Brian Stoffel
@Brian_Stoffel_
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"The Anti-Fragile Investor" | I demystify the stock market | My portfolio:
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Last Seen Profiles
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The most necessary skill in finance: How to analyze...
▪️Balance Sheet
▪️Income Statement
▪️Cash Flow Statement
Even though many professionals pay $100K for an MBA or accounting class, many can't do this.
Instead, here's an outline for analyzing all 3 in just 5 minutes:
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Revenue and income are NOT the same thing
Costs and expenses are NOT the same thing
Net income and free cash flow are NOT the same thing
Confused? Here's a quick breakdown:
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The market crash is here
Forget profits -- Free cash flow matters now more than ever
If you're an individual investor, you MUST know how to read a CASH FLOW STATEMENT
Here's what you need to know:
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I’ve read thousands of books.
In 2010, I picked one up that would change my life.
The book: *Fooled by Randomness* by Nassim Nicholas Taleb (
@nntaleb
)
Over a decade later, the 5 lessons that have stayed with me:
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Capitalism is brutal
If you invest, you MUST know how to identify a moat
Here are 9 financial “rules of thumb” that Warren Buffett uses to tell if a company has one:
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Accounting is the language of business
But, it’s FILLED with incoherent jargon
Here are 8 of the most confusing terms explained in plain English: ⤵️
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Accounting is the language of business.
If you buy stocks, you MUST learn how to read a balance sheet.
Here’s everything you need to know:
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Some stocks are STRONG BUYS when they fall
Other stocks are SELLS when they fall
How can you tell the difference?
Here are 5 financial yellow flags to help you out...
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Capitalism is brutal
If you invest, you MUST know how to identify a moat
Here are 9 financial “rules of thumb” that Warren Buffett uses to tell if a company has one:
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I only own 17 stocks.
Here's each one and why I own it...⤵️
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Interest rates. Inflation. Recession.
Moats matter more now than ever.
If you invest, you MUST know how to identify them.
Here are 9 financial “rules of thumb” that Warren Buffett uses to tell if a company has one:⤵️
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What is EBITDA?
Here's everything you need to know about this confusing accounting word:⤵️
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When I research a company, I spend most of my time thinking about MOATS.
There are 5 in particular that I look for…
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Growth stocks are ⬇️ huge. Which are bargains today?
To find the best, you MUST learn how to read an income statement
Here’s everything you need to know:
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The market crash is here
Forget profits -- Free cash flow matters now more than ever
If you're an individual investor, you MUST know how to read a CASH FLOW STATEMENT
Here's what you need to know:⤵️
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I only own 18 stocks.
Here's each one and why I own it...⤵️
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How to analyze a:
▪️Balance Sheet
▪️Income Statement
▪️Cash Flow Statement
In less than 5 minutes:
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I only own 18 stocks.
Here's each one and the key metric I'm watching for each...⤵️
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You shouldn't even try to understand this without reading
@nntaleb
's books.
But if you've read them (at least twice apiece) and need a refresher -- this helps
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I own 19 stocks
Here they are, from most to least "expensive":
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Jeff Bezos wrote 24 letters to his shareholders.
I devoured them all.
Here are the 5 most important lessons from them
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EBITDA sounds complicated.
But it can be as simple as this.
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I own 23 stocks.
Here are the Anti-Fragile scores (lowest to highest) for all of them ⤵️
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What company you follow checks many of these boxes?
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Inflation. Recession. Bear Market
6 charts that EVERY investor should memorize today
1⃣: Stocks Win!
⚫️ Returns over two centuries
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Want to know why $SE is down 25% today?
It's actually simpler than you think...⤵️
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The P/E ratio sucks
It’s a metric that easily deceives investors
Here are 8 reasons why the P/E ratio can be INCREDIBLY misleading (and what metrics to use instead): ⤵️
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Six years ago, I read
@nntaleb
's *Antifragile*. The lessons invaded my brain and haven't left since.
I started taking the ideas and applying to investing.
I created a framework for stock picking from it. It has 8 parts
It has roughly 4X'd the market.
How it works, a 🧵⤵️
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The market crash is here.
Forget profits -- Free cash flow matters now more than ever
If you're an individual investor, you MUST know how to read a CASH FLOW STATEMENT
Here's what you need to know:⤵️
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I own 16 stocks
Here they are, from most to least "expensive":
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I started investing ~ 10 years ago. I've been able to achieve 26% returns *per year*
A few things have helped:
*
@themotleyfool
* The combined teachings of
@DavidGFool
and
@nntaleb
(Antifragile)
* Sharing my holdings to be accountable.
My current port as of 9/1/21 ⤵️
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1) Narratives are powerful
Stories are powerful. They are also blind to randomness.
This can lead to dire consequences.
Money Quote:
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If you buy individual stocks, you MUST watch their earnings
Here are 6 investing tools that are massive time savers:
⤵️
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Capitalism is brutal
If you invest, you MUST know how to identify a moat
Here are 4 financial “rules of thumb” that Warren Buffett uses to tell if a company has one:
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15 timeless investing principles, visualized:
1: If you want to build wealth, you have to invest
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3) Focus on process over outcome
Because huge success is determined by luck, we shouldn’t focus on outcomes. We should focus on the process by which we reach our decisions.
Money Quote:
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Many people don't know the difference between NET INCOME and FREE CASH FLOW
That's alarming.
If you invest, you MUST know the difference.
Here's the short version⤵️
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I own 18 stocks
Here they are, from most to least "expensive":
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2) Luck (Randomness) Is Everywhere
Consider 1,000 possible futures for…
A skilled dentist ⇒ successful in over 900 such futures
A skilled actor/trader/author ⇒ successful in ~5 of such futures
Luck plays a large role
Money Quote:
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For 10 Years, VALUATION was not a factor in my investing.
That ends today
Here's what will be changing...⤵️
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The Price-to-Earnings (P/E) Ratio is great...when it works.
Here are 3 times when it DOESN'T work🧵⤵️
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The S&P 500 is up 18% this year.
Is the market overvalued?
History says, "Yes...by 60%!"
Here's why "History" is wrong:
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I asked: What's the most undervalued stock?
The
#1
answer: Google $GOOG
Is it actually undervalued? Here are SIX methods to find out ⤵️
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My 3 best investments ever average a 1,200% return.
They all share 6 key traits…⤵️
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Want to learn to do a Reverse DCF in 5 minutes?
Here's how to get it done in 7️⃣ simple steps⤵️
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In 2022, my portfolio fell 53%.
Affect on my daily life: ZERO.
Why? My finances are ANTIFRAGILE.
Here are 🔟 steps to get there.
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I only own 19 stocks.
Here's each one and why I own it...⤵️
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EBITDA Explained Simply
EBITDA is an acronym that stands for Earnings Before Interest, Taxes, Depreciation & Amortization.
EBITDA is a major financial indicator used to evaluate companies' profitability with different capital structures.
EBITDA is a rough guide to show how
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The Zero Interest Rate environment may be gone FOREVER
Forget profits -- Free cash flow is what matters now
If you're an individual investor, you MUST know how to read a CASH FLOW STATEMENT
Here's what you need to know:
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If you pay attention to P/E for stocks like $AMZN you shouldn't be buying any stocks
Here's why P/E is completely USELESS
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I probably spent more time on this
@themotleyfool
article than anything I've written in 10 years.
It addresses a simple question: How Much Is Enough?
H/T
@morganhousel
(idea of Enough),
@slyubomirsky
(How of Happiness),
@nntaleb
(via negativa)
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I only own 19 stocks.
Here's each one and why I own it...⤵️
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Inflation. Recession. Bear Market
6 charts that EVERY investor should memorize today
1️⃣ Stocks Win!
🔵 Returns over two centuries
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Positive thinking ....
My 6% cash position is now probably a 10% cash position.
And I didn't have to sell anything
😉
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Think about it:
A better way of conceptualizing a process and its results would look something like this.
The only thing you can control is the process. The outcome is determined (in varying degrees) by fate.
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The 5 lessons:
1) Narrative are powerful & misleading
2) B/c they’re blind to luck (randomness)
3) Thus, focus on process (~skill) over outcome (~luck)
4) Don’t forget, it’s about payoffs X probabilities
5) The skill = limiting downside while creating opportunities for upside
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Capitalism is brutal
If you invest, you MUST know how to identify a moat
Here are 9 financial “rules of thumb” that Warren Buffett uses to tell if a company has one:
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With practice, you can do this in a matter of minutes.
But give it time😀
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5) Skill is downside protection
The SKILL is in doing everything you can to limit your downside
Then, leave enough room and opportunity for LUCK to benefit your upside.
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Some stocks are STRONG BUYS when they fall
Other stocks are SELLS when they fall
How can you tell the difference?
Here are 5 financial yellow flags to help you out...
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4) Consider probabilities AND payoffs
We usually consider probabilities much more than payoffs. That’s a mistake.
Even if you have a 99.9% chance of success – if failure leads to ruin, it’s still not worth it.
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Just had my first quadruple-Spiffy.
Original buy price: $43.00
Thanks $SHOP, as well as
@TomGardnerFool
and
@DavidGFool
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If you invest in stocks, you MUST know how to read financial statements
Here are the three key statements, and a primer on how to decode them⤵️
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14 Books That Changed My Life 📘
(and what I learned from each of them)
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It's insane it's this hard.
My goal is that it's made simpler
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Some stocks are STRONG BUYS when they fall
Other stocks are SELLS when they fall
How can you tell the difference?
Here are 5 financial yellow flags to help you out...
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The 9 Most Anti-Fragile Companies I've Evaluated
(That are still under $100 billion)
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The best investing tools.
Free & Pro (Paid)
📊 Charts:
FREE: Finchat
PRO: Finchat
🏫 Education:
FREE: Investopedia
PRO: Maven
📲 Conference Calls:
FREE: Quartr
PRO: Quartr
🔢 Financial Data:
FREE: Finchat
PRO: Finchat
💸 Stock Screeners:
FREE: Finviz
PRO: YCharts
✍ Stock
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I love stocks, but personal finance is 10X more important than stock picking.
Use this framework to make your personal finances bullet-proof: 🧵⤵️
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In 2011, wife & I quit teaching, rolled over 403(b)’s.
Since then:
💰Never earned more $$ than 2010.
🏠Bought House
👩👩👧👦Started family
BUT, also since then...
Our roll-overs have 10-BAGGED
Surprising lessons on how we did it 🧵
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By the end of Mar, entire country will be on lockdown. Hope it doesn't take that long
If we had listened to
@yaneerbaryam
,
@normonics
, and
@nntaleb
when they issued their warning (Jan 26th, I believe), this wouldn't be necessary.
IF we have guts to do it, recovery starts May 1
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In 2016, Warren Buffett first purchased Apple.
Many thought he was "too late"
He's up 800% since then.
The obscure valuation metric that proved naysayers wrong:
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As I talk to ppl about
#CoronaVirus
, I realize there are some basic concepts we need to nail down.
This, on second and third-order effects, is paramount
To find out more, read
@yaneerbaryam
@nntaleb
@DellAnnaLuca
@normonics
@EpsilonTheory
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So why is Unity $U down so much?
You'd be surprised by how STRONG certain parts of the company are.
And how FRUSTRATING the thing holding them back is.
Here's what happened
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EBITDA Vs FCF
What's the difference?
EBTIDA = EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION & AMORTIZATION
FORMULA: Net Income + Depreciation & Amortization +/- Non-Operating Income And Expenses + Interest + Income Tax Expense
→ EBITDA measures a company's ability to
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In the summer of 2011, I created "The World's Greatest Retirement Portfolio" and wrote about it for
@themotleyfool
.
I picked 10 stocks, and put $4,000 into each one.
Tweleve years later, here's how it turned out⤵️
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Don't forget: these statements don't live in a vacuum!
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In 2017, I made my first purchase of a company that is now my largest holding.
First ten shares cost ~$430.
Today, those same shares are worth ~$13,500
That's a 32X return in just four years!
Here's the stock, and three more I'm putting $$ into in search of similar results ⤵️
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Capitalism is brutal
If you pick stocks, you MUST know how to identify a moat
Here are 5 financial “rules of thumb” that Warren Buffett uses to tell if a company has one:
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Summary:
1: Revenue & Sales = Same
2: Costs = Making product/service
3: Expenses = Running the business
4: Profits, Earnings, Net Income = Same
5: Net Income = Accrual Accounting
6: Free Cash Flow = Cash Accounting
7: Accrual Accounting = 💳⌛️
8: Cash Accounting = 💵
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Think about it:
A journalists job is to make sense of the world. But if much of what happens is random, there’s no story to tell.
Without a just-so story, you’re out of a job.
Being poor < Being wrong
Thus, (most) journalists continue to be blind to randomness
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I own 19 stocks
Here they are, from most to least "expensive":
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457
It's kind of like someone is trying to make this difficult for normal people to understand
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Over the past decade, I've been blessed with:
✅27% annualized returns
📈That's roughly 1,000% total
One of the keys behind those results: Looking for something that's often ignored by analysts...⤵️
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I own 19 stocks.
Here's are my TOP TEN holdings and where my 👀 go first when they report...⤵️
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I'm down to owning just 19 stocks
Here's exactly why I own each one ⤵️
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What is Working Capital?
Here's a simple way to understand this confusing finance term.
Working capital -- aka Net Working Capital -- is the difference between a company's current assets (expected to be used/consumed/converted into cash <1 year) and current liabilities (debts
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To review the 5 yellow flags
🟡Lots of goodwill
🟡Gross margin declining
🟡Rapidly deteriorating balance sheet
🟡Excessive stock-based compensation
🟡Significantly more net income than free cash flow
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I started investing ~ 10 years ago.
👨🏫Rolled over my 403(b) from teaching
📈Started investing it.
Since then, I've averaged 25% returns per year.
A few things have helped:
*
@themotleyfool
* A huge bull market
* A framework I devised to help
My portfolio as of 10/3/21 ⤵️
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The ANTIFRAGILE PORTFOLIO owns 21 stocks.
Here's each one and the key metric to watching for each...⤵️
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