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• How long do you need to make 1 billion dollars?

• Let's talk real numbers.

• Assuming you make 100K dollars annually, which is a pretty decent income.

• Let's put aside concepts like inflation, interest rates, opportunity cost aside and just assume

• hypothetically how many years you have to work to earn 1 billion dollars based on the

• numbers we have today.

• If you have started working the day the United States declared independence in 1776.

• let's assume that you were so frugal that you saved every penny and somehow survived

• without spending a single penny on anything.

• You lived with your parents, only ate at home what your mama cooked.

• By 2021, you will have 24.5 million dollars saved in your bank account.

• Almost 250 years of hard work would not even put close to the billionaire's list.

• Leave alone competing with the world's richest people.

• Let's be a little bit more generous and extend that time frame to 2021 years.

• How much would you earn if you had worked hard for the entire modern history?

• Unfortunately, I have to disappoint you because you would only save 202.1 million dollars.

• That's not even 1 percent of Jeff Bezos's wealth, the world's wealthiest person.

• Let's put aside Jeff Bezos and figure out how long do you have to work to even be on

• the Forbes Billionaire's list.

• To make your first billion dollars, you have to work and save every penny for 10K years.

• Yes, 10K years.

• Just for the record, human civilization is 12K years old.

• This example should illustrate to you the difference between Bezos and someone making

• 100K dollars a year.

• Even if you make a million dollars a year, you still would be considered poor in comparison

• to what Jeff Bezos has accumulated in the 30 years.

• This example perfectly illustrates to us that even if you have all the time in the world,

• you still won't be able to build wealth if you do not follow the rules of money.

• We have already made multiple videos about the rules of money, which you can go back

• to, but the question that many of you might have in mind is - do you really have to build

• a 2 trillion dollar company to be able to build that much wealth?

• take the example of Warren Buffett.

• He didn't start a tech company or even was involved in the invention of any revolutionary

• technology.

• All he did was finding the right companies to invest in.

• But not all investors turn out to be successful.

• Most people lose money when investing in the stock market and most recently in cryptocurrencies,

• so the question is - what differentiates a successful investor from the rest?

• What is value investing, and Why all millionaires follow this particular rule?

• We will answer all of these questions and many more.

• But before we do that, make sure to give this video a thumbs up, and here is a little disclaimer

• - this is not financial advice, and everything that's said in this video is for educational

• and entertainment purposes.

• And now, let's dive in.

• In the late 1990s, when Google was a tiny company.

• Sergey Brin and Larry page were desperately trying to sell google to a tech giant.

• Back then, Google wasn't the conglomerate they are today.

• Google's founders were more than happy to sell Google to Yahoo for 1 million dollars,

• but Yahoo declined their offer and didn't see any value in Google since Yahoo was the

• internet back then.

• Yahoo was what google is today, but a Stanford professor named David Cheriton saw the value

• in Google's algorithm and invested 100K dollars in the company.

• Today his investment has grown to over 6 billion dollars.

• Instead of randomly buying stocks, he tried to find the value behind the company and bet

• on the long run and turned \$100K into 6 billion dollars.

• That's what value investing is.

• If you take a look at any company that Warren Buffett, Charlie Munger, or Peter Lynch have

• invested in, you will see the same pattern.

• Buffett looks for companies that are so valuable that he can buy the stock and forget about

• it for the next 10 years.

• Think of Coca-Cola, Gillette, and even Apple.

• He doesn't intend to sell any of his stocks.

• Some people doubt his investing abilities, but the fact that he built a 100 billion dollar

• fortune simply by picking up the right companies to invest says a lot about the power of value

• investing.

• Value investing is picking up stocks whose values are a lot more than what they are trading

• in the market.

• Back in 2016, Warren Buffett clearly saw that Apple is such a powerful brand that they literally

• sell anything they want for a much higher margin than any other tech company.

• And in the last five years, apple's valuation tripled.

• Most average investors choose a stock based on how popular the stock is or who's promoting

• it without really understanding the underlying technology behind it.

• People have dozens of stocks in their portfolios, but if you ask them what they really know

• about the companies they have invested in, they barely know anything real.

• There are a lot of passionate Tesla investors, for example, on the internet who are calling

• people like Warren Buffett fools who don't invest in Tesla.

• They read short statements of Cathie Woods, who claims that Tesla is at least worth 3K

• dollars per stock.

• Tesla is going to produce Roadster 2 that's going to be faster than Bugatti and yet only

• cost 250K dollars.

• Tesla Semi Track is on the way.

• Tesla is going to create an app that will compete with Uber.

• Tesla is going to create 100 GIGA factories that will produce enough cars to replace every

• car in the world.

• Do you see the problem with that?

• Despite the fact that I admire Elon Musk for everything he is doing, especially with SpaceX,

• he has created so much hype around Tesla that people treat Tesla as if it already has done

• all of that when in reality Tesla roadster has been postponed to 2023, the semi-truck

• that was introduced in 2017, 4 years ago and its not yet on-sell, its Giga factories in

• China and Germany are facing regulation problems.

• I am not even talking about the Tesla app that will compete with uber or Level 5 autonomy

• that Musk has been promoting for the last I don't know how many years.

• Instead of completing any of these projects, Tesla came out and announced the Tesla Robot

• and how it's going to revolutionize the world and replace humans.

• The world goes wild.

• Immature investors quickly buy Tesla shares when that robot is really just a human dressed

• as a robot and performed a creepy dance, while Cathie woods, the woman who claimed that Tesla

• stock worth at least 3K dollars, quietly sells 110 million dollars worth of Tesla stock.

• Let me ask you a question: let's say you have a tv today costs 740 dollars and 100 percent

• confident that in a year or 2, this TV will cost 3K dollars.

• Would you sell it today?

• Of course, No, why sell it now when you can it sell 4 times that price a year later.

• Or maybe you don't really believe in what you are saying.

• Value investing is the absolute opposite strategy.

• It's not about running behind what is cool or what's trending.

• If it's already trending, then you are most likely late to the party.

• If you know the true value of something, you can save a lot of money when you buy it on

• sale.

• Most people would agree that whether you buy a new TV on sale or at full price, you're

• getting the same TV with the same screen size and picture quality.

• Stocks, like TVs, go through periods of higher and lower demand leading to price fluctuationsbut

• that doesn't change what you're getting for your money.

• If a stock is worth \$100 and you buy it for \$58, you'll make a profit of \$42 simply by

• waiting for the stock's price to rise to the \$100 true value.

• On top of that, the company might grow and become more valuable, giving you a chance

• to make even more money.

• If the stock's price rises to \$130, you'll make \$72 since you bought the stock on sale.

• If you had purchased it at its full price of \$100, you would only make a \$30 profit.

• Of course, there are some fundamentals you have to look at before buying a stock, like

• the balance sheet, cash flow, income statement.

• Do your ratio analysis to find out how does it compares to its competitors and how cost

• effetely they are using their resources.

• However, that's not enough to find the true value of the company.

• Value investors look beyond these numbers, such as the people who ran the company, the

• values, and principles the company is following.

• At the end of the day, what is a company?

• It's a group of people who came together to create a product or a service, and based on

• how creative, discipline, and organized these people are, the more successful the company

• is going to be.

• That's why before investing in any company, Buffett usually meets with the management

• of that company to find out who really runs the company.

• If you can't do all of that, then you probably shouldn't invest in stocks.

• In an experiment that was done by a Princeton Professor Burton Malkiel, blindfolded monkeys

• throwing darts at a newspaper's financial pages selected a better performing portfolio

• that mutual fund experts.

• Yes, monkeys who know nothing about the stock market outperformed experts with Fancy MBA

• degrees and years of experience, which says a lot about our ability to pick up individual

• stocks.

• That's why Warren Buffett said: most people would be better off investing in an index

• fund like the SP500.

• That's not to say that you shouldn't invest in individual companies.

• You can if you know how the company operates if you're familiar with the products and deeply

• understand the company's philosophy.

• If you want to learn the fundamentals of the stock market, how to read financial statements,

• or do your ratio analysis, you can check out my course on Skillshare.

• If you have enjoyed this video, you will most definitely enjoy this custom playlist that

• I have created specifically for you that has our most popular videos on .... that can potentially

• And now give this video the thumbs up that it deserves, and make sure to subscribe if

• you haven't done that yet.

• Thanks for watching and until next.

How long do you need to make 1 billion dollars?

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# Why All Millionaires Follow The Value Investing Rule

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Summer posted on 2021/10/03
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