Smattering Podcast 64: The Smattering Turns 1
Plus, Jason is still a better stock picker
64. The Smattering Turns 1
[00:00:00] Jason Hall: Hello everybody, and welcome back to The Smattering, a very, very special edition of The Smattering, where we ask the hard questions about investing and finance. I'm Jason Hall joined as usual by my dear, wonderful friend and amazing partner on this venture. Jeff Santoro, the voice of the people. What's up Jeff?
[00:00:22] Jeff Santoro: Hey, how are you friend?
[00:00:24] Jason Hall: Good. I got my, I got my deep voice going on, man.
[00:00:26] Jeff Santoro: Yeah. You sound congested.
[00:00:28] Jason Hall: Yeah, we've been going through the plague. So, a mutual friend of ours, whose name shall not be mentioned, happened to pass through my home for roughly 36 hours, and brought all of the plagues with them in their, in their spawn, and spread them throughout my home. My wife got COVID. She was sick for a little bit. She has a superpower. So, didn't knock her down. I was convinced that I got COVID, but it wasn't, it wasn't. I've just got this little cold thing, but, but it's not going to stop me, Jeff. It's not going to stop me.
[00:01:03] Jeff Santoro: No, you are, you've done this, you've done the podcast with pneumonia. You've done the podcast with a bad cold. You are, you were like the U. S. Postal Service, you know, through all types of weather. You are here.
[00:01:15] Jason Hall: Yeah. Yeah. That's, that's me. And I deliver. I absolutely see that. It was good. It's good. So Jeff, why is this special? What's so special about this particular episode?
[00:01:25] Jeff Santoro: Well, this will come out just a few days after the one year anniversary of the beginning of this podcast. Our first episode went out on August 3rd, 2022. So This is our one year anniversary, look back episode. We're gonna take a, take a little trip down memory lane. For those of you that have been with us for most of, if not all of the past year, we want to really, really thank you.
[00:01:52] Jeff Santoro: It's been really fun to watch the podcast grow from very small, humble beginnings to where we are now. But it's been even more fun to know that there's some listeners that have been with us for forever. Pretty much the entire time, from episode one, all the way through this one, which is 64.
[00:02:11] Jeff Santoro: So we're gonna look back. We're gonna talk about, ask each other some questions about the past year. We're gonna tease some new stuff we have coming down the road in the future and hopefully this isn't too, navel gazing, self aggrandizing for our audience to take a minute and look back at our one year anniversary.
[00:02:30] Jason Hall: I'm hoping it'll maybe encourage the people to go back that haven't been around since the beginning and maybe listen to some of the earlier episodes. Cause there's a lot of stuff that we think is pretty evergreen that can be useful. And like, that's one of the things that we try to focus on is obviously when things are really topical and relevant, we want to talk about those things if we think they're interesting. But a lot of the things we talk about we want people to be able to listen to this podcast in five years and they still apply.
[00:02:54] Jason Hall: Before, before we get into the, the, the nuts and bolts of this conversation, Jeff, I just want to remind everybody, we have grown this podcast a lot. And, and a big part of that is those of you that have made it a point to go in and put a rating. We love those five star ratings, but we want you to be honest because the feedback does help us. So give us a rating. And if you can throw in some words in a review, like how you found the podcast, what you like about it, it really, really helps.
[00:03:22] Jason Hall: We consistently just, it seems like almost week over week and definitely every month. We continue to grow. And a big part of that is because people find the podcast because you guys are giving us a feedback and you're rating it in your, in your podcast app. So thanks for that. And please continue to do that.
[00:03:39] Jeff Santoro: Yeah. And just, I want to shout out a couple of people just in the last month or so. We've gotten a couple more reviews on Apple podcasts. So, JBDenley gave us a nice review a couple weeks ago. ElMarko9 back in the beginning of July, Dan D in June. So if you could be so kind as to not only do the stars, but also write a couple words, we would, we would really appreciate that.
[00:04:02] Jeff Santoro: All right. So Jason I think a good place to start as we look back on the year is, what has changed about the podcast? So I was thinking about this myself.
[00:04:13] Jeff Santoro: It's hard to remember our where we were about a year ago, but I think essentially when we started, we had a couple ideas what we wanted the podcast to be. We spent some time talking through it, but I think we also were, I don't know, I guess smart enough to say to each other, but it's going to change over time. It's going to evolve. We're going to have to see where it goes. See how we're feeling, to try some things, see how they shake out. So let's, I guess, start with what has evolved over the past year with the podcast?
[00:04:43] Jason Hall: So the first thing is they've gotten so much damn longer. Our first episode and it's, it's really just an intro, it was 10 minutes. And then, they, from there, they were between 20 and 25 minutes for the most part for a while. And now we're typically close to an hour, most, most episodes. So that's one thing that's definitely changed.
[00:05:04] Jason Hall: We've also, fallen into this kind of once a week cadence for a while there. We were doing stuff a little more often. We were also like, we have our YouTube channel that's mostly stock talk, right? We make videos about companies that we're interested in, or maybe companies that are popular and maybe we don't like them, we want to share why we don't like them. And I do a ton of that with Tyler and with your day job, it's harder for you to do as much of that.
[00:05:29] Jason Hall: But what we did for a while is we were starting to put some of those into the podcast feed. And we've backed away from that a little bit. And I guess the way I think about it, Jeff, and it's interesting because this didn't actually, this exact way to think about it, even though it's the way that we've approached it from the beginning, is that we've started with framework, right? And not like, rules.
[00:05:52] Jason Hall: There's certain promises that we've tried to be consistent with. Like we, as we hit our stride, like the promise, like you have an expectation. I know we, maybe this sounds kind of goofy, but I mean, we did, we have a relationship with, with everybody that listens to it.
[00:06:08] Jason Hall: We have, there's an expectation that we set with our cadence of publishing new content, and I feel like we've done a pretty good job of evolving in a way that our listeners seem to like, but also works really well for us because this is a thing that, you know, we don't, you know, we're not making a lot of money to do this. It's still a labor of love.
[00:06:33] Jason Hall: And that has not changed for me. I love, I absolutely love doing this. Maybe more now. Then when we began, what about what about you?
[00:06:41] Jeff Santoro: Yeah, I mean, you hit on the big changes. I think, when we started, we were, I remember saying to you, like, 45 minutes is probably plenty.
[00:06:48] Jason Hall: But I was so like, like, I was the one really pushing back about doing the longer form stuff. And you're like, no, it's fine.
[00:06:55] Jeff Santoro: Yeah. I mean, I listen to a lot of podcasts. So I think for me, the idea of 45 minutes to an hour is normal. That's what most of the podcasts I listen to come in at. I don't really think it matters. I mean, , even now, sometimes we'll do a shorter episode. Sometimes we'll do one that's slightly longer. I don't think it's a deal breaker for anyone.
[00:07:13] Jeff Santoro: I do, I know I asked you what's, what has changed. I think what I, what I wanted to talk about was what hasn't changed. And I think this is something we both talk about a lot, trying to make sure we keep doing and we're going to keep doing into the future, which is try to always bring back what we're talking about and especially the guests we bring on, to try to bring back what they talk about, to the basic idea of how does this relate to the frameworks we all use as individual investors to keep being good individual investors.
[00:07:47] Jeff Santoro: So it's like our north star. And for as many things as has have changed, the evolution of the YouTube channel, we've added the transcripts, we've added the newsletter, we've really tried to stick to that core tenet of let's have normal, honest conversations like we would if we were hanging out at a bar about investing, be humble in our answers, give our answers, as we say in our disclaimer, every, every episode and not try to act like experts. Even when we have a level of expertise about certain topics.
[00:08:19] Jeff Santoro: All right. So next thing I wanted to ask you, so we, this is our 64th episode. So we've done a bunch of these. Do you have any favorites? Do you have any, any favorite episode or episodes that stick out to you?
[00:08:32] Jason Hall: So the one, one thing in general that I really like is I love it when we do mailbags, those are a lot of fun. There's a lot of fun. I feel like they definitely serve our listeners, but also they- getting ideas from other people about fun things to talk about. I really, really enjoy that. I really enjoy that a lot.
[00:08:48] Jeff Santoro: Yeah, agreed.
[00:08:49] Jason Hall: I, I also, I think I'm, I'm, there's another question you're going to- that we've got on our, on our list here to talk about. And this one might be my answer for both. But Jim Gillies was a lot of fun. I think the conversation with Jim might be my favorite conversation and it was so long, we had to do two episodes, like that was (long) even for us. It's like, this is a lot.
[00:09:16] Jason Hall: So, I think that might be my, my favorite and even it's two episodes, but I really enjoyed that. What about you?
[00:09:23] Jeff Santoro: I tried to think of it as favorite interview episodes and then favorite non -interview episodes and yeah, I stru- the thing and the reason I struggle with the interview ones is, you know, over the past year, we've interviewed a lot of guests who are also friends of ours. And so I, I'm, I'm trying to be careful about picking favorites there. The fact is I've enjoyed all of those conversations.
[00:09:51] Jason Hall: So very different.
[00:09:52] Jeff Santoro: Well, we didn't, here's why, like, we didn't know them. Like we, we were, we reached out to Jacob Goldstein because we were-
[00:09:59] Jason Hall: Well I had interviewed Jacob before, but yeah, I don't know him.
[00:10:01] Jeff Santoro: Right. He's not a friend of ours. Like, we had a connection. We, we knew him from Planet Money. We knew he had a book that had recently come out, but he was just the kindest. And we, he came on and it was almost like he was our friend.
[00:10:15] Jeff Santoro: Like, just he, if you remember before you hit record, he, he just started like, hi, and then asked us a question about something and we had a whole conversation about that. So that was just fun from that standpoint.
[00:10:26] Jeff Santoro: And Mitch Fatel is a comedian. So that was just, we- as people know who listen, we, we joke, we joke with each other a lot and bust each other's chops. So that was just- those were my favorite interviews because I don't feel like I'm picking one friend over another.
[00:10:41] Jason Hall: My favorite thing, let me say this about Mitch. It was, it was a great conversation. It was a lot of fun, but my favorite thing about Mitch was you and Mitch absolutely roasting me in our DMs, planning, coordinating dates and all that.
[00:10:56] Jason Hall: Like you got- literally I caught on fire at home. Like not,
[00:11:00] Jeff Santoro: .Yeah, it was, it was pretty brutal.
[00:11:02] Jason Hall: Not metaphorically caught on fire. Like I actually caught on fire. It was, it was wonderful. It was fantastic. It was fantastic.
[00:11:10] Jeff Santoro: Yeah, that was, we, we should reach out to him again, just so we can start making fun of you more.
[00:11:14] Jeff Santoro: I, my non for a non interview episode, I think I would go with the one we did recently, "I don't know how to invest anymore" because we joked at the time that it was like my financial therapy session. But the reason I picked it as my favorite is I think it's the one episode that embodies most what we're trying for this podcast to be, which is just an honest conversation about how sometimes it's really tough to be an investor.
[00:11:43] Jeff Santoro: And if we recorded that earlier in the year, the market was down. I was feeling really kind of like, I don't, I was questioning things. And I think everybody goes through that, you know, I'm in the middle of reading, morgan house's book, the psychology of money, which has been on my like to do list forever. And I finally got around to starting it and it's great.
[00:12:01] Jeff Santoro: But so much of what he writes about is how your emotions and your feelings are 90% of the battle. And that's exactly what I was feeling when we recorded that episode. So that would be probably my favorite non interview episode.
[00:12:16] Jason Hall: Let me, let me mention one thing for those that haven't subscribed to our newsletter.
[00:12:20] Jason Hall: We send out the transcript. It publishes the same time the newsletter- or the same time the podcast goes to the, all the podcast feeds. And we put links to all of these episodes throughout it. So if you're interested in finding any of these episodes go sign up for our newsletter. Just go to TheSmattering.net and it'll take you to it. And you can find that transcript with the links to each of those podcasts. If any of those from our library sound interesting to you, that's a quick, easy way to find them.
[00:12:50] Jason Hall: I want to call out a couple of other episodes that, that I just, to me resonate. And the first one, and I'm trying not to apply too much hindsight bias to this one, but I just think it's really useful in the same way that the, that I don't know how to invest one was there's episode 45 running toward fires.
[00:13:09] Jason Hall: And this was when everything was happening with banks. We recorded this like a week and a half after the FDIC had seized Silicon Valley Bank and Signature Bank. And it was a few weeks after that, that First Republic was seized. But, but the whole gist of that episode was knowing what opportunities look like in the midst of chaos and fear and panic. And, and having, and having the capacity to act in some way in your best interest. So I really encourage people to go back and listen to that one. I think that one might be so far, maybe the one that I think could be the most valuable to people when it comes to investing and picking stocks. So that's one that stood out to me.
[00:13:52] Jason Hall: So there's a question on here, Jeff, that I love this question. Of the people that we've had on the podcast, who, who did, who did you learn the most from?
[00:14:04] Jeff Santoro: So I would, I have two. One is Nick Rossolillo because he just knows so much about semiconductors and that's an industry I know a tiny bit about. And he just really helped me solidify some of that in my head. But I would give my like gold medal in this category to John Maxfield, because you and I have a running joke about my frustration with understanding bank stocks.
[00:14:28] Jason Hall: We, we can't share it on this podcast.
[00:14:29] Jeff Santoro: No, but it's just, first, I don't consider myself to be a stupid person, but every time I try to read a SEC filing or a conference call for a bank I just feel like the stupidest person in the world. There's just so much jargon and different metrics that are important for banks that are not for other companies that it just really frustrates me. But what I loved about that episode and what was so clarifying and where I learned so much was John was really hammering home the idea that confidence is king with banks. And he went on this whole thing about how people think capital is important and you have to have all the cash reserves , but basically said, that's great you can have all the money in the world. As soon as people no longer believe in you as a bank, you're done because no bank can survive a bank run.
[00:15:15] Jeff Santoro: And what was fascinating is that was what, a few weeks, six weeks, maybe before Silicon Valley Bank crashed. It was so prescient. It was like he was predicting the future. And it was like the first time in a high level, I really had a different understanding of bank stocks and investing in banks and what's important to look at and what's important to consider.
[00:15:37] Jeff Santoro: So that was the one I think I probably learned the most from like, comparing my level of knowledge heading into the interview and then way the way I understood it afterwards.
[00:15:47] Jeff Santoro: What about you?
[00:15:48] Jason Hall: It was almost exactly one month before. I mean, it was the same week one month before.
[00:15:53] Jeff Santoro: It was crazy.
[00:15:54] Jason Hall: So I'm gonna say, and and my answer this is going to be a little- So I would say probably the person that I've learned the most from that we've had on the show is, is not, is not you, Jeff, is not you. It's, it's probably John Rotonti.
[00:16:12] Jason Hall: John, of course, was a colleague of ours at the Motley Fool, and I worked with John far more closely than, than you did on some of the, premium,, the member- only stuff that he was doing when he was at The Motley Fool and just having lots of conversations with him on Slack. Zoom sessions together, doing shows and working on reports and helping him with research and that kind of thing. Like seeing his process was really, really great.
[00:16:39] Jason Hall: And then, of course, when we had him on, giving him an opportunity to really talk through his value investing approach was wonderful. So, that I think I would say John overall, even though it's not the conversation, I knew everything he was saying on our show. But he was so compelling to me to have on because of everything that I had learned from him in the three years, the three years before, before that.
[00:17:05] Jeff Santoro: Before I ask you the next question, I'm curious if you know, anyone who's listening I'd be curious to know what, what you thought, or which guest you may have learned the most from, or what episode anyone listening might've thought was their favorite.
[00:17:18] Jeff Santoro: So if anyone feels compelled to reach out to us, , email, Twitter, whatever, let us know what you think. That'd be cool. I'd love to hear that.
[00:17:26] Jeff Santoro: And so that brings me to another question I had for you, Jason. So we did in a series near the beginning. It was a four part series. We called it How We Invest (part 2 part 3 part 4). And we walked through our processes of investing kind of briefly and then had conversations around it.
[00:17:43] Jeff Santoro: So I'm curious, that was, I don't know, I don't have it in front of me when that was, but I feel like it was probably back in-
[00:17:48] Jason Hall: September.
[00:17:48] Jeff Santoro: Yeah. In the fall.
[00:17:49] Jason Hall: September. Yep.
[00:17:50] Jeff Santoro: So we're almost a year away from that. Is there anything you've changed about how you invest? Anything in your process that's different almost a year later?
[00:17:59] Jason Hall: I think generally my process hasn't changed right and I've been you know, been doing this basically 15 years now. And the vast majority of that time is, is full time either investing, writing about the industry, covering companies that sort of thing. So my process is pretty formed.
[00:18:18] Jason Hall: I would say if there's any one thing that has started to change a little bit is being more open to holding more cash, just because cash can actually generate some sort of a return now. It's easy to get 5% yield on, on cash now. And, and that the vast majority of my investing career, no, you couldn't get a half a percent, most of it.
[00:18:44] Jason Hall: So being more mindful about thinking about 5% is my, and again, this is just in my portfolio. This is- you go back and listen to that how we invest and look at the toolbox. There's emergency savings, right? There's cash for near term needs, like anything you're going to need to spend it on in the next year or two.
[00:19:06] Jason Hall: And then there's cash you hold as dry powder in your investing account, right?
[00:19:11] Jason Hall: And different people manage it different ways. And the way that I manage it is that I think about it as a percentage of my portfolio is around 5% is my target amount. And the framework for me is if the market drops 20% from a recent high, I'm going to deploy half my cash, like because there's going to be stuff that I want to own or own more of that's down more or trading for like, deeply discounted and then it's time to start putting that money to work. If the market continues to fall, I'll deploy more and more of that cash.
[00:19:40] Jason Hall: But because you can get more return now and also because I see less and less opportunities, I'm starting to think about expanding that framework, maybe closer to eight to 10%, right?
[00:19:54] Jason Hall: I want to be careful about it because I don't want to fall in love with cash. It's really easy to do that because 5% is nice. But it's not 10%, right? And I don't want to step over dollars to pick up pennies, so to speak, and fall in love with that kind of guaranteed return and miss the opportunity for my long term goals, right?
[00:20:13] Jason Hall: What about you?
[00:20:15] Jeff Santoro: My, just in the past year, it's not changed a whole heck of a lot. I think the one thing that, the biggest thing that has changed is I no longer buy, I no longer buy multiple stocks every week. I now buy one stock every week.
[00:20:32] Jeff Santoro: So I used to take my money, split it among the four weeks of the month, and then split that among two or three ideas. And now I just make one decision each week because I was taking...
[00:20:45] Jason Hall: You're finding your conviction.
[00:20:46] Jeff Santoro: It's a conviction thing. And it's also, , I've said this many times, so forgive me for repeating myself, but my individual stocks are still such a small portion of our overall portfolio that I started to see some investments start to pay off, up 60% up 70% up 100%, and then be like, well, I wish that was more than $90, you know, some small amount of money.
[00:21:07] Jeff Santoro: So it's a conviction thing. It's like, it's a realization I can take a little bit more risk in that portion of my overall portfolio, because it's still comparatively a smaller chunk. I might even at some point get to a point where I buy twice a month or once a month and then one bigger kind of decision. I haven't gotten there yet, so we'll see how that changes over time.
[00:21:33] Jeff Santoro: The only other thing that's really changed, and it's sort of related to what you're talking about, is just a year ago, you, it was, it's the cash thing. And it, and the fact that the market's done really well this year, I'm a little bit more patient with having to buy something each week.
[00:21:48] Jeff Santoro: Like just as an example, last week I just couldn't, I couldn't make a decision. A lot of things seemed really overvalued. I couldn't, I didn't see as many deals adding to positions I already had, I didn't have anything on my wishlist that I was ready to buy. So I just didn't do anything. I just punted. And maybe I'll buy two things this week as a result.
[00:22:10] Jeff Santoro: That I think is an evolution that I, I've made over the past year. Partially just 'cause it's getting more experience, but also the market's in a different place. A year ago, I couldn't wait to buy every week because things were hitting all time lows and I had high conviction and I was like, I'm gonna get a good, a good deal here.
[00:22:25] Jeff Santoro: So I, I would say those two things are probably where I've made the, the most change over the past year.
[00:22:31] Jason Hall: I wanna, I wanna add one more point because I think this is maybe. Maybe the most important part of like thinking about my process and my process hasn't really changed. But like the complexity of my portfolio, like the makeup of my portfolio, like what's where, where my, where my money is now, has changed substantially.
[00:23:01] Jason Hall: Like I'm looking through my top five positions. One, two, three, four, really could look like top six or seven. Only one of those was a top six or seven stock a year ago. And now, like you look at it in homebuilder, Trex the home the decking company, bank, bank, bank. Like it's, it's my, my, it feels like, like my process is working because, we talked about like the banks and again, it's a few months, so I don't want to put too high, too much hindsight bias and too much short term focus on it. But thinking opportunistically, keeping a little bit of cash.
[00:23:49] Jason Hall: Being really disciplined about not selling too fast. There's, there's a million reasons that somebody could have said, , I'm going to sell Trex right now because housing's a mess. Interest rates are up. All of their buyers are already pulling back. And now Trex is, I just did nothing and it's, you know, it's like my third or fourth largest stock now, just kind of came out of nowhere.
[00:24:10] Jeff Santoro: Yeah. I've had a couple of those two stocks that are now at the top of my spreadsheet that were at the bottom if I sort by returns. You know, it's been interesting to see.
[00:24:18] Jeff Santoro: All right. I have a, a variation of a question we already talked about. So we talked about our favorite episodes, but one thing I've noticed is we often finish recording and then usually go off to do something like pick up our kids. And later that night, we'll inevitably say something to each other like, that was fun. Today's episode was fun.
[00:24:38] Jeff Santoro: So I'm curious. Do you have an episode that we've done that sticks out to you as being the most fun? Like what's the most fun we've had on the podcast over the past, past year?
[00:24:48] Jason Hall: So my favorite one in terms of the name and but also think that maybe the contents: Fighting Chimps and Picking Stocks. It was just a fun name and that was a fun one. But I really, when we started talking about, I can't remember the name of the episode now, but- okay, here it is. Episode 49: Are Your Goals the Same as Your Incentives?
[00:25:10] Jason Hall: That was such a deeply engaging conversation, as, as we kind of, because a lot of it was just kind of a thought process. And like I had realizations throughout the conversation. It was just a lot of fun. I really, really enjoyed that conversation.
[00:25:24] Jeff Santoro: It's funny, the whole having realizations throughout the conversation was exactly why I picked my favorite which was 5 Stocks for 10 Years.
[00:25:33] Jason Hall: That was great Is that still our most popular episode?
[00:25:36] Jeff Santoro: It's our second most. So John Rotondi's in a John bumped it off the top of the list. But for a really long time that was our most listened to episode and it's still our second most
[00:25:46] Jeff Santoro: And I had the exact same experience during that one as you were just talking about with the one you chose, which was we had it all planned out and we had specific prompts we wanted to talk about. But as we were talking with each other, we both just kept coming up with, oh, but what about this? I hadn't thought about that.
[00:26:04] Jeff Santoro: And that, and that made it so much fun to record because it was, it really was like a live kind of conversation that we were able to capture for the audience, which I thought was cool.
[00:26:14] Jason Hall: I need to go back and re listen to that one because that's one of our pre- transcript ones. I want to go back and see because I don't remember which stocks Like which stocks we, because I think we actually picked some stocks.
[00:26:26] Jeff Santoro: Yeah, there were five that we came up with, but to me that's less interesting than just the way we ended up having to think about it. , the whole idea of like, just as a quick example, we don't need to relive the whole episode, but the idea of like how you balance risk if you know you can only hold five stocks.
[00:26:44] Jeff Santoro: Like, does that make you super conservative? Does that push you towards the ones that have the lowest chance of going to zero? Or does it make you more aggressive and shoot, you know, shoot for the moon, so to speak? So that's a good one.
[00:26:58] Jason Hall: That was the most powerful part of that conversation, jeff, is the idea that you would think five stocks, 10 years, you're immediately going to lean into your highest conviction stocks. But then you start doing the mental math of what if I'm wrong, right? And you stop thinking about the ceiling and you start thinking about the floor.
[00:27:18] Jeff Santoro: Exactly.
[00:27:19] Jason Hall: Yeah, that was fun. That was episode 35, folks. Definitely check that one out.
[00:27:25] Jeff Santoro: That's a good one to check out. If anyone ever, so whenever someone learns about the podcast, I get asked a lot like, what's, what episode should I start with and I always say, well, obviously the first one and you should listen to all of them. But if they don't want to do that, I usually direct them to that one. I think that's a good taste of what we can do when we're at our best.
[00:27:44] Jeff Santoro: All right. So I don't want to give away too much of what we have planned for the future, but maybe Jason, let's give the audience maybe 1 or 2 things we're thinking about for upcoming episodes or maybe even series that they can look forward to if they keep, if they keep being loyal listeners.
[00:28:04] Jason Hall: Yeah, so as a starting point, that's something that you and I've talked about a lot is doing series. And we did the how we invest and that was basically the only true, like planned it out in advance series that we've done, even though we've had like series of episodes, like running toward fires, running away from fires. I don't know how to invest anymore, and then let's talk about stocks the next week. That, that there was a theme that kind of carried through.
[00:28:31] Jason Hall: But one of the things that we've talked about a lot is investing with kids, and makes sense for you and I, both. Our kids are- your kids are a little bit older, a little closer to college age. My son's still a good bit away, but we've got colleagues like Brian Withers, for example, who his kids are, he's got one, I believe that's college age and one that's already out. So he's already lived through that. We have other colleagues with like Tyler Crowe, for example, his couple of kids, and both of his kids are still preschool age.
[00:29:05] Jason Hall: But having some conversations around investing and kids, I think is a better way to put it because the more I've been thinking about this, Jeff, you invest for your kids, right? You save money for their college, post, post high school education needs. Maybe if you have enough wealth, you fund a trust, right? Different things that you do, but that's investing for your kids. Then there's investing with your kids, which is a totally different, a totally different thing. And I'm excited to try to do something with regards to that, maybe we can get some of our friends to help us out with it.
[00:29:47] Jeff Santoro: Yeah, I, I'm really looking forward to that. We've been talking about doing it for a while. We have to actually like figure out a time to actually plan it out this way. I think we thought the summer might be a good time for that, but with vacations and stuff that didn't really work out the way we wanted. Yeah, I made it harder. I think.
[00:30:01] Jason Hall: What else, what's...
[00:30:02] Jeff Santoro: well, I'll tease one more thing and it's, it's, it's not a new thing, but maybe a variation.
[00:30:07] Jeff Santoro: So over the course of this year, we've been doing the portfolio contest where we, you and I each pick three stocks. We pick three together, the audience pick three. And we had a un-portfolio of four stocks just as a fun one year game to play, and we're already kicking around ideas for what to do in 2024 that I think will make it better and more fun. And, I think our idea over the, over time is to do something along these lines each year and maybe tweak it, do it a little different each time.
[00:30:41] Jeff Santoro: Keeping all the old portfolios around, we maybe middle of next year we can revisit the 23 portfolio and see how it's doing a year and a half into its inception.
[00:30:49] Jeff Santoro: But when we were discussing what to do next year, we were both kind of excited at how much more fun it could potentially be and how it could really pull in the audience a little bit more in a, in a live scoring kind of way. So I won't say anything more about it than that, but that's something to look forward to near the end of this year as we head into 24.
[00:31:09] Jason Hall: We've got one more thing that we want to, we want to do too, that I'm really excited about.
[00:31:16] Jason Hall: We talked about how when we first launched the podcast, we were, our cadence was a little bit more than once a week. And we have an idea for something that it's funny because you initially referred to it as a gift to our listeners. And I'm like, no, no, this is, this is a gift to us.
[00:31:35] Jeff Santoro: Well, to be fair, when I said gift to our listeners, I did it in air quotes because it really is because it really is for us.
[00:31:43] Jason Hall: Yeah, so we, we've talked about it before on, on the podcast, but you and I have a regular text conversation every single day. You know, it's all, it's a lot of stuff and a lot of it's ideas for the show, but also just our personal lives and investing lives and, and that sort of thing.
[00:32:01] Jason Hall: And it's time to start having some of those conversations. And they're going to be short, right? Five to 15 minutes. And our goal is maybe once a week, maybe sometimes maybe more, maybe a week will go by where you don't get one. We're going to call it The Smattering Rough Cuts is, is what we're going to call it.
[00:32:23] Jeff Santoro: Yeah. So nothing's changing with the normal cadence of the podcast. That's going to keep every, every Saturday morning you'll get our normal, well planned out podcast where we talk about things and answer questions have guests on.
[00:32:35] Jeff Santoro: But at some other point some weeks, there might be a gift from us, to us, in your podcast feed where we discuss, argue, yell at each other, joke around something. Basically taking our one on one conversations and just hitting record while we have them.
[00:32:57] Jeff Santoro: We have no idea if this will be good or bad. We have no idea if we will do this forever, but it's something we're gonna try as we roll into year two here, we've gotta keep it fresh, do something new. So look for that maybe as early as this coming week. And give us your feedback.
[00:33:13] Jeff Santoro: Let us know if you think it's, it's a value add or a value subtract to, to your experience as a listener.
[00:33:21] Jason Hall: To be clear, to be clear, you sharing with us that it is a value detract does not mean we will stop doing it. I just.
[00:33:31] Jeff Santoro: Yes, if we're just, if we're going to be honest, that's true. All right, here's a question for you as we sort of wrap up here near the end did you think we'd make it a year?
[00:33:40] Jeff Santoro: When I texted you in July of 2022 and said, hey, we should start a podcast and then a week later we actually did, did you think we'd be sitting here a year later with a successful podcast that is continually growing?
[00:33:54] Jason Hall: So this was not my first attempt at a podcast. I had another former colleague and still friend who reached out to me to start a podcast a number of years ago and it didn't really get very far. There were some professional reasons we weren't able to continue. That kind of stuff.
[00:34:12] Jason Hall: And honestly, Jeff, I went into this with zero expectations in terms of what it was going to become or not, beyond just as long as it was fun and we were having fun doing it and it could fit within our very busy lives I wanted to keep doing it.
[00:34:28] Jason Hall: I'm not surprised that it made it a year. But also I could have seen this thing not making it to the spring if I'm being, if I'm being honest. It's been Incredible but not not that surprising not not that surprising in the grand scheme of things. What about you?
[00:34:45] Jeff Santoro: I absolutely thought we would make it a year. Like I had- and and here's, I think because it was two things. I remember Brian Withers reached out to us way in the beginning and said something. He sent us some statistic. Like 98% of podcasts never make it to 25 episodes but the ones that do, like last forever. I don't, I'm paraphrasing. It was something like that.
[00:35:06] Jeff Santoro: And we were at episode like 12 or something, and I remember being like, I totally understand why that stat exists, and I believe it, because I don't know that everyone who starts a podcast has a real clear reason for why, or, I've thought about doing it in the past for all sorts of different things, and it just, I never, I never even started.
[00:35:26] Jeff Santoro: But for some reason, I felt like the what we wanted to do, and the fact that we got along well and like to make fun of each other, and we just had fun doing that, that that alone would sort of keep us going.
[00:35:40] Jeff Santoro: And it's also, I think what we have going for us in terms of longevity is this is neither of our primary means of living. We started it as fun. We've been saying to each other for the whole year as long, we have to keep this fun. If it stops being fun, I don't want to do it.
[00:35:58] Jason Hall: But we haven't had to keep it fun. It just is fun.
[00:36:00] Jeff Santoro: It just is fun. Yeah. So I think that's why I was not surprised that we, we made it a year.
[00:36:05] Jeff Santoro: All right. So let me piggyback on that question then. What's your hope for the next year or two or five or decade?
[00:36:13] Jason Hall: Well, that I can find a better host than you to work with.
[00:36:16] Jason Hall: No, no. In all seriousness, as much as we joke, I really want to stress this. I couldn't imagine having a better partner and co host on this, on this, this venture. Because you've been, (holds up hands in heart shape) yep, right back to you, big guy. Right back to you. So, it's because you, you really were the driving force for the beginning.
[00:36:35] Jason Hall: And like, we knew, like you were saying, and I want to emphasize this because it ties to like the going forward, especially you as being like a consumer of pods, I don't really listen to many podcasts. I don't. And like, I listened to almost zero investing podcasts. I listened to odd lots and every once in a while, I might listen to, to another investing podcast or two if there's an episode that somebody sends me a link to and says, hey, listen to this.
[00:37:01] Jason Hall: Generally, like I listen to things like hidden brain, right? Those are the kind of the podcasts I listen to. I enjoy what's your problem I enjoy, it's kind of a business focused one, but it's certainly not an investing focused one. But I, again, from doing like Motley Fool live and being really engaged on Twitter and our pals over at chit chat money that like have a specific kind of podcasts that, that, that they do. And so many of the other podcasts out there, like animal spirits, that a lot of those tend to be more focused on either investing professionals or people in financial planning and not a lot of podcasts that are really just around like the mindset stuff and talking about frameworks and just having conversations that I, I definitely felt like we were fitting a niche and like giving something to people that you don't necessarily get from a lot of other podcasts out there.
[00:38:00] Jason Hall: And I think going forward, , over the next year my biggest hope is that we can continue to deliver thing- deliver conversations that remain relevant and don't get repetitive.
[00:38:20] Jeff Santoro: Yeah. Yeah.
[00:38:23] Jason Hall: I think that's the big thing. There's always going to be common themes, right? And we're always going to have opportunities when things that are driving the animal spirits or that are in the, in the investing consciousness come up that we're going to circle back to having that investing toolbox and having your own framework and finding your own answer, right? All of those things we talk about.
[00:38:45] Jason Hall: And that part is going to be consistently repetitive, because that's kind of the secret to being successful financially is like having a process, right? Sticking to it and then also knowing when to change it based on everything else changing around you. But I think that's the biggest thing is that hoping that we can just continue to consistently deliver things that are entertaining and pleasurable while also serving the thing that people are coming to us to get.
[00:39:14] Jeff Santoro: Yeah, I agree. The teacher in me wants to keep I hate to say he wants to keep teaching. I don't feel like we're teaching, but if we can, if people keep reaching out and saying that they enjoy it and they're getting something out of it, that's, that same feeling that a teacher has. So I hope we keep doing that and like providing value to people, entertaining, whatever it is. I hope-
[00:39:35] Jason Hall: I get so much fulfillment from doing this. I always, I'm the guy that brings up the money. And half of it, I'm just kinda being a little bit goofy, but also being open with people that, right we don't, that since we're still a small podcast doesn't make a lot of money, but the fulfillment like that's, that's the incentive for me. Right.
[00:39:52] Jeff Santoro: Yeah. But the real thing next. The real goal I have for like for, for however long we do this is to just keep talking about your mistakes. So, , everything you do wrong that does not work out, I want to highlight and talk about it. That's my, that's my true goal for the future.
[00:40:11] Jason Hall: I will continue to provide you with plenty of ammunition to put at your, put in your, you're an idiot gun. Yeah.
[00:40:18] Jeff Santoro: I hope so. I hope so.
[00:40:19] Jeff Santoro: All right, so let's take a quick little break here. Stick around and we're going to come back and we're not going to do a full portfolio Smattering portfolio 2023 review or anything, but we are at the end of the month.
[00:40:30] Jeff Santoro: We're recording this on the morning of August 1st. So we're going to real quick, take a look at The Smattering Portfolio, talk through who's ahead, who's not ahead. As we hit the end of July to wrap up this episode. So stick around.
[00:40:42] Jason Hall: Hey everybody, we are back from our coffee break. Jeff makes the very, very best coffee. It's delicious. Hey Jeff, it's the end of another month. Let's talk about the portfolio.
[00:40:54] Jeff Santoro: Alright, so, I'll give the quick recap. We'll share some thoughts. And then we'll let people be on their way.
[00:41:01] Jeff Santoro: So the leader through the end of July, right, so year to date leader, is still the unportfolio. But it is very, very close. The unportfolio is up 65%, again, because of my terrible good picks. But Jason is nipping at its heels at 64. 1%. This is as of, it's live on the 1st, so these are not exact numbers at the end of the month. You are almost, you've almost caught up to the unportfolio, Jason. How do you, how do you feel about that?
[00:41:38] Jason Hall: I feel like I should have I should have counseled you a little bit when we were doing this, because the two stocks that you picked for the unportfolio are by far the best two performing stocks this year, which is completely wrong. It's backwards.
[00:41:54] Jeff Santoro: I did it wrong. I did it wrong.
[00:41:56] Jason Hall: You were supposed to pick stocks that would do bad.
[00:41:57] Jeff Santoro: Yeah. I did it wrong.
[00:41:58] Jason Hall: So Jeff picked companies that he had no interest in, in, in owning for various reasons, Meta Platforms and Tesla. Which are up 168% and 113%.
[00:42:10] Jeff Santoro: Well, no, no, no. To be I, I've said this before, to be fair, I did think they would struggle this year.
[00:42:15] Jason Hall: It's true. It's true.
[00:42:16] Jeff Santoro: But not, I mean, this is- you, no one would've predicted, I don't think anyone would've predicted. I mean, maybe like the Tesla Kool-Aid drinkers would've, but I don't think any rational, neutral observer would've predicted 168% year to date at the end of July for Meta that's just bananas.
[00:42:38] Jason Hall: Well, and again, building off of that same thing, CrowdStrike, Lemonade, and Trex, my three stocks, Lemonade still hasn't proven much of anything, right? If we're honest, in terms of, they're growing like crazy. Their customer service numbers are wonderful, but they're just not, they haven't proven that like they can actually underwrite insurance profitably, which you're going to be an insurance company, have to do that.
[00:43:02] Jeff Santoro: So the whole, the whole portfolio is just wild in that sense, right? Excluding the unportfolio, there are only two stocks that were picked by anyone in the, in the, all the little mini portfolios that are in the red, Boston, Omaha and Outset Medical, right? Everything else is up.
[00:43:21] Jeff Santoro: Everything else is up double digits, except for Simon Property Group, which is only up 6%, excluding dividends. So it's probably closer to 10 with dividends, 8, 9, 10 with dividends.
[00:43:30] Jason Hall: It's probably about 9%, yeah.
[00:43:32] Jeff Santoro: But I mean, Brookfield, 13%, MercadoLibre, 43%, Taiwan Semiconductor, 32%, CrowdStrike, 54, Lemonade, 64, Trek, 75. I mean, it's just... Bananas that this is where we are halfway through the year, considering where we were when we picked these stocks at the end of 2022.
[00:43:54] Jeff Santoro: So, you know, we don't have to, we're not going to go deep into any of them. A lot of these companies are just starting to report earnings. We'll have a much deeper dive at the end of July. I'm sorry, at the, at the end of September when we finish the quarter. But yeah, it's just crazy. And you are, you are catching up.
[00:44:09] Jeff Santoro: So just to round up the the totals here, my portfolio is up 46%. So I guess that puts me in third. Team audience is behind that at 29% and our combined portfolio team smattering is up 12%. As we sit here on the morning of August 1st.
[00:44:27] Jason Hall: Yeah. And you know, it's funny because if you had have told me that one of the portfolios was going to be up 12% at the end of July I would have said that's probably the winning portfolio at this point.
[00:44:41] Jason Hall: That's the losing portfolio.
[00:44:45] Jeff Santoro: I mean, these, almost all these portfolios could get cut in half between now and the end of the year. And you still would've signed up for that return.
[00:44:54] Jason Hall: That's a great return. Yeah. Yeah.
[00:44:56] Jeff Santoro: At, at the, at the end of last year. It's just absolutely wild that they're, they're doing so well.
[00:45:01] Jason Hall: I wanna be clear to you, like, this is not, this is not us, old man yelling at cloud here. This is just, it's just a such a good reminder that just in the short term you just, you don't know what's going to happen when it comes to stocks. And that's why you build a framework around your long term goals and your short term goals. And you invest according to those goals, not because of what your gut's telling you.
[00:45:26] Jeff Santoro: Yeah. And let's be fair. I mean, we could look back at this portfolio five years from now and it could be down to the market. Yeah, this is a very, very, I mean, I think the reason we're so amazed at the returns is like because of the bear market we were in. And I don't think anyone really predicted it turning around like this.
[00:45:43] Jeff Santoro: I mean, I think in December, probably people figured by now we'd be in a recession. And maybe, , stocks will be flat or down. I mean, I think that was my prediction for the year that we would just be a flat, you know, up 2% down 2% kind of a year for the market. And it's been anything, but.
[00:45:58] Jeff Santoro: I, I don't know, do you, does this, does right now feel a little bit to you like 2021 did? Do you get any of those like vibes?
[00:46:08] Jason Hall: I don't, I really, I really don't. Because as much as CrowdStrike, for example, it's up 54%. It's still way down from its all time high, right?
[00:46:18] Jeff Santoro: Yeah. I, that's the other thing that's worth pointing out. A lot of these returns are because when we picked these companies, they were so beaten down.
[00:46:25] Jason Hall: Yeah. Lemonade's up 63%. And I think it's still like 85% below its all time high, right?
[00:46:31] Jeff Santoro: Yeah.
[00:46:32] Jason Hall: So again, that's, you gotta be careful there cause you're anchoring on what that high was. And that doesn't mean it's cheap, right?
[00:46:40] Jason Hall: It's just, we have a long way to go for so many of these stocks to get back to kind of those mania levels. It all- but it always feels how it feels because we look now as like interest rates are super high and is there going to be a recession or not? And like all of those things and like, there's never been a time where we've had protracted unemployment that was this low that we didn't get a recession within a couple of years, right? So, and with a recession, you get a down cycle in the market, right? It's just, it happens.
[00:47:14] Jason Hall: So, but there's the way it feels and then there's what actually happened. So, you know. Those are two different things.
[00:47:23] Jeff Santoro: Alright, so one question that you have to answer before we end the episode. Out of your three stocks, CrowdStrike, lemonade and Trex, what's one that, what's one thing you're looking for with their Q2 earnings? 'cause that's where we are right now in the, we're right in the beginning / middle of earning season.
[00:47:43] Jeff Santoro: What's something you're, you're looking for with one of these companies when they report?
[00:47:48] Jason Hall: So I'll start with CrowdStrike 'cause it's generally reports pretty late. And the thing that I want to see with them is continued comps. So it's net revenue retention is the, the metric there, which basically it's for every dollar a customer spent last year, how much did they spend this year? And like their record of growing that dollar to like $1.30, $1.20, $1.30 for years, every quarter is so, so strong.
[00:48:21] Jason Hall: And we've seen a touch, a ton of companies like Meta reported last week and I think their head count is down between 15 and 20% from the, from the peak. That's tens of thousands of users that they don't need seat licenses for. And if each user has a, a computer and then they have a smartphone and maybe there's some other device that those are endpoints that Meta doesn't have to pay Microsoft or CrowdStrike or whoever, right?
[00:48:55] Jason Hall: So I'll be really interested, we're going to start learning more about the impact of the tech company layoffs on these, on some of these software as a service companies, and we're going to find out how strong their moats really are. So I'm really focused on that for CrowdStrike are they gonna continue to be able to grow through as we're starting to get to the year over year point for so many of those layoffs. So that'll be interesting for me to see .
[00:49:19] Jason Hall: For Lemonade again, it's when does Lemonade report? They report soon, next week?
[00:49:27] Jeff Santoro: Yeah, I don't know.
[00:49:28] Jason Hall: August 3rd. So they will, they dropped their results on the, on the 2nd. So they, they'll be out by the time this podcast is published. I knew it was coming up and I've already said it, but it's really simple. I want to see their gross loss ratio, their, their ability to underwrite insurance profitably. I want to continue to see that the trends have been better, but they're still bad. Right. They're still not good.
[00:49:50] Jeff Santoro: It's almost like the only, I don't know, I don't want to simplify it too much, but it feels like it's the only thing that matters for the next several quarters is just to keep watching that, that, that ratio get better and better, right?
[00:50:00] Jason Hall: Especially if they're, if their growth rates continue to, to remain so incredibly high. They are a tiny, tiny insurance company in the grand scheme of insurance.
[00:50:09] Jason Hall: And then with Trex, I really want to see how, like, so Trex sells to distributors. Right. They sell to the big box like Home Depot and Lowe's, but they also sell to a lot of regional distributors that supply contractors, commercial buyers, they're not DIYers, and I really want to see have they finally moved through that period where their distributors had, had really cut back on orders as we get through the- this quarter is their most important quarter in terms of like the peak deck building season. So it's really going to be important to find out what's happening with their distributors in terms of orders for the rest of the year. So really paying attention to that because higher interest rates, decks are, can be super expensive. It can be a five figure expense and it's after kitchen and bath and interior stuff. So, it'll be interesting to see like how has the consumer been affected when it comes to the last thing that people will spend money on for their, for their house. So, I'm watching that really closely because the stock is up so much that if their forward guidance isn't stellar, this is, this is a stock that could give back a lot of, of its gains.
[00:51:25] Jeff Santoro: Yeah. Yeah.
[00:51:26] Jason Hall: What about you with yours?
[00:51:28] Jeff Santoro: So, with Amazon, it's two things. It's, the last quarter, there was a pretty significant improvement in operating income on the, I believe on both on the North American, but definitely the international side of the business. So that's all the e-commerce stuff. And this is just related to their continuing trying to sort of fix all the overspending they had to do during the pandemic to meet that demand. So that's like, to me, the big thing with Amazon is how long does it take them and how good are they at getting back to what would be a quote unquote normal level of operating expenses and operating margin, for a business that's not in the throes of a pandemic or trying to recover from, from it.
[00:52:14] Jeff Santoro: So I'm looking for that. I also want to see if AWS spending ticks back up. It had slowed a little bit the last couple quarters. So that's something I just always keep an eye on because it's such a big part of the business.
[00:52:26] Jeff Santoro: For Outset Medical, it's really, I mean, they're very simple. It's just they have to just continue to grow, sell more machines, get more doctors on board to steer patients in that direction. They talked earlier in the year about the second half of the year being stronger. So I just want to see if that happens really simple with them.
[00:52:45] Jeff Santoro: And The Trade Desk, it's, it's always going to be with them about how soft or not soft the advertising market is generally. So they don't report a lot of metrics other than the high level financial stuff. So you kind of have to like hear what they say about the advertising market. So I'm curious just to see how that's playing out.
[00:53:04] Jeff Santoro: I'm also curious if they give any more insight on how they are being impacted by or benefited by all the additional advertising based streaming platforms, right? So Disney+ added the, a tier with subscriptions, I mean, with advertising Netflix added a tier with advertising. I want to see what they have to say about that. If they're benefiting from those changes.
[00:53:27] Jeff Santoro: But that's another stock that I feel like if it, if they don't deliver in a quarter, I could see it give back some of its gains. Cause it's, it's it's up 100% this year. So if they suddenly don't meet analyst expectations or give some soft guidance for the future, that could be another one that, that peels off, but it's been good every quarter.
[00:53:48] Jeff Santoro: You know, you're going to have a lot of political spending over the next year, so that should help them too. So that's a couple of things I want to look for with them.
[00:53:57] Jason Hall: All right, Jeff. We did it, buddy.
[00:53:59] Jeff Santoro: We did it.
[00:54:00] Jason Hall: We didn't just do it. We did it for one year.
[00:54:03] Jeff Santoro: We did it for a year. Here's to, here's to another year, Jason.
[00:54:08] Jason Hall: And then nine more after that.
[00:54:10] Jeff Santoro: That's right.
[00:54:11] Jason Hall: All right, everybody. Thank you for listening to us. Thank you for helping us get this far. Thank you for listening to our answers to these hard questions. And as always, it's up to you to find your answers. And after one year seeing you guys out there doing it, I believe in you. You can do it.
[00:54:32] Jason Hall: All right, Jeff, we'll see you next time.
[00:54:33] Jeff Santoro: See you next time.