Q&A from Bruno: Should You Trust Your Analysis, Buy Quantum ETFs, or Borrow Against Your Portfolio?

0:00This show is sponsored by Liquid IV. Summer is here and let me tell you I could not be more excited. From running down to the lake for an early morning fishing trip before work or running my favorite trails or even yard work you name it. I just love being outdoors when it heats up. But with that heat comes dehydration and sometimes I feel like water just doesn't cut it. That's exactly why I started throwing Liquid IV's hydration multiplier sugar free in my bag every day. one stick 16 ounces of water and you're hydrating faster than water alone and the best part is it holds up to four hours powered by their liv hydro science formula with electrolytes and essential vitamins science-backed clinically researched and honestly you can just feel it working currently white peach and rainbow sherbet are my favorites you just tear them open you pour them in simple as that you're done get moving with superior hydration from liquid iv tear pour live more Go to liquidiv.com and get 20 % off your first purchase with code investing at checkout.

0:58That's 20 % off your first purchase with code investing at liquidiv.com. The other night I'm online shopping for Brenner Inc. Yes, I still use a Brenner, I know. And I'm getting ready to check out when I suddenly realize, yet again, I cannot remember my stupid password. But that's when I noticed they've recently added at the top of the screen that purple shop pay button. One click and my name, done. Address, done. Card info, done. Done. Check out. Done. Honestly, it's one of the best things in online shopping right now. That button is Shopify. And if you're running an online business or thinking of starting one, Shopify makes the transaction just as easy on your side.

1:36They give you inventory tracking, payment processing, analytics, marketing, and much, much more all in one place. No jumping between platforms, no chaos. And if you get stuck, they have 24-hour support that genuinely is the best. See, less carts go abandoned and more sales go with Shopify and their ShopPay button. Sign up for your$1 per month trial at shopify.com slash beginners. Go to shopify.com slash beginners. That's shopify.com slash beginners. You don't have to swing at every pitch. Sometimes we get into this mindset that when we're analyzing a business, you know, what if I'm spending all my time looking over here?

2:19when the choice to my right is going to be the one that could set me up for generational wealth. And that is unfortunately part of the gig of investing in the stock market is you can invest in everything and you have to choose your battles. And so... I love this podcast because it crushes your dreams of getting rich quick. They actually got me into reading stats for anything. You're tuned in to the Investing for Beginners podcast. Led by Andrew Sather and Dave Ahern. Step-by-step premium investing guidance for beginners. Your path to financial freedom starts now. Starts now. All right, folks. Welcome to Investing for Beginners podcast.

3:05Today, we're going to answer a listener's questions. We got these great group of questions from Bruno. And we're going to go ahead and answer these on the air. So we'll just kind of work through them as we go. So here we go. So we got good morning, gents. Just listened to the stock crash episode. Super helpful and learned a ton about Fiserv. So the first question is, I am still learning how to invest in long term with the fundamentals. I almost don't trust myself to rely on what I find in reports to feel confident in investing in companies. What else should I be looking for? Fantastic question, Bruno.

3:42So here's our answer. oh yeah here's the answer we could spend an entire episode on this so i love it thank you for writing in bruno this is awesome um yeah like looking at fundamentals there's so many fundamentals you could look at there's so many metrics there's everything it can be hard to get to a place where you feel like okay i know enough to feel confident And the first thing I would say is it is not something that I would worry or try to worry about getting to overnight. Picking stocks is a long journey. And I have the personality where when I go after something, I want to have it all figured out.

4:27I want to have it mapped out. I've got day one through 365 all mapped out. I know exactly what 365 is going to look like. Like we can all laugh about that now because we know that's not how life works. And so just because you might buy something and then the way that you analyze a stock changes in six months, that's not necessarily a bad thing. It's a learning process. With all that said, for me, one of the great filtering tools that really helped me out as a beginner was the price to earnings ratio. The reason for that is that it can take away a lot of landmines out of your stock picking, and that can be a great way to just avoid a lot of heartache in the early days.

5:17So price-to-earnings ratio, it's on most financial websites if you pull up a stock ticker. Price divided by earnings, the lower the number, the cheaper a stock is compared to its earnings. And so if you can not only use a filter like that, but start to layer multiple filters, you can reduce the number of stocks you're looking at. And that can help you feel a little more confident. Maybe it's like, okay, maybe I've used three or four filters. And so I have a group of like 10 stocks. maybe not all 10 of them are going to be winners, but maybe the group of 10 as a whole is on average going to do better because I know these three metrics help me find better companies.

6:06That's, I think, a nicer way to look at it that, okay, it's not a guarantee that I'm making the right choice, but at least I'm starting to stack the odds in my favor. And that's really all you're doing when you're looking at fundamentals anyways. no perfect measurement of fundamentals is ever going to help you find the perfect stock because there's no such thing as the perfect solution in the stock market. No, and that's the challenging part of investing is that there's no one size fits all. There are so many different shapes and sizes to think about when you're investing in it. That can overwhelm and make people feel like they don't know what they're doing because there are so many different options.

6:53And I think the idea that Andrew was espousing about looking at the PE ratio and using several different filters to try to narrow the companies you're looking at is a fantastic place to start because I think when you start to narrow down your choices, it makes it easier to make choices. As someone who worked in a restaurant business, I have found that when you go to places, and I also observed by experimenting, And when you go to places and they have a bazillion different things on the menu, it's really hard to make a choice. And you feel like you're not making the right choice or you start hesitating because you're worrying that I'm not buying the right thing or that kind of thing.

7:35And I know that that has been a complaint about businesses like the Cheesecake Factory, which has one of the largest menus you're ever going to find. I've heard people complain about Taco Bell and that their menu is too big. There's too many choices. it's hard to make decisions. One of the easiest shifts I've ever worked in my entire restaurant life was a super, super busy night that we gave the guests two choices. They got two things for a salad, two things for an entree, two things for a dessert, and that was it. And because we narrowed it all down, the decision-making on the guest part was so much simpler, and it was also easier on the kitchen.

8:15So anyway, all that to say that narrowing your choices can can help you make decisions. I guess the other thing that I would think about too is when you're trying, when you're worrying about missing things, a couple of things kind of spring to mind. Number one is you don't have to swing at every pitch. Sometimes we get into this mindset that when we're analyzing a business, you know, what if I'm spending all my time looking over here when the, the choice to my right is going to be the one that could set me up for generational wealth. And that is unfortunately part of the gig of investing in the stock market is you can invest in everything and you have to choose your battles.

9:00And so I think once you figure out what your style is going to be and kind of how you want to invest, that can start to, again, narrow your opportunities or your choices. The second thing I would throw out there for Bruno, and anybody else that's kind of feeling like this, is we recently discussed the use of a checklist. This is where having a checklist can be crucial, critical, assign whatever adjective you want to this. A checklist can help you start to figure out, okay, what am I missing or how can I trust myself? Well, when you know that your benchmark for a return on invested capital, for example, is 15 % and you look at a company and it's coming in at eight, okay, fine.

9:44I'm not missing that because I can trust myself that I know this is what I'm looking for. And part of the challenge, of course, is setting up the checklist. We have one for you. You could start with to use as a template and then you can adapt from there. Follow your favorite investors, see what kinds of things that they hang their head on as far as numbers, revenue growth at this, and margins at this, all those kinds of things, you can kind of adapt to the different kinds of companies that you're going to encounter in the market. But going back to having a checklist, even if it's only 10 to 20 questions, not a lot, can be super, super helpful in helping you gain trust and, okay, I'm learning this about this business and these metrics tell me this.

10:32Okay, I can trust it because I know I've used it in the past, Other people have used it, and this has been successful for other people. And this is where having a checklist can help set aside some of those doubts and fears of missing out or making a mistake because you missed on something. It helps narrow the mistakes that we could make. So that's what I would tell Bruno if we were having a coffee together or a beer to look at a checklist and try to follow in. Yeah, I absolutely love that advice. One other idea just kind of pops in my head. You have the numbers, you have the fundamentals, you have the checklist.

11:12Those are all great things. Maybe try picking an industry that doesn't have as many people. Maybe there's three or four major players in the industry. We kind of made the question a little shorter, but Bruno mentioned how he's listening to earnings calls and things like that. Maybe pick a small industry, listen to all the earnings calls for everybody in that industry, and then see what your favorite company, like favorite as in what company do you feel most confident about after analyzing all those options? So rather, again, trying to limit the playing field, do I feel confident in my ability to at least compare competition?

11:57Because in my mind, that's an easier hurdle than trying to say, is this the best stock in the stock market out of 19 ,000 other options I have today? It's easier to say, is Chipotle the best fast casual restaurant? Or is McKesson the best medical distributor? Those decisions I think are easier and can help you feel confident about not only yourself, but also the businesses you're investing in. And that's what it's all about. being confident both in yourself and the businesses you're investing in. That's a magical, powerful formula to have because then that can... If you have confidence in the businesses that you're investing in, you know that they're going to outperform their competition.

12:47They're going to do what it takes to be the best or to hold their ground in their industry. Then you can know you're probably going to get a great result from that if you pay the right price. and then just obviously I think being confident in yourself and your abilities and your judgment is you know that's that's obvious too but um maybe try that I don't know I haven't done I haven't done that intentionally where I'm like I'm just gonna pick an industry but I know there have been times in my journey where I was like you know what I want to have some exposure to insurance for example. So let me see if I can find my favorite one and then run the numbers and see if the numbers still come out okay.

13:32And that could be another way to get to maybe where you're trying to go here. I'm excited to share our friends over at the Plink app released a major upgrade featuring a sleek new look, real-time insights, smoother trades, and tools that help you feel more confident with every move. Here's the bonus I think you'll love. They also released the dividend match where they'll match 25 % of all the dividends you earn up to$250 a year. You can track the match along with estimated dividend payouts all within the income hub on the app. More great features are on the horizon to go along with some of their other user favorites like expert ratings, real-time news insights, and simulated trading.

14:05Whether you're just starting out in your investment journey or looking to enhance your knowledge, Plink meets you where you are and helps you grow into the investor you want to be. If you've been curious about trying Plink, now could be the time to make the move. Head to the link in the show description to download Plink today. Max dividend bonus is$250 per year, payouts made monthly, no opt-in required, other terms apply. Simulated trading tools for informational purposes only. Investing involves risk, including risk of loss. Opinions expressed on this podcast are not necessarily those of Digital Brokerage Services LLC, member FINRA, SIPC.

14:36I've been thinking a lot about heart health lately, not because something felt wrong, but because I got my results back and saw markers I'd never even heard of that were out of range. What caught me off guard is how much can be happening quietly with markers most people have never even had tested. Here's the thing about feeling healthy. Feeling fine and being fine are not the same thing. Most of us track the basics, maybe cholesterol, maybe blood pressure and assume that that covers it. But there are markers that paint a much more specific picture of what's going on inside your body. For example, your omega-3 index because your body can't make those fatty acids and most people are deficient without even knowing it.

15:08And amylase, which reflects how well your pancreas is handling the job it does every single time you eat. These aren't obscure numbers, they're just ones that most standard physicals skip entirely, and they're ones I'm glad I know about thanks to Function. That's why I use Function. 160 plus lab tests a year, including the cardiovascular markers that actually tell a more complete story. Not a guess, not a maybe, a real look at where things stand. That's why taking your heart health seriously actually looks like. I use this, and you should too. Check your health the way I do. Function provides 160 plus lab tests for$1 a day and member pricing on MRI and CT scans.

15:41Join at functionhealth.com slash beginners or use gift code beginners25 for a$25 credit towards your membership. What's the best way to get started in the market? Download my ebook for free at stockmarketpdf.com. Yeah, that's a fantastic decision or a suggestion because again, it helps you narrow down your focus and it also helps you really learn that particular sector or industry really well, which even if you decide that maybe these four companies are not ones you want to invest. It's also more knowledge that you've gained. And if you ever have to come back to that industry or sector, that's knowledge you've already acquired.

16:21And so you don't necessarily need to require all of it. You may have to brush up on, if you're older like me, you may have to brush up a little bit more, but you won't have to do as much of the hard work. So I think that's a great suggestion. All right. So let's move on to Bruno's second question, which is, what are your thoughts on investing in ETFs like the S &P and QUTM or Quantum? So what are your thoughts on this question? Another great question. I really believe it depends on what ETF we're talking about. the I don't know there's pros and cons ETFs I love the S &P ETF I would recommend that for most people it's just you set it and forget it as long as you're confident in yourself and you know that I'm not going to touch this until I retire and I have multi decades until I do have to retire that's easy it's a slam dunk just don't freak out if the market goes down because you know that that's what it's supposed to do.

17:31What are your thoughts on QTM? That is, I think, probably a different beast. You were talking about the companies that were kind of under the hood of this ETF. And that has a big bearing on any ETF that you're going to invest in. You have to know what's in it. Like the one that Andrew was talking about a moment ago, the S &P 500, whether that's the Vanguard one or the myriad of other ones that you could choose from. Those are all a collection of the 500 top businesses in the United States. They're all put under one ETF. And that's a fantastic way to just invest in the, I guess, the economy of the US.

18:17And it includes all the big names that we're all familiar with, NVIDIA, Amazon, Google, Netflix, Microsoft, Amazon, Meta, Tesla, the Lion King. It just goes on and on and on. Anyway, so you know what's under the hood for that. When you're looking at any other ETF, that is very important to understand what's under the hood because that's obviously what's going to drive the returns on the ETF. Now, my first blush, when I first looked at Quantum, the first thing I saw was talking about quantum computers and that to me kind of was like that was kind of a hard pass no simply for the fact that I don't know a lot about quantum computing frankly I know very very little about it other than it's a different way of running a computer and that it is it's still in the early, early innings of this technology.

19:23And the early returns look like it could be quite promising and could be a pretty amazing breakthrough in how we figure things out, how we answer questions and whatnot. But again, it's very, very early innings. And a lot of the companies that I've seen bandied about in this particular thing aren't even generating revenue and already have billions of dollars in market cap because people are, in essence, gambling that this is going to be the next thing. And it very well could be, but we're so far away from whether this is going to pan out or not. So to me, it's very much speculative, but I will quantify that.

20:07Andrew took a moment and looked at what was under the hood and maybe you could share some of the companies and we could talk a little bit more about that. Yeah, some names I'm not familiar with. I'm just going to list some of the ones I am. Tower Semiconductor, Intel, Oracle, Baidu, Alibaba, MongoDB. So you got semiconductors in there. You have a cloud company, Oracle. Baidu is Chinese e-commerce or something. Not super familiar with them. Yeah, MongoDB being a cloud. So yes, the name of it is Quantum. And I didn't recognize the top two holdings, who those companies are, but each of the position sizes are pretty small.

20:53So the biggest one was maybe like 2%. And a lot of them were around 1 % position size. You're buying this, you're not getting a huge exposure to Intel if you hate Intel, for example, or Oracle if you think Larry Ellison is the worst human being on the planet. It's not a major, major allocation there. But yeah, it is interesting. I would have thought that it would have been kind of to your point of all these speculative non-revenue names, but these are definitely names generating revenue at this time. Some of the bigger ones. Yeah, for sure. And the thing with an ETF like that is you just need one of these companies to do well, and then the ETF can do well for you.

21:46I think when you're thinking about investing in these different ETFs, I think the way I would try to approach it or think about it would be, what are my expectations for this? Why am I buying this? And what am I hoping to get out of this? And so whether it's something, air quote, more traditional like the VTI or SPY that focus on the S &P 500 or whether you're looking at something on quantum or whether you're looking at something like that focuses on the airlines or focuses on the cruise ships or focuses on cloud computing or semiconductors. There is a gazillion of ETFs out there and you can find anything that you want to fit your flavor.

22:37So if you're going to invest in something like a quantum, you have to understand what am I trying to get out of this and what are my expectations? And also what is your time horizon? Are you expecting this to do really well in the next year and then dump it? Or is this something that you expect to hold for the next 10 or 15 years? And that sets up different expectations. So that's kind of how I would try to approach looking at these kinds of investments. And to your point earlier, Andrew, I think S &P 500 is kind of a no-brainer for most people. And something like quantum, I think I would probably put on more of the speculative bandwidth as I wouldn't put 50 % of my money in it, but maybe throw in one or 2 % probably wouldn't be a horrible thing.

23:25So I guess that's kind of how I approach What are your thoughts on any of that? I completely agree with you. It's funny, like you mentioned how some of these are not generating revenue. I'm getting Nikola. Was that the company Nikola Vibes? They crashed and burned. Similar story where they IPO'd and did not have revenues. So yes, there might be, quantum computing could very well be the next big thing. but we don't know who the company is at this time. It could be Google actually, could actually take a lot of this or it could be one of the companies in here and this ETF could have been the greatest thing you bought in your time machine going 20 years out.

24:13It's just a hard game. And you know what makes it hard too is there are so many ETFs coming out now, like so many flavors. The flavors just keep multiplying. the barriers to entry that make an ETF are not huge and so there's a lot of ETFs out there and so it's funny that a product vehicle that was supposed to make investing easy is kind of hard in a way because you do kind of want to know what's under the hood but again that's a lot of overthinking for something where if we're just talking about throw a couple percentage points at it and just call it a day, that could be fun too. So I just love to overthink things and really dive into the weeds on stuff.

25:05But yeah, for your general investor, having a percent or two in a thematic ETF, I think is awesome. Agreed. Agreed. Great question. All right, let's move on to the last question. So my goals are like most others. I want my portfolio to set me up long-term so I can buy a comfortable home. I partially listened to your housing episode with interest rates on savings. He asked, but are there ways to leverage my portfolio when taking out loans for a home? So this is an interesting question. And I'm curious what your take is on this. Yeah. I think we're starting to breach into high net worth type of strategies when you talk about using the portfolio for collateral for loans and things like that.

25:53And so I would just say it's out of my circle of competence. I would probably talk to your private banker and he could educate you on the ups and the downs. Let's just keep in mind, we grew up, I'm putting that in air quotes, we grew up on Warren Buffett and I grew up on Dave Ramsey, two guys who are very anti-debt. And so Warren Buffett was somebody who showed that you could build wealth without the whole debt spiel. A lot of people make a lot of money with debt, but a lot of people also go bankrupt with debt like Dave Ramsey did. So he's very anti-debt now as well. So I don't know. The overthinker in me really gets excited about the idea of squeezing out basis points here and there and using collateral and all these things.

26:51That's the overthinker. That's the CFO. That's the maximizer. That's the optimizer. the other part of me who's been able to observe other wiser people who talk a lot about debt kind of says you know what there are always instances that we are not prepare for that are unprecedented that are black swans as as Nassim Taleb calls them And so respecting that, you have to be very, very careful with debt. And even there are people who are anti-debt and they become very wealthy despite not taking advantage, in air quotes, of all the leverage opportunities with debt. So long-winded answer. Obviously, there's a lot of ways you can go with that, but that's kind of what I think.

27:43Do you have thoughts as well? The first time I heard about Bitcoin, honestly, I thought it was a scam. I did not realize it was something that would last, and I was wrong. Technology has made it so much easier to use these days, especially on Cash App. With Cash App, it was so easy for me to take the direct deposit I already receive, allocate a percent of that to automatically buy Bitcoin inside of the app, and I can use that as a form of payment in so many places. If you've been curious about Bitcoin but haven't made the jump yet, Cash App makes it easy. You can set up automatic purchases with zero fees or buy larger amounts also with zero fees.

28:20Start small or go bigger. It's designed to be simple either way. For a limited time, new customers can get$10 added to their balance. Just use code CashApp10 when you sign up. And don't forget this part. Send at least$5 to a friend in the first two weeks. Terms apply. CashApp is a financial services platform, not a bank. Banking services provided by CashApp's bank partners. Bitcoin services provided by Block, Inc. brand. For additional information, see the Bitcoin disclosures at cash.app. What is that? Oh, yeah, it's a World Cup holder. Like the soccer tournament World Cup holder for the world.

28:58Fits every car, holds every cup. It has a Carvana logo? Carvana made it. They buy and sell cars, so they made a car cup holder. So, got any good cups lately? I used to. I just couldn't figure out where in the world to put them. The World Cup Holder, brought to you by Carvana, proud sponsors of the World Cup Holder. Sign up today to win yours at cup-holder2026.com. Not authorized or endorsed by FIFA. Not a real product. For parity and fair use purposes only. I have similar thoughts. I would agree with you. In the whole investing world, we've cut our teeth with Warren Buffett and Charlie Munger and people of that ilk.

29:32And they have been very anti-debt along the way. And they have felt that it can lead to excess and ruin. And if not managed properly and correctly, and understanding the tiger that you have by the tail, so to speak, it could really come back to be very dangerous and detrimental to your fiscal health. that being said i've also we've also learned along the way i know i have that debt is not the ultimate evil that i kind of felt like it was at the beginning of my investing journey i've come to learn that there is as always in finance nuance to how these things are done and yes i would agree that the idea that using leverage on your investment portfolio to take out loans for a home probably sounds next level to me and is not something that I have any experience doing and I'm not in a position to do.