Robert Leonard  01:42

Awesome, very awesome. So I want to start today’s conversation by going over some questions that might help millennial investors and new investors. But then I also, on the back half of the show, I want to go into a tactical conversation about how we might analyze a specific stock. So yeah, let’s start with talking about what you believe is the best way for millennials and new investors to get started investing? Should they focus on 401ks through their employer or maybe an individual retirement account, you know, also known as an IRA, or a traditional brokerage account, or maybe something else?

Jason Moser  02:13

Yeah, I mean, I think most millennials at this point are, you know, in the workforce, and hopefully, if you’re in the workforce, you have a company that sponsors a retirement plan. I think that’s the easiest way to get started, making sure number one, that you’ve eliminated all that high interest debts, you don’t have anything too terribly troublesome over your head.

But as long as you’ve done that, and you’ve got a job, I say, sign up for your 401k plan. And if you don’t have a 401k plan at work, you can certainly open up an IRA with just a traditional brokerage and then have part of your paycheck just distributed into that IRA or contributed in that IRA every pay period. That’s getting you started really investing because you’re looking so far out with a retirement plan. This is setting you up for success 30-40 years down the road. And that’s really how we view investing at The Motley Fool, to begin with. So yeah, I think doing something just as simple as an employer plan or doing it on your own is a good way to get started.

Robert Leonard  03:02

Not only can you get free money if your company has an employer’s match, but also by investing in a retirement account, it forces you to think long term.

Jason Moser  03:11

Yeah, it is. And I think a lot of people feel like at that age, maybe they’re not making as much money as they would like, and that you really can’t afford at this time to put something aside, but I’m telling you, you really, you can’t afford not to do it. And I’ve seen it just time and time again, if you get yourself set up for it, and you start contributing, you’ll adapt, you know. You have a little bit less you’re taking home, maybe, but you’ll figure out a way to adapt to that. It really is important to be thinking down the road, because you know, you got to figure out a way to take care of yourself. And certainly investing is one way to do that.

Robert Leonard  03:41

And if you really start at the beginning, once you’re a few months into it, you’re used to that new check, so it won’t even seem any different to you.

Jason Moser  03:49

You’re right and hopefully down the road, you know you’re getting a raise sooner or later. It gets easier as you get older. But you’re right at a young age, it’s difficult to maybe see the forest for the trees but you will adapt very quickly. I’m glad you said it was so easy even for you to get into that mindset.

Robert Leonard  04:03

I have to say, I was very, very lucky. I was able to get a job at a local credit union, as soon as I graduated high school, and essentially I worked that job throughout college. And that’s how I paid my way through college. But ultimately, what I was doing at that credit union I was a loan officer. And so when I started there, one of the things that they required was for us to go through a training program. And part of that training program was about financial literacy. They wanted us to make sure that we got our finances in order, and that we make sure that we really had good financial literacy, because if we’re going to be working with people’s money, they wanted to make sure that we had our money handled appropriately.

And so one of the things they talked about was investing for retirement. And so for me, I was only 18 at the time. I was just coming out of high school,as the beginning years of my college career and I was living at home and so I didn’t really have too many bills and I was putting 60% to 70% of my income into my 401k. Now of course, I wasn’t making a ton of money at the time but still 60-70% of my income was going into my 401k. So I was super lucky to learn that very early on and really start to think long term just from the very beginning of my career and really get started early.

Jason Moser  05:12

Oh, yeah, that’s terrific, man. I tell you, it’s amazing how you have a job doing something like that, and how much you learned about how stuff works, right? And I mean, you know, I worked in lending. I worked in insurance, all of that before I went to the Fool. And I think it really gives you a lot of exposure as to how stuff just works. And to your point about financial literacy, either figure out a way to learn it through, you know, the jobs that you have, or you’re fortunate enough to have learned in school or through your parents or something. But most people, unfortunately, just don’t get that exposure to the financial literacy that they need.

Robert Leonard  05:43

Yeah, you know, although that job was little in the grand scheme of things, it had a huge impact on my life, and I really think it has changed my life forever. Now, assuming someone has decided on the right type of account for them, which strategy should a new investor implement? Should they pick individual stocks? Or should they diversify through a low cost ETF?

Jason Moser  06:04

So my job obviously is very much focused around picking stocks. And so I’d love to just say get in there and start picking stocks for everyone. But the thing is, it’s just not that way. I mean, really, it does depend on… it depends on the individual and that individual risk tolerance. I mean, we’re talking mostly about millennials obviously here. So they’re more in the grow your wealth phase of life, as opposed to the protect your wealth phase of life. But it’s always worth understanding how far you’re down the line and what phase you really are in.

But I think that you can invest in stocks without having to pick stocks and a good way to get that started is by just investing in the S&P 500 index fund. To me, that’s just the simplest, vanilla, easiest way to go ahead and get invested in the stock market without feeling like you’re taking on too much risk. Because it’s that index fund, it’s based on 500 different holdings, different businesses, and it’s a good first step, you know.

And then, you know, like we say, you gotta learn how to walk before you can run. Well, you’re walking when you get that index fund, when you buy something like that. And then learning to run is maybe when you start bringing those individual stocks in your portfolio, if you feel like that’s something you can tolerate from the risk perspective. Alot of people can’t, that’s really understandable. It’s our job to try to teach people why they can’t do it. But some people don’t want to. And that’s very understandable. So index funds are great way to go.

Robert Leonard  07:18

One of the ways I explain it, and I like to recommend to people is to start investing in your 401k. Learn the ropes that way, because a lot of times, you can’t pick individual stocks in a 401k. Now, of course, there are some plans where you’re self directed, and you can do that. But in general, 401ks, you’re not picking individual stocks. So I think that’s a great place to start, you just pick your ETFs or mutual funds, and you can start there.

Now, in today’s culture, though, people aren’t staying at their jobs forever, so there’s a good chance that you’re going to leave your job, which means you’re able to roll over your 401k and when you do that, rather than rolling over that 401k into your new company’s 401k, what I recommend is taking that money from your 401k and rolling it into an IRA and now you can use some or all of that money to pick individual stocks.

You have some experience with investing through ETFs and mutual funds in your 401k. You have your feet wet, and you know you kind of have an idea of what’s going on. So now, you can start pick individual stocks. And then if you want, you can use your new company’s 401k to diversify again, or just invest in ETFs and mutual funds.

Jason Moser  08:22

Yeah, I like that. I’m glad you said that. Because a lot of places don’t give you that self direct option. And when I got to the Fool, they actually do offer us that.

Robert Leonard  08:30

So I’m curious to get your point on this because you’re a finance expert yourself. So what investing advice do you often hear given by other experts that you think might be inaccurate or potentially misleading for new investors? And how would you change that to be true?

Jason Moser  08:45

So I feel like the biggest challenge that we face with really all of the investors in our universe, I mean, we espouse the very long term focus mentality and saying, “Listen, we’re not talking about buying a lottery ticket and getting rich in a year. I mean, you’re getting into this thing for the long haul, it’s going to take a lot of time.” And there’s so much language out there in the financial media today. It’s just very short term focused, buying and selling, trading, getting in and out of names, whatever the language is, there’s a lot of it out there that really puts across that short term mentality.

And I think that’s the biggest challenge we face is teaching people not only the idea behind the longer term mentality, but helping them practice and build up the patience to be able to just embrace it and enjoy it. Because it really is, I mean, investing is kind of a lifetime journey. If you want to be a day trader, that’s fine. I know people who do that. It’s just a very difficult way to make a living, the numbers not working in your favor when you take that short term approach versus the long term. So for us, it’s really all about just figuring out ways to teach people the psychology of embracing that long journey.

Robert Leonard  09:46

Have you found any ways to get millennials interested in a more long term approach?

Jason Moser  09:51

Yeah, you know, the thing I think, probably better than anything, and I’ve taught this to my girls, as well, my daughters, I’ve 13 to 14 year old daughters and this is how I’ve taught them about investing. That’s how my dad really taught me. It’s business focused investing, it’s just making sure you understand that you are an owner of this business and my daughters, we’ve been working with them and helping them build portfolios here of individual stocks now for probably five, maybe six, six years, longer probably.

What really resonated with them was that there are owners of Disney, and owners of Apple, and owners of Nike, not owners of those stocks, but owners of those businesses. And once you start getting in the mentality of being a business owner, you want to own awesome businesses for long periods of time, because that’s fun. I mean, it’s just cool to say you own this killer business. And it’s cool that usually the stocks of these killer businesses go up. So I think just instilling that business focused mentality is just a really good way to go about it.

Robert Leonard  10:42

I found that a great way to do it as well. When it’s a blip on the screen, it’s hard to rationalize. It’s hard to understand that you’re owning a real business, right? But when you think of it as owning a piece of a business, like when you go to Disney, I recently went to Disney. When I was there, I reminded myself, “Hey, I own a piece of these different roller coasters that I am going on.” And so when you make it tangible like that, it’s much easier to remember that you’re actually buying a piece of true business.

Jason Moser  11:08

Absolutely, man. I mean, I just do a lot of cooking in our house. And I mean the time of our recording now, McCormick announced earnings this morning, and it was just a great day for the stop on an otherwise bad day in the market. I just think of myself every time I’m cooking, I just have McCormick all over our kitchen. It’s fun, I own the stock, I own all the spices, and it’s working out.

Robert Leonard  11:29

So in this part of the show, I want to do something that we haven’t been able to do yet. And I want to take a deep dive into an individual stock pick that you have. I want to walk the listeners through a full analysis of better understanding of how to analyze a company. We’ve talked about picking individual stocks on a broad scale, but we haven’t talked about it for a specific company. So let’s dive into that a little bit more. Which company are we going to be looking at today?

Jason Moser  11:55

That’s the ticker as ETSY.

Robert Leonard  11:58

So first thing, how did you find this company? You know, with thousands and thousands of companies available to invest in, how did this one make it onto your radar specifically?

Jason Moser  12:07

You know, I remember the brand name Etsy from when it is started in the early, I guess, 2010 or 11, or something like that. And it just was something that I had seen. I remember when it went public then I thought, “Oh, I just had noted that it gone public.” But I have my younger daughter hit this stage at school where she was into making a lot of slime. It was like the stuff to do at school, like they’re making this craft slime with different colors and textures and selling. And so she got into doing that and I mean, you know, they were selling it. And so she asked about opening up a little slime store online.

And so we went actually through the process on Etsy and doing that. And all along the way, I was thinking, “Man, this is really a robust setup.” And it got me just interested in at least what kind of business it was. And so then I went to work and I read through the *0-K, you know, which is basically the annual report and just learned more about the actual business itself, its model like, how does it make money? I think that’s a key focus with any company, if you’re going to take a look at it, is know how it makes its money.

I mean, you’ll see I think metrics on TV are thrown out there all the time, P/E ratio and whatnot. I mean, that’s all fine, but that doesn’t really tell you about the business itself.  So learning about how Etsy worked as a business, then trying to figure out okay, what kind of a market is there for this? How big of a market opportunity is this? And then the $50,000 question, as we’ve been asking with so many companies is how did they survive Amazon? Because I mean, Etsy is ultimately the business model. It’s a very capital light marketplace.

You know, it’s a great network of people who sell their goods, but the Etsy business itself, I mean, they don’t carry any inventory. They don’t own any really stuff, right? They’re just connecting people. And so learning a little bit more about all of that, it got to the point where you could see it was a growing business with a big market opportunity. And, you know, when you have those capitalized businesses, they can make a lot of money along the way. It did seem like there were some concerns regarding leadership and I think Amazon as well. And I think that kept a lid on the stock for a while, I think the market wasn’t very fond of it. But there’s been a leadership change there back in 2017.

Joshua Silverman, I believe his name, he is the CEO there now. And he’s done a lot of things to grow this network, make it more valuable to the buyers and sellers that use it. And that’s showing through all the metrics that they report, core in, core out. So you see a pretty good business that’s growing with good leadership, then you start thinking, all right, well, maybe that would make a good investment. And then in this case, it’s been a good one so far. We’ve still got some time to go.

Robert Leonard  14:30

Yeah, the market will always tell, right? What’s interesting about that, and what it reminds me of is Peter Lynch’s book “One Ip on Wall Street.” In that book, he talks about finding investment opportunities by looking at the products you use on a daily basis. And in your case, it was with your daughters by setting up that store. That’s where you learned about that business. And I think that’s really, really interesting.

Jason Moser  14:52

Yeah, and I think you talk about teaching people, beginners, new people, and people who are just new to investing about ways to look at it and finding ideas and you know, you wake up and get out of bed and from there on, your entire day, you’re walking past a lot of great investment ideas. So you just kind of take a look at the world around you. And that’s where all those ideas are, they’re hiding in plain sight.

Robert Leonard  15:12

It’s kind of funny because for me, I can’t use anything without considering it from a business perspective. Now, even when I was at Disney recently, I was analyzing everything. I was thinking about how everything is impacting their business and their stock. I was thinking about the margins on the concession stands. I was just thinking about everything from a business perspective. And I tend to do that with a lot of businesses now. But going back to our analysis, now that you have a company on your radar, what are your next steps? How do you analyze this company and decide if it’s a good place for your hard earned money?

Jason Moser  15:45

Yeah, that’s a good question. I mean, I think I had gotten past the point where I didn’t feel like I had sunk a bunch of research into this company, and then, you know, consequently, then I felt like I really needed to go with it or recommend it because I’d already spent so much time into it. I mean, I was pretty good about being quick but the time to get in there and understand the business from the beginning, and if it was something that was interesting to me and it was…

Then for me, I mean, I started going through company filings, 10Ks, 10Qs, which are the annual in the quarter reports I’ll go through… their earnings call transcripts, other transcription presentations they have whenever they do investor roadshows. Any resource you can find to learn more information about the company, about management particularly, and hearing their language, their ideas about how they’re going to grow this business and how they view the world. I mean, is this a business that’s focusing on the long term like we are as investors, or is this a business that is, you know, just trying to meet Wall Street’s expectations every quarter?

And I think that’s always worth paying attention to because we generally like saddling up with business leaders who are looking five and 10 years down the line and not really worried about quarter to quarter. And going through and reading more about Silverman, it became apparent that he had a lot of great ideas that will take some time to roll out and so you felt like he was looking at things from the long term and ultimately, then it’s just, you know, we hear a lot about price and people say is that stock cheap or is that stock expensive? If I find a business that really fires in on all of those things that I’m looking for, you know, a good market opportunity, a good culture of good leadership, growth prospects, something that I can understand, then price is not something that will just keep me from ever buying a stock or even recommending it for that matter.

And that’s the David Gardner in me I guess. And Thomas is the same way too. The founders of the Motley Fool, Tom and David  Gardner, they taught us a lot about not haggling over price and just getting in on good businesses. And so you know, I will model out the financials to understand what impacts the financials and where the stock could go one day. But you know, when you find a business that you really like, don’t haggle so much over the price. The stock market ebbs and flows in the short run, but definitely over the longer haul, the trend is all just in one direction.

Robert Leonard  17:45

At the beginning of that you said you got into the research quick, and I think that illustrates an interesting dynamic that I want to learn more about and I want to talk about it a little deeper. And I want to hear what you recommend for the listeners. So say somebody has spent six days, maybe even 10 hours working on the analysis for a stock. And then they realize, maybe this isn’t the best company to buy, but they’ve already spent all that time working on it. How can somebody get over that mental hurdle of all of that waste of time that they would have if they don’t buy that stock?

Jason Moser  18:16

That’s a really good observation. And it’s not easy to overcome the sunk cost. That’s a very powerful concept. And, you know, I was, I’ve been at the Fool since 2010. And I’ve been there as an investor my entire career. So I went through the analyst development program there for about a year and a half. And the guys that were in that class with me, we all had started this thing called the 10k challenge. And the idea behind the 10k challenge was we want to figure out a process to be able to get in and understand a business to then say, “All right, we’ve put in an hour and we can come away and say this is a business I’m interested in learning a little bit more about or not, I think I’m going to take a pass.”

This gets easier as you sort of grow and develop your investing philosophy. But regardless, it was a very process oriented exercise where we just had to basically go through and answer three questions regarding the company, you know, what does it do? How does it make its money? What are the competitive threats? Some kind of framework like that, that forces us to go through the 10k, exactly how the business works, you know, learn about the competitive landscape and the market opportunity that’s out there.

And you can come away from an hour of just reading through a 10k really answering those three questions. And that can have a profound impact. For me, certainly, the older I’ve gotten that’s worked out even better in that one hour. And you can say, well, I like that or I don’t like it. If you think one hour into some resource there, that’s reading on the train ride to work or something, it doesn’t feel so bad. And that’s how we did that in our development program back in 2010, and 2011. And that 10k Challenge is carried on ever since like any, we still even use that for our investing insurance, *for our every internships every summer. It’s a really great tool.

Robert Leonard  19:46

That’s a great framework. I really liked that idea. It might be a little difficult to implement that first, but once you’ve analyzed a few companies, you’ll probably get the hang of it pretty quickly. And you can limit yourself to an hour, if you like it after an hour. You can continue to go on research a little more if you want to. But if you don’t like it, then wait on it, put it to the side and maybe revisit it another time or just forget it all together.

Jason Moser  20:10

Yeah. And the more you do it, the better you get at reading 10ks. And so you just get better and more productive with it as time goes on. It was just always a good framework that just sort of, it’s very simple and effective in its nature. And that’s why we’ve we’ve stuck with it.

Robert Leonard  20:24

I actually have a quick funny story about that. So back when I was in college, my curriculum required that I take biology, physics and chemistry. And mind you I was a finance major. So I don’t know why this was needed. But for whatever reason, I had to take those courses. And of course, I had no interest in them. So I spent all of my time in those classes, reading companies’ 10ks. So what I would do is I would use my colleges’ dollars that they gave us so for our printing, my university would give us dollars every semester that we could spend on printing.

And so I’d use all of the dollars that I was given printing 10Ks because I’d go to class, I’d go to these classes and my professors would throw away the 10Ks so I wouldn’t read them during class. And then I’d have to go print them again. And I would just get to need to do that. So that’s, that’s how I spend a lot of time in college, reading 10Ks. Now talking a little more tactically about analyzing a company through its 10ks, when you’re analyzing a company through reading its 10ks, what are you specifically looking for?

Jason Moser  21:24

Yeah, for me, once I understand how the business works, like how it makes its money, I started looking for the metrics that matter, is what I call them. And it’s just the indicators of success or failure. I mean, you’re gonna have companies where sometimes it’s just as simple as you know, as a company, their revenue growth and they may be that’s the metric that matters. But in a lot of cases, I mean, there’s going to be businesses where subscriber growth matters or pricing power perhaps matters.

You’re talking about not only how they make their money, but learning about how we can spot whether the company’s succeeding or failing and so a lot of it is just coming through and looking for that type of information. Sometimes they’ll make it as plain and simple as the metrics that they report on their, you know, like in their earnings reports. But you know, there are always different ways to look at things. And you can put together your own metrics that matter too and so I do that all the time. I think it’s fun to come up with a new way to look at things. But yeah, looking for those metrics that matter.

Robert Leonard  22:17

So what are some of those metrics that you look for Etsy specifically?

Jason Moser  22:21

Oh, yeah, well, with Etsy, really, it boils down to the gross amount of product, the merchandise sales that are going through their network, and then you are just looking at the number of active buyers on the site and the number of active sellers. And they don’t have any inventory, like Etsy doesn’t have any inventory because it’s just a network. So they’re not really beholden to that same type of margin threat. And so we’ve consequently been able to see them grow their margins fairly nicely here recently, and they just passed through a price increase.

Not all that long ago, I think there were some questions to whether sellers would really appreciate that or tolerate it. And, you know, apparently they did, because everything is still going strong. But yeah, I mean, you look over time and things like revenue growth, the amount of money that’s going through their network, active buyers, active sellers, and then you know, take a look at the margin picture and see how margins are trending. That can be a great idea as to how the business is not only growing, but it’s growing and becoming more efficient.

Robert Leonard  23:13

And so for Etsy, are you looking at the gross volume that’s going through their network, because their business model makes money off of a commission or a percentage of that, and that’s why it’s a big driving factor of it?

Jason Moser  23:26

Exactly. That’s exactly right. Because they make money a few different ways, because they have the network and services from marketing to payments to shipping and whatnot. But yeah, it really does all boil down to the more dollars that are flowing through that network. That means the more people are using it and selling stuff, and that indicates that not only is the company growing, but people that are using it are finding value.

Robert Leonard  23:48

Yeah, absolutely. That makes complete sense. So if somebody’s decided they’ve done analysis and have decided to purchase a company stock, do you continue to track it after the purchase? And if so, how frequently should some check up on that company that they just bought?

Jason Moser  24:02

Yeah, I definitely track it just because… I mean you understand, we’re stock nerds, we look at this stuff every day no matter what. I would say like you don’t need to be checking up on what your stocks are doing every day. You don’t need to do it every week. And honestly, the more diversified you become, the more stocks that you own in your portfolio, the less you’re going to even really be focused on that because it does become a little bit overwhelming, and you’re not thinking about it as much because you’re well diversified.

You know, you’ve got a lot of good things going for you. But yeah, I think we check it all the time, obviously. But we don’t recommend people check it all the time, because there’s really nothing you can do about it. Anyway, if you’re looking at it in the context of investing over decades, hopefully, I mean, the day to day machinations of the market aren’t going to really affect you. But it’s entertainment too, right? There’s some entertainment value there and people love to see how their businesses are doing. The stock price is a proxy of that, but you don’t need to feel like you need to check it really ever. I mean, it’s interesting to check your portfolio itself. Maybe check in there every quarter, see how things are going so you can keep informed and educated. But yeah, it’s not something you need to micromanage.

Robert Leonard  25:04

Outside of your day job, because obviously, as an analyst, you need to stay up on these things. But just for your portfolio alone, do you read every quarterly report? Or you do it on maybe on an annual basis for what you own? Or how do you approach that?

Jason Moser  25:15

I mean, I own a lot of the stocks that I cover. So I do end up reading them just because it is either work or just entertainment related for me like I’m just reading it and enjoying it. So yeah, for the most part, I’d say read most of their quarterly reports, typically scan the report and like the transcript, and you can really, when they’re good businesses, you’re focused more on like looking for the red flags. And so thankfully, I don’t see a ton of red flags with really good businesses. It’s fun. That’s the only like doing it.

Robert Leonard  25:42

Yeah, absolutely. What is the best process for purchasing a stock in an individual company? Should an investor buy the entire position right away? Or maybe should they take it slower and buy a few shares at a time and scale up their position through a strategy like dollar cost averaging?

Jason Moser  25:58

I mean, there couple different ways to look at that. I think my daughters, for example, we got them started when they were young. And the idea with them is that every time they buy a stock, then they can’t buy that stock again, that means they have to buy a different one. And the idea is there just to teach that notion of diversification and how it can help. I think just getting that point hammered home early on. So I think from that perspective, you know, they’re just going to buy at once.

Now there are times that we teach our members where if you’re either unsure, or you feel like there’s a stock or the price is really kind of out of control, it’s a little bit of a volatile holding, or it’s a stock where, you know, you want to build a bigger position over time anyway. People can buy in thirds, which is just buying, you know, in three different stages along the way that can help you ease into a position. And we always have taught making sure just to keep your transaction costs at 2% or lower. But now I mean, virtually everybody with special uses, I’m sure you saw that suaveness where they just cut their transaction fees completely. And so I mean, we’re basically the race to zero has come to an end. Gransaction fees are no longer an issue. So you can really buy into a position as much as you want without having to worry about those transaction costs.

Robert Leonard  27:09

When transaction fees were higher, you had to buy bigger positions to make it worth it when you’re paying that commission. But today, as we record this episode, Charles Schwab went to zero trade commissions and I expect others to follow and of course, there was already Robinhood. So now maybe investors don’t need to do that.

Jason Moser  27:28

Listen, I remember back in the day when I was paying $50 commissions, so I mean, think about that. And I mean, I’m not *battle, just now we’ve hit zero. And that’s pretty cool. You know, I mean, most places are just going to start going to zero because that’s what the competitive direction has determined.

Robert Leonard  27:44

Yeah. And that definitely helps investors make more frequent smaller investments.

Jason Moser  27:50

I mean, now the big challenge, I guess, you got so many these really good businesses out there with these stock prices in the thousands of dollars and, you know, some people just because they can’t afford perhaps one entire share, that would prevent them from getting in. I mean, obviously, they’re fractional shares that you can buy and on certain platforms, but yeah, I mean, that’s been a great I think addition, it gives investors more choice.

Robert Leonard  28:10

If after owning a company for a little while, we’re continually checking up on the quarterly or annual report, what are you starting to look for to potentially liquidate or close that position? What are some of the red flags that might pop up? Or what causes you or what should cause a millennial to close the position they have?

Jason Moser  28:29

Yeah, I mean, I, frankly, I’m hoping not to sell, right. I mean, I’m really hoping that I don’t have to sell anytime soon. My goal when I buy these companies that I own is to own them for a long time until such time as I need the money for something. I mean, ideally, you want to sell it at some point so that you can live your life and enjoy, you know, the work and the success. But I mean, if you’re looking for the signs of a business in trouble, I mean, that’s certainly something that you want to keep in mind there.

Perhaps the market becomes less enthused by it and obviously that would be reflecting the stock price and if you see where sales are slowing down, or margins are eroding, or they’re not innovating or they’re outpaced, you know, then you look at that you say, :Man, maybe this is a business, it’s, you know, not as good as it once was when I bought it.”

And that happens. We all get it wrong. And even then, you know, sometimes you get it right until things start changing. And I think that’s always important as an investor to just to be able to keep an open mind and when things change. That’s okay, roll with the changes and figure out how to deal them. So yeah, I mean, ideally, don’t sell but if you see signs of a business and trouble, then you want to consider selling and that’s going to obviously be a little bit different for every company.

Robert Leonard  29:34

Does it make sense to sell a company or a position to put it into something that you think has better prospects now? You know, if you don’t have any cash, say you have no dry powder to invest, is it better to sell one of your underperforming or companies that you may have lost faith in to put into something that you have more conviction in?

Jason Moser  29:51

Selling your losers is a really effective strategy when you sell those underperformers. There is no question that if you have a better idea, a better place for your money. Get your money to that better place and selling underperformers is a very effective way to do that, because you got to remember it is underperforming for a reason, right? I mean underperforming businesses, they don’t let them change overnight. And so not only are they going to continue to underperform, but then there’s gonna be all that time that goes by where that money could have been working in a better fashion. So putting better ideas is something I’m always contemplating because you know, it’s a big world out there with a lot of different tickers.

Robert Leonard  30:24

One of the other things that investors need to do is when they’re doing that analysis, I recommend that people and I’m sure you probably do something simila,  is you need to make maybe bullet points or take some notes as to why you’re buying a company so that if down the line, things are changing, you need to be able to look back and say, “Why did I originally buy this company?”

If you know, if you only have a couple companies in your portfolio, you might remember but if it’s long enough down the line you might forget. So you need to be able to look back on those notes and say, has my thesis changed? And if so, maybe I need to liquidate this position and look for a better place for my money.

Jason Moser  30:54

Yeah, keeping those notes are great and in the near run, in the near term. You don’t really think you may need them because you just kind of remember what’s going on. But you realize more and more time goes by, it’s difficult to remember all of that stuff. And it’s really great to be able to just look right back and say, “Oh, this is what I was thinking, this is what I’m saying.” And a lot of times, whatever I’m preparing for, you know, like the radio show at work, or just if I’m going into a meeting regarding a stock that we’re covering or talking about, I mean, I can go back and look at all of my notes from 5 ,6, 7 years ago, in some cases, and get a quick feel for what I was thinking then versus now. It’s really effective.

Robert Leonard  31:28

Do you have any specific tools or resources you use to take those notes? Or do you just use the old fashioned pen and paper?

Jason Moser  31:35

Now I put things into a computer. And a lot of times, it’s easy enough for me what I mean, I keep just a Google Drive of a lot of stuff. And then from there, I mean, we have some research databases at work that also help in that regard. But you know, just keeping everything in one location, and then Google Drive is really effective for that.

Robert Leonard  31:54

Yeah, it certainly doesn’t have to be super high tech for it to work. A simple Google doc or even word doc can work. So another way I like to invest, and I recommend this to a lot of people is investing in a basket of stocks to follow a trend. And I know you invest very similar to this, and I know you have your war on cash basket, because you think that ultimately people are moving away from cash and cash could potentially go away in the future. And in this strategy, you can invest in things like MasterCard, Visa, PayPal, Square, etc.

All of these companies are positioned to benefit from a move away from cash and more towards digital and card payments. So rather than having to pick one of these companies that you think is going to benefit the most, you’re able to invest in a small basket of these stocks, and just benefit from the trend in general. And you can almost treat it as your own small ETF. Can you talk to us a bit more about the strategy and what you like about it?

Jason Moser  32:48

Yeah, I mean, I think it’s just an easy way to get exposure to what you think is a very significant trend. And I think everything that we’ve been doing our work we saw very clearly that I mean the world was going away from cash or is going away from cash and more towards electronic payments and whatnot. And so that we’re on cash basket was just basically born of that idea that there’s this massive trend of why try to pick one winner. I mean, when you start looking at and you realize, we’re covering MasterCard visa, every quarter, every quarter, we’re saying, you know, they’re not going to*inaudible.

And why don’t I own these shares? And so eventually you start thinking, all right, the writing’s on the wall, and then you had a Paypal and Square in there. And it was a nice way to build just a little fun to get exposure to, you know, that one big trend. And then the other one that struck me, healthcare’s just a massive market. And so, you know, I kind of looked at doing a little basket of stocks from the healthcare perspective as well. And it’s just a matter of finding a big trend that you like, and then finding the businesses that you feel like that are really steering that trend. And you don’t have to try to pick one winner because typically, with those big trends, there’s going to be multiple winners.

Robert Leonard  33:49

It helps from multiple perspectives. You can have more than one winner, like you said, but you also don’t have to get the company and the trend right. You just need to get one of the two right, and you’ll actually do pretty well.

Jason Moser  34:03

Yeah. And the trends are pretty obvious, right? I mean, like, you don’t have to be a genius to say, “Well, it looks like the world’s moving away from cash.” Like, we kind of figured that one out. And so it’s going to take a while to get there. I mean, it’s no revelation that health care is a huge market. But hey, I mean, there are a lot of companies out there that are helping steer it towards *theater, and you can build your own little personal collection of the ones that you think will be best off.

Robert Leonard  34:24

Now, finding those trends is relatively easy, like you said, but picking one company to lead the way, that’s very difficult, which is why you and I are both such big advocates of this basket strategy. Jason, thank you so much for your time tonight. I really appreciate it. Where can the audience go to learn more about you and all the different things you have going on?

Jason Moser  34:46

Really, I don’t live much of a social media life, but you’ll find me on Twitter and that’s about it. So @TMFJMo, that’s where you can find me and ask me any questions. You know, I love tweeting out all sorts of stock nerd stuff all day and we’ve got the radio show, Motley Fool Money every Friday and I host the Industry Focus Podcast for the Motley Fool on Mondays. So, you know, you can catch those on Spotify and Apple Podcasts and everywhere else you get podcasts. And that’s where you’ll find me.

Robert Leonard  35:12

I’ll be sure to put links to all of Jason’s work at The Motley Fool in the show notes so you guys can connect with him and learn more about all that he has going on. Jason, thanks again for your time. I really appreciate it.

Jason Moser  35:23

Oh, you got it. Thank you.

Robert Leonard  35:25

Thank you for listening to the show today and being a part of the community. Make sure you subscribe to the podcast if you haven’t already. If you have subscribed and you’re enjoying the show, it would mean so much to me if you would please rate and review the podcast in Apple Podcast. You can also share what you’ve learned on social media and tag me in the post. I’m excited to connect with you all and hear all the amazing changes you’re making in your lives. I look forward to seeing you again next week.

Outro  35:51

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