1

Transcription

1 A welcome back to Taking Stock, a course on investing. I am Ted Kerr. I'm the president and CEO of Touchstone Capital. Helping me on the call tonight, as, as in previous weeks is Maribeth Moore, a Touchstone Capital team member as well. She's responsible for helping all of you find out about this course in different ways and she's going to help us to continue to manage through the course tonight and in the follow up to tonight as well. So thank you Maribeth for all of your work. We appreciate it and have all benefited from it. Do you have any trouble or questions related to the course? You can contact us directly with, set up a special address at Ted@tedkerr.com, that's t-e-d (one Now you're going to be joined tonight and throughout the course by around 30 fellow participants who are taking the course with you. Most of them are watching it live, but some of them due to scheduling watch, the recorded version online as well. This course is for you if you're looking to become a more confident investor. It's also for people who are in their prime earnings years, saving a lot and wanting their money to grow as fast as possible, and it's for you if you're nearing retirement or in retirement and want to know more about managing risk at this crucial time. Certainly in recent weeks have increased people's attention to risk as the markets are struggling. You know, I just love investing. I've been helping people by investing their money and teaching them about investing for almost 25 years. It's really hard to believe. I want you to experience the same joy and sense of accomplishment as my clients have for many years. When you achieve your financial goals through investing, and that's really why I'm doing this. This training is going to go deep on five crucial topics. Of course tonight is the last of those five live webinars that will be the principal version of this course. The first lesson was about learning to invest with confidence. You'll recall that the big takeaway from lesson one was simply this, know what you own. That's the most important step you can take to investing with confidence, know what you own. The second lesson was about learning how to invest instead of speculate. We explored the most important concept in investing called the margin of safety, and importantly we also introduced to companies that will be used throughout the course as a case study to help us learn the key Taking Stock concepts. You'll recall those two companies were Aflac and Aetna and we're going to return to them again this evening. In the third lesson, we focused on understanding mutual funds and other products to understand what you truly own through those products. We built upon what we learned in previous lessons and introduced a new free tool called Morningstar.com. Which we're going to revisit again tonight to show you how you can determine if you're a mutual fund is truly an investment or has crossed the line into being a more speculative endeavor. The fourth lesson last week helped you to zero in on the primary drivers of investment returns. We discussed the four pack of the central measurements, which included, if you recall, operating margins, earnings growth, return on equity and debt levels. Finally, tonight in lesson five, we will deal with the plethora of financial information out there to help determine what you can ignore and what you should pay attention to. Wouldn't that be 1

2 nice in this day of inundation of news and media? In addition to the live Webinar each week, I've posted a recording of each webinar so you can go back and rewatch them as many times as you want along with a full transcription of the recording so you can actually read or reference what we've discussed. I've developed a special selfassessment survey that I've administered each week that you can take as we make our way through the course to determine what you are doing well and maybe what you need to work on a little bit. Finally, we're also posting some additional resources to the course website that we hope you'll find helpful. In previous weeks, we introduced some new features to our Webinar to help you get engaged with the lesson. You'll recall that we introduced a feature called snap polls. During a Webinar, including tonight. I'll prompt you to participate in a snap poll to help gauge your understanding and perspective on certain concepts. Second, we'll be using the built in question and answer feature so you can easily get your questions asked and answered. Whereas the staff poll will just pop up when I launch it. The Q&A will be available throughout the Webinar. Just click on the Q&A button on the menu button at the bottom of your zoom window and when it launches that separate Q&A window, you can just type in your question. Both Maribeth and I will be monitoring the Q&A and we'll respond accordingly. Lastly, you have the ability to raise your hand as we've done in previous weeks course. I mean that in a virtual sense, but I'll prompt you to do that just to check our progress at a certain point in the Webinar. Okay. Let's look at our agenda for tonight. In this lesson in part one we'll distinguish between company performance and investment performance. Now, most people assume those concepts are synonymous, but I can assure you they are anything but in part two I'll explain how investment performance is understood and what makes it so complex to monitor and evaluate. In part three, I'll explain how company performance works, its importance to investors and why it is relatively simple to track and evaluate. Finally, I'll answer your top questions as I have in previous weeks. First from the survey I sent out before tonight, and we've got some great questions from that as well as from the questions you submit tonight through the Q&A function. You know in lesson two we introduced two companies that are very similar, which we will use in this course to compare and contrast important concepts. You'll recall in that lesson and when we introduced the margin of safety concept, we told you about Aflac Inc in Aetna Inc. Both of them are large US based insurance companies with nearly identical operating profit over the last five years. We concluded that Aflac was an investment in the true sense of the word because it's earnings yield provided a generous cushion over the safety of bond yields, but Aetna on the other hand appeared speculative since it's safety margin was almost nonexistent. In lesson four, we demonstrated that Aflac is a potentially good investment because it meets or exceeds three of our four demanding measurements. It comes close on the remaining one. Aetna, on the other hand, fell far short signaling us to pass on this company for inclusion in an investment portfolio. 2

3 Tonight, we'll use these two companies one more time to demonstrate how to measure company performance assuming you were a shareholder and wanted to know whether you're making progress by owning one of these two companies. All right, let's go ahead and get started. Last week I let you in on an interest of mine. I've always wanted to fly and in fact I've got my pilot certificate back in This week, I'm going to extend the metaphor of flying and use it as a way to explain the difference between investment performance and company performance. Now you would think that measuring the speed of an aircraft like this Cessna 172 SP that I have actually flown would be straightforward enough. What complexities or controversies could possibly arise for measuring the speed of an airplane, but as you will soon see, measuring speed the correct way could make the difference actually between life and death. First of all, you should know that speed in an aircraft is measured in knots instead of miles per hour and knots is often abbreviated as it is here as K-T-S. In this slide. A Cessna 172 is shown, flying from left to right, at 120 knots, but you'll notice there are actually two speeds given. The first is the airspeed, which is 120 knots. The other indicated below is the ground speed, which is also 120 knots. Air Speed is the speed at which the air is traveling over and under the wings of the aircraft. It's actually what gives the plane lift. Depending on the weight of the plane, the angle of the wing and the size of the wing surface among other factors, a certain amount of airspeed is necessary to keep the aircraft a loft, so it's pretty important. Ground speed on the other hand is just that, it's the speed at which the aircraft is passing over the ground. If you were standing looking up at the plane, this is the speed you would observe. Note that while ground speed is important in certain regards, it's airspeed that is essential because that's what provides lift and it keeps the plane in the air. As you can see, the aircraft's performance when the air is not moving is pretty straightforward. The ground speed and the airspeed are the same, but what happens when you introduced the idea of wind? Obviously wind is a regular condition of flight, especially as you get to higher and higher altitudes. Wind begins to cause a disparity between airspeed and ground speed. In the case shown here, if there is a tailwind of 20 knots and the aircraft continues on with an airspeed of 120 knots, the ground speed climbs to 140 knots. It's basically the sum of those two numbers added together. Right? But what if the opposite scenario emerges and you experience a headwind. In this case, the aircraft's airspeed of 120 knots is partially offset by the 20, not headwind, resulting in a ground speed of 100 knots. The important point when flying is this, airspeed provides lift and is essential to flight ground. Speed is a product of airspeed and wind conditions which are largely out of the pilots control. Over the duration of a longer flight, wind conditions will change and could cause the ground speed to increase or decrease materially. But in order to maintain safe flight, the pilot is most concerned with maintaining a proper airspeed. Now you might be wondering what in the world does all this have to do with investing and how does it help us distinguish between investment performance and company performance, which is really the topic 3

4 of the evening. Well, I want you to look at it this way. The airspeed is like company performance. It gives you a truer sense of how the company is doing and whether the company is safe and making the right type of progress. Whereas ground speed is like investment performance. It certainly includes the impact of how well a company is doing, but it also includes the impact of numerous external factors. Hopefully this will become clear over the next several minutes as I unpack both of these two concepts for you. But before I go any further, I want to make the most important point of this lesson right up front so there's no questions and that is this. When monitoring your investments, you need this distinguished between company performance and investment performance. Evaluating and one is simple. Evaluating the other is complex. And this is so important, I'm going to say it again. When monitoring your investments, you need to distinguish between company performance and investment performance. Evaluating one is simple, evaluating the other is complex as you will see here in a second. But let's begin with investment performance. What is investment performance? Investment performance, which is also called total return, is made up of the increase or decrease of the stock price plus any dividends the company has paid. So if a company's stock goes up or appreciates 10% and the company pays a dividend equivalent to 3%, then the total return is 13%. That seems pretty straightforward, but it's actually very complex to monitor investment performance because of the number of factors that influenced that first piece, stock prices. I'm going to take the opportunity now to draw on a response from those of you who submitted the survey before this lesson. Over 80% of you indicated that one of the regular ways in which you monitor the performance of your investments is through statements you've received from your brokerage firm or investment advisor. The returns listed there are total returns and they're indicative of this manner of monitoring, the monitoring of investment performance, and can we just say it we've all been there. You've been there, you get your month end or quarter end statement and you see a precipitous decline in the value of your account and you begin to wonder what caused my account to decline so much. Let's take a look at just some of the factors that could have had an impact on your account values when you came to that point of opening your statement and drawing that conclusion. In any given period, the following items, and these are just an example of some of the things that could influence the price of securities in your account. Let's go through this list, weather like wild fires or hurricanes, changes in supply and demand within the economy, US and foreign elections, energy prices going up or down unexpectedly, shifts in global trade and terrorists, international terrorism, domestic terrorism, even aggression from other countries vying for command of the world stage like Russia or China. Big budget deficits, even global health scares can have effects on securities prices like the Ebola crisis of a few years ago. And finally the Federal Reserve who we affectionately refer to as "the Fed." 4

5 If you aren't aware, the Fed is probably the closest watch body of decision makers on the planet when it comes to investors. The slightest alteration in their were periodic statement regarding their policy of short term interest rates. Seemingly can cause the market to soar or collapse within minutes. So what's the point? It is this, if you are trying to monitor and manage investment performance, good luck. If you're trying to look at your monthly statement of account values and figure out all the things well enough to understand why your account was down 4.5% in last 30 days, then perhaps you're smarter than I am. This makes me think of a great Warren Buffett quote and this quote is both a commentary on this idea of investment performance and it's actually a great segue into our discussion of what I call company performance. Here's what Warren Buffet said back in 2003, about 15 years ago, he said "It's bad to go to bed at night thinking about the price of a stock. We think about the value and company results; The stock market is there to serve you, not instruct you." And I just think that's a great quote. You know, like buffet, I'd like to propose that there's a better and more effective way to monitor your investments other than to just watch prices gyrate up and down. This way of looking at company performance allows you to truly understand how your portfolio is performing. Wouldn't that be nice? Okay. Let's look at what I call company performance as an alternative to investment performance. Company performance is made up of changes in book value, which is basically a company's net worth plus dividends paid to shareholders, if any. Think about it, if you were a company and over time your assets went up in value and your debts went down in value, pushing your net worth higher, wouldn't you consider that progress? Well, believe it or not, it's really that simple and that's how we should look at the companies in which we're invested. Now, there are two principle advantages to monitoring your investments in the fashion I'm prescribing here. First, there are relatively few factors that influence book value and that makes it simple to monitor. You can know pretty easily what has affected the performance of the companies you own. Again, I say to you, wouldn't that be nice? Instead of opening a monthly statement and wondering what in the world happened, you can calmly and easily review your portfolio to determine the likely influences, but there's a second and perhaps even more important reason to favor this approach and that is this, and I'm going to read a quote directly here from the International Journal of Economics and Business Administration from a recent publication. It says this, "There is a positive and high correlation... between book value and market value... This indicates that the change in book value per share leads to a change in market value per share." Okay, let me say that to you again and perhaps a little more simple terms. If you are able to watch and verify that the book value of your companies is going steadily up over time, then you can rest assured that it's actually quite likely, statistically likely, that the value of your investments will go up over time as well. One measure, easily understandable and knowable, causes another important measure to change. Increases in book value lead to increases in market value, which is the price of the securities you 5

6 own. Alright, let's continue the explanation of company performance and then we'll get into a helpful case study to see exactly how this works. Companies typically generate profits over time. That's what they're built to do. Profits are simply what's leftover after a company sells its products or services and then pays all it's expenses. Believe it or not, there are only three things a company can do with these profits. First, they can pay a portion of them out to shareholders in the form of a cash dividend. In this case, the company's profit essentially becomes the shareholders profit right away. Second, the company can hold onto those profits which we call retained earnings and reinvest them back into the business, hopefully to grow it over time. You know this can make sense because most shareholders would love to see both the value of their investment and their income from their investment go up over time. Third, and finally a company can use their profits to make what are called share repurchases. Share repurchases means that a company goes out into the stock market and actually buys back shares of its own stock. The effective which is to shrink the number of shares outstanding. Now, if you're one of the remaining shareholders, meaning you didn't sell your shares, you actually end up owning a larger piece of the company's pie. So this method of monitoring performance, which we call company performance, is pretty straightforward. Companies earn profits and either pay them out to shareholders, generating an immediate return on investment or reinvest them to generate future growth and returns. It's management's reinvestment of retained earnings that caused book value to increase over time. Again, it's no different than your own household. If you have earned income over the course of a year and you pay all your expenses and have some profit left over, what do you do with it? If you retain some of that in the form of savings, your net worth, what we call book value, goes up. Well, let's look at how this works at the company level by taking a look at our case study, returning again the Aflac inc. Now for this, we're going to go back to Morningstar.com as we did in a previous lesson. Other websites and subscription services have the same information. I'm not favoring Morningstar, but this one is free and it's relatively easy to use, so we're just going to go back there. As before, we'll just go to the homepage of Morningstar and simply type in the company name, Aflac, to get started, and then we're just gonna hit the enter button. Just like before, we're going to simply click on financials as indicated here in the navigation bar. Once there, were going to go to the bottom, we're going to click on where it says all financials data. Now we're going to go back to the top and we're going to click on where it says balance sheet. Now, Morningstar has some work to do on their site because as you can see, after clicking balance sheet, a whole new navigation menu appears just above that. It's kind of strange. A previous previously unavailable item called key ratios actually shows up for us in this new navigation bar. Look, as far as I can tell, there's no other way to navigate to this very helpful page of information called key ratios. I know it's a bit strange, but oh well. All right, so let's click on key ratios. 6

7 Now, there are a lot of numbers here and I will understand completely if you're the type to have an allergic reaction to a spreadsheet full of numbers like this. What I've done is simply highlighted what's important. As you can see, there's two sets of numbers we're interested in. First, we have the dividends paid each calendar year by Aflac. This is valuable because it tells us exactly what the cash returns to shareholders has been each year going back over a long period of time. Second, we have the history of the company's book value per share. Again, this is the net worth of the company on a per share basis, so you know exactly what's happening to the value of the company over time, from the perspective of a holder of a single share of stock. In the case of dividends, I highlighted in blue the last three full years worth of dividends. That would be for the year ended 2015, 2016 and In the case of book value, I highlighted the beginning and ending value of that same three year period, so on December 31, 2014, the book value was $20.18 on December 31, 2017, three years later, the book value was $ Now let's build our analysis of the company performance using these simple numbers. However, before we move on, let's just check in with everyone to see how we're doing. I'm going to ask you to raise your hand if you're with me so far, just click raise your hand. Let me know. I can keep moving on because we've covered a lot of ground. if we haven't lost anybody, we'll keep moving, but if we don't see enough hands going up, I'll need to slow down or perhaps even back track over a couple of these Morningstar slides. Okay. It looks like a good number of you are sticking with us, so I think we'll go ahead and move on to the next slide. As you can see, I've summarized the numbers for both Aflac and Aetna on this slide. Now we're going to get to Aetna minute, for now, just focus on the column for Aflac. As you can see, the book value increased over this three year period of time from $20.18 to $ That's an increase of $7.96. In addition, shareholders received cash dividend of $2.49 over that span. Thus the total company performance was $ That included both the increase in the net worth in the dividends received. Pretty simple. Now, if you divide the total of $10.45 by the original book value of $20.18, you get a total percentage of 51.8%. Now that's simple and it's straightforward math. This is not complicated. The management of Aflac has produced a return to shareholders using these key measurements of over 51% in three years. Now, many people think in terms of annual return, that's natural. If you perform a slightly more complicated calculation, which I don't show here, what you would find out is that that's equivalent to a 17.3% annualized return. Now, I don't need to run a poll of those people participating on this webinar to determine if any of you would have been happy without results, right? Now, keep in mind, I've said nothing here about the stock price of Aflac. The stock price remember, is subject to all kinds of external factors. It's like I said before about ground speed. The effects of wind can wreak havoc on your ability to evaluate the performance of an airplane. Headwinds and tailwinds, they can mislead you as to how the aircraft is performing. In this case, what we've tried to focus on is how the company is truly 7

8 performing for shareholders and in the case of Aflac, it seems to be performing extremely well. Keep in mind what I shared on slide 12 earlier, there is a positive and high correlation between book value and market value, which means that a book value increases over time. There is a statistically likely chance that the stock price will go up by a similar amount and that's important. All right, let's turn our attention to Aflac's competitor of sorts, Aetna. I've gone on Morningstar and fetch the same information for them as I did for Aflac. As you can see, the book value began the three year period at $42.66 and ended the three year period with a book value of $47.68 for a net increase of $5.02. Now in addition to this, Aetna also paid a cash dividend of $3.75 per share for a total gain to shareholders of $8.77. This represents a 20.6% return on an original book value base of $ Now by comparison, the Aetna annualized return as just 6.9%. Can we say it's some rather pedestrian return compared to the somewhat astonishing rise of 17% a year for Aflac? I'll remind you again that this is not an analysis of the stock price performance. This is simply showing you how the companies themselves did in generating returns for their shareholders. Okay. Let's hit the pause button right here. We've covered a lot of ground. I want to make sure we haven't lost anyone before moving on to this final part of the presentation, so I'm going to insert a snap poll here just to get your feedback and get you thinking about some of what I've already shared with you. Okay? Now I want to try and use your imagination here for this poll. I want you to imagine that your monthly or quarterly statement that you receive from your broker or investment advisor did not include price information for your securities. Heaven forbid, right? What it listed instead was just what I put here under company performance. That is the change in net worth of the companies you own since you bought them or perhaps in the prior period and the cash dividends you earned since you became an owner. Now imagine an event happened that was perceived as very bad for the stock market. Let's say something really bad happens like a war an outright war breaks out in the middle east between Israel and Iran for example. As a result, prices of securities have fallen around the world. With your newly designed account statement, you don't see market values or prices. All that you see is the book value of your company's growing and the cash dividends you've received. Okay? So this is all imaginary and hypothetical. Here's the poll question. It'll pop up on your screen now. Imagine an event happened that was perceived as very bad for the stock market. As a result, prices of securities of falling around the world. With your newly designed account statement, you don't see market values or prices. Which of these statements would you find most in alignment with what you would feel. Would you find it reassuring because you can see that the companies you own are performing in spite of the apparent international turmoil? Or would you find this disconcerting because your statements don't in some way reflect the apparent impact of what's truly happening in the world? So let me just take a minute now and let you 8

9 guys read through that question and the multiple choice responses and see where you all fall on this. Okay. This is super cool as investment advisor, to be able to run these polls and to see your response. Now, my point in doing this poll is to help you to consider what monitoring your companies that you own could look like, could look like, in real life if you had the tools to do so, and if you could imagine focusing on company performance instead of headlines. In the case of the people on this webinar, I will report to you that 88% of you said that you would be reassured by simply only seeing the book value and the change in the company's progress and perhaps the dividends you received. Just 12% of you would find it disconcerting to not be able to see the actual impact of those price changes. So you can draw your own conclusions, but I think it's an interesting, imaginative exercise about how we think about the performance of our investments. Okay, let's move on. I want to go back to a slide from an earlier lesson called the essential measurements from lesson four, just last week. You'll recall that we compared Aflac to Aetna across four key metrics. I highlighted for you at the time that whereas Aflac appeared to be a great company with high operating margins and high returns on equity, Aetna was a mediocre or even a subpar performer on both counts. Now, it should be no surprise to us then that during this period of time, Aflac grew its book value far faster and paid more in dividends in percentage terms than Aetna. It really only makes sense. Aflac was more profitable, meaning it had more earnings and was more productive and its use of equity. So of course management would find a way to increase book value far faster and pay more in dividends than Aetna. And that's what I want you to make the connection about. If you do your work on the essential measurements and you choose investments that meet our criteria, then you greatly increase your chances of acquiring great company performances over time. And as we've noted, the ultimate correlation between book value and market value means that the prices of your investments should rise over time as well. Recall that I mentioned that there are three things companies can do with their profits or earnings. First, as we said, they can pay out cash dividends to shareholders. That's like making immediate profits for shareholders. Second, they can retain their earnings to invest back into the business. Hopefully that grows the book value over time. That's also good for shareholders. And third, you might recall I mentioned that companies can go out into the market and repurchase shares of the company to reduce the number of outstanding shareholders, thereby increasing your proportional ownership. If you retain your shares. We're going to go back into Morningstar. One final time to retrieve just a few more data points to talk about this idea of share repurchases. Now, this data is also found in the same key ratios section of Morningstar that I showed you how to navigate to previously. In this case, I've highlighted a different number showing the shares outstanding for Aflac at the end of each year. As you can see, I've highlighted in blue the year end values for 2014 and I want you to take note of these and then let's look at the next slide to see what's happening in the case of Aflac and those shares outstanding. As you can see, the outstanding share count for Aflac has 9

10 decreased from 908 million shares at the end of 2014 to 798 million shares at the end of That means that Aflac management repurchased an astonishing 110 million shares during that period. This had the effect of decreasing the shares outstanding by over 12%. Now, let me say this another way. If you were a shareholder of Aflac during this entire period, you would have seen your ownership interest increased by over 12% simply because the company had excess profits and use them to buy back shares. Companies that exercise share repurchases are great vehicles for wealth creation, for those who remain shareholders. Less shares outstanding means that the remaining shareholders have more profit per share and more book value per share over time, and this can have a compounding effect on an already productive company. Super exciting. Aetna, well, they bought back shares as well at a pretty healthy clip you can see on this slide, but at a slightly lower rate than Aflac of course, given the fact that they had less profits to work with. Okay. One last thing before we move on to questions. I just wanted to include here a note about the journal article I cited earlier regarding the correlation between book value and market value. if you want to look that up, here's the citation. We'll also include this in the resources download on the course website. I just wanted you to know where I got that important information regarding correlation between book value and market value. Okay. Let's move on to the Q&A. I'll begin with some questions that I came that came in through the survey during the week and then we'll roll right into questions that are posted here tonight, so if you have any thoughts, now's the time to start typing away and the Q&A. I'll get to those in a minute after after I cover the s that we got. All right, so the first question we got via the survey we sent is simply this, "It seems like the so called FAANG stocks, that's F-A- A-N-G, have taken a real beating in recent days. Are any of them worth investing in now?" Now, you may have seen some of the headlines in recent days regarding the precipitous drop in some of the popular technology companies. You might recall from lesson three, we discussed the so called FAANG stocks when we talked about the Fidelity Contra Fund and their inclusion in the top 10 holdings of Fidelity Contra Fund. FAANG, if you recall stands for, it's an acronym, Facebook, Apple, Amazon, Netflix, and Google. Google actually goes by the corporate name Alphabet, to make things a little confusing. Back in that lesson, we applied our methodology regarding margin of safety to those FAANG stocks to determine, apart from the fact that they may be great companies or not, are they safe to invest in? Are they too expensive? Are they at a price worth investing in? And we did this several weeks ago, right? Well, obviously things have been dropping since then. At the time of that lesson, when we did that analysis, we concluded that all five FAANG, stocks did not nearly have sufficient safety margin. Even if we did conclude they were great companies to merit investing in. Well here we are a couple of weeks later and there's a fire sale, right? Facebook is down, Amazon is down, Apple is down, Netflix is down, Google was down. All five of these companies are down significantly from their 12 months high. In fact, I have the figure to share with you 10

11 that came right across the wire today that I found astonishing. These five companies between them, since they hit their all time highs within the last year, have lost a total of over $1 trillion in market capitalization. That's trillion with a T. So there has been massive losses in these five technology stocks and I find this all quite frankly very affirming because all that I was telling you a couple of weeks ago was that there is no margin of safety. These companies have to thread the needle. Whatever metaphor you want to use, they have to get it perfect in terms of execution to just buy these high stock prices. And obviously each one of them, not surprisingly, is starting to struggle in different ways. Apple has announced a slowdown in iphone sales. Facebook is dealing with security and privacy issues and we could go on down the list. So, I feel affirmed. Now, the question is posed by this person are any of them worth looking at now. Well, I'm not going to give you a direct answer. I'll refer you back to lesson three. You can rewatch it. There was one of the five that we felt had a safety margin, not big enough yet to invest in, but by now perhaps is large enough to invest in and it happens to be a company that's in the Dow Jones industrial average top 30 companies in the country. And one of the few companies that actually meets most of the essential measurement criteria. So, this is not a recommendation, but if you're diligent and are interested, there may be a company out there who, because of the recent price declines, maybe appropriate for inclusion in your investment portfolio. All right, let's move onto the second question. Are there any good books on investing that you would recommend? This is a great question. We're obviously coming to the end of this course and for people who are interested in following up and learning more, obviously books are a commonplace to turn to for what can be trustworthy information. I'll have you recall, if you remember back this far, five weeks ago on the first lesson actually introduced the idea of following some of the great investors of all time. I mean many of them are older, wise, feeling magnanimous, and they share freely of their investment philosophy and how they do things and the mistakes they've made. And so there are some great books out there that really outline how these great investors did this over a long period of time. So on the course website, go back to lesson one, click on the download for resources and you'll see a list of four or five books I've recommended there that would be great starting points for you to formulate and investment philosophy and to learn about how some of the great investors have done it. If I had to pick one book, if somebody said to me, look, I'm going on vacation for a month. I'm not taking any other books with me and all I want to do is learn about investing. I would start with "The Intelligent Investor" by Benjamin Graham. It is the defacto standard for investing and it has been for 50 years. I'd recommend starting there, but you can find other books that are worthy of your consideration as well. All right, let's get back to online Q&A. Maribeth, I see no questions as of yet or as of right now. So we're gonna move on. Close to the wrap up here. Now, I truly want to thank all of you for participating in this lesson and this being the final lesson in this course that I've called Taking Stock. It's kind of a play on words, right? 11

12 I hope you've enjoyed the experience. More importantly, I hope that you're on your way to becoming a more thoughtful and confident investor. Just like in previous weeks, tomorrow you'll be receiving an . It's going to include a very brief survey to evaluate tonight's lesson, but I'm also going to ask you more general questions about the course at large. I hope you would indulge me by participating in that to let me know what you thought about it. There's also a link as we do each week to the course webpage that will have a recording of this evening's webinar, as well as watching other webinars that we've had over the last several weeks. There's a full transcript as well as resources you can download as you've heard me talk about before. Now this webinar was pretty dense with information rivaling one or two of the other ones we've done, so you know, take advantage of your ability to rewatch all or portions of these recordings and to view and download the transcripts and the slides as well if it will be helpful to you. I want to thank everyone again, as I've said to you before, remember today is a great day to take stock of your investments. 12