get cheap and

Then it happened sometimes it happened to me with meta I you know looked at meta a long time ago and I said well this will never be in the value bucket and then within a year it was so so yeah it’s a great exercise to go through and

Learn about these companies and pretty much all of them are at some point are going to be available at an attractive price what else is in your like your Tech stack or your toolbox that you’re using to do your analysis is it pretty straightforward you I I wasn’t familiar

With the website that you mentioned with all the historical financial data but tell me more about like your Tech stack yeah it’s not that sophisticated it’s quick f.net that’s a great website I I mean it’s not my methods aren’t sophisticated quick f.net is a sophisticated tool but yeah you can go

In there you can quickly bring up any company and if you pay you can download all of these financials so I don’t have any affiliation with quick f.net I just like the tool but yeah I download it and you can get look at 20 years worth of financials in terms of companies the

Pick I tend to go through a lot of different sources to just kind of get ideas for companies I should look at I look at a lot of big investor Holdings so an investor I respect is Terry Smith for instance I’ll look through his Holdings he often pay he pays higher

Prices than I would ever pay but he has a very good eye for Quality so I’ll go through his Holdings I go through a lot of ETF Holdings I mentioned Toby Carlile I look at his Zig ETF I see what he’s up to I look at qval that’s West Gray’s ETF

That’s based on Toby’s work I’ll look at some quality ETFs like qal that’s an ey shares product I’ll look at that the Welsley fund they have a lot of very interesting like dividend paying companies that I’ll take a look at and then you know a lot major sourcing of

Ideas is kind of like just driving around and looking at things like I stumbled into a tractor supply and I’m like what’s this place like and I’m long Tractor Supply now but yeah just yeah just kind of saying like hey that parking lot looks full I’m going to

Check that out I do less of the mechanical screening like I used to like run very specific screens and restrict my universe to that but now I’ll look at anything I just want to learn I’ll learn about any business and if it’s not at a great price right now okay I’ll move on

To the next one and keep an eye on it and someday it will be at an attractive value yeah I like the cloning idea you mentioned Terry Smith and just looking at investors that you admire and maybe copying them to some degree there’s a great do you ever have you ever been on

Data Roma I think it’s called da t a ma a and it shows like the Holdings of all the like the Top Value investors have you ever come across that website yeah I use that and yeah that’s where I used to kind of see what Terry

Smith is up to you can see what Pat dorsy is up to you can see yeah any big investor monish B Bri anyone you can think of you can go on there and you can see what they’re up to and that’s always a nice thing to look at yeah it’s great

It’s a little delayed because you know it’s whatever a quarter late or something like that but it’s such a great source of information I think yeah absolutely I I I love going on there and seeing what a lot of big investors are up to I would say to that though don’t

Simply follow an investor into an idea definitely do your own work and it’s not just about like maybe they’re they’ve made a bad investment that’s possible but the key thing is like you need to develop your own conviction about things like once something goes wrong if you

Just copied an investor you’re not going to be able to stick to it you’re not going to be able to hold it you need to have some conviction yourself and have some understanding of the business you’re buying rather than just F an investor into it with that said great

Way for idea generation for companies to look at companies to research it’s a great starting point I think and I like the idea of just driving around that’s kind of a Peter Lynch idea right like look around you like what businesses are doing well it’s you can you keep your

Eyes and ears open and you’ll be able to figure it out yeah totally and I’ve gone through a an experience with Peter Lynch’s ideas where I’ve looked at that in the past like oh well that’s naive like just buy what you know that’s ridiculous but then thinking about it

I’m like you know if I just bought like stuff I liked like dominoes and Home Depot and Amazon and stuff like that I probably would be much more wealthy if I went back and then all the other weird things I bought like if I just did stuff

Like that so yeah trust your own judgment if you see a business you like that’s a great starting point I’m not saying just buy stuff you like neither does Peter Lynn she Advocate you do research beyond that but it’s a good starting point like if you’re into

Something or you know someone in your family is into something you see them going to a specific store or website all the time it might be worth looking into it and seeing what’s going on there there was a tweet that you had recently and you asked like what’s the most

Overrated investment book I wanted to hear what your findings were what were some of the things that what you think what some of the you know your followers thought oh that’s a controversial question um I think there’s a lot of people kind of trolling and saying the intelligent investor by Ben Graham I

Disagree with that I do agree with them in the sense that is a very dense book and it is a bad place to get started I think if you I think a much better starting point for an investor would be something like the little book that beats the market by Joel greenblat which

Is extremely accessible you can sit down and read that and like in afternoon that’s a great starting point to kind of learn the basic principles of value investing so yeah some people said that they said Ben grams work I I said I disagree with that but I understand what

They’re saying there margin Mar of safety came up a few times by Seth Gorman I like margin of safety I think it’s fine I think it’s a decent book I wouldn’t pay $1,000 for it but yeah I was going to say it’s like a$1 thousand

Book at least that you know I looked it up on Amazon recently I was like whoa I don’t think I’m going to be buying that anytime soon yeah I think that the limited supply of it has kind of increased its reputation maybe Beyond where it’s deserved but I still think it’s a pretty

Good book I I don’t have any major issues with it they mention principle by Ray diio which is which I thought was I thought it was a good one you know you read about the he’s written all about all of these principles he has and you

Know there was a book that just came out the fund which is all about Bridgewater and a lot of things with us actually like in practice and most people can’t really handle it like the radical transparency and all that and I don’t know if it’s really a great way to run a

Business to have all that radical transparency where people are sharing brutal feedback with each other and so yeah I thought that kind of ranked highly up there but yeah that was a fun little tweet yeah that is fun I also wanted to hear a little bit about your podcast

That you’ve been doing talk to me about some of the guests that you’ve brought on and just like have any of them I don’t know changed your thought process at all or is it not an echo chamber but like are you bringing on guests that will challenge your own thinking at all

Oh yeah I have people from all kinds of different Persuasions and stock strategies yeah like I’ll talk to like I mentioned I don’t include macro in my process but I talk to a lot of people about macro and I’m always interested to hear from successful macro investors and

Hear what they’re doing hear their perspective on things yeah and I have people from all kinds of different you know Persuasions so I’ve had JL Collins on there he’s a 100% stock indexing investor that was a great interview I don’t invest in 100% stocks but I think

There’s a lot you can learn from him in a lot from that strategy and that was an excellent interview his book is what the simple path to wealth simple path to wealth and I’d say if you are starting out and you just want to learn the basics of investing buy that book follow

The plan and it’s probably going to work out over the long run so yeah so that’s a great book I have macro guys like I had catrini on that was a great conversation we talked about we talked about gp1s we talked about artificial intelligence I have people that are like

More of a buffet persuasion I’ve had them on like the science of hitting he was a great interview I talked to him about a lot of different things I’ve talked to Toby car a while I’ve talked to Lawrence hamtil he has a very interesting perspective it’s very oriented towards like Industries and

Sectors and he’s interested in a lot of very cool businesses I’ve had very deep value guys on like Evan blacker he’s he does exclusively netn Nets so I had him on the podcast and that was a great interview I’ve had some long short guys like I don’t short stocks but I’ve had

Like for instance George lvad from upsp Capital that was a very interesting interview but yeah overall it’s just a cool opportunity to have really interesting conversations with investors that I respect and they’re from all kinds of different Persuasions and ideas and yeah I learned something new from

All of them and they’re really cool conversations to have what about you know you’re into the small cap stuff what about Ian Castle he’s more like micro stuff micro cap but like have you ever had him on I’m trying to get him on approached him a couple times he’s been

Busy but I’m sure he’ll come on eventually but yeah I love Ian Castle he’s he’s a really entertaining guy he’d be a good one I want to touch a little bit on movies I know you’re like a movie guy and I am too so I wanted to hear

Some of like your top money you know investing movies that that you love like something you’d watch year after year investing movies I mean you got to go with Trading Places right that’s an fantastic movie hilarious Eddie Murphy in his prime that’s an amazing film to watch another one I like is other

People’s money that’s a pretty funny one with Danny DeVito that’s a very good movie it’s he’s a he’s a corporate Raider and he buys like it it’s it actually the company he’s buying sounds like Berkshire Hathaway like it’s a New England like they do wire and cable New England wiring cable they’re getting

Destroyed competitively it’s like a dying business and he wants to go in and liquidate it and what I really like about that movie so there’s Wall Street which I feel like is almost like a it’s a cool movie but it’s almost like only giving you one side of the argument like

A very Marxist side of the argument like capitalism is evil and these guys are terrible other people’s money gives you the other side of the AR argument for the corporate Raider so he’s like hey this company sucks it’s bleeding money why don’t we just end this Enterprise

And then he actually gives a great speech at the end of the movie where they’re meeting with the shareholders trying to decide whether or not to liquidate the company like they’re going to elect his board and liquidate the company and yeah Gregory peek is the CEO of the company he gives this very

Inspirational Gregory peek style speech of like why this needs to be saved and how it’s about more than the company it’s about saving America and all this cool stuff any other movie they would just end it there and he’s right and you know the corporate raor is wrong but

They actually have Danny DeVito come up and give the other side of the argument and it’s compelling it’s like why why are we keeping this thing in business when it’s not making any money for anybody you know take the money invested in something with a future rather than

Trying to keep this thing that’s already Dead Alive I’ll have to check it out I’ve never seen it I mean I’ve heard of it but I’ve never sat down and taking the time to watch it yeah it’s a good one and then there’s the Gambler that’s a good movie with Mark wallberg the

Famous has the famous Fu money speech in it from John Goodman that’s a great movie yeah I like that one recently I rewatched The Color of Money That’s a good money movie more of a gambling movie but that’s about is that Paul Newman yeah Paul Newman and Tom Cruz

They pool Hustlers that’s a good film but yeah those are some good money movies I think I want to talk a little bit about like investing love stories is there anything right now in your investment that you’re really particularly fond of that holds a special place in your heart you love

Checking the price action on it and just following it and do you have anything like that right now yeah I’m really fun I invest in Taiwan semiconductor so I picked that up in December 2022 was that a p of 12 you know the expectation was we were at a bad point in the

Semiconductor cycle it’s kind of been perpetually cheap since then because everyone’s worried about an Invasion From China my attitude is if China invades Taiwan your portfolio doesn’t matter that much because we’re in World War III it’s kind of my thinking there but yeah great company they manufacture

The chips for companies like Nvidia and apple they’re really like the engine of everything that we’re seeing right now with AI is really made possible by tsm’s manufacturing methods so and it’s still it’s not as cheap as when I bought it like right now I think it’s around 18 EV

Bit something like that but it’s a it’s a fantastic business and I like owning it and I like following it I want to actually ask you with all these podcast guests that you’re having on do you fall prey to like kind of shiny object syndome where they’re talking about

Ideas like and you’re influenced by them and you’re changing your own strategy do you have flexibility there are you pretty this is your I want to hear about that a little I’m pretty set in my ways so yeah I don’t really have that syndrome um but I do like talking to

People and and learning about what they’re doing but now I haven’t changed really any of my investing practices when I talk to stock Pickers I can get some good leads there like I’ll have a stock picker on and they’ll mention a company I’ve never heard of of like um

George ladas he tipped me off to ball Corp that was kind of an interesting one I looked into ball Corp is that the what do they do they make aluminum cans for like Bud and Coke and Pepsi so and that that’s a pretty fantastic business I

Don’t think it when I looked into it I didn’t think it was necessarily at the right price right now but I think it’s great Enterprise it’s got a great moat often they have their manufacturing plants set up right next to like the Brewers so I I think it’s a great little mod

Business I wanted to hear if there’s like a younger listener that’s listening right now what would you tell your yourself or what would you have done differently looking back on things in your own investment journey and process sure so I mean I’d say if you’re younger you want to really focus more on

Your career and your personal finances than necessarily like stock picking or that kind of thing so you know this is a Harry Brown thing he says that your career is your most important source of wealth and he’s right you want to really focus as much as possible on your career

In those early stages so you can get yourself to a good income in the future you don’t necessarily want to spend all of your time buried in 10ks and then neglecting your actual job you want to really focus on advancing your career because that’s where a bulk of your

Capital is going to come from is from saving towards your career I’d also say you want to really focus on Personal Finance like I mentioned I kind of had to go back to basics like I was a finance guy in college I had learned all the stuff about the stock market but I

Found myself in a bunch of debt and I think if you talk to a lot of people like even people in the financial industry if you they may not admit to it but there’s a lot of them that are in tons of debt and are in atrocious shape

With their personal finances so I’d say the key thing is to establish those habits early on where you’re doing things like avoiding bad debt you are um saving a fixed percentage of your income you’re automating your Investments you’re very conscious about your spending you’re just not going out there

And mindlessly spending money you want to establish those good personal finance habits early on I’d also advise that if you do get into stock picking and that type of thing to really write down and keep an investment Journal so you don’t have to necessarily do it publicly like

I do on a Blog but if you just had keep an investing Journal that will really help you out later on so when you ultimately go ahead and sell it and say the investment didn’t work out you can say like well what did I think two years

Ago about that or even what did you think about like macro macroeconomic situations you might say like oh I think there’s going to be a recession next year and here’s why write that down in your journal and um I think over time that will start to reveal to you that

You’re probably wrong about a lot of things because people tend to be very selective about what they remember they remember the wins and they don’t remember the losses and then from that you can really learn a lot so I would just say that’s a huge thing take

Rigorous notes on what you’re doing and keep a journal and monitor your invest Ms and that type of thing and then overall I’d say like at that stage of the game you’re not dealing with enough money where your specific allocations and portfolios matter too much like say

You’ve saved up $20,000 you lose 10 grand if the market crashes 50% you know that’s painful but you know it’s not you have 40 years to continue to make money and in the long term that’s going to be a drop in the bucket compared to what you’re going to have someday if you

Stick to an investment program yeah those are all really good pieces of advice I want to do a quick fire round if you’re up for it do you have time yeah sure let’s do it cool so the first question I had was what’s been your best investment so far my best

Investment so far um in my current portfolio it’s meta I’m up about 125% something like that on meta from where I bought it yeah so that was that was a really good one um that one worked out really well so at what point did you buy that a couple years ago then a

Little after covid or when I bought it like the middle of 2022 so I um I was actually early to it it kept falling like through December and you know that was a good situation where it was a really good company and if you looked under the hood and you looked at the

Actual financials you saw revenues were growing you know if you looked into their investor presentations you saw that the daily average users were increasing it was an ideal value situation it also taught me not to move so quickly like I I think I was a little

Bit too eager to buy it so I bought it like I said early like middle of 2022 I should probably waited a little bit for more of a blowout but still worked out still worked out okay I want to hear if you want your thoughts on bitcoin love

It hate it my thoughts on bitcoin I’m not really a huge fan of Bitcoin I mean from an investment standpoint my view on it is that there’s the risk that the government can make it as zero that’s my main concern with Bitcoin where I feel

Like if you read about a lot of the use cases for Bitcoin right now a lot of people are like it’s used by human traffickers and terrorists and North Korea has their own mining operations because they’re you know an impoverished Society trying to make money in any way

But I’m pretty sure if we go to war with a rogue state or there’s a terrorist attack and then they tie the funds back where it was moved via Bitcoin I could see them ending it I mean the US government has already they in the past they ended owners private ownership of

Gold you it was a crime toown gold in the 1930s and I think if they have the incentives there they could absolutely do something that could potentially make a Bitcoin a zero so for that reason I still look at it as a pretty speculative kind of investment and I’m not really

Sure if we know what the use cases are for Bitcoin right now like I think that it doesn’t really work too well as a medium of exchange as like a currency because like I could make a deal with you today to do something in Bitcoin and

Well if I say I’m going to pay you one Bitcoin for this task well it could rise 100% it could decline 50% I know that the kind of the proponents of it say that that volatility will slow down over time as there’s wider adoption but I don’t know so for that reason I

Considered it more of a speculative thing but that said I need to get some Bitcoin people in my podcast who can maybe open my mind to to that but that’s where I’m at right now yeah no thanks for sharing that I wanted to hear too

Like you go back to you’re when you were 18 and somebody gave you Ben Graham’s book to your 18-year-old self what book would you give to somebody that’s 18 and just kind of starting to get interested in investing and showing you know the Sparks of the love of

Investing I would give them the simple path to wealth by JL Collins and I would say this is a great this is a great place to start like the place to start is more of on the I think the indexing side of things and keeping things simple

And if you do that you stick to this it’s going to work work out over the long run then I would say if you are interested in stock picking and you want to get more into that side of things I think a good starting point would be the

Little book that beats the market by by Joel greenblat and then I’d say you should also go in and read a lot of the buffet letters another great Buffet resource is a book called tap dancing the work which is a collection of like all of his best articles that would be another

Place yeah that’s a good one do you read many biographies like snowball or you know different biographies on investors that you love oh yeah i’ I actually just recorded a podcast about the snowball I just reread it so myself and the Canadian dividend investor got on and talked about it but

Yeah that’s the snowball is an Incredible Book yes yeah Alice Schroeder I think the author yeah I remember reading it when it first came out it’s dense but it’s so good it’s yeah I mean it’s a page Turner for sure yeah a little controversial because Warren Buffett

Doesn’t really he doesn’t seem to like it too much because probably a lot of it hit pretty close to home to his credit he opened himself up to this biographer and he said write the least flattering version and I think that would be a tough thing for anyone to do like if

Someone interviewed everybody in your life and wrote the least flattering version of it that would probably be a hard thing to read so I get where he’s coming from but it’s a great book yeah yeah for sure Value stock geek this has been a lot of fun I really enjoyed this

Thank you for your time before we sign off is there anything that you wanted to talk about that we didn’t get to touch on and how can people find out more about you learn about like what you’re up to and things like that yeah so you could check out my substack that’s where

I publish a company write up every week I publish a podcast every week so that’s the best place to to learn about my content is right there it’s Security analysis. Org you could go to valock geek.com that also redirects there that’s really where I I’ve got everything I’ve got all of my writeups

Updates of my portfolio and then all of these podcast conversations that I’m having nice and then you’re fairly active on Twitter as well right yeah I stay active on Twitter the handles at valock geek and yeah I try to post something at least once a day so I

Try to keep up with that and I meet a lot of cool people on there cool yeah we connected through Twitter so it’s a great tool I will put all this in the show notes so all those links will be there and people can find out more about

You but thanks a lot for your time today this has been a lot of fun yeah thanks I I enjoyed this as well when 2020 happened just like you did we had you know um lots of time on our hands and I spent a lot of that time studying and

Testing um studying all The Usual Suspects Warren Buffett Charlie Munger um and reading and reading and reading and and really going down the rabbit hole of value investing and I found out I loved