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Speaker 1: Hello.

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Speaker 2: My name's Santasha Nabananga Bamblet. I'm a proud Yr the

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Speaker 2: Order Kerney Whalbury and a waddery woman. And before we

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Speaker 2: get started on She's on the Money podcast, I would

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Speaker 2: like to acknowledge the traditional custodians of the land of

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Speaker 2: which this podcast is recorded on a wondery country, acknowledging

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Speaker 2: the elders, the ancestors and the next generation coming through

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Speaker 2: as this podcast is about connecting, empowering, knowledge sharing and

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Speaker 2: the storytelling of you to make a difference for today

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Speaker 2: and lasting impact for tomorrow.

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Speaker 3: Let's get into it.

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Speaker 1: She's on the Money.

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Speaker 4: She's on the Money.

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Speaker 3: Hello, and welcome to She's on the Money, the pod

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Speaker 3: cast for people who love Green Flags.

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Speaker 1: Oh that sounds like a good podcast.

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Speaker 3: I'm kind of excited for this one being well me too.

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Speaker 1: Let's get into it.

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Speaker 3: My name is Beck Side and as usual, I'm joined

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Speaker 3: by Victoria de Vine.

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Speaker 1: Hello. I'm excited about this because I love a green flag.

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Speaker 1: I mean a lot of my girlfriends seem to love

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Speaker 1: red flags.

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Speaker 3: I mean, that's the issue.

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Speaker 1: My friends said the other day, I was like, that

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Speaker 1: is such a red flag. I was like, I feel

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Speaker 1: like we're talking about relationships, like all he's doing is

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Speaker 1: showing you red flags, and she's like, yeah, I love

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Speaker 1: the carnival. I was like, Aha, you're doing this to yourself.

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Speaker 1: Today we're going to talk about green flags, and I

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Speaker 1: hope she's listening because it's about investment, not relationship advice,

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Speaker 1: which apparently she wasn't going to take from me anyway.

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Speaker 3: It's transferable, but we will talk about why green flags

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Speaker 3: are the ones to walk out.

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Speaker 1: They're the best kind.

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Speaker 3: They're the best kind of flags. You are well aware

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Speaker 3: that I am trying to fix up my finances. Yes,

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Speaker 3: probably not doing a great job right now, but that's.

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Speaker 1: Because we still have to sit down. I'm going to like,

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Speaker 1: sit you down and I'm going to take you through

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Speaker 1: the money masterclass and be like and then do this,

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Speaker 1: and then do that. Honestly, if it comes to it,

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Speaker 1: I'm taking your money off you.

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Speaker 3: I think that's probably where we're gonna get it.

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Speaker 1: Like, it's just going to end up with me being like,

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Speaker 1: that's not yours. Sit over there in the corner.

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Speaker 3: I need that. But no, today we're talking about investing.

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Speaker 3: I've never invested in a company or bought shares, and

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Speaker 3: I don't really know what companies should I invest in.

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Speaker 3: I know you can't give like personal advice right now

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Speaker 3: for sure. I mean maybe you can't.

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Speaker 1: No, I can't.

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Speaker 3: N I was kind of excited.

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Speaker 1: I was like, no one can legally, like you won't

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Speaker 1: shine a podcast that is Australian that will come out

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Speaker 1: and say, oh this share this, share in this share

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Speaker 1: perfect for beginners because that is personal advice and it's

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Speaker 1: actually illegal to do that. So if that's what you're

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Speaker 1: looking for, I'm just going to burst the bubble now

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Speaker 1: and be like, h nobody can legally provide that. And

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Speaker 1: if they are and they have said something like that,

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Speaker 1: you kind of go, that's a red flag, red flas

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Speaker 1: you should know you shouldn't be doing that. And I

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Speaker 1: can almost guarantee that they have absolutely no license to

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Speaker 1: be having that conversation anyway, so you shouldn't be taking

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Speaker 1: their advice. To begin with this episode today, I'm going

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Speaker 1: to talk a little bit more technically, So we're going

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Speaker 1: to talk about PE ratios. We can shook about PB ratio.

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Speaker 1: We're going to talk about the PS ratio, what they mean,

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Speaker 1: what is an ipo, how does all of that work,

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Speaker 1: and what does it mean when it comes to green flags,

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Speaker 1: we're not so much talking about your ethics and your

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Speaker 1: values and what is a green flag in that perspective,

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Speaker 1: because if we want to talk about my ethics and values, obviously,

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Speaker 1: if you know me well enough, you'd know that I'm

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Speaker 1: looking for sustainable, ethical businesses that are relatively environmentally friendly,

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Speaker 1: that care about their staff and all of that stuff.

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Speaker 1: Will do a whole episode on that. That is fine,

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Speaker 1: But that's more ethics than it is going.

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Speaker 3: Hey, Beck, how do we value a company?

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Speaker 1: What I can do is help you get the right

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Speaker 1: information so that you can choose the right investments for you.

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Speaker 1: And it's not as hard as people think it is. Like,

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Speaker 1: and I think that we all get analysis paralysis when

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Speaker 1: it comes to picking shares.

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Speaker 3: You're like, well, I don't know what one I pick.

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Speaker 1: And I'm like, well, why are we talking about what

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Speaker 1: share you're picking, Beck, when you don't even have a

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Speaker 1: shared trading form? Like there's so much we need to

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Speaker 1: set up first, Like why are we talking about investing

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Speaker 1: Beck when I know your budget's not on track? No,

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Speaker 1: And like that's not a bad thing. There's nothing shameful

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Speaker 1: or awful about it. It's more Beck, let's get your

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Speaker 1: financial house sorted so that then we know how much

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Speaker 1: we can invest comfortably, so that you're not shooting yourself

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Speaker 1: in the foot later and going, oh my god, Via,

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Speaker 1: I actually needed that money, and you don't have to

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Speaker 1: pull it out because you go, well, actually, v I reckon,

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Speaker 1: I can afford thirty bucks a month, and then I go, oh, great,

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Speaker 1: well let's work with that, whereas other people might go,

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Speaker 1: I'm so excited to start my investment journey. I'm just

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Speaker 1: going to really prioritize this. And then they're like picking

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Speaker 1: one thousand dollars or something and then realizing that they

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Speaker 1: can't afford their current insurance or like groceries aren't happening

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Speaker 1: in the same way that they were before, and they're

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Speaker 1: like transferring money out of their savings to make this

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Speaker 1: other thing. Like it becomes an absolute mess, a carnival.

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Speaker 3: You could say, oh, we like it okay, but it could.

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Speaker 1: Become like that, and then you become overwhelmed and you're like,

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Speaker 1: investing's not for me. It's all too complicated, it's too hard.

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Speaker 1: It's not like that.

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Speaker 2: Hmm.

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Speaker 3: Okay, Well, before we go too far into this episode,

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Speaker 3: can you just remind all of us why we should

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Speaker 3: consider investing in companies because we lack money.

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Speaker 1: I see, you know what I love compound interest.

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Speaker 2: Yeah.

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Speaker 1: Compound interest is the money that your money made because

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Speaker 1: it was invested, and then that money that your money

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Speaker 1: made it starts making more money. And then when your

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Speaker 1: money that the money made starts making money, that's free money. Beck,

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Speaker 1: and I love free money.

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Speaker 3: WHOA, Okay, there's a few steps to get there. But

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Speaker 3: once you're there, do you like free money? Beck? I

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Speaker 3: don't hate free money?

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Speaker 1: Oh, you don't hate it? Like, just be partial though

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Speaker 1: I'm not sure you know, I could take or only

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Speaker 1: like it if there's no catches exactly.

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Speaker 3: That's yeah.

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Speaker 1: Yeah, Like why are you trying to offer me fifty bucks?

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Speaker 2: Ye? Sir?

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Speaker 3: What's going on here?

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Speaker 2: Yeah?

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Speaker 1: Exactly. So today I want to touch on I guess

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Speaker 1: the importance of investing. You can start investing today. You

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Speaker 1: actually don't need a lot of money to do it.

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Speaker 1: We've spoken about this on the podcast before. There still

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Speaker 1: seems to be this I guess myth that you need

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Speaker 1: a lot of money to become an in And nowadays

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Speaker 1: we have platforms and I'll plug share Z's because obviously

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Speaker 1: we work with them. We adore them. A lot of

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Speaker 1: our community adore them. If you want to sign up,

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Speaker 1: use the code SotM and you'll get ten bucks in

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Speaker 1: your account to start, which is very sexy. Guess what

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Speaker 1: that is free for any But with Sharez's you can

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Speaker 1: invest with as little as one cent.

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Speaker 3: That's pretty good.

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Speaker 1: Like, I can't think of something more accessible. Mm. I

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Speaker 1: like that actually because they do what's called fractional investing.

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Speaker 1: So beck, if you went to a normal share trading platform,

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Speaker 1: you're like, I really want to purchase a share. I've

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Speaker 1: decided it's going to be an individual company. Let's say

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Speaker 1: it's beach p I don't know why that one came

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Speaker 1: into my head, but that was the first one that

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Speaker 1: came into my head. Maybe because it's like a spicy

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Speaker 1: it's got green flags, it's got red flags. Like I

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Speaker 1: don't know this would divide people, right, But if you

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Speaker 1: went to your normal share trading platform, for you to

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Speaker 1: buy one share in VHP, it's going to be about

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Speaker 1: forty six bucks and you might go will be I

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Speaker 1: just said that I had thirty dollars a month to invest.

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Speaker 1: I can't even buy one VHP share. What Shares's offers

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Speaker 1: and this is not me trying to sell their product.

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Speaker 1: It's me trying to explain fractional investing. They go, ah, well,

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Speaker 1: how much money have you got back? And you might go,

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Speaker 1: I've got thirty bucks. So you might go, actually, I've

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Speaker 1: got ten bucks, and they go, yeah, no worries, how

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Speaker 1: but we give you ten dollars worth of BHP shares

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Speaker 1: and they do what's called fractional investing, So instead of

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Speaker 1: you having to buy a whole share, you still get

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Speaker 1: exposure to that asset. You can purchase that asset, but

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Speaker 1: for what your budget is, not what the share price is,

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Speaker 1: which is really nice because a lot of people want

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Speaker 1: exposure to particular companies and you might go, oh, but

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Speaker 1: that one's too expensive for me to buy, like one off.

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Speaker 1: So it's kind of nice to be able to build

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Speaker 1: your portfolio in a way that suits you. And that's

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Speaker 1: one of the reasons why I really love this concept

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Speaker 1: of fractional investing. Is it safe, Yes, absolutely, Everything's still

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Speaker 1: held in the same way an ETF would be held,

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Speaker 1: So like, you are absolutely fine. I know a lot

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Speaker 1: of people like, oh, but is it risky. I'm like,

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Speaker 1: it's not more risky than any other type of investment,

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Speaker 1: so don't stress too much. Right, So it's very unlike property,

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Speaker 1: where you know, I can't be like, hey, Beck, do

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Speaker 1: you want to buy property and you'd be like, yeah,

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Speaker 1: but I've only got enough money for the bathroom, So

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Speaker 1: can we just buy the bathroom now and by the

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Speaker 1: rest of the house later. Now, it doesn't work like that.

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Speaker 3: That would be nice though.

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Speaker 1: You also don't have to be like a night trader

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Speaker 1: to make money in the share market. I feel like

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Speaker 1: there's this massive misconception that, like, to be a good

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Speaker 1: investor you need to sit in a dark room with

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Speaker 1: like three computer screens in front of you trading shares.

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Speaker 1: That's not what HAPs I pictured. Yeah, like you know,

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Speaker 1: I invest, There's no way I would be doing that.

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Speaker 1: I want to sleep at night, not trade at night.

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Speaker 1: And the risk of trading is actually incredibly high because

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Speaker 1: you're making consistent, calculated decisions. You've got to be educated

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Speaker 1: on that, and like most people are not. Do I

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Speaker 1: sometimes have a little bit of a play in the

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Speaker 1: trade market, of course they do. I'm an ex financial advisor.

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Speaker 1: That was my bread and butter, Like I love it,

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Speaker 1: But like, you don't do that to make lots of money.

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Speaker 1: You do that from my perspective because it's fun. Because

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Speaker 1: research tells us that you're going to get worse returns

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Speaker 1: if you do that than if you put your money

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Speaker 1: into a stable investment over the long period of time.

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Speaker 1: Because what we know to be true, beat is that

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Speaker 1: time is what matters most in your investment journey, not

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Speaker 1: how smart you are or how impressive the investments that

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Speaker 1: you've purchased are, but more how long you're exposed to

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Speaker 1: an asset class. Also, the sexiest part of the money

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Speaker 1: that your money makes making money, so compounding interest back

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Speaker 1: is that it becomes passive, so you're no longer having

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Speaker 1: to trade your time, so the hours that you work

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Speaker 1: each week for money, but money is still coming in

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Speaker 1: the door. You want to get paid for staying in

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Speaker 1: bed Beck, Yeah, that's how with investing. Yeah, So what

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Speaker 1: happens in the future is let's use my favorite example,

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Speaker 1: which I've used a lot on the podcast before, and

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Speaker 1: it's that one point two million dollar investment portfolio. So

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Speaker 1: we know that if you started at the age of

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Speaker 1: twenty one investing five hundred dollars each and every single

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Speaker 1: month up until your retirement age of sixty five, you

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Speaker 1: at an average rate of return of seven and a

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Speaker 1: half percent, will very likely have an investment portfolio worth

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Speaker 1: one point two million dollars, right, so you go, We'll

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Speaker 1: be that makes sense because I was exposed to the

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Speaker 1: market for that long. Well, no, because if you've just

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Speaker 1: saved it instead, Beck, you'd have two hundred and forty

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Speaker 1: thousand dollars.

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Speaker 3: Right.

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Speaker 1: So you're making by giving yourself exposure to the share

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Speaker 1: market over a long period of time. When million dollars

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Speaker 1: in free dollar.

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Speaker 3: Ruse, that's free money back to me free right.

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Speaker 1: But Beck, what does that mean once you retire, do

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Speaker 1: you just start spending that one point two million dollars?

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Speaker 1: The answer is no, no, no, because the money that

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Speaker 1: your money has made is still invested and it's still

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Speaker 1: making money. And if we be a little bit cautious,

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Speaker 1: so let's pretend that once you retire, your portfolio is

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Speaker 1: only returning five percent because we're being a bit more conservative.

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Speaker 1: Is that what the Australian share market returns back?

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Speaker 3: No, it's not.

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Speaker 1: The share market in Australia, or average over a thirty

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Speaker 1: year period of time returns close to ten percent. We're

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Speaker 1: going to be super conservative and pretend it only returns

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Speaker 1: five percent. Okay, a one point two million dollar investment

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Speaker 1: portfolio each year at a rate of return of five

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Speaker 1: percent conservative is going to give you an income of

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Speaker 1: sixty thousand dollars. Wow, without diminishing that one point two

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Speaker 1: million dollars. So that one point two million dollars will

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Speaker 1: consistently sit there and it.

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Speaker 3: Will just work.

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Speaker 1: It will be invested, but the money that your money

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Speaker 1: is making will be sixty thousand dollars a year, and

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Speaker 1: in retirement that becomes your income.

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Speaker 3: So you've taken the cream off the top.

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Speaker 1: So you just taking the cream off the top, and

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Speaker 1: then you know what happens like And I don't want

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Speaker 1: to be too dramatic about it, but I just think

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Speaker 1: it's so exciting to be in a position where you

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Speaker 1: then have that one point two million dollars, right because

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Speaker 1: we can't live forever, so we can make plans and

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Speaker 1: leave legacies and go, oh, well with that one point

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Speaker 1: two million dollars when I have kids, like, I would

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Speaker 1: love it to go to my kids, And you can

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Speaker 1: make as many rules as you want. You could be

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Speaker 1: like they can't spend the one point two million dollars,

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Speaker 1: they can just have an income for the rest of

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Speaker 1: their lives that they share between themselves of sixty thousand dollars.

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Speaker 1: Isn't that sexy? Yeah, that's they can add to it

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Speaker 1: and do the same thing. And that's how Obviously there's

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Speaker 1: a lot of other ways that family wealth starts and

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Speaker 1: need to generational wealth starts, but this is one of

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Speaker 1: the ways that intergenerational wealth can start and you can

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Speaker 1: set your entire family lineup for success in the future.

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Speaker 1: And I just think that's so exciting because I'm definitely

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Speaker 1: one of those people that is passionate about leaving a legacy. Yeah,

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Speaker 1: like I want to do good, be good, have a

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Speaker 1: good time, but I also want everybody to be in

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Speaker 1: a better off position. You're telling me I could do that? Yeah?

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Speaker 1: Is that attractive?

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Speaker 3: And we can start today, right here, right now, exactly

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Speaker 3: with as little as one said. That is very impressive. Okay,

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Speaker 3: So tell us what green flags should we be looking

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Speaker 3: out for that tell us a company is actually a

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Speaker 3: good investment all the.

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Speaker 1: Green flags, right, So first we're going to start with

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Speaker 1: the profitability green flags. So that's basically the first thing

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Speaker 1: you should look at. Are you investing in a business

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Speaker 1: that actually makes money? Because I can almost guarantee that

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Speaker 1: you're not going to make any money personally. If they

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Speaker 1: don't make any money, sure, where's it coming from to

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Speaker 1: be given to you? So then we're going to delve

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Speaker 1: a little bit deeper later. The first green flag is

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Speaker 1: that it's profitable and the profits are stable. So this

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Speaker 1: is where I go back and I go, hey, remember

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Speaker 1: that time that everybody in the media was talking about

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Speaker 1: after pay shares. Every man at his dog in the

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Speaker 1: office was like, I bought after pay shares and I've

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Speaker 1: made so much. This happened like just pre COVID, and

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Speaker 1: I remember just looking at people being like cool, Beck,

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Speaker 1: You're not being paid to own that share. You bought

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Speaker 1: that share, and that share increased in price, and the

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Speaker 1: only way for you to get your little mittens on

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Speaker 1: that extra money is to sell that share you have

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Speaker 1: while the market is high. If the market dips and

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Speaker 1: your share becomes worthless, you haven't actually made any money.

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Speaker 3: Yeah.

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Speaker 1: Whereas if we went and bought like a NAB share.

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Speaker 1: And I often use that as an example just because

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Speaker 1: it comes to mind. I used to be a financial advisor,

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Speaker 1: so I had like literally things that were wired into

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Speaker 1: my brain.

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Speaker 3: Bitch P and NAB or two of them.

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Speaker 1: Right, So if you went and purchased a NAB sharing comparison,

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Speaker 1: your friends aren't going to jump up and down in

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Speaker 1: the same way they did about after Pay. Right, They're

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Speaker 1: gonna be like, cool, Beck, you bought a bank share

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Speaker 1: and you'll be like, yep. For every single share I have,

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Speaker 1: I get paid eighty four cents. Oh, I get paid

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Speaker 1: to own that share. And that's what's called a dividend.

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Speaker 1: So that's pretty sexy, yeah, because that's a share that

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Speaker 1: pays you to own it, because it's a dividends share.

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Speaker 1: And we know that NAB over the last you know,

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Speaker 1: fifty plus years, they've made money. They're a bank. You're

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Speaker 1: really good at making money. I mean, we're pretty salty

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Speaker 1: at the moment because they're making money off our mortgages

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Speaker 1: that are sky high. And we could have these really

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Speaker 1: big conversations. But at the end of the day, if

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Speaker 1: you are making an investment, it pays to make one

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Speaker 1: that is going to put you in the best possible position,

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Speaker 1: even if it is a little boring.

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Speaker 4: Right.

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Speaker 1: So, Beck, do you want to be paid to own

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Speaker 1: something that you own over the long term or do

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Speaker 1: you want to buy something that increases in value? But

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Speaker 1: never pays you. It's just valued higher because of market demand,

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Speaker 1: and then it could go down later when it maybe

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Speaker 1: isn't as shiny as a product or as new of

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Speaker 1: a product. It's like bitcoin.

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Speaker 3: Yeah, I see what you mean, like doge coin train.

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Speaker 1: You were on the dose coin train. So you're telling

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Speaker 1: me you've never gought shared on the share market. A

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Speaker 1: little BECKSI ed has gone out and bought doge coin.

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Speaker 3: I was not very willing.

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Speaker 1: You know, I don't even know how I would buy

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Speaker 1: doge coin.

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Speaker 3: I know, I don't know how I got there.

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Speaker 1: Where is your doge coin?

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Speaker 3: Now it is gone and I have lost some money?

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Speaker 3: So interesting, I recommend.

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Speaker 1: So which side of the table should we be taking?

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Speaker 3: I guess ideally get paid?

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Speaker 1: All right, get paid? So we like that. But you

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Speaker 1: don't have to delve into a company's financials to do this,

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Speaker 1: Like you don't have to go read an annual report.

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Speaker 1: I will I have like the banks they like post

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Speaker 1: them on their websites, and they're beautiful, like they must

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Speaker 1: have a really good graphic designer, because like their annual

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Speaker 1: reports are so sexy, like they have like lots of

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Speaker 1: very bright colorful graphs and charts. A letter from their

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Speaker 1: CEO explaining what they did that. I just get so

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Speaker 1: excited reading reports.

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Speaker 3: I'm like, oh, boushie, I understand that I want to

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Speaker 3: be like you one day.

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Speaker 1: You could like it's a waste of time because you

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Speaker 1: don't actually need to do that, right. I used to

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Speaker 1: do that a lot more when I was a financial

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Speaker 1: advisor because I could sit down with you and you

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Speaker 1: might go, oh, well, why is that off this year?

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Speaker 1: Like last year it performed really well, and I could go, well,

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Speaker 1: I've read the report, here's what the CEO says, here's

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Speaker 1: what the market says, here's what you know is going on,

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Speaker 1: and this is what the future looks like. And you

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Speaker 1: would go I feel so much more confident. So that

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Speaker 1: was like part of my job. You don't need to

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Speaker 1: do that because all you have to do is look

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Speaker 1: on your trading or investment platform because it will usually

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Speaker 1: provide you with a really easy report of like where

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Speaker 1: they are, where they are, where they've been historically. You

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Speaker 1: can also google it really easily, like it's very easy

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Speaker 1: to google. Let's use NAB again as an example. If

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Speaker 1: you're buying a direct share, what has NAB's performance been

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Speaker 1: like over the last two years, five years, ten years,

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Speaker 1: fifty years.

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Speaker 3: Ago, come up back, gotcha?

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Speaker 1: Okay, so you don't need to be too specific.

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Speaker 3: Yeah, okay, but to be a little bit specific, what

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Speaker 3: exactly what you're looking for in these reports?

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Speaker 1: All right?

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Speaker 3: Strap up? This one's big.

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Speaker 1: So there are a few ratios that we're going to

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Speaker 1: talk about, and these are free financial inter caters that

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Speaker 1: are used by financial advisors, but they're also used by

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Speaker 1: people who invest. And I have an investing course coming

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Speaker 1: out early next year which is really exciting, so I'll

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00:17:08,359 --> 00:17:10,080
Speaker 1: be able to delve into it a little bit deeper

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Speaker 1: and really explain. Okay, well this is how you'd get it. Sure,

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00:17:12,840 --> 00:17:15,520
Speaker 1: you can google it as well. Like I hate the

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Speaker 1: fact that I could basically make myself redundant and be like,

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Speaker 1: you can google it back. I'll tell you what you need,

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00:17:22,440 --> 00:17:27,080
Speaker 1: But you can always google free pe ratio calculator and

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Speaker 1: you just put the numbers in and it will spit

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Speaker 1: it out so you don't have to do the calculations, right, Okay, Like,

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Speaker 1: I don't want you to feel overwhelmed because you're like

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Speaker 1: they assigned up to cheese on the money because it

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Speaker 1: was approachable, and now you're making me do basically complex algebra.

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Speaker 1: I'm like, you can sit down. Sorry, I've been waiting

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Speaker 1: for this moment. But the first thing is a pee ratio.

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Speaker 1: So that is a price to earnings ratio. Okay, so

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Speaker 1: we're comparing the price of the share to how much

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Speaker 1: that company makes.

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Speaker 3: Makes sense, right, So this is the.

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Speaker 1: Company's share price divided by its earnings per share. So

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Speaker 1: someone have earnings per share. If a company has a

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Speaker 1: high peer ratio, they might be overvalued. So if you

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Speaker 1: come out with a number that is deemed to be high,

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Speaker 1: one of two things. One that was a really goodbye,

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Speaker 1: or it could be overvalued. Sure, so you might look

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Speaker 1: at something again. Let's pretenders I have to pay. We

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Speaker 1: know that that company was overvalued because of market hype.

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Speaker 1: We know that people were really excited about it because

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Speaker 1: they were getting on the train.

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Speaker 3: It's like dogecoin.

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Speaker 1: Why was it so expensive when you bought it because

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Speaker 1: everybody was talking about it? Was it actually because their

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Speaker 1: annual report came out and they're providing a lot of

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Speaker 1: value when you know they've invested a whole heap of time, energy,

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Speaker 1: and resources, and you know they're going places. Or was

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Speaker 1: it because people in the market were excited about the opportunity.

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Speaker 1: When people in the market are excited about the opportunity,

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Speaker 1: often things will be overvalued, which means you're paying more

438
00:18:51,320 --> 00:18:55,080
Speaker 1: than you should for that asset. So this ratio tells

439
00:18:55,080 --> 00:18:57,119
Speaker 1: you are you paying what you should for this or

440
00:18:57,160 --> 00:18:58,440
Speaker 1: is it a bit speno right now?

441
00:18:58,480 --> 00:19:00,440
Speaker 3: How do we know if it's high? Does it tell

442
00:19:00,440 --> 00:19:00,960
Speaker 3: you on the thing?

443
00:19:01,160 --> 00:19:05,159
Speaker 1: So on average, when you're talking about PE ratios, to

444
00:19:05,240 --> 00:19:07,639
Speaker 1: make sure it's kind of on track, it's not overvalued

445
00:19:07,680 --> 00:19:10,280
Speaker 1: and it's not undervalued. You're looking at a number between

446
00:19:10,320 --> 00:19:13,560
Speaker 1: twenty and twenty five. Usually obviously I can delve into

447
00:19:13,640 --> 00:19:18,200
Speaker 1: this a lot deeper later, but about twenty to twenty five.

448
00:19:18,840 --> 00:19:21,320
Speaker 1: But when you see a low PE ratio like it

449
00:19:21,359 --> 00:19:24,879
Speaker 1: comes out like five, that could actually indicate that the

450
00:19:24,960 --> 00:19:29,240
Speaker 1: stock is undervalued. So this is where traders start to go, hmmm,

451
00:19:29,560 --> 00:19:33,080
Speaker 1: my ears are pricked up. I've done all my calculations

452
00:19:33,119 --> 00:19:37,080
Speaker 1: in this share. It's actually got a low pee ratio.

453
00:19:37,440 --> 00:19:40,479
Speaker 1: So either there's something wrong with it beck or the

454
00:19:40,520 --> 00:19:42,040
Speaker 1: market doesn't see its value.

455
00:19:42,359 --> 00:19:43,080
Speaker 3: Okay.

456
00:19:43,320 --> 00:19:46,440
Speaker 1: Often you might see a share with a low PEE

457
00:19:46,560 --> 00:19:50,320
Speaker 1: ratio if they are involved in any kind of drama

458
00:19:50,400 --> 00:19:53,040
Speaker 1: at the time, So you know, if something happens in

459
00:19:53,080 --> 00:19:56,560
Speaker 1: the share market, or if something happens in social media

460
00:19:56,600 --> 00:19:59,880
Speaker 1: and you know, the CEO has gotten in trouble for something,

461
00:20:00,280 --> 00:20:02,600
Speaker 1: and then market sentiment has gone down.

462
00:20:02,680 --> 00:20:05,200
Speaker 3: So that just basically means that people trust them less.

463
00:20:05,520 --> 00:20:08,880
Speaker 1: When people trust assets less, they might sell them off.

464
00:20:09,200 --> 00:20:11,720
Speaker 1: And as you're selling off, obviously the share price is

465
00:20:11,760 --> 00:20:14,960
Speaker 1: decreasing because there's less demand for it, and that could

466
00:20:15,000 --> 00:20:18,320
Speaker 1: result in an undervalued share. And do you know what

467
00:20:18,320 --> 00:20:20,480
Speaker 1: we like? Hmmm, we love drama.

468
00:20:20,600 --> 00:20:22,280
Speaker 3: We love we loved your drama.

469
00:20:22,520 --> 00:20:24,159
Speaker 1: It was up to me, Beck, I would have an

470
00:20:24,320 --> 00:20:28,000
Speaker 1: entire drama podcast in addition to this podcast, Like I

471
00:20:28,000 --> 00:20:31,119
Speaker 1: don't want to talk about like popular drama or like

472
00:20:31,200 --> 00:20:33,959
Speaker 1: other people like that's just like stuff you'd hear on

473
00:20:34,000 --> 00:20:35,920
Speaker 1: the train, Like you know what I mean, Like a

474
00:20:36,119 --> 00:20:39,240
Speaker 1: podcast where people are like calling in being like this

475
00:20:39,280 --> 00:20:41,119
Speaker 1: is anonymous, but like I heard on the train that

476
00:20:41,200 --> 00:20:42,919
Speaker 1: such and such did such and such and we'll just

477
00:20:42,960 --> 00:20:45,560
Speaker 1: like anonymize it. I'm here for the drama, Like I

478
00:20:45,640 --> 00:20:48,840
Speaker 1: just want the story. Let's do it. Anyway, back to investing,

479
00:20:49,119 --> 00:20:51,080
Speaker 1: that's what we're trying to get good at right now.

480
00:20:51,600 --> 00:20:53,400
Speaker 1: We love a bit of drama because it doesn't mean

481
00:20:53,400 --> 00:20:55,600
Speaker 1: it's true, but it also doesn't mean that the business

482
00:20:55,640 --> 00:20:59,800
Speaker 1: is impacted at all. Right, so you could seize the opportunity.

483
00:21:00,080 --> 00:21:02,959
Speaker 1: Can be like, they're undervalued right now, but are they

484
00:21:03,000 --> 00:21:06,920
Speaker 1: a stable business? Yeah, they look pretty good. That could

485
00:21:06,960 --> 00:21:09,760
Speaker 1: be an opportunity to seize. And I love when a

486
00:21:09,800 --> 00:21:12,800
Speaker 1: company is undervalued. Doesn't happen often, and when it does,

487
00:21:13,000 --> 00:21:16,120
Speaker 1: other investors, especially professional investors, are on top of it.

488
00:21:16,440 --> 00:21:19,679
Speaker 1: So can you, as a lay person go and you know,

489
00:21:19,800 --> 00:21:23,840
Speaker 1: pick an undervalued share? Not that easily, sure, but it's

490
00:21:23,880 --> 00:21:26,359
Speaker 1: nice to talk about why it's important because how many

491
00:21:26,359 --> 00:21:28,960
Speaker 1: times at school were you told do this maths problem?

492
00:21:29,240 --> 00:21:31,280
Speaker 1: Here's this ratio you need to learn. You're like, wellhy,

493
00:21:31,280 --> 00:21:32,080
Speaker 1: I would I ende with that?

494
00:21:32,200 --> 00:21:32,480
Speaker 3: Yeah?

495
00:21:32,520 --> 00:21:34,800
Speaker 1: Why we would do it because it could benefit us.

496
00:21:35,400 --> 00:21:35,840
Speaker 3: I can.

497
00:21:36,040 --> 00:21:38,800
Speaker 1: Next, is a PB ratio and it's nothing like a

498
00:21:38,800 --> 00:21:43,600
Speaker 1: PBNJ right, so it is a price to book value ratio.

499
00:21:43,920 --> 00:21:45,840
Speaker 3: Sounds complex? Let me break it down.

500
00:21:46,119 --> 00:21:50,320
Speaker 1: So this is essentially a company's share price divided by

501
00:21:50,720 --> 00:21:54,439
Speaker 1: its book value share price, very straightforward. I'm assuming you

502
00:21:54,440 --> 00:21:56,720
Speaker 1: could tell me what that is right now. It's basically

503
00:21:56,800 --> 00:21:59,359
Speaker 1: how much a share costs for you to purchase individually

504
00:22:00,080 --> 00:22:02,520
Speaker 1: book value. You don't want the heckn do they sell books? No,

505
00:22:02,560 --> 00:22:05,200
Speaker 1: they don't sell books. It's when you look at their

506
00:22:05,240 --> 00:22:07,879
Speaker 1: balance sheets. So you might look at their profit and loss,

507
00:22:08,000 --> 00:22:10,439
Speaker 1: and it's basically the cost of carrying an asset on

508
00:22:10,480 --> 00:22:13,679
Speaker 1: a company's balance sheet. So how much is the actual

509
00:22:13,680 --> 00:22:17,359
Speaker 1: business worth. So a business might be in significant debt,

510
00:22:17,720 --> 00:22:19,560
Speaker 1: so they might be really good at making profit, but

511
00:22:19,560 --> 00:22:21,600
Speaker 1: they might also be in significant debt. And we need

512
00:22:21,600 --> 00:22:24,399
Speaker 1: to take all of these things into consideration when making

513
00:22:24,400 --> 00:22:27,560
Speaker 1: an investment decision. Right, So you don't want to go, oh,

514
00:22:27,600 --> 00:22:29,840
Speaker 1: this is the best business ever, like, look how much

515
00:22:29,880 --> 00:22:35,560
Speaker 1: turnover they've got cough, what after pay did? But then

516
00:22:35,600 --> 00:22:39,040
Speaker 1: they're also running in the red because they are trying

517
00:22:39,080 --> 00:22:41,600
Speaker 1: so hard to invest so much into their business in

518
00:22:41,640 --> 00:22:43,679
Speaker 1: the hope that it will be successful. But if it's not,

519
00:22:43,720 --> 00:22:45,960
Speaker 1: they actually have so much debt and that's really bad

520
00:22:45,960 --> 00:22:46,720
Speaker 1: for shareholders.

521
00:22:47,160 --> 00:22:48,480
Speaker 3: Okay, Like, we.

522
00:22:48,480 --> 00:22:50,720
Speaker 1: Don't want to date people who are millions of dollars

523
00:22:50,720 --> 00:22:53,240
Speaker 1: of debt back spread flat.

524
00:22:53,760 --> 00:22:56,920
Speaker 3: It could be perceived as a red flag. You're right

525
00:22:56,920 --> 00:22:57,240
Speaker 3: about it.

526
00:22:57,480 --> 00:23:00,960
Speaker 1: About especially if they're trying to be in the media.

527
00:23:01,000 --> 00:23:03,639
Speaker 1: But you're like, I looked under the covers, and I

528
00:23:03,680 --> 00:23:04,800
Speaker 1: saw what you've got.

529
00:23:04,920 --> 00:23:05,719
Speaker 3: I see what's going on.

530
00:23:05,760 --> 00:23:08,000
Speaker 1: I see what's going on, and it's not that hot

531
00:23:08,880 --> 00:23:11,040
Speaker 1: red black. And that's where people can be all talk

532
00:23:11,080 --> 00:23:12,679
Speaker 1: and that will tell you if they're all talk or

533
00:23:12,720 --> 00:23:13,080
Speaker 1: all right.

534
00:23:13,200 --> 00:23:13,480
Speaker 3: Sure.

535
00:23:13,640 --> 00:23:16,880
Speaker 1: Number three, we're going to talk about price to sales ratio.

536
00:23:17,280 --> 00:23:19,720
Speaker 1: That's a good ratio. It's got the PS ratio, and

537
00:23:19,760 --> 00:23:22,800
Speaker 1: this is the company's share price divided by its sale

538
00:23:22,880 --> 00:23:27,480
Speaker 1: price per share. So you determine a PS ratio by

539
00:23:27,520 --> 00:23:31,720
Speaker 1: dividing the company's total market capitalizational value. So how much

540
00:23:31,760 --> 00:23:36,880
Speaker 1: is that business worth by it's trailing twelve month revenue?

541
00:23:37,359 --> 00:23:40,320
Speaker 1: So essentially, this shows how much investors are willing to

542
00:23:40,400 --> 00:23:43,879
Speaker 1: pay for a share in the current market. So what

543
00:23:44,000 --> 00:23:46,399
Speaker 1: does that actually look like? You need to have a

544
00:23:46,400 --> 00:23:48,119
Speaker 1: look at it, because it's not just what the share

545
00:23:48,240 --> 00:23:51,720
Speaker 1: price is. It's a bit deeper than that. But those

546
00:23:51,760 --> 00:23:53,720
Speaker 1: are the three that I want you to kind of consider.

547
00:23:53,840 --> 00:23:56,120
Speaker 1: For me, the first one that I would learn if

548
00:23:56,119 --> 00:23:59,000
Speaker 1: I was a brand new investor would definitely be that

549
00:23:59,119 --> 00:24:02,000
Speaker 1: peer ratio. That first one we talked about. It's the

550
00:24:02,040 --> 00:24:05,239
Speaker 1: easiest to calculate, it makes the most sense mentally, and

551
00:24:05,280 --> 00:24:07,080
Speaker 1: it'll give you a bit of confidence. I don't want

552
00:24:07,080 --> 00:24:08,439
Speaker 1: you jumping in and being like I need to do

553
00:24:08,480 --> 00:24:11,120
Speaker 1: all three at once, like, just start with one, because

554
00:24:11,160 --> 00:24:13,679
Speaker 1: that's essentially the company's share price by how much you

555
00:24:13,760 --> 00:24:17,000
Speaker 1: make from it. So Beck earlier, we were talking about NABS,

556
00:24:17,000 --> 00:24:19,320
Speaker 1: so let's use them as an example. So the NAB

557
00:24:19,440 --> 00:24:22,160
Speaker 1: share price is twenty eight dollars and forty two cents,

558
00:24:22,480 --> 00:24:24,040
Speaker 1: So that's how much it would cost to buy one

559
00:24:24,160 --> 00:24:29,040
Speaker 1: share in National Australia Bank SLAG. We know as well

560
00:24:29,200 --> 00:24:32,000
Speaker 1: that for each share that you own in NAB, they

561
00:24:32,000 --> 00:24:34,040
Speaker 1: pay about eighty two to eighty four cents a year

562
00:24:34,119 --> 00:24:37,159
Speaker 1: in dividends, so they do pay you to own their asset.

563
00:24:37,640 --> 00:24:40,160
Speaker 1: If we then plug that in and look at their

564
00:24:40,160 --> 00:24:43,880
Speaker 1: price to earnings ratio, NAB right now, at the end

565
00:24:44,040 --> 00:24:48,320
Speaker 1: of November had a PE ratio of eleven point seven

566
00:24:48,600 --> 00:24:54,439
Speaker 1: three percent. Okay, in Australia the average is fifteen. So

567
00:24:54,520 --> 00:24:57,439
Speaker 1: if we compare that to the fifteen Obviously, like we

568
00:24:57,520 --> 00:25:00,000
Speaker 1: gave different numbers because we're looking at an international mone,

569
00:25:00,680 --> 00:25:04,320
Speaker 1: but the average in Australia is fifteen. A low number

570
00:25:04,400 --> 00:25:08,080
Speaker 1: can indicate that the stock might be undervalued. If we

571
00:25:08,160 --> 00:25:09,920
Speaker 1: have a little bit of a think about the market

572
00:25:10,000 --> 00:25:12,399
Speaker 1: right now? Back, do people like banks right now?

573
00:25:13,280 --> 00:25:15,000
Speaker 3: Like, maybe they're disenchanted.

574
00:25:15,119 --> 00:25:17,080
Speaker 1: They're not that happy with them, are they? Because they're

575
00:25:17,119 --> 00:25:20,640
Speaker 1: increasing their mortgage rates. People are like banks absolutely screwing

576
00:25:20,680 --> 00:25:23,879
Speaker 1: us over. So you're right, people are disenchanted. Is it

577
00:25:24,080 --> 00:25:25,520
Speaker 1: still a good business?

578
00:25:26,080 --> 00:25:26,840
Speaker 3: Unfortunately?

579
00:25:27,440 --> 00:25:29,720
Speaker 1: Yeah, Like banks make the world go round to run,

580
00:25:30,200 --> 00:25:32,520
Speaker 1: so people might be a little bit disenchanted. And I'm

581
00:25:32,560 --> 00:25:35,480
Speaker 1: not saying that this is completely accurate. It's just an example.

582
00:25:35,880 --> 00:25:38,440
Speaker 1: But what I'm now seeing is that the average PE

583
00:25:38,520 --> 00:25:42,760
Speaker 1: ratio in Australia fifteen NABS is about twelve, So right

584
00:25:42,800 --> 00:25:45,560
Speaker 1: now they're a bit undervalued, and it would make sense

585
00:25:45,760 --> 00:25:49,920
Speaker 1: because people aren't that excited about banks. Does it make

586
00:25:49,960 --> 00:25:50,880
Speaker 1: it about investment?

587
00:25:51,200 --> 00:25:51,240
Speaker 2: No?

588
00:25:51,359 --> 00:25:54,080
Speaker 3: Does it make it a good investment No, can't say.

589
00:25:54,320 --> 00:25:57,879
Speaker 1: Can't say. But what we can say is that we

590
00:25:57,920 --> 00:26:00,840
Speaker 1: would not want to buy a bank that had a

591
00:26:00,840 --> 00:26:04,080
Speaker 1: PE ratio of thirty. If the average Australian PE ratio

592
00:26:04,119 --> 00:26:07,600
Speaker 1: is fifteen, gotcha? Does that make sense? And go, oh well,

593
00:26:07,640 --> 00:26:09,600
Speaker 1: maybe now it might be a not too bad time

594
00:26:09,600 --> 00:26:12,440
Speaker 1: to buy. However, the important thing to remember about when

595
00:26:12,480 --> 00:26:14,439
Speaker 1: the right time to buy is you can do your

596
00:26:14,520 --> 00:26:16,560
Speaker 1: PE ratio. You can do p B ratio, you can

597
00:26:16,600 --> 00:26:18,879
Speaker 1: do PS ratio, you can do all these ratios. But

598
00:26:18,920 --> 00:26:21,480
Speaker 1: the best time bag for you to invest is not

599
00:26:21,480 --> 00:26:24,280
Speaker 1: when the market is ready. It's when you are personally ready.

600
00:26:24,480 --> 00:26:27,000
Speaker 1: And I would personally love for you to overpay slightly

601
00:26:27,080 --> 00:26:28,960
Speaker 1: for a share that you'd then hold for a really

602
00:26:29,000 --> 00:26:32,760
Speaker 1: long time that pays off for you. Because I can

603
00:26:32,840 --> 00:26:36,880
Speaker 1: almost promise that everybody listening to this podcast can't time

604
00:26:36,960 --> 00:26:40,040
Speaker 1: the market. Yeah, I can't time the market. Warren Buffett

605
00:26:40,040 --> 00:26:43,360
Speaker 1: can't time the market. I'd be so flipping rich if

606
00:26:43,400 --> 00:26:46,640
Speaker 1: I could time the market. It's just good to make

607
00:26:46,760 --> 00:26:49,520
Speaker 1: us feel confident in the decisions that we are making

608
00:26:49,600 --> 00:26:52,199
Speaker 1: to understand these things. It's not the be all, end all.

609
00:26:52,720 --> 00:26:53,760
Speaker 1: You don't even have to do it.

610
00:26:54,040 --> 00:26:56,000
Speaker 3: Okay, So if I was listening to this, yes, I

611
00:26:56,000 --> 00:26:57,960
Speaker 3: would go back and listen to maybe like the last

612
00:26:57,960 --> 00:26:59,720
Speaker 3: ten minutes. So baby, let's take a quick break.

613
00:26:59,760 --> 00:27:01,880
Speaker 1: Yeah, and you can like rewind and listen to it again.

614
00:27:01,960 --> 00:27:03,719
Speaker 1: I feel like I've overwhelmed you. This is why we

615
00:27:03,720 --> 00:27:05,560
Speaker 1: need to get course out sooner so I can do

616
00:27:05,600 --> 00:27:07,960
Speaker 1: it in video and like have my little whiteboard and

617
00:27:07,960 --> 00:27:10,440
Speaker 1: be like this and this and this is what this looks.

618
00:27:10,200 --> 00:27:12,360
Speaker 3: Like hotally, No, you are great at explaining.

619
00:27:12,400 --> 00:27:12,840
Speaker 1: I'm trying.

620
00:27:12,880 --> 00:27:14,400
Speaker 3: Mom, You're doing great job.

621
00:27:14,440 --> 00:27:15,080
Speaker 1: Thanks, honey.

622
00:27:15,280 --> 00:27:17,600
Speaker 3: Let's go for a little break on the flip side.

623
00:27:17,600 --> 00:27:20,240
Speaker 3: We'll take a deeper dive into green flags that a

624
00:27:20,320 --> 00:27:29,480
Speaker 3: company is actually a good investment. Don't go anywhere, guys, okay,

625
00:27:29,600 --> 00:27:31,760
Speaker 3: v We are back. Hey feeling I'm so excited.

626
00:27:32,240 --> 00:27:35,720
Speaker 1: Nobody else is. They're like pe bp EPs, what.

627
00:27:35,880 --> 00:27:38,880
Speaker 3: Hey, I'm excited. Let's be excited together. But let's talk

628
00:27:38,920 --> 00:27:40,320
Speaker 3: about green flags again.

629
00:27:40,440 --> 00:27:43,080
Speaker 1: I love talking about green flags. Do you want to

630
00:27:43,080 --> 00:27:43,760
Speaker 1: know another one?

631
00:27:43,880 --> 00:27:45,040
Speaker 3: I would love to know another one.

632
00:27:45,040 --> 00:27:47,199
Speaker 1: I thought you might. That's why you're here today. So

633
00:27:47,400 --> 00:27:50,400
Speaker 1: another green flag. No debt, load debt or well managed

634
00:27:50,440 --> 00:27:53,960
Speaker 1: debt because you know how, in like our lives, when

635
00:27:53,960 --> 00:27:55,639
Speaker 1: we talk about debt, we're like there's good, bad, and

636
00:27:55,680 --> 00:27:57,480
Speaker 1: okay debt, Like if we talk about it that way,

637
00:27:57,560 --> 00:28:00,320
Speaker 1: kind of same for business, okay, Like good debt mean

638
00:28:00,320 --> 00:28:02,040
Speaker 1: that they're invested in the business and it was going

639
00:28:02,080 --> 00:28:04,399
Speaker 1: to grow because of the debt that they're taken on.

640
00:28:05,160 --> 00:28:08,440
Speaker 1: Bad debt would be they are having creditors chase them

641
00:28:08,520 --> 00:28:10,520
Speaker 1: because they have, you know, a bit off more than

642
00:28:10,560 --> 00:28:12,439
Speaker 1: they can chew and then probably not a good business

643
00:28:12,480 --> 00:28:13,080
Speaker 1: to invest in.

644
00:28:13,080 --> 00:28:14,399
Speaker 3: Right, that's traumatizing.

645
00:28:14,600 --> 00:28:17,320
Speaker 1: In a perfect world, a business would have no debt. Yeah,

646
00:28:17,400 --> 00:28:18,800
Speaker 1: it's very sexy.

647
00:28:19,040 --> 00:28:20,280
Speaker 3: She's on the money, has no debt.

648
00:28:21,000 --> 00:28:24,439
Speaker 1: Oh yeah, we're also not on the ax, so you

649
00:28:24,480 --> 00:28:26,320
Speaker 1: can't buy us as a share and norm will we

650
00:28:26,400 --> 00:28:30,879
Speaker 1: ever be because I'm the boss now, ah, I'm the

651
00:28:30,880 --> 00:28:34,919
Speaker 1: captain now. But ideally a company has no debt, but

652
00:28:34,960 --> 00:28:37,720
Speaker 1: that's not a deal breaker if there's like low debt,

653
00:28:37,800 --> 00:28:40,120
Speaker 1: or you can see that it's being well managed, like

654
00:28:40,160 --> 00:28:42,760
Speaker 1: they might have taken on an investment loan to you know,

655
00:28:42,880 --> 00:28:45,240
Speaker 1: purchase some assets that are going to further the income

656
00:28:45,240 --> 00:28:47,640
Speaker 1: of the business. If a company does bring in a

657
00:28:47,680 --> 00:28:49,440
Speaker 1: lot of money but it has a lot of debt

658
00:28:49,480 --> 00:28:52,400
Speaker 1: to pay off, that actually decreases your dividends because they've

659
00:28:52,400 --> 00:28:56,080
Speaker 1: got to pay their debt back before they pay the shareholders.

660
00:28:56,600 --> 00:28:58,600
Speaker 1: And that makes sense, but you don't really think about

661
00:28:58,640 --> 00:29:01,240
Speaker 1: that when you're looking at share price. So we always

662
00:29:01,280 --> 00:29:03,400
Speaker 1: want a company that has like low debt or debt

663
00:29:03,440 --> 00:29:06,200
Speaker 1: that's going to get lower over time. That makes sense

664
00:29:06,240 --> 00:29:06,880
Speaker 1: for the business.

665
00:29:06,920 --> 00:29:09,080
Speaker 3: Beck, Okay, I'm hearing you all right.

666
00:29:09,320 --> 00:29:10,920
Speaker 1: Do you want my final green flag?

667
00:29:11,120 --> 00:29:11,959
Speaker 3: Yes? Okay.

668
00:29:12,000 --> 00:29:14,840
Speaker 1: So final green flag when it comes to profit is

669
00:29:14,880 --> 00:29:19,240
Speaker 1: that the company is consistently raising dividends for a few reasons. One,

670
00:29:19,280 --> 00:29:21,200
Speaker 1: we always want to make more money, but like, is

671
00:29:21,240 --> 00:29:24,240
Speaker 1: this business keeping up with inflation? Back a yeah, because

672
00:29:24,280 --> 00:29:26,880
Speaker 1: if they're not, we're actually going backwards by owning them

673
00:29:26,920 --> 00:29:30,040
Speaker 1: over the long term. Right, that's not very sexy. But

674
00:29:30,280 --> 00:29:33,360
Speaker 1: you can check past dividend payouts on the ASEX website

675
00:29:33,560 --> 00:29:38,200
Speaker 1: or my favorite google it. What have NABS dividends been

676
00:29:38,280 --> 00:29:40,120
Speaker 1: like over the last thirty years? Have a look at it.

677
00:29:40,160 --> 00:29:43,400
Speaker 1: I promised there's charts everywhere on the internet about every share.

678
00:29:43,720 --> 00:29:46,040
Speaker 1: It's not just NAB of just clung to that example.

679
00:29:46,160 --> 00:29:48,800
Speaker 3: Today we like transparents. I don't even own nabshares at

680
00:29:48,800 --> 00:29:50,520
Speaker 3: the moment. What is wrong with me?

681
00:29:51,280 --> 00:29:54,760
Speaker 1: Anyway? I think that is probably where I will leave

682
00:29:54,760 --> 00:29:57,120
Speaker 1: it when it comes to green flags. I hope you're

683
00:29:57,120 --> 00:29:59,000
Speaker 1: feeling a little bit more confident and comfortable.

684
00:29:59,080 --> 00:30:02,560
Speaker 3: Yeah, okay, so I think right now we can't see

685
00:30:02,560 --> 00:30:06,240
Speaker 3: a single red flag, no red flag in sight, no profitability, red.

686
00:30:06,080 --> 00:30:09,440
Speaker 1: Flag, no profitability, that's what we're talking about, Remember.

687
00:30:09,240 --> 00:30:11,120
Speaker 3: But what else should we be looking for before we

688
00:30:11,160 --> 00:30:13,440
Speaker 3: invest in a company? All right? So no more green flags,

689
00:30:13,440 --> 00:30:15,040
Speaker 3: but we're just talking about things that.

690
00:30:15,000 --> 00:30:17,120
Speaker 1: You should be looking for in general. Can only have

691
00:30:17,160 --> 00:30:20,000
Speaker 1: so many green flags. Have you seen the TikTok trend

692
00:30:20,000 --> 00:30:20,840
Speaker 1: of beige flags?

693
00:30:21,080 --> 00:30:22,760
Speaker 3: Yes, so we're talking beige flags now.

694
00:30:22,920 --> 00:30:24,760
Speaker 1: No, no, no, we're not talking beige flags. I just

695
00:30:24,800 --> 00:30:26,120
Speaker 1: wanted to talk about TikTok again.

696
00:30:27,600 --> 00:30:30,200
Speaker 3: She loves talking about tik I love TikTok.

697
00:30:30,680 --> 00:30:33,320
Speaker 1: That's why I don't do any work anymore. Anyway. I

698
00:30:33,320 --> 00:30:36,040
Speaker 1: guess the next few tips they require a bit more research,

699
00:30:36,160 --> 00:30:38,520
Speaker 1: so they're like not just like immediate green flags where

700
00:30:38,520 --> 00:30:41,640
Speaker 1: you go go yep, tick p ratio, that's easy. Does

701
00:30:41,640 --> 00:30:44,680
Speaker 1: the company have debt? Yes? No, easy answer. Does that

702
00:30:44,720 --> 00:30:47,000
Speaker 1: make sense? Yeah, So it requires a bit more research,

703
00:30:47,040 --> 00:30:49,560
Speaker 1: but they're worth it, and we'll take you from a

704
00:30:49,600 --> 00:30:52,480
Speaker 1: novice to a pro investor in no time. I could

705
00:30:52,560 --> 00:30:54,360
Speaker 1: sell a sham well with this energy.

706
00:30:54,760 --> 00:30:55,280
Speaker 3: Seriously.

707
00:30:55,480 --> 00:30:57,040
Speaker 1: So, one of the things we want to look at

708
00:30:57,160 --> 00:30:59,280
Speaker 1: is whether there is a future in the product or

709
00:30:59,320 --> 00:31:02,560
Speaker 1: the service that that company is selling. So will this

710
00:31:02,640 --> 00:31:05,600
Speaker 1: actually be a profitable and competitive business in the next

711
00:31:05,640 --> 00:31:07,960
Speaker 1: ten years is a question you need to be asking. So,

712
00:31:08,080 --> 00:31:10,800
Speaker 1: for example, am I going to run out and buy

713
00:31:10,880 --> 00:31:14,160
Speaker 1: shares in a company that makes DVDs or CDs M

714
00:31:15,240 --> 00:31:17,440
Speaker 1: maybe they're coming back. Maybe they're coming back. You're like,

715
00:31:17,480 --> 00:31:19,560
Speaker 1: their vintage is like records. Like I don't want to

716
00:31:19,560 --> 00:31:22,600
Speaker 1: hear your justification, but like that's my example I have

717
00:31:22,680 --> 00:31:24,720
Speaker 1: come up with on the fly, and you're.

718
00:31:24,600 --> 00:31:27,080
Speaker 3: Gonna be like maybe no, no, no, you're meant to

719
00:31:27,120 --> 00:31:28,760
Speaker 3: say no, Beck, that's impressive.

720
00:31:28,800 --> 00:31:32,840
Speaker 1: That's impressive, but probably not because that's not where technology

721
00:31:32,880 --> 00:31:35,160
Speaker 1: is at right now, and in another ten years, that's

722
00:31:35,200 --> 00:31:37,840
Speaker 1: probably not going to be the dominant technology that the

723
00:31:37,880 --> 00:31:40,960
Speaker 1: market is using, in which case your share price is

724
00:31:40,960 --> 00:31:42,240
Speaker 1: probably going to decrease.

725
00:31:42,360 --> 00:31:44,520
Speaker 3: Gotcha, their profit is probably going to decrease.

726
00:31:44,880 --> 00:31:47,200
Speaker 1: You're right, there could be a vintage market, but like,

727
00:31:47,800 --> 00:31:52,480
Speaker 1: are we buying vintage market things on the ax? No? No, exactly?

728
00:31:53,360 --> 00:31:56,600
Speaker 1: Are they recession resistant? Is the next thing we want

729
00:31:56,640 --> 00:32:00,680
Speaker 1: to talk about. That's a good one, especially of the pandemic,

730
00:32:00,680 --> 00:32:03,200
Speaker 1: A really good question to ask. So like, for example,

731
00:32:03,360 --> 00:32:07,400
Speaker 1: during the pandemic, supermarkets did so well, right, Like, I

732
00:32:07,440 --> 00:32:10,280
Speaker 1: don't think people expected that, but it kind of makes sense.

733
00:32:10,640 --> 00:32:13,640
Speaker 1: But because regardless of what's going on in the economy,

734
00:32:13,720 --> 00:32:17,480
Speaker 1: VEC we all need to buy food. In fact, when

735
00:32:17,920 --> 00:32:21,160
Speaker 1: the economy is put, we're actually spending more money at

736
00:32:21,200 --> 00:32:23,640
Speaker 1: the supermarket than we are on takeaway and stuff like that.

737
00:32:24,160 --> 00:32:27,920
Speaker 1: So that's a pretty good business when it comes to receession, Preferably,

738
00:32:28,600 --> 00:32:31,560
Speaker 1: the customers for a particular business are from more than

739
00:32:31,600 --> 00:32:35,680
Speaker 1: one source. So like imagine if the business was propped

740
00:32:35,760 --> 00:32:37,440
Speaker 1: up because you know, it's probably not going to be

741
00:32:37,480 --> 00:32:40,680
Speaker 1: on the ASEX. But you get my example all right, Instagram.

742
00:32:40,760 --> 00:32:43,239
Speaker 1: So it's a really big Instagram account and they have

743
00:32:43,320 --> 00:32:47,680
Speaker 1: an Instagram shop. That's risky. Sure, So if all of

744
00:32:47,680 --> 00:32:50,360
Speaker 1: your customers are coming from one platform, what happens if

745
00:32:50,360 --> 00:32:52,920
Speaker 1: that single source is wiped out or that single source

746
00:32:53,000 --> 00:32:57,440
Speaker 1: is changed. It's not actually in your hands that entire

747
00:32:58,320 --> 00:33:01,200
Speaker 1: customer source has been wiped out, whereas a company that

748
00:33:01,320 --> 00:33:04,320
Speaker 1: might be on all social media platforms might be different.

749
00:33:04,680 --> 00:33:08,120
Speaker 1: That is just an example, but for bigger businesses it's

750
00:33:08,120 --> 00:33:10,520
Speaker 1: obviously very very different. But that's one I think we

751
00:33:10,560 --> 00:33:11,760
Speaker 1: can all wrap our heads around.

752
00:33:11,960 --> 00:33:14,760
Speaker 3: Yep, very risky to just be on Instagram.

753
00:33:15,120 --> 00:33:18,080
Speaker 1: It's why so many businesses, especially small business it is

754
00:33:18,120 --> 00:33:21,560
Speaker 1: now we're just talking about something completely different, no, but

755
00:33:21,600 --> 00:33:24,440
Speaker 1: it's why they want to diversify their customers. So It's why,

756
00:33:24,760 --> 00:33:27,280
Speaker 1: you know, once TikTok happened, they were trying to promote

757
00:33:27,320 --> 00:33:30,720
Speaker 1: TikTok from Instagram to push you over to another platform,

758
00:33:30,720 --> 00:33:33,560
Speaker 1: because if something happens to their main platform, at least

759
00:33:33,560 --> 00:33:35,920
Speaker 1: they can communicate with you on there. It's why if

760
00:33:35,960 --> 00:33:38,440
Speaker 1: you go on any website, they are always trying to

761
00:33:38,440 --> 00:33:43,000
Speaker 1: collect your email address because in the marketing world, Instagram's good,

762
00:33:43,120 --> 00:33:45,680
Speaker 1: TikTok's good, any social media is good, but what is

763
00:33:45,720 --> 00:33:49,600
Speaker 1: golden is your email address because they have direct contact

764
00:33:49,640 --> 00:33:52,360
Speaker 1: to you. They might not have the Instagram platform that

765
00:33:52,400 --> 00:33:54,560
Speaker 1: could connect with your profile, but they could send you

766
00:33:54,600 --> 00:33:57,960
Speaker 1: an email being like, hey, sorry, our Instagram got completely wiped.

767
00:33:58,000 --> 00:34:01,360
Speaker 1: Here's a new link to our new Instagram. So they've

768
00:34:01,360 --> 00:34:04,240
Speaker 1: got direct communication with you, which is why so many

769
00:34:04,280 --> 00:34:07,479
Speaker 1: companies really promote. They go, oh, ten percent of your

770
00:34:07,480 --> 00:34:09,840
Speaker 1: first order if you sign up to our newsletter, like

771
00:34:09,920 --> 00:34:13,520
Speaker 1: they put so much value on essentially owning the customer

772
00:34:13,880 --> 00:34:16,480
Speaker 1: because there's no rules around it in the same way

773
00:34:16,520 --> 00:34:19,560
Speaker 1: there would be around having a follower on Instagram or

774
00:34:19,600 --> 00:34:23,760
Speaker 1: having a follower on Facebook. So okay, you want diversification

775
00:34:23,840 --> 00:34:25,240
Speaker 1: of customer sources.

776
00:34:24,960 --> 00:34:28,200
Speaker 3: That makes sense. Everything's really checking out I'm like thinking

777
00:34:28,239 --> 00:34:30,000
Speaker 3: back to my life and I'm like, oh, that's why

778
00:34:30,000 --> 00:34:31,440
Speaker 3: you ask me, this is why you email me all

779
00:34:31,440 --> 00:34:33,760
Speaker 3: the time, and blah blah blah blah blah. But okay,

780
00:34:34,040 --> 00:34:35,600
Speaker 3: let's move on. What else are we looking for?

781
00:34:35,760 --> 00:34:38,560
Speaker 1: So we're looking for a company that has ipo'ed and

782
00:34:38,640 --> 00:34:43,040
Speaker 1: has done so for a while. You look confused.

783
00:34:43,640 --> 00:34:46,239
Speaker 3: IPO. So, an IPO is.

784
00:34:46,239 --> 00:34:49,120
Speaker 1: An initial public offering, and it basically refers to the

785
00:34:49,160 --> 00:34:54,040
Speaker 1: process of offering shares of a private company or corporation

786
00:34:54,239 --> 00:34:56,799
Speaker 1: to the public in a new stock insurance for the

787
00:34:56,800 --> 00:34:59,200
Speaker 1: first time. So the first time they're put on the market,

788
00:34:59,320 --> 00:35:02,680
Speaker 1: right O. So a lot of people get hung up

789
00:35:02,719 --> 00:35:04,640
Speaker 1: on like, oh, this company's about to IPO and I'm

790
00:35:04,640 --> 00:35:07,440
Speaker 1: going to invest in them. That's risky. How do you

791
00:35:07,560 --> 00:35:10,560
Speaker 1: know how they're going to stabilize and what their actual

792
00:35:10,600 --> 00:35:12,000
Speaker 1: share price will settle to.

793
00:35:12,520 --> 00:35:12,920
Speaker 3: You're right.

794
00:35:12,960 --> 00:35:16,120
Speaker 1: You might have an IPO that happens and that company

795
00:35:16,160 --> 00:35:19,319
Speaker 1: is completely undervalued and it's skyrockets and you make lots

796
00:35:19,360 --> 00:35:21,799
Speaker 1: and lots of money. But here it she's on the money.

797
00:35:21,800 --> 00:35:24,040
Speaker 1: We're about making money over the long term. I'd prefer

798
00:35:24,080 --> 00:35:26,480
Speaker 1: you to be stable and secure over the long term.

799
00:35:26,520 --> 00:35:29,600
Speaker 1: As opposed to get rich quick. Yep, we can't time

800
00:35:29,680 --> 00:35:32,279
Speaker 1: the market. I've said it a million times. If I could,

801
00:35:32,320 --> 00:35:34,160
Speaker 1: I already would have and I wouldn't even have this

802
00:35:34,280 --> 00:35:36,360
Speaker 1: podcast because I'd be too rich, because I'd be on

803
00:35:36,400 --> 00:35:36,920
Speaker 1: an island.

804
00:35:37,400 --> 00:35:37,879
Speaker 3: That's fair.

805
00:35:38,120 --> 00:35:39,400
Speaker 1: Do you have a companies to island?

806
00:35:39,880 --> 00:35:40,080
Speaker 3: Yeah?

807
00:35:40,120 --> 00:35:42,840
Speaker 1: Actually, if I ever I ever get a successful IPO,

808
00:35:42,840 --> 00:35:45,480
Speaker 1: I'll let you know than you. So essentially that means

809
00:35:45,520 --> 00:35:47,600
Speaker 1: that they are a publicly listed company on the stock

810
00:35:47,640 --> 00:35:50,239
Speaker 1: market and anyone can now buy shares in them. So

811
00:35:50,360 --> 00:35:54,320
Speaker 1: once a company has entered into an IPO, it's actually

812
00:35:54,360 --> 00:35:57,560
Speaker 1: a much safer investment because there's much lower risk now

813
00:35:57,920 --> 00:36:01,120
Speaker 1: because we actually can see what the market is willing

814
00:36:01,160 --> 00:36:03,480
Speaker 1: to pay for them, so before we're guessing what the

815
00:36:03,520 --> 00:36:05,719
Speaker 1: market is going to pay for them, Like everyone's kind

816
00:36:05,719 --> 00:36:08,320
Speaker 1: of been like, Oh, they're ipoing Beck for fifty bucks

817
00:36:08,320 --> 00:36:11,359
Speaker 1: a share, that's so undervalued. The business is worth more

818
00:36:11,400 --> 00:36:13,799
Speaker 1: than that because I love it. You don't know what

819
00:36:13,880 --> 00:36:17,040
Speaker 1: that dude who's saying that actually knows, or they could

820
00:36:17,080 --> 00:36:20,880
Speaker 1: be saying it's overvalued. Can't believe they'd expect fifty dollars

821
00:36:20,920 --> 00:36:24,400
Speaker 1: a share. How do you know what that dude actually

822
00:36:24,440 --> 00:36:28,320
Speaker 1: means right. So essentially, once they've put themselves on the market,

823
00:36:28,360 --> 00:36:30,720
Speaker 1: you can measure or you can see what the market's

824
00:36:30,719 --> 00:36:32,720
Speaker 1: actually willing to pay for them, and it's a much

825
00:36:32,760 --> 00:36:36,440
Speaker 1: safer investment and usually leads to larger dividends. We like

826
00:36:36,719 --> 00:36:39,480
Speaker 1: large dividends in this we do.

827
00:36:39,520 --> 00:36:40,560
Speaker 3: We like big d's.

828
00:36:40,880 --> 00:36:42,200
Speaker 1: Yeah, we like the big dividend.

829
00:36:43,719 --> 00:36:44,160
Speaker 4: Stop it.

830
00:36:44,320 --> 00:36:46,600
Speaker 3: Sorry, But the longer.

831
00:36:46,320 --> 00:36:48,839
Speaker 1: It has been iPod for, so the longer it's been

832
00:36:48,880 --> 00:36:52,200
Speaker 1: on the market, ye, usually the less risky the investment

833
00:36:52,280 --> 00:36:55,640
Speaker 1: because it's been through a number of different phases and cycles.

834
00:36:55,960 --> 00:36:59,480
Speaker 1: So that's why we talk about blue chip stocks. So

835
00:36:59,480 --> 00:37:02,600
Speaker 1: you can't just become a blue chip stock overnight. You've

836
00:37:02,640 --> 00:37:05,800
Speaker 1: got to earn that with time. So new chip stock

837
00:37:05,880 --> 00:37:08,760
Speaker 1: is kind of those tried true investments that have performed

838
00:37:08,760 --> 00:37:09,720
Speaker 1: well over time.

839
00:37:09,960 --> 00:37:10,800
Speaker 3: They're a bit boring.

840
00:37:11,040 --> 00:37:14,360
Speaker 1: If you had grandparents who were into investing, they definitely.

841
00:37:14,040 --> 00:37:16,319
Speaker 3: Care about the chip stocks. Okay, so you.

842
00:37:16,360 --> 00:37:19,520
Speaker 1: Might be talking about coals and woolies and HP and

843
00:37:19,560 --> 00:37:22,480
Speaker 1: the big four banks and stuff like that. Nothing exciting

844
00:37:22,560 --> 00:37:26,640
Speaker 1: like transurban so like transport and like toll roads and stuff.

845
00:37:26,680 --> 00:37:30,000
Speaker 1: You kind of go, there's nothing sexy about them. Yeah,

846
00:37:30,040 --> 00:37:31,920
Speaker 1: but we need them, but we need them. And have

847
00:37:31,960 --> 00:37:34,320
Speaker 1: you seen how much tolls are recently? Oh my lord,

848
00:37:35,480 --> 00:37:38,399
Speaker 1: now the back way to get to the studio every

849
00:37:38,400 --> 00:37:41,080
Speaker 1: time we record because tolls now to get from where

850
00:37:41,120 --> 00:37:43,160
Speaker 1: I live, which is probably giving away too much personal

851
00:37:43,160 --> 00:37:47,360
Speaker 1: information to where the studio is. It's like twenty two dollars,

852
00:37:47,440 --> 00:37:50,080
Speaker 1: I know what the heck in them on ash, So

853
00:37:50,239 --> 00:37:52,480
Speaker 1: I would much prefer to buy everybody coffee when I

854
00:37:52,520 --> 00:37:54,319
Speaker 1: get to work, And it took me fifteen minutes longer,

855
00:37:54,440 --> 00:37:56,319
Speaker 1: OKAYV So I feel like I've learned a lot today

856
00:37:56,360 --> 00:37:57,560
Speaker 1: and there's a few things I have to go and

857
00:37:57,600 --> 00:38:00,200
Speaker 1: google price to earnings ratio of me.

858
00:38:00,239 --> 00:38:01,160
Speaker 3: I had that off my head.

859
00:38:01,280 --> 00:38:04,719
Speaker 1: I did, Honestly. I'm really proud of you because at

860
00:38:04,760 --> 00:38:06,520
Speaker 1: the end of the day, I feel like you've been

861
00:38:06,560 --> 00:38:08,080
Speaker 1: on the show for like a year now, which is

862
00:38:08,239 --> 00:38:12,480
Speaker 1: wild to me. Like January is going to be our anniversary.

863
00:38:12,000 --> 00:38:12,600
Speaker 3: Whichuld we do.

864
00:38:12,719 --> 00:38:17,000
Speaker 1: I don't know, yes, Dounning, I'll think of something really cute, okay,

865
00:38:17,040 --> 00:38:20,040
Speaker 1: But I feel like you've gone from being like, oh, no,

866
00:38:20,239 --> 00:38:22,720
Speaker 1: investing's not for me. I bought doge coin one time,

867
00:38:23,040 --> 00:38:24,920
Speaker 1: to being like, oh, I kind of understand it, Like

868
00:38:24,920 --> 00:38:27,120
Speaker 1: I'm not that intimidated by it, Like you haven't done

869
00:38:27,160 --> 00:38:29,719
Speaker 1: it yet, which is so fine. Like we invest in

870
00:38:29,719 --> 00:38:32,759
Speaker 1: our own time, not when the market tells us to invest. Yes,

871
00:38:32,760 --> 00:38:34,040
Speaker 1: but like I feel like you might be a little

872
00:38:34,040 --> 00:38:36,080
Speaker 1: bit more confident than you used to be around going

873
00:38:36,120 --> 00:38:38,040
Speaker 1: oh no, like investments something I want to do, but

874
00:38:38,080 --> 00:38:38,800
Speaker 1: I just haven't.

875
00:38:38,560 --> 00:38:41,400
Speaker 3: Done it yet. Yes, I absolutely feel like you know,

876
00:38:41,440 --> 00:38:43,440
Speaker 3: baby step So thank you so much. I learned so

877
00:38:43,560 --> 00:38:45,880
Speaker 3: much today and over this year. I don't know about you,

878
00:38:45,920 --> 00:38:47,319
Speaker 3: but I think it's a really good place to leave it.

879
00:38:47,320 --> 00:38:49,319
Speaker 1: For that, I think it's a brilliant place to leave it.

880
00:38:49,440 --> 00:38:51,960
Speaker 1: So we will see you guys on Friday for a

881
00:38:52,000 --> 00:38:54,319
Speaker 1: little bit of a recap. But we love you and

882
00:38:54,320 --> 00:38:56,040
Speaker 1: we hope you have a good day. And sorry that

883
00:38:56,080 --> 00:38:58,080
Speaker 1: I overwhelmed you. I didn't mean it. Listen to the

884
00:38:58,080 --> 00:39:07,840
Speaker 1: episode again, my guys. Yes, the advice shared on She's

885
00:39:07,880 --> 00:39:10,120
Speaker 1: on the Money is general in nature and does not

886
00:39:10,280 --> 00:39:14,520
Speaker 1: consider your individual circumstances. She's on the Money exists purely

887
00:39:14,560 --> 00:39:17,520
Speaker 1: for educational purposes and should not be relied upon to

888
00:39:17,520 --> 00:39:20,880
Speaker 1: make an investment or financial decision. If you do choose

889
00:39:20,880 --> 00:39:23,840
Speaker 1: to buy a financial product, read the PDS TMD and

890
00:39:23,920 --> 00:39:28,520
Speaker 1: obtain appropriate financial advice tailored towards your needs. Victoria Divine

891
00:39:28,560 --> 00:39:31,920
Speaker 1: and She's on the Money are authorized representatives of Money

892
00:39:31,920 --> 00:39:36,160
Speaker 1: Sherper Pty Ltd ABN three two one six four nine

893
00:39:36,320 --> 00:39:40,279
Speaker 1: two seven seven zero eight AFSL four five one two

894
00:39:40,320 --> 00:39:43,319
Speaker 1: eight nine