Roaming Returns

140 - Stop Overpaying: How We Actually Decide What to Buy

• Tim & Carmela • Episode 140

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Most investors obsess over what to buy.
In 2026, the real edge is when and where you buy it.

In this episode, we break down the valuation-driven framework we actually use to decide whether something is a buy — across:

  • Individual stocks
  • REITs
  • BDCs
  • Closed-end funds
  • ETFs (including the S&P 500)

We walk through real examples like UPS, Realty Income (O), Main Street Capital, USA CEF, and VOO to show:

  • How entry price impacts total return more than exit timing
  • Why yield and dividends act as downside protection
  • Which valuation metrics matter for each asset type
  • How to spot overvalued “favorites” before they correct
  • Where income investors can still find margin of safety

This episode isn’t about predictions or hype — it’s about having your own valuation framework, so you’re not relying on analysts, headlines, or hope.

If you’re preparing for a volatile 2026 and want to protect capital while still getting paid, this is our playbook.

Questions? Email Tim at debrine9@gmail.com

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.

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**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 with dividend stocks so you can secure your finances and liberate your life. 

If 2025 taught us anything, it’s this: what you buy matters — but when you buy it matters more. In 2026, sloppy entries will sting because good businesses still lose money if you overpay.

In this episode, we break down how we actually decide when something is a buy for 5 different asset types. This isn’t about vibes or headlines. It’s about valuation, yield cushions, and real downside protection.

We walk through real examples to show that even when you love a ticker, you have to pass when the metrics say “no”. 

This is how you stop guessing, chasing, or learning the hard way.

What's up guys? All right, it's been a hot minute since we did anything of like substance on this other than reviews and predictions and things of that nature so Reviewing our portfolio I'm, pretty sure because if you've paid attention the last couple weeks like one of the like one of the core themes was that Evaluations and being picky about what you buy into is going to be kind of a premium premium in 2026 I didn't say that outright, but that's how I think it's going to be So i'm going to walk you through how to evaluate a individual stock a Business development company bdc a closed-ended fund and an etf this week So we're going to go through five just examples of like how um, how to evaluate them So maybe that you can get a better entry point because what i've actually learned through the years of doing this is that there's two huge things that you have to Pretty much ace to make a lot of like a lot of returns one is Obviously where you sell it if you're selling for profits or you're selling to like a stop-loss or whatever But the most important thing is your entry point if you can get like a company like say triple m that we got triple m at like 70 some dollars if you can get it like at 70 some dollars when it should be like its value is like 115 120 dollars where you get all that price When it when it returns to the median where you get a buffer you get a a like lowering mitigation of risk so you get that buffer factor in there margin, but like there's a reason why like like some of the most respected and sought after books and articles and Conversations interviews are with people that have actually excelled at the value investing. So that's what we're Basically going to do first stock. Okay. The first one is going to be stock Individual stock this can be whatever stock you care to pull up. I just pulled up one in the portfolio ups so whenever you pull individual stock the main numbers that you're looking for Researching the stock are p the p e ratio the price to earnings ratio I do both the forward and the backward the forward being like projections like they're using like the the finances and what the company's like Guidance is issued to like predict what the price to earning price earnings ratio will be in the in the future And the backward is the trailing 12 must say sometimes it's usually called the trailing But I just you want to do both the forward and the backward you're also looking at price to book The price to book ratio the price to sales ratio the yield because i'm a firm believer if you have a Good enough yield cushion. You can pretty much get in anywhere and be okay You're also going to look at earnings per share both verified and projected earnings per share. You're going to look at debt and revenue um, I know there's other things that people look at but that's Majority what I look at right there So for ups the the p e ratio backwards the trailing was 15.34 And the projected forward p price to earnings is 1460 So then whenever you pull that, um, you have those two numbers and you put that up against what the sector average is ups in air logistics and transportation and freight and stuff like that So the the sector average is 18.02 and that's super important You can't just say a p e and compare it to any different sector Or popular stocks and stuff because they're not you're not comparing apples to apples That's something like a lot of books do not differentiate There's two there's two things that you want to I always compare. I always compare it to the sector And the other one which I've actually started using Ai for is i'll actually start comparing like itself with this five-year price to earnings ratio So like I would an ai would type in like, uh, what is ups's? Last five year like five like the the last five years of trailing price to earnings The reason you're doing that is if say five years ago ups was had a had a pe of 17 Well, you know its current pe is a 15.34. So, you know, it's actually undervalued compared to itself The reason I do this sector is because then you're comparing it to like how it How it compares to all of its peers so you can do both You should do both Now the thing to know to remember here is the backward price to earnings ratio Measures a concrete data of an earnings price when compared to its verified earnings like this Like there's no this is why most people actually whenever they say pe it generally means the trailing because it's like verified data For pe ratio measures projected earnings when compared to current price, which is not actual data So that's crystal balling. So that's why you do both So, um what we're actually doing when we do that is we're looking at the current price of ups Which at the time I did this wrote this up was 101 dollars and two cents When compared to its reported earnings trailing and estimated earnings over the next 12 months forward So as soon as you understand what the difference was the trailing is its reported earnings The forward is its estimated earnings based on Fallible people fallible people and not being able to predict any of the economic stuff or like whatever. None of that Is reality yet? So it's vaporware If the forward is um higher than the trailing it could mean either Overvaluation or higher growth is anticipated. Like that's why like you can't solely rely on the forward Price earnings because it could be either higher growth is projected or it's overvalued You don't know you're just guesstimating. That's why you have to pull in other data and like some of the people that put Into that factor or the experts they put into that factor. Some of them have insider knowledge. Some of them have Are missing information that they need to have that's going to contradict that insider information that they do have I think a lot of them take into consideration the macros and economic stuff that's happening I know that we do because you've said multiple times like they're predicting this but I actually think it's probably going to be more in line with this so it's Based on x y and z. Well, everybody has their own like, um, equation that they come up with it's Almost like I hate to say because a lot of people don't want to do it But it almost behooves you to come up with your own equation If you're like if your livelihood depends on having enough money in retirement you probably should be doing creating your own ways to evaluate and Rather than relying on other people I we may I try my best but i've missed some I mean camping world, Icahn, you know, I have I have a list of Circumstances that we would have never guessed were happening And a lot of the companies don't want to disclose some of the things they're doing behind the scenes You have no idea what's going to happen in the year going forward You only know what has happened and you just try to make a good estimate and that is life Okay, so we just if the ford is higher than the trailing Obviously, like we said just mentioned overvaluation or higher growth is projected if the ford is lower than the trailing it generally But not always means earning growth is anticipated It also can mean that it's undervalued So again, but like it's easier to just accumulate as much data as possible Like I don't know like like think of like the cookie monster data data data data data data data That's just just me yeah, the more input you have the more you can make an educated decision and the more you'll be able to see red flags or conflicting information and ask questions of why You might be able to make sense of some of it and other stuff Like you'll get a spidey sense signal that says hell no or i'm willing to take that But then they we don't solely just go on priced earnings because that would be foolish So we have price to book which is for ups is 11.34 and we have price to sale Which is a 0.96 a price to book measures how much the market values a company compared to its net assets assets minus Net assets is assets minus liabilities So basically how much it's worth if they had to liquidate right now Generally If the price to book is less than one is undervalued price to book over one means do more research to verify or it's overvalued but like if it's a Established company that like the Experts love the price to book is almost always going to be more than one Right because good companies are always growing and in order to grow you need r&d and in order to do r&d you need money Therefore you take out loans So those are the ones that usually have higher debts because they are Utilizing it to do more growth and they go through cyclical phases where they have higher debt And then they actually have growth and then higher debt and growth and it just it's just how the the nature of the beast with that So to summarize it price to book measures net worth of a company compared to its current price How I break it down like so you're willing like the the people that buy ups are willing to pay 11.34 for one dollar of net worth of ups Why are they willing to pay so much for one dollar is what you have to actually? Detective around and figure out why well, it's it's freaking ups, right? It's not going anywhere anytime soon. So they know that that they know that it's going to be here in 10 years Um, unless some crazy shit happens unless we have an uber situation Price to sales on the other hand measures how much you can expect to pay for one dollar of revenue from ups So one is one dollar price to book is how much you're willing to pay for one dollar of net worth and price to sales Is how much you're willing to pay for one dollar of revenue? Um a lower price to sales could indicate ups is undervalued. Whereas a higher price to sales would indicate overvaluation Um because it's at 0.96 you're willing to be willing to pay one dollar for 96 cents in revenue Which is actually a pretty good pretty good measure so in a nutshell price to book measures net worth of a company minus I'm, sorry compared to its current price price to sales measures total revenue compared to current price. So like one is There's a slight difference net worth versus revenue There's a difference net worth is like revenue minus liabilities. Whereas revenue is just revenue So the price to book looks super high but price to sales looks pretty good on ups price to earnings looked Really good on ups compared to ups and price to earnings looked really good on ups compared to its peers So then you dig a little bit deeper and you come up with the yield the current yield of ups is 6.49 Or six dollars and 56 cents per share, which is a lot now the one thing that we've been Touching on or we talked about is like the yield cushion the yield protection Whatever like whatever the people use to describe it is that's it's not talked about enough Basically, it means how much you can miss the entry price for and still be profitable for the next 12 months If ups has a six dollar fifty six cent dividend projected for the next 12 months We cannot know for sure since the dividend is cut or raised but like dividend eps is a dividend grower. So we don't know exactly. No, so 656 is just a projection It's not actual but it's going to be Between 652 and 660. So I just did the average 656 This means if we bought ups the current price of 101 into 101 dollars and two cents We have already built in a six dollar fifty six cent buffer to actually have a side like a zero return for the year So if it drops down To 94 dollars and 46 cents, which is that full thing? You'd still be at like a break-even or positive If you own this if you do total return and that's another thing we brought up previously total return To me is like when you're doing dividend investing and income and income investing total return is way more important than Price share appreciation or depreciation, right? You get both but this is definitely a way to kind of protect you So with the 6.49 percent yield you have a protection built in that you can miss your entry price up to 94 46 and still even if it traded perfectly sideways the rest of the year at the end of the year Even though you're down six dollars and 55 cents You're technically in the positive for one cent because you have the 656 built in and your yield cushion, right? And other stocks that are just non-dividend stocks do not have that built in So this makes dividend investing really really nice if you incorporate this. Yeah, if you incorporate this strategy in it's very nice Now where it gets like wonky is we'll get into it down the road with the high yield ETFs and stuff like that like you're getting You know 20 some dollars in dividends. Well, like that doesn't necessarily equate to a good deal Those are different animals Like we're talking companies that actually have assets the nav erosion could be way more than 24 Yeah, but we're not we're not talking about those We're talking about ones that actually have companies assets incomes liabilities yada yada people who believe in products And then the so that you got all that everything looks good so far then you would actually dig into the earnings per share like the earnings per share actually has again the two The two sides you have the verified of 647 that was the 12-month trailing earnings per share And the last quarter was $1.74 and then you have the earnings per share projected for the next 12 months of 686 And we project to 19 2.19 cents in quarter four. So again, you're covering both sides You're covering the actual concrete data with the verified earnings per share of 647 But then you can see that the earnings per share is projected to grow to 686. So they are actually projecting ups to grow in 2026 and generally with eps and Specifically, it's normally a 12-month whenever you do the verified versus projected. Yeah With all that data what that tells me is a lot of useful information first You can see that ups has been making six dollars and 47 cents per share over the last 12 months And its most recent earnings was $1.74 per share in the last quarter With the dividend of 656 per share or 160 Dollar 64 per share per quarter. You can see the dividend is covered. That's that's huge You have to if you're doing dividend investing dividend growth stock investing You have to make sure that the the money that they're making recouping Earning like I don't know what the right word is covers the money that they're paying out It's like it's basically like your household checkbook Like if you have a paycheck for a hundred dollars and you're sending out bills for 120. Well, that's not good Yeah, right You're gonna end up in debt in arrears and with interest and all sorts of stuff and it just like bodes and bad things to come in the future So that was the first like the first part you just actually use the verified The verified eps to verify that the the earnings is actually covering the dividend The second part when you do the projected stuff when you're looking at the projected eps, you can see that the 680 6 or 2.2 dollars 19 cent earnings per share will again cover the dividend But you can also see that the earnings are projected to grow by over six percent in 2026 so that's very useful information the earnings per share actually gives you some of the most useful information if you actually break it down and Start like tinkering around with it So everything looks fucking fantastic on ups so far Then you go into the debt versus the revenue the debt is currently at 21.3 billion That's from their earnings the latest earnings report. There's so much debt. The revenue is 91.1 billion Now the reason I look at these numbers is to see where the company's main finances have been in the last couple of years I don't just do like a one-off. I actually go back like three or four or five years Uh the debt of 21.3 Billion seems ridiculously high, but it's not when it's compared to the revenue and it's not when it's compared to its historical debt It's historical debt was actually 25 26 27 billion going back So it's actually cut expenses to bring it bring bring the debt down to 21.3 billion Now do you do like a ratio of how much the revenue would take to pay back the debt in so many years and it's under A certain threshold. No, I just do it and like I mean I do the ratio, but I don't like I've read books where it's too high. I just don't buy into it. Well, so what's too high? That's the thing that you know that from experience but from like somebody who's coming at this who doesn't know So I think one of the books I would think that uh a few that they had twice as much debt as revenue That would be pushing the the the boundaries They also then again It also depends on the the investment like our reits and bdcs and banks and everything They're going to have higher debt just as a given but if it's like a normal stock like ups It would be like probably one-to-one. I know you I know that kind of established company I was gonna say I think Some of the books I read were talking about they have to be able to pay the debt back based on their revenue within like a three to five year range so like 21 times five would be 100 billion and that would happen within the five-year mark is essentially like Yeah, I don't know that standard but for whatever that what I do is I take the debt versus the revenue So ups is a debt to revenue ratio of 3.28 to one For every dollar of debt ups generates 3.28 in revenue. I literally just divide the debt into the revenue Okay That's actually I think a smarter way to do it I like this measure because I like this measure better than what she was talking about what other people talk about Better than the debt the one they always bring up is debt to equity which is liabilities And divided by the shareholder's equity I don't care about that because I want to know how much ups makes versus how much it borrows pays out Um with the debt to equity you learn how much ups will spend but you also learn which to me Is not useful is how much investors have been have invested. I don't care So what that basically is saying that to me debt to equity is basically saying hey we have um 10 billion dollars in debt, but our shareholders have invested 12 million dollars into the stock Who the fuck cares how much are you making? Right, right If you're not profitable who the hell cares what you put into it, but that's my opinion. I could be wrong I mean that might be a little different on a startup because startups don't really have a lot of incoming they have more outgoing So I could see that but ups is extremely established Look, there's I know there's a lot of people that prefer the dd de ratio I don't I just like I actually like to just divide the debt by the revenue Makes sense to me. I concur with that statement statement um What I whenever you actually go into the financials that you can also see that the revenue increased 7.7 over the past four years and the debt has shrank 13.8 over the same time frame The only issue that I come up with with either the debt to ratio or the debt to equity Equity ratio is that they're these are past figures not current data So like they you can't literally just solely rely again rely on the debt to equities or debt to rate a debt to revenue ratios because it's past That's not present. Well, how past is it? It's just up to it goes up to the last quarter like a few. Okay, so it's a quarter behind lag. Yeah, okay So what we were saying before past was better data, so it is concrete data, but again, it's not current data So but like a few but like that's why I brought up all these different things like the The pe the yield the price to book price to sales the debt The rate the debt the revenue because if you add all that up you get a clearer picture than if you just took any of those individually And in my opinion you get ups a stock that is super undervalued the pe ratio both forward and trailing that indicates There's room to grow the price to sales indicates it's undervalued price to books is um high but it's it's Historically the price to book for ups is in the high teens to low 20s and it's currently at 1134 So when you compare it to where it's been it's severely undervalued Historically the yield of 6.5 is way above the historical dividend, which was normally between two and a half and three and a half percent Historically, so again the dividend the dividends like twice as much as it normally is worth for this company All these factors indicate ups is undervalued the extent of how much a ups is undervalued is for the market to determine We just want to verify that the investment is undervalued plus we also have that built-in cushion of 656 but I think like if I like if you said it got into my head how much is ups undervalued by I'd say it's probably Should be 145 to 155 and it's trading at 101 So that's how I do. That's why we bought it Yeah, we've been in it for a hot minute and that's why we bought it and I keep adding to it Every time it dips below 100. I keep buying more shares And again, if you haven't listened to past episodes the last couple weeks if you do get in and it does start coming down Turn your drip on and let it dollar cost average down you minimize Or you start lowering your buy-in price cost basis, whatever the hell it's called and then Your yield goes up the more it goes down too So it's like you're you're actually like dividend stocks are so amazing because it's like all the things that are negative about regular Growth stocks like it's the opposite for dividend stocks. It's pretty fantastic But you also have to go in and verify why is it going down? Why is the yield going up? Like you have to like is it just a Public sentiment is it like a fatal flaw in the current Policy of the company like there's a lot of there's a lot of things that go in economic climate a lot of factors that go into it, but like if you know, like if you can pinpoint like what a stock is worth if you just Block out all the noise and you're like, okay Well, this stock is worth a hundred dollars and it's currently trading at fifty dollars All the noise is just noise and that's what warren buffett does. That's what the great investors do They always buy contrarian sentiment when things are on sale they just ignore ignore the noise, right? Come up with your own plan do your own research I mean it sucks but it's like again if you're like livelihood depends on I would think that you'd be doing it because like I know I mentioned this before Nobody in your life is going to care about your retirement as much as you do Nobody not one person you can do a thought you can do a fiduciary You can do a financial planner. You can do your friend or family. You can have know an accountant It doesn't matter none of them give a shit about your retirement as much as you do So, why would you rely on them and let them have that control over your future when it's most important to you? Okay reets I'm going to use I was smiling about this one because this is one of the controversial ones. I'm going to use the um Everyone's favorite re is o So we're going to like we're going to dig into o stuff and we're going to identify whether it's a good investment based on valuations So the first thing you have to know about when looking at reach you're looking at different metrics You're looking at some of the same ones, but you're looking at different ones. You're looking at um funds from operations ffo you're looking at actual funds from operations a ffo and you're looking at Nav, which is net asset value net income and payout ratios are the other key ones Reach because of depreciation makes using traditional metrics like eps and pe not the best course of valuation you can still use those but They won't yield as Specific as a result as you use the stuff we're bringing we're going to bring up here But it's a starting point You still use them as a starting point all data more data the better You still want to look at that debt and revenue. You still want to look at the yield you still want to look at like I mean, I still look at the price to earnings versus the peers, but they were um for oh the ffo for the in the late of the the last But I don't remember what quarter was was a dollar seven The affo was a dollar eight and their net income was 35 cents You find all that in their earnings reports. They'll actually like for reads They're actually pretty good when they'll just like when they get earnings reports I'll be like here's how much our ffo was here how much here's how much our affo was and here's what our net income is So that's you might not even have to go into there. I was gonna say I wouldn't it'll be like a ticker on like the news Thing they'll be like, oh re oh has a ffo of 107 net income of 035 You can probably just google search and it'll pop up because everybody else is looking for this information, too So like you don't have to actually go read those really dry earnings reports you notice the reason that we didn't bring up eps when talking about reaches because ffo and affo are variables that are a lot like Eps when it comes to stocks that indicate how much money reads are making Ffo actually adds back in Depreciation of the properties held and it also adjusts for property sales which generate a much more accurate operating cash flow for a read, right? The affo is a more specific number which accounts for rents collected and fees such as roof repairs carpeting and other ongoing property upkeep fees So the affo gives a much Better indication of whether the dividend is truly covered by cash flow So like whenever you're comparing the dividend payout you want to actually run it up against affo not the ffo or eps Or you can definitely not eps, right? Because we get yelled all the time because like I do my top 10 thing and i'm like well Here's how much like blah blah blah people are like you can't use those metrics I'm, like I know but like whenever you're trying to type something up into it into a chart You can't like have a chart. That's like a billion freaking characters long. I'm like, well, this is a reit So we're going to use columns f g and h you just have to like you gotta like you gotta start somewhere Right apples the apples start somewhere and then do more research if something looks good to look at deeper, right? So with o the net income was only 35 cents the last earnings report and the dividend is 81 cents for the quarter And this has been a continuous thing has it just looking at the net income You most likely would say no way the dividend is covered but adding back in numbers such as depreciation rents property sales Etc that you would with affo you see that the dividend is more than covered by the cash O has on hand at 108 to 81 There's see that you see that's a huge difference like you literally just look at the net income And you don't look at the affo you would never ever ever invest in o because it doesn't even come close to covering 81 cent Dividend, right? So let me say that's a huge difference between a payout ratio of 131 Using the dividend versus uh divided by net income and a 75 percent using dividends divided by affo Just saying like that's why you actually have to find these numbers when you're dealing with the reit Okay yield is 5.65 5 Historically o has had a yield under 5. If you go back 30 years, you'll see this it's seldomly been above 5 Now this is not suggesting That I was overvalued based on yield, but it's an indicator that hey Maybe you shouldn't you should double you should look at other factors look at other variables because this dividend is historically high And granted they keep raising their dividend But the if they raise the dividend the price should go up as it's called a dividend Magnet by some people dividend ladder by other people But like if the price if they raise the dividend the price should go up to reflect the new dividend, right? So the yield stays the same the fact that the yield is historically high is a little bit concerning But there's there could be reasons the interest rates market conditions stock price, etc Which would explain the difference if you combine a high historical yield with a higher price to sales Remember ps means how much an investor spends for one dollar of revenue In o you're paying 941 for one dollar in revenue and remember in ups it was 96 cents. So you're paying you're You're paying a lot for one dollar revenue in o so like if you look at the historically high dividend But the pretty like it's not historically high, but it's very very high price to sales Just i'm starting to see that there's potential that o is overvalued, but we're going to dig further dig for it dig further the debt for o Uh at the end of the last earnings, which would be the end of the I got This one the debt is actually yearly. So this is in 2024 because they haven't reported for 2025 yet. So at the end of 2024 the debt was 26.3 billion The revenue was 5.3 billion. So that's so this we just mentioned again. We just mentioned with ups, right with reeds It's going to be high. It is going to be almost always have high amounts of debt like Because their entire business model is based on having assets Utilizing debt and then utilizing that depreciation and the flow of stuff to actually like drop taxes and things down That's the nature of the beast if you've ever been if you do any like Like do basic research like dude, you could just type it into google You can go into and just ask what is the historic of for reits? Generally, what is their debt to debt to revenue? It's in the 0.25 to 0.33 range Meaning that for every dollar of debt you can expect to make 25 cents to 33 cents in revenue O comes in at 20 cents So that's a lot lower than that range this suggests. Oh is slightly overvalued compared to other reeds having I've researched again not saying I would I know all read numbers But I do know a lot I do know a lot of reads because that's like we do a lot of reads in our portfolio in both portfolios Um debt has increased almost 200 in the last four years that again It's not itself not a bad sign as we borrow money all the time And right because they have to buy more assets to make more money The problem with that debt though is you have to look at when it was borrowed So now like I know like I know but if they borrowed it in the last five years, they borrowed it at elevated interest rates So the so that their interest payments are going to be a lot more so you have to understand like you have to be Somewhat cognizant of the interest rate climate like the most of the debt that o has picked up It went up 200 the last four years. That means they borrowed a lot of money at interest increased interest rates. That means Their In theory, it may play out differently, but in theory their margins are going to shrink because they're going to be spending more money to pay back the debt that they borrowed at elevated interest rates. Now, will they pass it on to their tenants? I don't know the answer to that. I don't know how that works. Do you really think that that's possible with the inflation and everybody already being pinched? It's possible. They'd have to really think about that though because they might actually drive out their tenants and then it takes a lot of time and actual money to get new tenants in, cleaning, repairs, the whole shebang. So, these are things that business owners from the real estate perspective have to think about before they make these decisions, just like if you were a freaking renter or a landlord yourself. So, the debt increased 200% in the last four years. Revenues increased 231% over that same period of time. So, it's not terrible as of yet and so far not so bad. Or the numbers suggest you're overpaying is here. Net income has decreased 2% in the last two years. Debt has increased 45% in the same time frame. There are 32% more shares on the market during the same time, meaning you're paying more for less and net income and debt are not in a good spot. I have never seen anybody talk about the amount of shares that they owe ads. They owe ad a lot because everyone's under the impression because they increase their dividend every month for the most part that we'll just keep dripping it. We'll just keep making a lot more money. They add a lot, 32% more shares. I haven't heard you talk about that. So, they have a lot of share dilution. 32% more shares in two years is crazy. Is that normal for REITs? No. No, that's a super high number. So, that might be how they're hiding some of their red flags because I bet you if you actually took that out of the mix, those other numbers would be worse than they actually are. That could be a one or two-year thing. It literally could just be like, oh, something shit happened in the last two years where they just had all this stuff go down or they can be in for an awesome 2027. I don't pretend to know enough to know what O is going to do in 2026, 2027. But even though I think the experts are trash when it comes to this stuff, sometimes they do get it right. Currently, there are 21 analysts who cover O stocks. So, if you pull up their stuff, there's 21. If you go to Yahoo Finance, you'll see 21. If you go into Fox Business, you go into CNN Business, whatever, like 21 analysts are covering the stock. Only six suggest buying. The rest are holds with one person saying to sell. That's pretty low for this climate because generally, the experts are always buy, buy, buy, buy. It's like 98% of experts don't recommend selling ever. So, that's why I don't put any faith in what they're saying. But I don't know enough about O to know that. So, I actually have to pay attention to what they say sometimes because they're actually going to give you their earnings projections and they're going to give you the debt projections and stuff like that. But the fact that there's only six suggesting buying when everybody says buy, buy, buy, buy, buy, buy. That is interesting. The other thing here is there are other REITs to buy. And if a REIT that you're looking at has potential questions and there's better options, why would you put your money in the one with questions? Well, I think it's overvalued based on this historical dividend. And I think you're not getting your money back because based on a dilution with the 32% new share. So, I wouldn't touch this stock. Right. Which is why we do not own it. And we have not owned it the whole time we've been doing these updates. I wouldn't touch it. And I know people give me shit all the time like, oh, it's like the dividend that's the best REIT, blah, blah, blah, blah, blah. No. The data suggests that there's something going on here that it's going to come back and bite you in the ass at some point. Well, and the thing with a lot of times when people are trying to, I guess, cook the books. Not that that's necessarily what's happening. Either they're struggling and they don't want their people to know about it yet and they might be able to get it underhandled and might turn around and everything will be fine. But sometimes look at your own personal situation. Sometimes you're trying to keep things afloat and at some point you can't anymore. And then it gets exposed. So, sometimes those information takes time to actually come out and actually be seen. Actually, if I'm going to say something, I think O's extremely overvalued actually. So, there you go. I think it's probably 10% to 12% overvalued. But those are, I mean, that's not really the point of this. It's the fact that this is how we evaluate, this is why we evaluate, and this is why we wouldn't buy this one. But look at all the data I just brought up. That's why I think it's extremely overvalued. So, BDC, everyone's favorite. BDC is Main Street Capital. We were in it for a while. We sold it pretty much at the peak and haven't got back into it yet. So, let's look under the hood of this one now. BDCs are generally income-producing investments with a little bit of price appreciation. It's possible. You want to look at the NAV, net asset value here. You want to look at their NII, which is their net investment income, and the usual data. You want to look at the price-to-earnings, the yield, debt, and revenues, things of that nature. But mainly you want to look at NAV and you want to look at NII. NII is like the EPS for BDCs. The NAV price for Main Street Capital is $32.78. Based on the last time I saw it, Main Street was above $60. So, you're paying twice as much for that. That right there should be your first red flag. Red flag. Holy hell. Probably got out of it. Net investment income the last earnings report was $1.03. So, those are the two numbers. Remember those. When you're looking at the NAV, you must also take into consideration the price-to-NAV ratio as well, especially when it comes to BDCs. This is super important with BDCs. You can't just look at NAV. You actually have to look at the price-to-NAV. I just brought up why. It's trading at $60 and it has a NAV of $32. That seems ridiculously high. So, Main has a NAV of $32.78, and when I wrote this up, the current price was $61.75. That means the price-to-NAV ratio was 1.88 to 1. That means for every dollar of NAV, the price reflects $1.88. That's crazy. That's crazy high. You want that to be around 1. So, you're paying 88.38% premium. So, if we equated this to a bond, if you bought a bond over $100, it would be $188, something like that. The difference is they would call it back and Main Street is just like, yeah, just keep investing. But that's a risk. Just think of 88% premium. Just think of that. That's insane. That's paying almost double for something. Would you do that at the grocery store? They did during COVID with toilet paper. So, it's like, I guess, circumstantially, things happen. It's high, but when you look at historical data, you see that the current price-to-NAV ratio is the highest it has ever been. In the last year, Main Street's price-to-NAV has been higher than it's ever been in the 30-some years it's been on the market. So, that is a red flag number one. In fact, the average price-to-NAV ratio since Main Street went public, I think it was 36 years ago, is 1.48 to 1. So, you're at 20% over value just looking at the price-to-NAV. So, then you have to look at the end of the financials and determine if that high price-to-NAV dictates price growth or price loss. You would like to see the NAV increase in the long term. Main Street has had a NAV of $31.65 one year ago and has a NAV of $26.86 three years ago. So, that means the NAV is actually increasing. It's increasing quite a lot, actually. That's like 25%, 26%. In fact, Main Street has seen an increase in NAV for every quarter since the first quarter of 2020. So, we came out of COVID and Main Street has just been banging it out. Main Street Capital has a net investment income over $1 since January of 2023. However, Main Street has never had more than $1.07 in NII since it went public. So, those are important. With BBCs, you kind of want to look at the historical data with the current data to try to get a projection of where it's going, what the possibilities are going forward. What I'm seeing is this shit is overvalued. But anyway, the price-to-earnings is $15.85 and the earnings per share is $6.03. We mainly look at these metrics to see how Main looks compared to its peers when it comes to price-to-earnings and if there was any earnings growth in the last year. When compared to other BDCs, a 15.85 price-to-earnings is not bad. The average for BDCs is 24.03. So, again, this is why you don't just look at price-to-earnings. You're like, well, fuck, it's like 18% undervalued compared to its peers. So, we'll get into it. This is where you dig in and you find that the five-year average price-to-earnings for Main was 13.05 and the 10-year average was 13.83. So, this is an area where when you compare it to the sector average, it looks really good. But when you compare it to itself, it looks really overvalued. On the earnings per share side, the 6.03 is the highest EPS Main has ever reported, which was 5.85 back in 2024. So, the earnings per share are growing, but the NII is not growing. It's not growing as much as the earnings per share. But the fact that this sucker is at least 20% overvalued. But anyway, then you want to dig into others. You don't have to do this once you determine, well, this is 20% overvalued, but I did it anyways just for illustrative purposes. The debt is 2.81 billion. The revenue at the end of 2024 was 541 million. So, that's a 2.88 to 1 ratio, which is not ideal. Not ideal at all. BDCs on the whole have higher amounts of debt. So, that in itself is not a reason to eliminate Main. But if you combine all this, I feel that Main is overvalued. I don't know why I have that in there. The 1.88 price-to-NAF plus the price-to-earnings average makes me think there is a correction in share price for Main coming down the road and it's coming down pretty quickly. It's not sustainable what they're doing. I know this for a fact because when we were in Main, the price-to-earnings, the price-to-NAF ratio, once it hit 1.85, I said that's way too high. So, I sold all of it. People thought I was crazy. I sold all of it because a lot of the experts say this is a core holding. I was like, dude, I know I can get into a better price. Once I sold out of it, that price-to-NAF ratio dropped down all the way down to 1.5. I know I can get it for cheaper than that too. So, I'll get back into this at some point. It's just overvalued right now. I think probably $54 would be where I'd be willing to buy back in. And this is a prime example of how we turn capital around. So, it's like you can kind of get a hybridized strategy of growth stocks with the dividend approach if you actually pay attention to these numbers. Because if you hybridize your investing strategy to encompass the value investing with the dividend approach, you're able to then get some of these capital gains and then have extra money to dump into the lower stuff to then get more dividends. And it helps you actually create kind of like this dividend churn machine. None of the other ones that they say, if you're in a dividend stock, just make sure, check in once a year and make sure everything's good financially. Like, no, for me, like you... You can do that. But because our time horizon is so much shorter than most people's 30 years, this is how you expedite and exponentially grow your dividend income. It just doesn't make sense. Without having to work an extra job. Why you would let something that's like 20% overvalued rebuy. Right. It doesn't make sense, like logically. And a lot of people were selling their houses during an inflated housing market for the same reason. Why would you sit on an asset that's like... Like people say that real estate investing is a core asset. But if the market is stupid high, why would you not sell if you have the opportunity to do that? Yeah. You could always look at just rent for like a year or two. Right. Until things drop back down. Wait for the real estate market to bottom out and then you can buy a house... Absolutely could. Of equal size and probably the same neighborhood for $100,000 less. I don't know. It's just crazy to me that people do that. Anyway. Closing to funds. We're going to do the closing to fund USA. So patriotic. When evaluating closing to funds, there's seriously... There's only two really things, two things that you really need to look at. The price to discount rate reading and the historical price to discount rating. I know it sounds simple. It really is. Closing to funds are probably the easiest things in the world to evaluate. The dividend yield only becomes important if you can not make heads or tails about the discount rating. And what I mean by that, if you say that it's like 8% discount, but it's like 7.5% historical, what would you do with that? Is that undervalued or is that fair value? That's what I'm saying. That's the only time the dividend yield becomes important. You don't know if it's undervalued or fair value, but it's not as important as it is on other stuff. So we look at the current numbers for USA. We see that the premium to discount currently is at a negative 8.32%. And we see that the historical premium to discount is negative 6.61%. So we know just looking at those numbers that USA is undervalued. Now this is where it gets in the gray area because how much is it undervalued? If you looked at that, you'd say it's like 1.7% around there undervalued, but that's, I don't think that tells the whole story, but that gives you a good starting point. So when you're looking at a closing to fund, all you really want to know is that you're not overpaying because closing to funds have such high yields. You just don't want to overpay. The premium to discount rating will tell you that for the most part. What it tells you is the current NAV divided by the current price. So if you add up all the assets that USA holds and you divide it by the current price, it comes out to that it's negative 8% from where it should be. If the number is negative, that means the closing to fund is trading at a discount. If the number is positive, that means the closing to fund is trading at a premium. The mistake a lot of investors make when dealing with closing to funds, and I do believe this is why people avoid dealing with closing to funds on the whole, is a current discount does not mean it's a good closing to fund to invest in. You must look at the historical number. This is like when we were comparing the PE to itself. That's what you're doing whenever you're doing this. You have to look at how it compares to itself. It doesn't matter. On a whole, it doesn't matter. What does negative 6% give you if you don't compare it to historical numbers? You'd know that, I don't even know, eggs probably be a really good example where eggs were at a certain price and then we had that massive thing we had with chickens where the prices went ridiculously high and then they've dropped down, but they haven't gone quite back to normal yet. We were just like, yeah. There are so many. I bet you at least over 80%, it might even be 90% of closing to funds that have a discount to their NAV price, but you have to identify if it's overvalued still. A discount of negative 5% means nothing. Over the course of the, since its inception date, the closing to fund, the discount's been 12% and it was 20 years ago. Negative 12%. For 20 years, it was at negative 12%. In 2025, it's at negative 5%. Well, people look at that and say, well, it still has a discount of negative 5, so I'm still only paying 95 cents for a dollar worth of goods. Then it could drop down to that negative 12% again. Historically, because it's historically over so many years, the mean is negative 12. Probability is high that you're going to lose 7% in NAV. The reason that USA is undervalued is not because it has a negative 0.83% discount right now, it's because it normally trades at negative 6.61% discount. It's been around since the 90s. This fucker's been around for over 30 years. The tricky part is if you come across a newer closing to fund, so you don't have that track record of 20, 30 years. If you have 30 years of data and the median is negative 6.61 and it's currently at negative 8.32, the probability is pretty high that it's going to go back to the median and that means the price is going to go up. Even if it was a newer one, it wouldn't stop us from investing in it. We would just put a lot less into it because of the lack of history. That's how you do that. The yield of USA is 10.67%. Like I mentioned previously before, the absolute beauty of closing to funds is that they normally have super large yields, which means it's way easier to actually have positive returns with closing to funds. This is probably the easiest thing to invest in where you can actually see positive returns year after year. Even if you whiffed on this one and did get in, if it was overvalued, you still have that protection of that 10%. Yes. 10.67% yield gives us almost an 11% buffer built in, but because we know from historical data that USA is 2% undervalued, I would expect to make no less than 10.67% over the next 12 months on this one. I would expect to make the yield on this one. I was going to say, and actually probably get price appreciation during that time. Okay. Now the ETF we're going to do is Boo, because everyone always talks, they always like schmooze up on Boo. You still have to look at the premium and the historical discount when it comes to ETFs. Does Boo even have a yield? It does. It's dirt. It's like a less than 1%. Is this even a good example? But it's how to evaluate the ETF. Okay. So you still have to look at the premium to do the historical discount. And the reason you have to do that, even though the share prices are updated at the end of the day, at the end of every market day, they'll reset that so that it'll be zero and zero. You can still find deals if you do this. If you buy during the day, you can be like, oh, well, it should be at zero and I'm getting it at 0.01. So you're getting a one cent discount, but it's not near as important. Um, where you want to really look at for ETFs is the expense rate. Okay. Then this is a metric that you want to be familiar with as most ETFs as the average passive managed ETF have a range of 0.14 to 0.15 as their expense rate. And for actively managed ETFs, the average rate is 0.43 to 0.44. The only reason you want to look at that is if it has a smaller yield, say it has like a 3% yield and it has an expense rate of 0.5. Well, that's not really, you're not like, it doesn't, obviously the fees are paid out before the yield is made, but you want like, I wouldn't be willing to pay 0.43 for an actively managed ETF unless I knew I was getting some, some, some, some income in return. Right. Well, well above it could be, Oh, it doesn't give you shit for dividends. Why would I want to pay more than 0.03? It literally is. That makes no sense. That's why you have to look at the, not because you're trying to find the cheapest expense rates, but you want to make sure the expense rate actually means something when it comes to the distribution yield. So is this active or passively managed? Passively managed. I think they just said like the, I think it's the S&P 500. So like they only update it whenever a new company comes into the S&P 500. So is this saying that ZOO costs you more money because of the management fees than what you make by holding it? No. Okay. Yeah. You do want to make sure that your yield does equal more than the expense rate. Otherwise that's just foolish. Right. Another area that I look at when looking at ETFs is the 52 week range. And for view, it's $442.80 to $636.80. I always look at the 52 week range. It's just a barometer of how the ETF has been performing in the last year. And that doesn't mean just because an ETF is trading at or near it's 52 week high, that it would be disqualified. But I just want to make sure that thesis for buying it is sound. And generally when I do ETFs, I like to pick them up, not when they're at the bottom, not to what, like for ZOO example, I wouldn't pick it up if it was trading at like $444. I would wait to hit the bottom and then bounce up to like $460, $470 before I get into the ETF to make sure it's on the upswing. Right. Because a lot of ETFs actually do just trend down, down, down, down, down, down, down. So avoiding that. And then I also want to buy an ETFs like normal ones, not the high yield ones. Obviously I look at the 20 day moving average for view at $629.06 and the 50 day moving average is $624.48. I look like glances at that because it gives me an idea of like where I could get it as opposed to where it's at. Like 50 day moving average, I could go a little bit above that. So my entry price, if I was buying ZOO currently, it would be probably about $627 with all this data. You can determine real quick if an ETF is in an upward trend bullish or a downward trend bearish just by looking at those numbers. And this one's on an upward trend. It was at $624.50 days ago. Now it's 20 days ago, it was at $629. And then it's currently, I forget the current price, $632 or something like that. Okay. Yes. You always have to look at yields. The yield for VOO is 1.12%. I wouldn't invest in this personally because I'd... Better options. This just lets you know your wiggle room. And with the entry price with VOO, you don't have much room for wiggle room. So you need to make sure that you're either damn sure about the S&P or okay with potential loss. That's all. But you can get like a lot of good ETFs have like the three to 6% yield. So you have a little bit of buffer room. What is VOO? It's an S&P 500 that just holds all the companies. So it's like an index fund. Or you have a really long time horizon. If you have a really long time horizon, what he just said is, again, the stock market goes up an average of 10% over a 10-year period. So if you have 30 years, you more than likely make up for that during that. Yes. But you also have to like, when you're dealing with most ETFs, you have to have some idea of macro trends. You don't really have too much evaluation data other than like this 52-week price, the moving averages, and things of that nature, and your yield cushion. So you have to say you're trying to get into robotics ETFs. Or robotics going to be good, powerful, money-making machines in 2026? Probability says yes. Right. So we use the ETF strategy with like AI. We did it with nuclear. And he freaking slammed nuclear out of the park by doing the ETF. Can you imagine trying to pick individual nuclear stocks and like missing them and then having the other ones go up? That'd be horrible. No. It's a lot of research. I didn't feel like it. I do enough research. Right. So ETFs do make it easier for certain things. ETFs, if you're a very intuitive person, I think you have an easier time than if you're not. I'm not trying to discourage people from getting into like ETFs. But like if you have no intuition based on like ideas and macro trends, there's a lack of data when it comes to valuations on this. A lot of people are bullish on the S&P in 2026. So they're actually really cool investing in VOO right now. Or they have a long time horizon. And it's just like an index fund where you're making 1% and that compounds over time. In my opinion,  VOO  is overvalued. S&P is overvalued. Now, you can find that by just looking up valuation of the S&P. And it's historically overvalued. And because you're only getting a 1% yield, I would wait for a better entry price. I would stash my cash earmarks for  VOO  or any other index fund ETF that you were thinking about getting into, into SBAR or THTA and let it compound because SBAR and THTA give you 12%. And they have some exposure to the S&P 500, not a lot. And that's exactly what we did with the remaining money for our main portfolio. If you watched us do the investing things, we were sitting on, how much money was it? 70,000? Yeah, 70,000. 70,000, we were waiting to invest out of that 152. I have 20,000 left to figure out what I'm going to do with. Okay. So he put some into a couple of stocks that did come into a value range, but he put a good, huge chunk into SBAR and THTA. And then what do you say? You have 20 left, 20,000 left? You got to go out and figure. Because SBAR, they just deal with treasuries and S&P stuff. And THTA deals with treasuries and S&P stuff. And the reason he's saying that about the overall market, again, we don't necessarily know where things are going, but it is just like a fractal of everything we just talked about with valuations. We do it on the micro level of each individual stock ETF, and we do it on the macro level of the actual markets. So if you apply that same strategy, it might not come to fruition soon, but it seems to work pretty much across the board. It happened with Maine, it's happened with a lot of other stocks. The next one is UAN, but I have to figure out what I'm going to do with that. So this is us implementing the strategy that we talked about. UAN is so overvalued. It's like $113. It was so high before this year, it was like $102. And to wrap this up, this is literally what we implement when we do our weekly live streams. So you'll see us putting this into practice, well, for the most part. Like the special ones, we won't go too, too in, because again, you have to come up with that list. But that's where we start, and then we actually go deeper into the different subsectors of asset class if needed, if we were going to buy them before we would actually pull the trigger. So if you want to see us live doing that, finding these stocks to evaluate, you can join the live streams. We usually do them on Tuesdays, but we ended up doing it on Wednesday this week because we were working on car stuff all day. And we had a chance to get food, so food trumps getting you guys a live stream. And we were cold and hungry. Sorry. And cars were frustrating. Cars are super frustrating because they're built with like people's tiny hands. They're trying to get into them, it's like such small hands. The one area, there was probably, what is that, a centimeter between the piece and the bolt. They need to get this stupid thing. It took forever. It's just annoying, small hand people. So next week, we are going to revisit one of the areas that people really love on the podcast. I'm currently going through a bunch of weekly stocks, and I'm picking out some of the better ones and seeing if I would recommend buying them or not. Some of the ones we haven't really talked about because when we last talked about this, it was like 66, 68, something like that. And now there's 140 of them. Like I told you, when I said that, I said they keep coming out every week with weekly pairs. So there's 140 some weekly pairs right now. Okay. So that'll be the update for next week. No idea where we'll be because I plan on leaving here in Pennsylvania at some point. We were supposed to leave this week, but I don't think it's happening. We'll see. Weather and car problems. We might be in the middle of a forest. Hey guys, we're in a forest. Probably at my brother's house. Yeah, probably. All right. So we will see you next week from wherever the heck we're at. Yeah.