GMR 162: Become a Better Investor with Alex Mason
Behind every stock is a real business that sells products and services to customers. Understanding the business helps us better understand the nature of the stock. In this episode of GMR, we talk with Alex Mason, an individual investor and podcaster whose interest in investing has motivated him to study over 100 companies listed on the S&P 500 list. His research and his Mental Models are a great resource to help you become a better investor.
Show Notes
What you will hear in this podcast:
This thing that we call the stock market is really just this auction system of buyers and sellers for these companies that you and I use every day.
Learning that I can be a part-owner in these companies just by buying a stock was just amazing to me, and that is what really set me off on the journey.
Mental models are these thought experiences or ideas that can help explain a concept, and the reason I find them important is that they can really inform rational decision making.
In this life, there are maybe 100 or so really big ideas that, if we grasp those ideas, will make us way better thinkers and decision-makers.
One of the mistakes we new investors often make is we’re looking strictly at the past performance to inform a decision about the future.
We can’t pay for yesterday’s growth. We can’t also punish yesterday’s declines either.
There’s a big difference between a company that has a big brand name, something you recognize that you’re very familiar with their products and services, and the actual steadiness of the cash flow of that business.
What helps me is not forgetting as an investor what we’re actually buying, what is the source of these returns, and where is the money actually coming from.
One of the main sources of how I do my research is the 10K; that’s an annual filing with the Securities and Exchange Commission that every public company has to file on a yearly basis.
You learn so much, even just sitting down and reading the annual report for half an hour.
Combining that basic sense of valuation (PE ratio) with what I’ve learned already about the company is what informs my decision.
If you’re a new investor and you want to get into the Market, by all means, explore Index Funds and start putting money away for your future, but if you do have an interest in learning about individual businesses, I definitely encourage that as well.
At the end of the day, I want my families portfolio to exceed the rate of the Market’s return, and if I can get 2 or 3% compounded annually, that may not seem like much, but if you look over a 40 or 50-year period you’re looking at double or triple your net worth, and that’s life-changing.
Resources
Alex Mason Website - stockstoryteller.com
Companies Studied - https://stockstoryteller.com/podcast/companies/
Mental Models - https://stockstoryteller.com/podcast/mental-models/
Budgeting tools and other free resources - https://leosabo.com/resources
David’s website - www.stewardshippastors.com