Rule #1 Finance Blog

With Investor Phil Town

InvestED: Episode 161 – Why You Should Be Tuning in to Quarterly Earning Calls

We are coming to you this week to discuss the wonders of Chipotle and why it is so important to be present during quarterly earnings calls for the companies you own. We are also announcing some exciting meet & greet opportunities coming up this weekend!

In Episode 161 You’ll Learn:

Remember, this podcast and the information in it is only to be considered for purely entertainment value and not to be taken as financial advice.

Chipotle

  • Phil does not think Chipotle will go down again, he bought at a great price thanks to options trading and is holding onto it (but not buying anymore unless it goes back on sale). It is not on sale anymore.

Quarterly Earnings Calls

  • Pay attention to the annual report, but it is also a great idea to attend and listen to quarterly calls.
  • Often, if the story changes it will be discussed in these calls and you’re going to want to know it before the “big guys” starting making moves and the price drops.
  • As a small investor, you have the advantage of being nimble and quick, you just have to be in tune to know about it.
  • The idea of Ownership – If you own 2 shares of stock think of it like you own the company – get in that mindset and you will be in good shape.

Show Notes:

Berkshire Hathaway Annual Meeting -Phil & Danielle will be there this weekend – All the Details


Episode 161 Full Transcript

Phil Town: Hey everybody this is Phil Town

Danielle Town: And this Is Danielle Town.

Phil Town: Welcome to the Invested podcast, we are so excited today.

Danielle Town: We’re so excited.

Phil Town: To be talking about the best investing strategies in the world that come from the best investors in the world who have been doing this successfully for 85 years. And if you didn’t grow up in a family with a lot of money and you didn’t grow up in a family where they understood proper investing then we’re going to invite you to join the Rule 1 family here.

Danielle Town: I was just thinking as you made that description wait do I qualify for that particular designation. Because I’m sort of going wait a second I don’t know what I’m doing. Did I grow up in a family with a lot of money that knew about investing. So I guess I would say to everyone out there even if you grew up in a family with people who knew about investing. And I have to say I’ve talked to a number of you out there who say to me hey my dad also is a financial adviser or hey my dad works in a bank or you know my mom taught people about accounting. Like people come up to me and say this stuff and they always end it with and I don’t know anything about it either. And I’m like yes because that’s not the kind of thing like unless you somehow have this special interest in those kinds of things it’s just not the kind of thing that you hear about at home. So it’s all of us Dad. It’s all of us.

Phil Town: I think it is actually, it really probably is. I mean man I mean it’s very hard for kids to just jump into adult activities that are sort of from a kid’s point of view not really very interesting until later, until you grow up and then you find out oh well interesting or not I better do this because I’m in trouble.

Danielle Town: Well you know what, nobody ever says-

Danielle Town: Yeah. Well, it’s like if you have a parent who is let’s say like a tax adviser. Nobody really expects you to be going around going oh my God what my parent does is so interesting. And I’m learning so much about it and I’m 8 years old. And even when you’re a grownup all of us want to avoid the tax stuff.

Phil Town: That is so true.

Danielle Town: Kind of like that but I think people who are in the financial world don’t think of it like that because you guys all think it’s fascinating and we’re kind of out here going oh, not sure about that.

Phil Town: This is, by the way, one of the great conundrums of modern life is that back when we were living in tribes. I have a certain romantic envy of tribal life. So you know because essentially you’re bringing your children up right there where you are all the time and pretty much everything you’re doing, male and female, is pretty vital, if you don’t do it well you’re going to die and you’re part of this community you’re deeply invested in and they’re deeply invested in you because you need to do well for the community to be OK. So you have this automatic great connection with your family. And then of course that evolves into farming ultimately, herding and then farming. Both of which are also kind of you know family enterprises.

Danielle Town: Yeah it’s true.

Phil Town: Really it’s the Industrial Age that set things off in and isolated are kind of skill set and made our skills incredibly difficult to learn. Like you know the skill of a surgeon, the skill of a lawyer, the skill of a great business mind take many many years of adult life to learn and access that. And I think investing is probably one of the easier things to access if we can figure out how to get kids started in it.

Danielle Town: That’s cool. Yeah.

Phil Town: We should think about that. We haven’t really thought about that much.

Danielle Town: You’re so right. And also another thing a lot of people have been saying to me since our book Invested came out is how can I get my kid, meaning like an actual you know under 15 kind of kid interested in this financial stuff, interested in investing because they see us as father daughter. And I think they don’t realize that I didn’t come to this till I was like 30 something. It’s a great question you know like looking back what would have worked for me and I’m frankly not sure what would have worked for me. But I think it’s something we could really think on.

Phil Town: And I honestly have been answering that question badly for most of the time I’ve ever been asked it because I always answer it well you know the apple doesn’t fall far from the tree. And so you know you really must be an investor for your children to be interested at all. In other words they’re going to do what you do. They’re not going to do what you say. So if you’re not following the good principles of investing, they’re not either.

Danielle Town: But I’ve always thought that’s good advice.

Phil Town: Well I’ve come to realize that even if you are following good investment advice your child probably won’t follow it either. So I think actually you have to do both. You have to it or your kids probably aren’t going to be at all interested and then we’ve got to find a way in that’s accessible to an 11-year-old.

Danielle Town: Yeah. So I’m working on it. It’s a good future project for us. So before we-

Phil Town: But for right now-

Danielle Town: Intrinsic value and technical indicators I got a quick announcement which we’ve now mentioned the last two episodes and now I have real information for you guys. My dad and I are going to be at the Berkshire Hathaway annual meeting coming up very very soon this weekend and we’ve got three different events that we’re doing all of which are on my website danielletown.com. If you go to the blog section or you go to the in the news section, it’s on both of those sections on danielletown.com and here’s what it is.

Danielle Town: We are going to be at this incredibly exciting book signing. It’s not just us. There’s 15 or 16 other authors who are going to be there including Warren Buffett’s grandson himself. So we’re so honored to be in this company at Creighton University in conjunction with their value investing panel. That is on the Friday, this coming Friday and it’s from 1 to 6 p.m. Then on Sunday. So Saturday we’re going to be at the meeting all day. Come say hi to us. Sunday we’re doing a live podcast from The Bookworm bookstore in downtown Omaha at 1:00 sharp. So come a little earlier than one and there’s limited seating if you guys want to be in on that and see how we do the podcast and we’re going to have special guest LJ Rittenhouse who I’ve mentioned a few times on here. I adore her and I think it’s going to be so interesting to talk to her because she is an expert on Buffett and on the meeting and is going to tell us all the secret stuff and then that podcast we’re going to put up as usual on Tuesday next week so everybody who’s not going to the meeting which I know is most of you will get to hear that on Tuesday as usual and then Sunday night or Sunday late afternoon we’re going to be at the airport bookstore signing our book, The Hudson bookstore in the Omaha airport.

Phil Town: And then Sunday morning.

Danielle Town: Sunday morning, what’s happening?

Phil Town: We’re running the 5k.

Danielle Town: Oh my gosh that’s not on my list dad.

Phil Town: Well we are running the 5K and all of the Rule 1 people are going to have on Rule 1 shirts, those will be like either t-shirts that say Rule 1 or their polo looking shirts that say Rule 1 and we’re running together in a big mob going my speed with my wrecked knee at about 1 mile an hour.

Danielle Town: OK. So as you guys can tell he has given me no information about this and we are now finding out that we slash he will be run walking Sunday morning. So obviously we’re just going to be around. Come say hi we’d love to meet all of you who are listeners and are at the Berkshire Hathaway meeting giving homage to the tradition of Masters. To Warren Buffett, Charlie Munger and all the other incredible investors who are going to be there. It’s going to be cool. I’m really excited. It’s our first meeting for both of us actually. My dad has never been to the Berkshire Hathaway meeting which is nuts.

Phil Town: Somehow which is sad really. I mean I’ve had many many many many years of opportunities. You’d think I’d run out there but I just haven’t. I’ve been watching it online but never actually gone and all my friends are saying get out here, you better do it. So and then I’m going to regret having not done it for the last 30 years.

Danielle Town: Well no time like the present.

Phil Town: No time like the present and moving along I want to take a victory lap, a victory lap is called for here.

Danielle Town: A victory lap?

Phil Town: Well yeah.

Danielle Town: What are you a victor of?

Phil Town: Well you know this podcast has just abused the name Chipotle Mexican Creole.

Danielle Town: Oh God.

Phil Town: Over and over and over again.

Danielle Town: Everybody is pressing pause on their playback.

Phil Town: Not again.

Danielle Town: Ah, Chipotle.

Phil Town: But this is an investment that, now, by the way, let me do this claim here that this podcast is not recommendations or advice in any way shape or form. You should always seek the advice of a professional who you trust and therefore these are not recommendations that we’re giving you right now, this is just entertainment and education only, how’s that sound Danielle, is that pretty good for a non-lawyer?

Danielle Town: That’s 100 percent correct. And we do not know your financial situation. We don’t know anything that’s going on with you. So that is why this is not advice in any way. Take your own counsel, find the counsel of somebody else who does know your financial situation. Do not listen to us. This is pure education and entertainment and it’s not legal or financial advice.

Phil Town: Here comes the entertaining part. I’m entertaining myself. …basis in Chipotle, I’m ballparking because we-

Danielle Town: When you say we who are you talking about? Is that your fund?

Phil Town: We, well me. Me. Me.

Danielle Town: Oh. OK.

Phil Town: I’ll just say me. Not a basis in Chipotle driven down by options trades that we do over time. Very low-risk options trades I have not taught Danielle yet.

Danielle Town: No.

Phil Town: Down to a ballpark, I’m ballparking here about 260 to 280 a share, I’m not positive.

Danielle Town: You got that down with options trades?

Phil Town: Oh yeah.

Danielle Town: Whoa.

Phil Town: We’ve had some of our students get the basis to zero on stocks. In fact, it’s one of the things we go over in the workshop now a lot, is we show like The IBM basis driven to zero. Oh man. There’s been four or five-

Danielle Town: I’m going to let you take your victory lap. But I’ll just say I mean as you guys all know who listen I have deeply avoided options because the second I’ve waited in they’re so confusing that I know that I would get totally screwed up and not accomplish what you just described. But for me now doing my investing practice for a while, like a few years and feeling more confident I’m starting to see kind of the benefit of this so who knows what could happen in the future. So that’s amazing that you did that with options trades.

Phil Town: And it was quite fun. And I believe that you made an investment in Chipotle, did you not?

Danielle Town: I did. So I haven’t really said this publicly and this is a whole other discussion that I’ve been thinking a lot about is how to put this, like I feel very private about my investments, like it feels really personal to me and that’s why I occasionally on the podcast I’ll kind of you know mention something or my dad will mention something and I don’t really get into it. So it’s something I’ve actually been thinking quite deeply about. What do I reveal publicly? What’s comfortable? What’s a boundary I need to push through and what’s a boundary that’s healthy? You know?

Phil Town: I can tell you right now-

Danielle Town: Oh you’re going to tell me.

Phil Town: In my humble opinion you’re completely correct in holding your cards close because you remember the basic idea is that we like to buy these companies when they’re on sale and then we like them to go down. You want to buy more when they’re cheaper. So coming on a big podcast like this that’s listened to by thousands of people is a wonderful recipe for driving up a stock price. You can say oh Danielle’s buying it then everybody who doesn’t want to do their own homework or seek counsel will run out like a bunch of morons and buy the stock without even thinking about it just because somebody they’re listening to happens to be buying that stock which is completely stupid.

Danielle Town: It’s completely stupid.

Phil Town: You never do that. And they’ll run out and do it and of course, then all of that activity is out there on the stock, the stock goes up, not down. You want it to go down. You don’t want it to go up. Right?

Danielle Town: Yeah.

Phil Town: Now the reason I’m mentioning Chipotle right now, that we’ve got investments in it is because it has exploded upward and I don’t think it’s going to go down anymore. I think that boat has sailed. And so I’ve bought all I want in my portfolio and the only way I’m buying more of it is if it drops back down into that 280 range then I’ll buy more. But it’s at 422 a share right now. It exploded up, I’m ballparking your purchase price at around 300. I think that’s close. So both of us are sitting here right now with about a 40 percent return. You’ve got yours in less than a year and that is another really impressive, so you I will say you are killing it. You are just killing it in your portfolio right now.

Danielle Town: Thank you. I’m not saying that those numbers that he just said are exactly accurate but yeah.

Phil Town: I can say that they are not exactly accurate.

Danielle Town: They’re not exactly accurate.

Phil Town: They’re wrong high or low, I don’t know which way.

Danielle Town: But yeah I actually, so many people have been asking me like how much work I put into investing. And let me give you an example. I did not know that the Chipotle price popped up today until my dad informed me of that just a few minutes ago.

Phil Town: Oh hunny, it didn’t pop up today. It popped up days ago.

Danielle Town: Oh OK. So I pay no attention because I am in this company for a long time although it is occurring to me right now that I know I set a Google alert for Chipotle and I don’t think I got any Google alerts, maybe I need to check that. Investing fail.

Phil Town: But can I just say one more thing. I just I have to be your dad here for a second. And that is that Chipotle jumped up on the news from its quarterly earnings report which is your homework. You’re supposed to do that one.

Danielle Town: No totally.

Phil Town: You’re supposed to pay attention to the quarterly earnings report.

Danielle Town: Dad, I do except not on the day it comes out. I check it like later on the weekend when I have time.

Phil Town: OK that was, let’s see last weekend.

Danielle Town: Well I didn’t do it last weekend.

Phil Town: This sounds more and more like really bad excuses for not noticing that the earnings report came out midweek last week, it went right through the weekend. It’s been almost an entire week since they did it and the earnings reports are very very important if you own a company.

Danielle Town: Alright. So let’s talk about-

Phil Town: Listen to the CEO who’s brand new by the way from Taco Bell.

Danielle Town: I know. I know about that.

Phil Town: Right.

Danielle Town: Let’s talk about this for real though. Like not joking about it because this is truly how I handle my investing and maybe I need to pay more attention but I don’t know. It makes me happy not to pay attention. So, first of all, I have absolutely and this is the truth. I have absolutely no idea what price I bought that company at. I can look back at it. But as of right now I have zero clue and I like it that way. I love it that way because it doesn’t matter to me. I’m pretty sure that the number started with a 3 and that is all I remember.

Phil Town: Well I’m pretty sure you’re right since it’s been at a 3 or lower like I think the highest it’s been ever since you started getting interested in it is around 325 or so.

Danielle Town: Yeah yeah. Which may have been when I bought it. I have no idea. I don’t think it started with a 2.

Phil Town: Danielle is being a little facetious when she says she has no idea because she actually does have an idea that she bought it in some way or another on sale.

Danielle Town: Oh yeah definitely.

Phil Town: And then once that happens and then fine, you forget about it.

Danielle Town: Here’s what I’m trying to express. That’s what I’m trying to express. Once it’s bought I kind of forget about it. Like I definitely paid a lot of attention to the price at the time and I actually remember getting stressed out about exactly what I got stressed out about when I bought Wholefoods which was like oh my god it went down 2 dollars right after I bought it and if I had only waited for one day it would have changed what I bought it at and then I got all stressed out about it.

Phil Town: [crosstalk 00:18:56]

Danielle Town: And then I bought another traunch and I was like oh I should have bought it earlier. I should’ve bought it later and I got really stressed. And that is why forgetting about it makes me really happy because I don’t like thinking about numbers like you’re a numbers person. I’m not. It doesn’t make me feel good to think about that stuff or to remember it, like it doesn’t give me any like good touchpoint where I think for you it gives you like a good sort of basis from which to think about your companies from there on. So I forget about it.

Phil Town: Well you can’t forget about it completely. You have work to do as an owner of a business and I want you to take seriously-

Danielle Town: I’m getting to that, I’m getting to that.

Phil Town: Well good cause we need to get to that part.

Danielle Town: Yeah so that’s why I’m saying let’s talk about this seriously because this is how I handle my investing practice and maybe you think I should do it differently. So, purchase company, immediately forget what price I bought it at. Kind of automatically but a little bit like I’m not trying to remember if you know what I mean. Then set my Google Alerts so that I don’t really have to pay attention, it’ll just show up in my e-mail which maybe I screwed up on because I didn’t get a Google alert.

Phil Town: Yeah, you got to make sure you actually get the alert.

Danielle Town: Yeah you definitely got to do that. I was getting them for a while and then-

Phil Town: You should set them so you don’t get bothered by trivia.

Danielle Town: Yeah which is hard to do which maybe that’s why I stopped getting them because I think I was messing with it. So then what I do, and here’s the part that I think you might have a problem with. I don’t really, like I know that quarterly there are earnings calls but I actually initially when I first started put those calls on my calendar and you know treated them like I needed to be there. And it kind of made me feel stressed and like it made me sort of pay more attention to the price and I didn’t really like that feeling because I want to be in a company for the long haul. And so I actually took them off my calendar, the earnings calls and started just thinking like okay I’ll get to them when I get to them, like it’ll be after they happen, maybe a few weeks after.

Danielle Town: I’m not going to know what’s happening with that company right on the day that it’s happening. Now what a lot of people would say to that is that’s really stupid because when earnings calls happen the prices either jump up or jump down based on a lot of stuff that happens on those earnings calls, sometimes they the same but often there’s a big movement based on what happens with those quarterly reports. And so I’m not paying any attention to those things until later when I check it to say like OK what’s going on with the company overall, what’s my opinion, is an event happening, has the story changed with more reflection and time and perspective from doing that a bit after those calls happen and after those reports come out. So that is how I’ve been approaching this. What do you think about that?

Phil Town: I think a couple of things. First that it’s a good thing to not get caught up in price and I applaud that part of this whole thing in terms of you know doing what you have to do but emotionally not get caught up in the day to day price movements. But I think it’s important that you pay attention to the story and the story that we create around a company is vital as we go forward because we want to watch for story changes right. If the story is changing we want to know that. There are changes to the story which are pretty important right. Like if for example the CEO of a company came out and said well we are going to completely change our business model of railroads into telephones. You’d want to know that right. You’d want to know that and you’d want to know it right away and the reason you’d want to know it right away is that there’s going to be some aggressive movement by fund managers to exit that company for the very reason that you might be thinking about exiting that company as well. The uncertainty level of the future just went skyrocketing through the roof.

Phil Town: And here’s the thing. You have an advantage as a small investor over these fund managers. It takes them weeks and weeks to exit that position, often six to eight weeks to fully get out of a large position in a company without cratering the stock whereas you can exit completely boom in one second. That’s a huge advantage that you give away by waiting a week until you listen to the earnings report.

Danielle Town: Jeez, that’s a really good point dad. Alright.

Phil Town: I know, I know.

Danielle Town: But how do I square that with my very strong desire to not be attached to the price once I’ve bought it?

Phil Town: Well you got to be attached to the story.

Danielle Town: Yeah so maybe that’s how I square it.

Phil Town: You know forget the price. This is about whether you want to own the company or not.

Danielle Town: It does yeah, that does. I’ve been thinking about the earnings calls as just being about price. But you’re right they can have a real strong story effect.

Phil Town: There’s another thing about earnings calls that I really like and that is that many times the corporations don’t transcribe all the questions that are coming in from research analysts at all these big banks and those questions can highlight problems with the story that are very important. I really like the idea that you listen to the questions. You’ll learn a lot about your company. And the other thing is that just automatically you have a sense of whether or not you should really own this business if you just can’t stand listening to this earnings call. Like maybe this isn’t a business that you’re really interested in.

Danielle Town: That’s my too boring box which is a very important box.

Phil Town: Forget too hard, it’s the too boring problem.

Danielle Town: That’s right.

Phil Town: OK. Now having said all of that I will say that Warren Buffett does not come out with big quarterly reports. He comes out with annual reports. He feels at least as far as Berkshire Hathaway goes an annual report is sufficient for the shareholders to know what’s going on in the business and to make a judgment about the value of the business. So I’m not going to say you’re 100 percent off base by just pushing these things out to a point where you don’t care about the price, you’re getting the information later. It’s not critical but I would say at an absolute minimum you’ve got to pay a great deal of attention to the annual report.

Danielle Town: Well that one yeah I agree with that. But we’re talking about quarterly.

Phil Town: Right.

Danielle Town: So what you’re saying is. Well here’s what I hear you saying. I should be there on listening to the earnings call on the day that it happens because there could be big movements after that.

Phil Town: Yep. If the story changes you’re going to want to know it. Now again I’m going to say I don’t, this is going to be critical once or twice in a blue moon. OK. For example this quarterly earnings report for Chipotle all it did was highlight how great they’re doing.

Danielle Town: Yeah yeah.

Phil Town: You don’t need to be there for that. All right.

Danielle Town: But I hear you that probably all it takes is one experience where something bad comes out. And I wasn’t listening at all of a sudden I’m going to be there on every quarterly earnings call. From then on because that’s it ad experience

Phil Town: Shocker. I remember with this company called Geel Dan, they make t-shirts-

Danielle Town: Yeah you’ve mentioned that a few times and we put that example in our book Invested actually.

Phil Town: And it’s just a really good example because in this case, I don’t think it was even a quarterly earnings report. It was just the CEO made a big news you know whatever you call it, you know big-

Danielle Town: Announcement.

Phil Town: Announcement and announced that they were going to just lose a lot of money over the next year because of cotton prices being so high. And as a small investor you have the ability to be pretty nimble and you know if you’d paid attention right there knowing full well that the big institutions are going to be bailing out like crazy regardless of the long term value of the business being unaffected by the short-term cotton prices they’re going to get out because the problem is going to last a year or so. So they’re bailing like crazy. You know that they’re going to bail like crazy from just studying investing properly and that means you could have exited at forty-five dollars a share and bought your entire position back at fifteen dollars a share like half a year later. So those kinds of-

Danielle Town: Wow.

Phil Town: Those are not critical because if you just stayed with it long term you know that 45 dollar investment right now I think is worth 60 anyway, maybe more but so you would’ve done all right. But imagine if you’d gotten out and then bought back in.

Danielle Town: Sure.

Phil Town: Three times more shares of stock and those shares then went to 60.

Danielle Town: Yeah.

Phil Town: Wow.

Danielle Town: Ah man I’m really processing this information. I feel a little like bummed out I have to say. Now I have to go back to having it on the calendar and paying attention. But I mean I totally get what you’re saying. And maybe that’s just part of being an investor. You can see how excited I am about this.

Phil Town: An owner.

Danielle Town: Owner.

Phil Town: So it really I mean clearly one of the things that you’re not taking as seriously as I would like is the idea of ownership, if you own one share of a stock you own the whole company. If you own all of this business and that was all of your money wouldn’t you be kind of paying more attention.

Danielle Town: Yeah, yeah.

Phil Town: Okay. Then to the degree, you would pay more attention if you owned it all. That’s the degree I want you to pay attention as a partial owner. So we should always treat the purchase of the company as if we’re buying the whole thing. And if it’s the only business we’re going to own the rest of our lives. And that’s why we just can’t buy you know 50 companies, you just cannot possibly keep up with that and have a life. Right, we’re not full time doing this.

Danielle Town: Exactly.

Phil Town: So you got to keep the number of businesses limited because you’re going to focus on those businesses and understand them as if you were an owner of the business, like a real-

Danielle Town: I think you’re right. I think I have not 100 percent, with Wholefoods I did, but I have not a 100 percent been thinking of myself as an owner. I think you hit the nail on the head. And that’s something I really need to work on and it goes to what I said at the beginning of this episode which was I haven’t really said that I owned Chipotle, like I haven’t really, like I have not stamped my name on that company.

Phil Town: There you go.

Danielle Town: And just because it’s gone up now like it’s a classic ridiculous investor thing to do like oh it went up so now I’ll tell everybody about it. That’s so irritating. You know like feel free to send me hate mail about that one. I’m irritated at myself over that.

Phil Town: I was going to say something to that effect, that it is you know incredibly self-serving to only mention the things that go up.

Danielle Town: Completely. So yeah. And I think I need to really think about this a little bit more, like how invested am I. Like if I’m going to own something I think I should have to stamp my name on it and I think I should be paying more attention to those calls. I think you’re right. Do you do that? Do you watch or listen to the earnings calls on the day as it’s happening? Because I have never seen you do that.

Phil Town: I do some of the time because on a lot of these earnings calls are coming after hours, they’re either before hours like at 8:00 in the morning or they’re after hours at 4:00, 4:30, something like that, Eastern. So life gets in the way. But I get on it as quickly as I can.

Danielle Town: Which is like the next day or?

Phil Town: The next day.

Danielle Town: Or a week and a half later like me.

Phil Town: No I do sit on it. And I have to confess though I actually prefer to read the earnings report transcript if it’s got all the questions in it and over on Seeking Alpha they’ve got those transcripts there. So because I could just do it so much faster than listen to people talk. But there are some earnings reports where it’s important to go and listen because for example Chipotle has a new CEO.

Danielle Town: Well what I’ve done is treat it like a podcast and I just listen to it while I’m doing other stuff like I actually have listened to them while I’ve done yoga at home. I listen to them while I do the dishes. You know we’ve all got stuff to do where we can just listen or like you know a lot of people listen in their cars.

Phil Town: But here I will tell you this honey. I think that it’s very important for you to keep up as an owner of the business. And I think if you buy really good businesses it’s not a requirement that you listen to them every quarter. It is a requirement that you listen to them every year. But I would hate to have people on this podcast decide it’s just too much to listen to this stuff every quarter and-

Danielle Town: Yeah. It feels like a lot. It feels like a lot.

Phil Town: If you own 10 companies, it’s 10 hours a quarter which is a lot. You know when you get right down to it. So if you shift that to annual you may give up the occasional big change in the story and you somehow never hear about it but you know-

Danielle Town: But that’s what the news alerts-

Phil Town: I don’t think it’s that critical to be on it quarterly. I guess now that I’m thinking through it I don’t think it’s so critical that I would say you have to do it or you shouldn’t invest. I would say you should invest and you have to do the manuals and make an update on what you think the value of a business is and whether the story’s changed and it’s best if you listen to the quarters. But it’s not required. How about that?

Danielle Town: Well that is very different from where we started which was chastising me for not listening to it for an entire week and a half.

Phil Town: It is very different but I started to realize I might be throwing the off switch on a bunch of investors who would otherwise massively benefit from you know just doing it once a year. I mean you’re still going to be way ahead of the investing game then putting your money into mutual funds in my opinion if you just [inaudible 00:33:50]

Danielle Town: I’m going to think more about this everybody. Because I think a lot of you feel like I do and I’m going to think more about this, think about how I can better, I mean I’ve been very comfortable with this idea like oh I’ll sort of catch up with it you know when I have some time on the weekend and I’m going to think about if that’s a good way to go, if you’re right dad that listening to it very close to the day is the way to go. It’s almost like you’re saying a little bit either listen to it close to the day or just don’t really worry about it.

Phil Town: Yeah I’m very conflicted about this right now.

Danielle Town: I know. I think we need to think more about the-

Phil Town: Just looking at you and the hesitation that that creates, we have a stack of quarterly reports you got to listen to, makes me nervous that we might be turning people off. So let me say that what’s the downside of listening to it once a year. OK. The downside of listening to it once a year is that the story changes somewhere in the intervening year and it’s in a significant way and you’re not paying enough attention to know that it has and that you should be exiting this investment. That’s the downside. I would say that that downside doesn’t happen very often in wonderful companies. So it’s not going to happen very often to you. And when it does you know you could find yourself giving back some of the profits that you made or giving back your original capital some of it which would be terrible. And once you do that it will make you want to pay more attention. So I’m very conflicted about this. I want to tell you you should really do it, on the other hand I don’t want you to not invest if you don’t feel that committed.

Danielle Town: Well here’s what I’m going to do. I’m going to do it just like I’ve done everything else here. Practice it. See how this works for me. Probably for the next six months or so. So like the next like let’s say two rounds of quarterly calls and I’ll let you guys know what I think. We’ll see how it’s, if I can do it on the day like does that make me feel pained for lack of a better word, like does it feel like work or does it feel like a good part of my life the way this investing practice has really turned into being for me so more to come on this. I’m going to ponder this one.

Danielle Town: And we’re going to talk about technical indicators. Guess what, next time. Because we got to go.

Phil Town: So sorry. And the good news is I think they’re still saying stay with the market so what that’s worth.

Danielle Town: Thanks everybody and hope to see you all at the Berkshire meeting. And we will be talking to you next time with our live podcast from that meeting on Tuesday so you’ll get to hear all about it. Talk to you then.

Phil Town: Bye.

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On the InvestED podcast, Phil and his daughter Danielle shine a light on the successful investing strategies that gurus like Warren Buffett have used for 80 years. Listen in for a great stock market education on basics, learn how to invest on your own, and follow along with real-time examples and investing tips from week to week.