Roaming Returns

037 - How To Avoid Analysis Paralysis When Investing

• Episode 37

Share episode

Many people suffer from analysis paralysis because there's so much information on investing out there. You may listen to 10 experts, but they all say completely different things about the same stock.  

In this episode we lay out how to get around the anxiety, overwhelm and fear of making the right investment choices, because being stuck in that place just sabotages your future. 

The key lies in having the right foundation. When you're able to determine your own goals, metrics and plan, you no longer lack the confidence to make investing decisions. 

Tickers mentioned in this episode:

  • VZ
  • T
  • MMM
  • ECC
  • HTGC


Drop your comments or questions for this episode on one of our posts. 


Still feeling overwhelmed or uncertain which investments are good? Sign up for our emails where Tim narrows your options down to just 10 great stocks each week.

If you're looking for a more detailed summary of this episode, click here.    

Text Us 📲

Want FREE weekly market updates, Tim's top 10 dividend picks, and our portfolio updates delivered right to your inbox? Subscribe to our email list.

Stay connected. Follow us on social!

**DISCLAIMER**
Ticker metrics change as markets and companies change, so always do your own research. The content in this podcast is based on personal experience and is for educational purposes, not financial advice. See full disclaimer here.

Episode music was created using Loudly.

Welcome to Roaming Returns, a podcast about generating a passive income through investing, so that you don't have to wait till retirement to live your passions. Today's episode is about analysis paralysis. If you've ever had a hard time making a decision and felt the anxiety ratchet up, this episode's for you.
We know how investing can be overwhelming, which is exactly why we're going to share with you the five reasons that typically cause analysis paralysis and what we do to get around it. Tune in so you can formulate a strategy to kick those nerves to the curb. Here we go.
What up, peeps? We are back. And peepettes, not to be sexist. Oh my gosh.
Just pick a gender neutral term. It's way easier than doing the either or crap. Peepers.
Peepers? What's up, peepers? Whoa, that's actually really funny. So sorry to do this to you again. I know we had just, I don't know how long ago it was because time gets confusing whenever you have podcasts.
You record them, then they come out like a week or two or three, and she went to Greece and it's like a month. We did a psychological podcast about the biases. This is going to be another psycho heavy episode.
So we did say we were going to do the screener this episode, but we were talking about what would be best for you as the audience from a learning perspective, and we actually decided to do this episode before. There's going to be three episodes that I'll like. The next three episodes are going to be tied together.
This one's about the psychology that we're going to do of paralysis by analysis or analysis paralysis, however you want to. Basically investing financial anxiety. And then the next one's going to be risk tolerance, risk mitigation, and how you can actually use that to create criteria that you then can put into your screener.
So the screener's going to be the third one, and the screener's probably going to be the most important of the three, but you need to have a foundation to create the important factors of the screener, if that makes sense. You have to have the foundation to know what the heck you're even going to use as metrics for your screener. So that's what we're going to be exploring in the next two episodes.
I know it sounds super fun, so sorry. You are so not sorry. I'm so sorry.
Well, why don't you tell them what you found first, because I thought this was really funny. When you stumbled upon analysis paralysis, a lot of people struggle with financial anxiety and that paralyzing factor, and they actually have a psychological condition that is the exact opposite of that. What was that called? Oh, extinct by instinct.
Extinct by instinct. That's what I suffer from. What that basically in a nutshell is, is you rely on your gut so much that you kill yourself.
So basically Tim's YOLO has a technical term. Yes. Extinct by instinct.
My YOLO actually has more factors into it, like normally when people YOLO, they just don't think, they're just like YOLO, whereas I actually have went over a lot of parameters in my head numerous times prior to any type of situation arising, and then I'd be like, oh, okay, YOLO, because I've already thought this through like two years ago. And I actually do something very, very similar to that, and we'll kind of get into that as we go through this episode. So I just thought that was a really interesting tidbit I had never heard of.
All right. Well, a prime example of analysis paralysis or paralysis by analysis, I'm just going to use analysis paralysis, but I know that a lot of people- It's so much easier to say. I know a lot of people have made money in books from doing the paralysis by analysis, is if you go to the store and you're buying something simple, say peanut butter or chips or whatever, there's like a thousand different choices of chips.
Options, brands, prices. There's the ones that are supposedly, quote, healthy. They're the ones that are reduced sodium.
There's the king size. There's the store brand. There's the Lays, and then there's the Doritos.
There's so many different options. And if you find yourself standing there for an extended period of time, not knowing what bag of chips or what jar of peanut butter to get, you are actually being analysis paralysis at that moment. You're enacting the principle.
You're overwhelmed. Basically, it's like- Overwhelmed by options. It's like a sensory overwhelm.
And how that relates to investing is people think that holding off decisions will make things better, but all it does is actually creates more choices because the longer in the investing world that you hold off on buying a stock, there's going to be 30 different stocks that go down that are going to be in the value area. So then your initial, oh, I'm going to buy one of these five stocks, has then turned into, oh, I'm going to buy one of these 35 stocks, and that actually overwhelms you. And there's a lot of people, I can't relate to this personally, but in the research I was doing, a lot of people actually get anxiety whenever they get overwhelmed and I don't.
Do you know? No, that's the vast majority of people get anxiety when they're overwhelmed. I don't get anxiety if I get overwhelmed. I get mad.
But in the psychological behavior realm that I study, anxiety essentially means that you need to make a decision, basically. And the more and more you put off making said decision, the worse the anxiety gets. So anxiety essentially comes from inaction, which is exactly what we're getting to, right? Yes, I guess, maybe, hopefully.
One of those words. Well, when we were reading about it, it was saying that if you put it off because you want to make the perfect decision or if you put it off. There's five main reasons that when I was researching that were repeated over and over in the different literature, one of those is actually a desire for perfection.
Humans, for whatever reason, we have lots of flaws, but one of our biggest flaws is most humans want a decision to be perfect, a house to be perfect, a car to be perfect, a job to be perfect. So humans, by our nature, we desire perfection. And that's just not practical.
That's not realistic in the stock market because the stock market is actually never going to be perfect unless you are some kind of math nerd where numbers create perfection. So I was going to say, what I like to tell people who have the perfectionism issue is it's not about the individual decisions, it's about the system. If you can create a perfect system, it takes away the paralysis when it comes to those moment to moment decision making criteria.
Yes, that's what all the foundation that we've laid through the months has been, is getting people to the point where they actually have a system that they can implement. Exactly, exactly. But I think a lot of people who have a perfectionism thing don't have a system dialed in.
And then if you get the weekly email, I know I keep harping on it, deal with it. If you get the weekly email, I literally take 19,000 stocks and I give you 10 each week that are decent areas to research and you could probably buy three or four each week of those 10 that I give you. So basically what he's saying is if what we talk about in this episode, in next week's episode and in the third episode overwhelms you, you should probably sign up for the emails because Tim does all of that for you every week.
I use a screener and then I do the research and make sure all the metrics I look for are present. I don't recommend anything that I wouldn't buy myself, so yay me. Okay, so we discussed the desire for perfection is one.
They're not in any particular order, they didn't do a survey, a rank file type thing. The second point is fear of making the wrong choice. I can't relate to this, but this is what I read.
With so many investing choices out there, people really worry that if they're making the right choice and one of the factors that they really dwell on is will the stock perform like I expect it to? They create expectations that sometimes aren't livable and a prime example of that is I know pretty much anyone that's ever invested has heard that the S&P index fund on average returns 10.6% per year. That is a bad thing. I understand that they're actually trying to present it in a good way, but it's a bad thing because people expect 10.6% every year and there's going to be years, multiple years where you make less than that.
That's just how it is and there's going to be years where you crush that, but people as humans and what I'm writing for next week's email is along these lines, the negativity bias humans, we dwell on or we relate to or we emphasize negativity way more than we do positivity. We also kind of like shoot ourselves in the foot with what he just talked about with the setting an expectation and not having the expectation be realistic. Realistic expectations are super important.
If you invest in the stock that yields 10%, you probably will have an expectation that you're going to make 10% and realistically, you should never expect 10% on something that yields 10%. There's going to be years where it's 6%, 4%. It's an average of 10%.
So that means- That's what you're just where you focus on the 10%. That's just a yield. That doesn't take price appreciation or depreciation into effect.
No value changes. Market conditions. Market conditions.
Emotional craziness of people investing, institutional investors, the macro trends, the investing climate. It doesn't take any of that and so you're not actually looking at all the different variables. You're just focused on an expectation of 10.6 or 10% in this particular case.
And the thing with making the wrong choice, I know I do that quite often, but I have like my own little system dialed in where it's like, okay, I don't want to have to redo work. So I'd rather do a little more research or due diligence upfront before I actually take action. But I don't strive for perfectionism because perfectionism, it's the law of depreciating returns.
If you put in so much effort, I guess Pareto principle, I love that. If you put in 20% of your effort, you get 80% of the results and that extra 20% takes you 80% more effort. That doesn't make sense.
I can tell you as someone that's been investing for many years now, there's a lot of negative aspects to the stock market. One of the actual positive aspects that I think, and I've actually never heard anyone say this, is you shouldn't have a fear of making a wrong choice because if you make a wrong choice, odds are you're going to be able to at least break even. That's what's so amazing about dividend investing.
You kind of have your little safety buffer there. If you follow the criteria that we've been harping on, like if you make sure something's undervalued, so to say, what do I think, Verizon is undervalued by like 10% right now. If you buy Verizon that's undervalued by 10% and you're going to be collecting 6%, that gives you a 16%, theoretically, 16% wiggle room.
So you shouldn't be fearful of making a wrong choice because you're following the right data to actually get something undervalued. If you follow other publications, I can't begin to tell you that they don't do that. I can tell you multiple ones that I've looked at, they actually will just say buy up to a certain point.
They don't tell you how much undervalued it is. That's why a lot of the things I read, they kind of migrate towards close-ended funds because that's one of the few things that you can actually, as an investor, look at and say, oh, this is 8% undervalued compared to where it historically is. Just like bonds.
But that's why I put the P.E. versus the P.E. peers. I mean, the one other aspect that you could do to verify that the information I'm giving is correct when you're doing your own individual research is to look at the historical P.E. of a certain investment. I just don't have the time to do that or I would do that.
I go through so many, it's probably over 200 different publications and messages I get each week and then I'm going through so many stocks and ideas that I get in these publications. I just don't have time to do a historical P.E. data point. I'm sorry.
Well, and the true answer for fear of making the wrong choice, you have to make a choice to know if it was the wrong choice or not. You can't actually get the answer without taking action. Why I like what I do enough to the point where I put myself and my research out there is I take the fear of making the wrong choice off the table because I've... Hopefully.
That's what we're trying to do. Hopefully. That's what we're trying to do.
But I'm talking about this specifically just from the fear of taking the action. Even with us covering that piece, the answer is in the action. Okay.
So let's unbeat that dead horse. That horse is dead. Okay.
Another point is unclear objectives. If you don't have a defined plan of what you're trying to do with your investment plan, whether it be you want income to a certain point or you want growth of a certain point or you just want your principal to stay intact, maybe gain a little bit, you have to have a plan. And one of the aspects of the plan which will be addressed in the next podcast is what risk you're willing to take on and the way to determine what risk you're willing to take on is by doing a risk tolerance analysis of yourself, your current economic position, your current financial responsibilities.
You have to take all these things. That's why I said a few podcasts ago, you literally have to be honest with yourself to create the best possible plan for yourself. If you half-ass it, that's not helping you in the long run.
It really isn't. And then you hear that saying all the time, failing to plan is planning to fail. It's 100% true.
A couple other areas of objectives, unclear objectives point is what are your goals for each investment? You literally should for every investment you have in your portfolio, you should have some form of idea what you're going to do with them, whether it be collect dividends on the stock until it reaches a certain P.E. and then turn the drip off and then collect cash or whether you're going to start taking profits at a certain point when it becomes to a certain valuation. You have to have a goal for each investment. Myself personally, I don't like to take profits that often.
I'd rather just turn the drip off, get my dividends and cash and then apply it to other investments in the portfolio but to each their own. But we do have alternate strategies too for different stuff like yield maxes are a completely different animal and we have completely different goals and criteria for those specifically. So knowing what you have and knowing the different strategies to apply.
In the same breath as know what your goals for each investment are, try to hypothetically think what will happen to your psyche or your emotions or your brain or whatever you're investing with if the investment goes down. So say it goes down 15%, what is your plan with that particular investment when it goes down 15%? Like Icon, Icon shot down 50% but I've known all along that I got into Icon because I want to hold it for as long as I can hold it so that when it went down, it sucked hard ass but I was still going to hold it because I believe in what they're doing. That's why it helps to do the research so you know what you're investing in and I'm not saying have like an emotional connection to the company but invest in stuff that you like or that you know.
That way, your investments should not worry you if they go down. Say you're investing in oil, oil is a cyclical thing where it goes up sometimes and sometimes it crashes down. If you believe in oil, which I do, I believe in clean energy as well but oil is going to be around the rest of my life.
If you believe in oil like I do, then if it goes down, that just presents a buying opportunity. It doesn't necessarily create a panic, oh, I have to sell, I have to sell, I have to sell. Now with that being said, you have to be adaptable like say you believe in utilities, well, you could have a situation that occurred like in Lahaina, is that how you say it? When the electric company there burnt down the whole town, well, that obviously at that point is a black swan event but you still have to have an idea in your head what you're going to do if a black swan event happens to one of your investments.
What happened is they burnt the town down, now they're getting the holy shit suit out of them and you have to be willing to dump the stock at that point regardless of how you feel. Yeah, the suit factor is the big one there but if it was some rogue thing with like the lead in the wires like AT&T and Verizon. AT&T and Verizon have the lead in the wires and you have Triple M that's being sued about their ventilators but- You know those two are going to turn back around.
Triple M, I'm completely comfortable and I actually own that in her mom's retirement. We own a lot of it in her mom's retirement because it's just a company that's been around for 70 years, they've been sued before, they're going to get sued in the future so- Yeah, that's a completely different circumstance. It's part of doing business whenever you supply the world with everything.
Right. And then you have to, the last point of the unclear objectives is you have to know how long you're going to stay invested in each individual investment. Like what criteria do you have? It might not be a time frame- By that I mean like if you know like in 10 years you're going to want to buy a house, well then you know in 10 years you need to have enough money set aside to buy the house.
If you don't, then which investments are you going to cut to make the money up for the house? You have to have an idea of that. And it doesn't have to be time based either. It could be like if the company decides to cut their dividend two times in a row, you decide to nix the company.
I mean that's the exact same type thing. How long are you going to stay invested? As long as they're a good company and then you have your metrics for that. Let's just have an objective.
It's a bitch but- But it does really help you because once you have your system dialed in, it's just gone I can tell you from personal experience that doing all the legwork up front is so important because now it's like second nature to me like where I don't even really have to exert much thought. That's exactly how everybody learns skill sets. You build up your foundation, you go through the motions, you etch in the habit.
So like she just brought up that if we're in a dividend stock and it cuts its dividend twice, I dump it. That's just how it is. I don't like have an emotional attachment to like a con might cut their dividend and they might have to be dumped even though how much I really like them.
Like if you can't get it right the first time, that it means that the management is a bunch of idiots and that you need to- And they don't care enough to fix the problem. That's a big issue. I mean in the other ones we were talking about where Tim doesn't like to sell off profits or actually dump shares but when it comes to a certain point where our portfolio is so far over saturated in one asset, it really, really increases our risk for having too much of the portfolio percentage in one egg and that poses its own issue.
So it's a non-emotional decision. Once it hits a certain point- I'm still trying to figure out how to trim a few of our good, really good investments down below the six percent. Like we have three now that have actually appreciated beyond the six percent of our total portfolio.
So I have to figure out not how or when I'm going to- He's still trying to dial in all his objectives. I'm trying to figure out when I'm going to do it. Like am I going to do it after they go dividend, after they go ex-dividend that way I still get the money for it.
Am I going to wait until there's another shoot up in the company, like their earnings report. Say their earnings report is two weeks from now. Well do I wait for the two weeks to the earnings report? Because it's a win-win situation for me if their earnings report is shit and it goes down ten percent.
Well it's going to fall back below the threshold of what I have and I can just kick the decision on down the road a little bit. If they shoot up ten percent, well then I know I definitely have to sell at that point regardless of- So he's actually creating a system where he's waiting for a specific event to happen. It's generally either the ex-dividend date or earnings report basically is what like those are two like really important factors when it comes to how to rebalance my portfolio.
It's not really an end of the year thing like most people I know they do it at the end of the year. They're like oh I have to rebalance it for tax harvesting. It's not that.
It's just those two main points. And then the fourth point that I came across in my research is information overload and I mean I don't really think I have to stress too much on that like everybody who's anybody knows that when you're on the computer you have access to everything you could possibly ever want. The problem that you're encountering with the information overload, there is one caveat to that, is there's a lot of untrusted sources that you may or may not be getting information from.
I know I have a few untrusted sources where I'm like I don't really trust what they're saying. What I generally use them for is if they present like a compelling argument say for a gold mining company, I'll actually go and then research the gold mining company on my own. I don't just listen to them.
You shouldn't listen to anyone ever. You should always do your own research. Yeah, you should listen to other people for ideas because sometimes they miss things or they find things that you missed because you can't be every place every once but you really should have your own.
But like what happens to general people is they get so much information that they become paralyzed. I think that falls in that the more information you get to, it kind of creates one of these other ones where overwhelm and then you get into perfection or like fear to make that decision. If you have too much information and you try to make a perfect selection or a perfect system with too much information, you get like you basically you see you drag your feet because you're like oh my god, this is so much going on.
I can tell you I actually do this but the reason I actually can make progress is because I have a system dialed in where when I hit a certain threshold or I can combine different like similar concepts to then narrow things down. You have to have your system dialed in to be able to synthesize the information down to a manageable. I understand that.
I know. I know. But it's all in the system.
But what happens ultimately, these other four points actually lead up to the fifth and what I think is the most important but like it's not what they actually discuss as the most important. It was always just like a caveat in the research is lack of confidence. All this other shit actually just it piles up, piles up, piles up where you become paralyzed.
You become anxious. You have too much information. It comes to a point where you have a lack of confidence because you're not confident that you're going to make the right decision or that you've used – you've made a bad decision prior based on the same information.
So you have no confidence to pull the trigger a second time and that's – for an investor, lack of confidence is probably the killer. Like if you have no confidence in your investing ability, then you may need to pay like a financial advisor at that point on my honest opinion. But the thing with confidence, confidence doesn't come without taking action and having successes in steps.
So if you break your steps down, you break your system down so you get all those small wins, you can actually train yourself to build up confidence. If you don't do that, confidence is going to wreck your world and it's going to be your biggest bitch. Well, it's like anything.
Like if you think about – just think about your normal everyday life. Like if you go to work and you have no confidence, you're not going to be able to perform your job very well. You can say you're single and you want to date, if you have no confidence, you're going to be single.
You're going to get friends on left and right. For pretty much the rest of your life. Right.
Like say you're driving and you have no confidence when you're driving, you're going to make a lot of boo-boos, unforced errors because you're so scared because you have no confidence in your abilities. Like it's – confidence is one of the most important things that humans develop. Not even just investing.
It's just in general. And the thing is if you're focused on the fear factor and focusing on not screwing up, you tend to screw up because you're afraid of screwing up. So you're focusing on the screw up part as opposed to focusing on succeeding, focusing on accomplishing, focusing on actually having the good wins, the good investments, the good whatever.
That little shift in perspective can make a huge difference in the direction you head. I call it running towards the goal versus running away from the monster. Monster? Well, monster is probably not the right word.
Monster? Running away from the fear. I mean, it is a monster. Well, that's what I'm saying.
It is a big gnarly – So how do you – Big gnarly mofo. How do you actually begin to solve those five points? That was my deep thought for when I wrote this email. Well, first, you have to come up with a clear and concise plan.
It has to be not crystal clear, but it can't be muddied either. It has to be that worst case scenario that like shit where you can see like kind of the whole way down to the bottom of the sea or the bottom of the river or whatever. So we like to do like a general outline of things.
And then over time, as you start tweaking and start playing in the sandbox – Well, like the first – You get clearer and clearer. Would be know what you want to own. Yes.
Whether you want to own energy stocks or utility stocks or gold or you want to be invested in the financial sector or maybe you just want bullet shares because you don't trust the market at all. Like you need to know what you want to own and why you want to own it is super important. So once you conclude that, OK, the macro trends are saying that it's going to be a good year for energy stocks and probably REITs, well, then that's why you want to own it because the macro culture is basically saying the interest rates are going to go down.
REITs are going to go up. Utilities are going to go up. Energy is always – there's a war going on.
So there's a good chance that there's going to be a deficit of oil or whatever the reason why you want to own it. Then once you know that, you have to know how long you want to own it and when for whatever circumstances you're going to sell it. So like those – I lump those together for a reason, a particular reason.
Because you may have a plan, you want to hold this stuff for 10 or 15 years, but you also have to have an idea of what circumstance it would take for you to actually not hold it for 10 or 15 years. They're kind of lumped together. Yeah.
So like the extenuating circumstances, right? Yeah. Determine how much risk you could tolerate. We'll go over that next week hopefully to help you further.
I mean I know we've discussed risk a lot in these podcasts, but risk – We're actually going to dedicate next week's episode entirely to risk and risk mitigation. Investing carries risks. Life carries risks.
Just like leaving your house carries risks. Yeah. I mean it's just part of life.
I think it was Warren Buffett that said, know what companies you own and why you own them. He did all right. He did all right.
So how do you – so once you determine what you want to own, then you have to – then you're probably going to make a list like you're like – you'll determine, hey, I want to own REITs. Well, you're going to have a list of REITs and then you have to have – you're going to have to define a few necessary research criteria points, which we'll go over two podcasts from now with the screener. Because if you listen to 10 experts, you're going to get 10 different analysis of the same investment, like say Hercules Capital.
If you researched Hercules Capital and you came across 10 experts, you're going to have 10 different points of view, 10 different points of data, 10 differing everything about Hercules Capital. So you have to focus on what matters to you and do your own research. And at that point, you'll come across like this is going to be the yield, the PE ratio, the PEG ratio.
Is it going to be revenue growth, debt load, five-year dividend growth, five-year revenue growth? Whatever points that make your research specific to your situation, you have to create that. I will walk you through as best as I can when we do the screener episode. I have a really – a few really good points about screeners.
And more is not always better. It's not. That gets towards that perfectionism, overwhelming, contradictive crap, right? I have a really, really, really, really, really good screening process.
But if I have more than 200 stocks, the time that it takes to go through 200 different stocks, I don't even think probably a week, maybe two. By the time you get through the list of 300 stocks, you have to go back and do the 300 again because it changes day to day, week to week, definitely day to day. Most often, most likely it will change day to day.
So you have to prioritize things. Month to month, year to year. And that's key, right? So that's why you have to come up with – you have to come up with the points specific to you, your situation, your financial goals and go with it.
And I'm going to try my best to give you ideas to do that. And there are two reasons. The first we were just discussing is time.
The time that you will have to dedicate to research if you have 500 stocks is ridiculous. But say that you're crazy and you want to turn over 500 stones. So Peter Lynch would be happy with you because you turned over as many rocks as possible.
Well, if you have five pieces of information that you're looking for in each stock, it will be so much easier to compare say an oil stock versus a telecommunications stock because you're just looking at like the five-year revenue growth and the oil stock and the five-year revenue growth in the telecommunications stock. It just makes it easier to make it apples to apples comparisons basically. Yeah, that's why I like to turn everything into percentages.
OK. So now we have – do you have a plan and you have a screener so that you can find stocks and you have to define what makes an investment a buy? That is, again, it's an individual preference, really. I mean, to me, if you have five of your boxes and they have to be within specific thresholds and the stocks that have the most ones checked rank highest to the list. So I have what I consider to be potential buys.
The P's, the price earnings vastly lower than its peers. A profit margin of at least 30 percent. History of multiple years of dividend increases.
The more, the better, actually, obviously, like a five. It's 15 years versus five. I'm going to kind of lean towards the 15 years, at least three years of revenue growth, at least three years of debt load reduction, a yield of at least four percent and a payout ratio of no more than 90 percent, unless it's a REIT or a BDC that those payouts can actually be more than 90 percent.
Once I actually have narrowed everything down and compared apples to apples and I can create a list, I go through each of these points. That's why it takes me so freaking long to do all the research, because I have these points I go through before I it's a potential buy for me. And if it's a potential buy for me, I pass it on to you guys as soon as I determine it.
Now, my screener doesn't actually use those points. So that's why it actually takes longer. My screeners, different points.
And then that screener narrows down to however many, how many? I think it was seven hundred down. It was like 70 some in the last screener I did. So the 70 some then I would actually look at these seven points and each of the 70 some stocks.
But that's way better than 1900. Yes. And that's the whole point.
So narrow your pool and then narrow your pool and then rank. You're narrow, narrow, narrow, narrow, narrow. Yep.
And then the few left standing. Now, I do have a couple of points that were like my help people. I don't like anything that's around.
It's 52 week high. I understand they always say, let your winners run, blah, blah, blah, blah, blah, blah. I just don't like it.
There's too much manipulation and profit taking and all sorts of nonsense. I don't like anything around the 52 week high unless it's circuitous capital. But then I even then I wouldn't recommend buying it right now.
I don't like to buy investments within one week of its ex-dividend date because there's, again, too much volatility going on. I find it actually is better to buy it two days after the stock goes ex-dividend. So like I give you guys a list every week.
You can buy them if you want before the ex-dividend date. But I would actually buy them two days after the ex-dividend date because I say two days because obviously on the ex-dividend date, it's going to go down by the price of the dividend. Sometimes it'll recover really quickly within a day.
Other times it'll keep going down within the day. It takes the second day before you can see where the price is starting to level out in that whether it's going up or going down. I don't like to buy in December or the first two weeks of January because there's so much shenanigans going on.
There's portfolio reallocations going on. There's tax harvesting going on. And what happens is if there's so much volatility and tax harvesting going on December, December tanks and then the first couple weeks of January are chaos because December was really bad.
If December is really good, then generally January, the first part couple weeks of January are really bad. So like I just don't I pretty much stay out of the market for six weeks, seven, six or seven weeks a year. I'll like look at the portfolio and be like, oh, that looks nice.
But I don't actually buy anything during those points. And the most important thing that I have never done and I actually can't stress this enough to y'all is never, ever, ever make an investment decision, whether it's buying or selling out of desperation. Yeah, desperation is just bad.
Bad juju. That's like it's the exact opposite of confidence and confidence is super important. So like whenever you sell something, be confident.
I'm selling this because this, this, this, this, this happened or I'm going to buy this because it met this metric, this metric, this metric. But once you start doing desperate things and make sure they're your metrics, that you're not making a decision based on other people's reactions. They need to be based on your metrics.
So I keep saying it's for them and their own individual personal or personal subjective. It's their personal screener. It's their personal.
Don't default to exterior everything. And it's all that should be like, that's why that's one of my biggest bitches about all these publications I read is they try to lump like 300,000 people together like, OK, well, you are interested in dividend stock. So here's a vanilla general email or weekly letter or monthly subscription thing that goes out to 300,000 people.
They're trying to basically can conform 3000, 300,000 people into the same boat. And that's not each individual's different. But that's my bitch.
Other people might like that. They like to follow the herd. I like the herd, whatever the herd's doing.
I want to be doing the opposite of that. That's that's its own bias, too. I have that problem as well.
That's me. But we'd like you guys to get skilled in your own metrics and criteria so that we can actually be mind mind partners or mind brainstormers. You guys can give us like stuff you find and we could talk back and forth.
Like we wanted to be more collaborative, collaborative. But like at the same time, like there's a lot of people I talk to that are really into they're into trading contracts for Bitcoin and Ethereum. And they do it with leverage.
And they keep asking me, like, are you sure you want to do this? I'm like, you sound pretty knowledgeable in the crypto realm. I'm like, I am pretty knowledgeable in the crypto realm, but I'm not doing anything with leverage. If you can give me a like an invite to something where we're not using leverage, by all means, I will probably check it out.
But leverage that leverage is bad. Yeah, we lost quite a bit of money. I lost quite a bit of money.
We that was all you. That was all me. But Tim flat out told me that had I not made that big booboo, he probably would have went down that risque thing, too, and probably lost more money than I lost.
I would never do leverage, though. Like I don't know. But like I remember you said you were contemplating it.
And it is enticing. But it's so not worth it. A lot of people have asked me about ECC, like the number one stock that I get asked about is ECC, which I am actually just finished up researching for next week's email because it goes X dividend the week after.
And everyone always inquires about ECC. Well, what I found is that ECC generally trades at eight percent over its NAV price, but currently it's trading at like 11 percent over its NAV price. So I wouldn't buy it at this moment, but I wouldn't wait for it to go back down to where it's at NAV price because it never will.
Like there's certain things like that that I can help people with. But it's again, it's not my criteria. So every time I've been in ECC, I've made money.
But that's just me. But that's the number one stock I get asked about ECC. OK, so what are your criteria for ECC? Just out of curiosity, it has to be, again, not close to its 52 week high.
I don't like to buy it within a week of its X dividend date. So like it goes X dividend, I think on the 7th of March. So I either buy it like the end of February or I buy it the week after it goes X dividend.
I would make sure that its trading price compared to its NAV would be where historically is at, like eight percent. Like if it's above that, you're you're overpaying two or three percent for like a eight dollar stock. So how expensive it is? It might be less than I don't know exact price.
But that's me. That's one of the it's one of those funds where it's very difficult to find profit margins and P.E. versus its peers, like if I can find the P.E. of ECC, but like its peers are very difficult to like because they don't really do like a P.E. of the closing in funds sectors. It's very difficult to find that.
So that's why if you look at the chart, it says NA. But that's just like that's one. Then the second one I could ask the most.
The second one is Hercules Capital. Hercules Capital, I would not buy right now, right now. If you have it right now, I would turn the drip off and collect cash.
You can either invest it in other income investment things or you can wait for Hercules Capital to fall, take a dip and then buy it on the dip. But right now it's it just smashed its earnings. It shot up a lot.
It's like it's 52 week high. It's 52 week high is also its all time high. So I'm and it takes a lot for a company to break through an all time high.
I'm not I'm not. It's not that I'm not confident they can go higher. It's just that probability wise, there's a higher probability that it's not going to crack its 1861 all time high.
The higher probability is it's going to bounce. It's going to it's going to be a resistance point and it's going to bounce down off of it. If there's all that shit that I'd like, I keep saying there's risk mitigation.
There's a lot of probability that goes into most of everything I talk about when it comes to stocks like that one there. I'm pretty sure I would probably wait till I'd actually not get back into Hercules till it's like 1650. If it goes back down that far, I'd let it fall a couple of dollars.
So I got back into it because you can always get the Main Street capital, which is basically the same thing. It just pays less, less of a yield per year. But it's the same thing with the same awesome numbers.
Well, that's the thing. Don't let yourself get emotional over this stuff. Just because one of these isn't a buy doesn't mean other ones are not buys.
Don't get don't try to shoehorn things. Other opportunities are always available. Always.
Always. AGNC, 16%, EARN, 17%, PSCC is 15%. Like they're like they're all similar companies to Hercules Capital.
Hercules Capital just happens to be one of the best. HRZN's like I think at 11%. Like they all literally you can find another high yielding BDC that's good.
This may be just not as good as Hercules Capital, but I would not overpay for Hercules Capital when I could get the other ones at discount. Agreed. That makes so much more sense.
Because, again, the probability is Hercules is going to fall. Why would I want to like get in the company that's high? I'm overpaying for something that's going to fall. I'm only getting a 10% yield.
So the odds are probably going to make 5% on that because it'll fall 5%. And then you're probably like most time you're like, oh, my God, what's going on with Hercules Capital? Right. You take on that extra risk.
Then you actually trash your confidence when it does pull back, because that's usually what happens when people flood in because they're like, oh, this is going up. So everybody jumps on it. But then as soon as there's any any person that comes out and says this is overvalued, it's going to like fall off a cliff again.
And then you're going to be down money. And right there, confidence trash. It's like follow the metrics.
But see, that's why I don't actually suffer from that analysis paralysis, because I actually have thought so many different scenarios for each investment that we own. I think that is key because I run through. I don't know if like I don't know if people have that capability like I do.
But like each one we own, I have like probably ten different scenarios. And I'm like, oh, this is what I'm going to do if this happens. This is what I'm going to do if that happens.
And I know I do that a lot, too. And I think that's why people think I'm a lot more in the moment or like risk taking. But it's like I've already calculated what's important to me if I have safety measures in place for my own skill sets and this, this and that.
So it's like when something happens, I can make a snap decision and just roll with it. That's how nobody else sees I'm in real life. Like I've done enough stuff where I can make it what seems like a risky, risky decision.
But when it comes to my capabilities, I actually don't buy something unless I have at least four or five different scenarios thought out. Like what happens if it does this? What happens? It does that. What happens? It does this.
Yeah, but it's like for me, I'll do certain things before I buy it. Well, exactly, exactly. Everything's in the prep work, because you have to think where we are.
This money is going to be paying for the rest of our lives. So there are high stakes. So there's like we can't really go out and make a hundred thousand dollars that quickly back unless we sacrifice other things, which were at the point in our lives where we're not willing to do that.
So there's a lot of there's a lot of pressure. So I like we've already taken all the other risks and all these other things getting up to this point. It's like we have decided at this point we are not willing to take on certain risks.
And this is where we've ended up. This is our individual metrics, our individual plan, our individual thoughts about all this. And that's what I'm saying.
Each individual investor has a completely different plan than each other investors. One hundred percent. OK, that's that.
Next week is going to be the in more discussion about risk. Like we'll get into more detail how to like basically how to first you have to identify how much risk you're willing to take. There's like I think most people should know this, but they don't.
I don't know why. And then there's ways to actually mitigate risk. And we've discussed a few of them where you can actually take a risk on, say, an 18 percent yielding stock as long as you have certain other risk mitigation things like, you know, two or three other lower yielding stocks that are like really good companies like Triple M and Verizon that are six percent.
So you can take a 18 percent risk because you have six percent of your portfolios get pretty much guaranteed. So that was that six and six is twelve. So I'd be 12 percent if you average those three together.
So you're not getting the full 18 percent, but you're you're actually minimizing the risk and taking a 12 percent, which is still really good. Yeah, there's ways to do that. It's still better than the market average, right? Yeah.
But then I don't pay attention to market average. Remember point one? Yeah, I know. But I'm just saying those of you who do focus on that average thing.
So and then we'll get into the screener. I know everybody's going to be super excited about the screener because it is fucking sick. I put a lot of time into it.
It's really simple. Once you like once you hear you're like, oh, my God, that's super simple. But like, I've actually done a lot of what's the word? There's a lot of due diligence behind the scene tweaking, a lot of tweaking, a lot of testing, a lot of moderating this over the last few weeks.
It's not weeks. It's been years. Whatever.
OK, years. I don't know what you do. My screeners take because I do all my other weird stuff.
My screeners taking years to develop. And this is the point. It's all in the prep work.
Like even right now, I'm working on the condo when I paint a room. People are like, how do you get your paint jobs to look so freaking good? And I'm like, it's 90 percent prep work. It's patching all the holes.
It's painting the molding with certain stuff. It's taping everything off, having it extremely crisp, clean. And like it's it's all in the prep work.
It takes me like maybe two hours to paint. Sometimes it takes hours upon hours to actually do prep. So same thing with stocks and investing.
You got to do a lot of prep and years in process. Now my prep is taking years. And now when I get it shoots data out, then it takes hours upon hours to actually research and finalize the data.
But it beats trying to do it all at the same time. Exactly. Slow and steady wins the race.
And we're finally starting to see the fruits of the labor. Excessive fruits of labor, actually. Yeah, it's been a good it's been a good time to be in our portfolios the last like six months.
Really excited to see the rest of 2024. It's going to be nice and gravy. It's going to be beyond 2024.
But yeah. All right. So as I mentioned last week, I am starting to convert these into videos because I don't have anything on YouTube till I get that all in order.
But I am going to post a post for comments on Facebook, TikTok, Twitter. What's the other one? TikTok, TikTok and Instagram. So there's one on each one.
IG. IG. So there's one on each platform.
So whichever one is your favorite, if you have comments, questions or concerns, requests, whatever, go on to the link that's in the show notes for this this podcast going forward and drop a comment there because you can't do it for the podcast. So you might as well do it somewhere else. Any questions, like seriously, any questions and no questions, stupid.
I know that we've heard that our whole lives. But like, I'm literally trying to teach you guys skills so that you don't have to ask me questions like 10 years from now. Yep.
That's the goal. It's literally to set up a system. I don't like I understand.
It's kind of counterproductive to everything else you've encountered. Like they want you to hang around. They literally they try to make you year after year after year.
They literally make you dependent on them. We're trying to do the opposite. We're trying to make you self independent.
I want you guys to be able to like, I learned this from this dude like in 2024 and I've made millions of dollars. I don't even remember. I don't even remember his name.
That's cool with me. Right. Hopefully you can meditate on this whole.
Live the dream. Anxiety analysis, paralysis thing and get geared up for next week's risk episode, which I think is actually going to be very, very informative. Risk.
Like the game. We will see you in the next episode.