Stocks 101 for Beginners - How to do Stock Analysis

[00:00:00] Speaker 1: The stock market is overvalued any way you look at it. Market Watch, January 2015. Rising anxiety that stocks are overpriced. The New York Times, August 2015. Fears grow over U.S. stock market bubble price. Financial Times, September 2015. Do not expect the growth of recent years to continue. Kiplinger, January 2016. The Federal Reserve says U.S. stocks are overpriced. Fortune Magazine, June 2016. Guys, it is now 2019. And it would take a stock market collapse of 37%, exactly like the one we had in 2008, for all of our stock portfolios to go back to their 2015 levels when all of these articles were written. So I guess that means the media was wrong. Welcome to Stock Market Analytics for Beginners. Hey, what's up, guys? Andrei here, and let's dive right into it with one of my most requested videos on this channel, and that is Stock Market Analytics for Beginners. Now, if there's one thing I want you guys to take away from watching all of my videos, it would be this one. Hopefully, by the end of this video, you will be a more confident investor, and all you have to do is watch this video all the way until the very end. And, of course, gently tap the Like button. Please don't everybody rush to the button all at once. Also, wearing a tie makes me feel like I'm being slowly choked to death by a baby. It's weird. I hate it. I don't like it. But I do like being extra sometimes, so let's continue. The strategy is simple. We're going to buy and hold long-term so that we can collect monthly income by buying blue-chip dividend-paying companies that pay us every single month to just sleep and do nothing. And we're going to do that while ignoring all of that media noise and all of that media frenzy, telling us what to do and scaring us away from investing. Now, you guys can use any brokerage for this, whether it's M1 Finance or Webull or Robinhood. Doesn't matter. I use Robinhood, and with this strategy, I was able to build a six-figure portfolio that's paying me roughly $550 a month, or 4%, with a dividend growth rate of 5.6% per year. That's way outpacing inflation, which I'm happy about, and of course, all I have to do is sleep and do nothing. But since I'm editing these videos until 4 a.m., I don't sleep, so it kind of balances itself out. Now, I started this journey when I was about 22 years old, and at the time, I was getting paid about $14 per hour, and I saved, and I eventually built a portfolio that is worth roughly $186,000, which is up $5,000 from April, and it's up nearly $59,000 from all time, which is pretty incredible. So if I can do it, I think anyone can do it. If anyone is interested about how I got there, I made a video about that as well. So no fluff on this video, let's dive right into the most important metric of all, and that is the macroeconomic analytics. Guys, this can't get more fun other than dry macroeconomic analytics. This is what you asked for. This is what you get. I'm going to try not to put everyone to sleep with this information by breaking it up with my lame humor and jokes, and yeah, I guess let's just dive right in. All right, so if you didn't know, this past May marked the second worst performing month since the 1960s for the US stock market. That's right. But then in June, just last month from making this video, that June rose 17% for the S&P 500, making it the best performing month of June since 1997, which coincidentally was the year that I came to America. I was just nine years old and that year was also the first year that Pokemon aired on television for the US. Better times, am I right? So why is any of this important? Well, it's important because investors like myself have had a lot of good reasons to exit the market. In fact, you can make a really good case for why you should be afraid right now. I got texts from my friends in December 2018 saying, I hope you pulled out, man. That dip, this is the crash. It's coming. But they too were wrong. Had I listened to them, had I gave in to my fear, I would have missed on nearly $30,000 of gains. You can see from December 2018, you can see how that curve just goes straight up and I gained $30,000. My portfolio dipped all the way down to $150,000 and that's not even counting the dividends that were paid to me every single month that I reinvested back. But instead, I held on during December 2018 all the way till now and that's how my stocks were able to go back up. But there were signs of slowed economic growth. There were signs of trade tensions and uncertainties and the scary yield curve inversion that no one talks about. And the last thing is high market valuations. However, if the last six months have shown us anything, it is that it's important to continue to stay the course. I want you to continue investing no matter what the stock market conditions are. In fact, I want to show you a piece of research that I found that I think is one of the most important things to know about if you're an investor in the stock market. And I want to share this with as many people as possible because I get a lot of comments and questions asking, Andre, what's going to happen when the stock market collapses? They're going to stop paying your dividends. Your money is going to be gone. What then, idiot? This next one comes from SimpliSafe Dividends. There's a book called Zebra in Lion Country by Ralph Wenger. Sorry. It's hard to say his last name on camera when you're trying to be serious. Sorry, I'm a mature young adult. I will not laugh at his last name. Let's continue. So he cited a University of Michigan study that between the years of 1969 and 1993, there was roughly a 90-day period, which accounts for 1% of the entirety between those two years where that had the best stock market gains. And if you were outside of that three-month period, you would have missed out on the best stock market gains within nearly 30 years of investing. But it gets worse. Way worse. Because Wenger referenced an additional study that found that if you were outside of the market for just 7% of the time, between 1926 all the way till 1990, you would have earned absolutely nothing from 64 years of investing. Can you guys imagine? That's an entire person's lifetime in that era. If you started in 1926, which coincidentally was the year that Harry Houdini died at the age of 52, which is coincidentally how many cards there are in a deck of cards. Random useless facts. And if you had started investing in 1926 and you weren't around for that crucial four-and-a-half-year period during the stock market's rise, you would have made absolutely nothing. All because you were that guy. But be honest with yourself. Have you ever been that guy? Because if I'm honest with myself, I know I have. That's normal. That's being human. It's okay to be afraid. So what can we extrapolate from this research? Well, we can make the case that doing nothing and just staying in the market by way of inactivity was the best thing to do. Inactivity was the greatest ally in 64 years of investing. Not rebalancing, not selling off, not waiting to buy the dip, just nothing. Sleeping and waiting to get paid. But what if you were starting today and you wanted to build a stock portfolio, perhaps like mine right now? What would you do? Well, I could tell you this much. The U.S. stock market is not gonna continue to grow at double-digit growth rates forever like we are right now. That's just unsustainable. A healthy U.S. stock market should be growing at roughly 7% per year, which also accounting for inflation, 2% per year, that's a healthy stock market. So like Bob Ross would say, we're in the good times now. So should you invest today or should you be scared? Well, I'm gonna let you in on a little secret and I don't want your money. I don't wanna sell you anything. I don't wanna sell you on a course, but here it is. Yes. Yes, you absolutely should invest today, right away. The risk of losing money quickly goes away the longer you stay in the stock market. But don't take some random YouTuber's word for it, please. I'm gonna show you some data and research that backs that up as well. This one is from Visual Capitalist. Check it out. So these charts show yearly returns from 1872 to 2018, which is a period of 146 years over one, five, 10, and 20-year continuous periods. Now we can't base future results on past results, but one thing is clear in all of these charts, and that is that the S&P 500 has never had a negative return over a 20-year continuous period. Additionally, these charts show reinvestment of dividends that are adjusted for inflation. But the best part is that you and I don't have to be experts at picking stocks. In fact, rather than focusing your energy and your money and time on trying to figure out what's gonna perform better, Apple or Tesla next year, who cares? We don't know what's gonna happen. Focus your attention on growing a well-built and diversified dividend portfolio that pays growing dividends every single year within a reasonable margin of safety and own anywhere between 20 to 60 stocks. I own closer to 80 because rumor has it I'm very well diversified and own no more than 25% into each sector. And that's what you should focus on. Combine that with a 65% savings rate and guess what? You're gonna be done with life in about 10 years. And I mean, you won't even need a job because the investments that you have and you've invested over those years are going to passively, without needing a job, pay you for all of your expenses for the rest of eternity. And I mean that literally. And yes, I made a video about that too. I hope the research that I provided earlier was enough to dissuade and discourage people from being day traders or traders in general just because, guys, it just doesn't work. And I hope the research shows that enough. But full disclosure, have I ever sold stocks? Yes, of course I have. In the last eight years, I've probably sold about eight stocks, one to two per average a year. And yeah, I've made mistakes. My goal is to buy quality companies at attractively discounted prices. But sometimes, you know, you make a mistake and you buy them slightly overvalued. But over time, that diversification smooths everything out and makes everything balanced just as it should. I think this was the most important metric that I can provide for you before I give you the fundamental analysis for companies because this is what you have to understand when investing in the stock market. It's not about trying to time it. It's not about trying to, like, figure out when's the best way to get in. This is the best time. It's today. And this guy right here behind me is my dividend tracker. I made it myself. It has all of my companies. The balance that it has in the industries, it's all color-coded. The dividend yields, it has everything. And it's actually for iOS, but I'll also be making a Microsoft Excel version. And I know I've promised that to you guys several months back. I just haven't found the best way of sharing it with everyone. Besides that, I'm also gonna be making a top 20 dividend portfolio recommendation as well as a fundamental analysis video. And what else was I gonna make? Oh, I was gonna share with you guys how much money I made for last month of June in my dividends. I think it was a pretty big month. So anyway, guys, pump up those rookie savings rates. Continue investing. Invest today. Invest long-term. Don't listen to the market media stuff. It just doesn't matter what the media says. And continue doing your thing. Continue being awesome. Love you guys, and I'll see you very soon. Peace out.