Greedy's Vault - Week 3

LevWedge Studios Presents

FRIDAY OCTOBER 27, 2023

WHAT'S INSIDE:

Puppets | Perspective | Finance

Theme of the week: RISK Mr. Market - what’s moving Greedy’s Tickers - Top Bulls & Bears Greedy’s Take - Lessons to consider Coming at ya - Next week’s preview

The Common croc’s perspective on risk Expectations vs. Reality: Risk is that twist in the tale where the ending you anticipated isn't what unfolds. Broadly, it's when your investment doesn't perform as predicted, leaving you with either a tad less or, in some cases, a lot less.

Greedy's Take: Venturing into the financial marshlands is never a sure thing. There are hidden surprises and unknown dangers. Think scandals, CEO missteps, or the occasional corporate faux pas. This underscores the importance of doing your homework, understanding the terrain, and ensuring your moves are wellcalculated. Whether you're investing for the long-haul or in for a quick trade, the unexpected is always lurking.

The Many Faces of Risk Every investment journey comes with its set of bumps and bends. There are myriad risks, each unique, and plenty of analytical tools to gauge them.

Greedy's Take: The investment world isn't just about financial risk. It's also about the risk of jumping in too soon, or too late, and missing the boat altogether. Risk is omnipresent, but the riskiest move? Avoiding the game entirely.

Risk Mitigation - The Old Playbook Traditionally, spreading your eggs across multiple baskets (diversification) or using other hedging strategies is seen as the way to temper risk.

Greedy's Take: While diversification is a classic move, it's not the be-all and end-all. Sometimes, rules can be bent, even broken, provided you understand the game and the stakes. But here's the golden rule: doing nothing is the most perilous play. Inflation waits for no one. Sitting on the sidelines, with your cash stashed under the mattress or in a bank, lets the inflation monster creep up on you. So, diving into the financial waters, albeit cautiously, isn't just a choice; it's a necessity. Don't let the fear of risk lead to the greatest risk of all – inaction.

www.greedyshow.com

VOL.3

www.greedyshow.com

VOL.3 PAGE 2

From Greedy’s Goggles, there are many facets to risk...

The Total Wipeout Risk inherently means that there's a shot at kissing some or all of your investment goodbye.

Greedy's Experience Sure, I've never been stung with a complete wipeout in the stock market. The big bad 'B' (bankruptcy) hasn't crossed my path, but hey, I'm still a young croc in this vast financial swamp. My gamble into the airwaves, with radio investments during these high-interest times, might just be my "I-touched-the-hotstove" moment. Only time will tell.

Greedy's Safe Bet Metrics: Want a safer bet? Look for companies that have sturdy financial pillars. What does that mean?

1. Low Debt: A company weighed down by debt is like a boat with a hole; eventually, it might sink.

2. Cash is King: Companies that have a robust cash reserve can weather storms better. They can innovate, expand, or simply keep the lights on during tough times.

3. Cash Machines: Aim for businesses that are not just making revenue but turning that revenue into real, tangible operating cash flow. This is a sign that the company is efficiently transforming its core operations into cold hard cash.

4. Valuation Metrics: Keep an eye out for companies that have low cash flow multiples relative to their price. This can often signal an undervalued stock, offering you more bang for your buck.

5. Shareholder Givebacks: Companies that return cash flow to shareholders in the form of stock buybacks are your friends. These buybacks can keep your stocks sailing smoothly even when the financial seas get choppy. It's such a significant factor that I often filter stocks based on this metric alone.

Want in on this? Dive into **THE GREEDY TICKER LIST**, available exclusively on Fridays for paid subscribers, or every day for those hardcore market enthusiasts that sign up for GREEDY MODE. How to Get Burned: Want to get toasted? Dive headfirst into those high-flying startups running on fumes (limited cash) or old-timers who are burdened with debt and watching their revenue trickling away. These are the investments where the risk of losing it all skyrockets.

Remember, while every investment has risks, understanding and mitigating them is the key. Dive into the swamp, but with your eyes wide open.

www.greedyshow.com

VOL.3 FRIDAY, OCTOBER 27, 2023

PAGE 3

The Greedy Gaze on Risk Types, Allocation, and Mitigation Diving into the Depths of Risk Risk isn't just a four-letter word. It's multifaceted and comes in different shapes and sizes, much like the creatures of the swamp. When talking stocks, they're usually classified based on their market cap: Large-cap Stocks: These are the big fish, with a market value between $10 billion and $200 billion. They're typically your steady, reliable picks. These are the ones that don't make rash moves, and yes, it's here that you're likely to find those safe, cash-flowing giants.

Mid-cap Stocks: Floating with a market value between $2 billion and $10 billion. They're like the adolescents of the stock world: full of potential but sometimes unpredictable. They could be on the rise or, unfortunately, tumbling downhill.

Small-cap Stocks: With a market value between $250 million and $2 billion, these are the wild cards. But, they're also where you can strike gold. They pack potential but come with a higher degree of risk.

My Gamestop Dive: Take my Gamestop experience, for instance. It started as a small-cap, but with the surge in its price, it rocketed to a valuation of over $10B in just half a year! This just goes to show that the risk landscape is dynamic and everevolving.

Cake Layers of Risk: Risk isn't just one-dimensional. It's like a layered cake. Not just about where you place your bets, but also about the size of your bet. And here's the golden nugget: proportionality is key.

www.greedyshow.com

VOL.3

PAGE 4 FRIDAY, OCTOBER 27, 2023

My Bet Size Philosophy: On riskier endeavors, based perhaps on a hunch or intense research, my general rule is to never go beyond 2% of my portfolio. Sounds smart, right? Of course, rules can be bent, but it's up to you how far you push the envelope.

For large-caps, conventional wisdom warns against allocating more than 10% of your portfolio to a single stock. But hey, I've been known to challenge the status quo. I often resonate with Charlie Munger's take on diversification. Why on earth would I pour the same amount of money into my 20th favorite idea as I would my top one?

So yes, there have been instances where I've loaded more than 50% of my funds into one large-cap.

The Common Croc's View on Diversification: Often, in the investing marshland, you'll hear the adage: "Don't put all your eggs in one basket." The underlying premise is that diversification — spreading your investments across various assets — provides a safety net against the unpredictable tides of the market. This is a perception that has been accepted for generations.

However, let's flip the boat for a second and consider a slightly uncharted territory.

Can one be over-diversified? I firmly believe so. While diversifying can shield you from the downfall of a particular asset, being excessively diversified can be the silent risk lurking beneath the surface. It's like having too many eggs and not enough baskets to know where they all are.

Think about it. If you're so diversified that you can't keep track of or understand all your investments, are you truly managing risk or just diluting potential returns? The true essence of investing isn't just avoiding losses; it's about understanding and capitalizing on potential gains.

Ultimately, the path you choose — be it a diversified portfolio or a concentrated one — is largely dependent on your individual style, personality, and financial goals. Some investors sleep better at night knowing they have cast a wide net, while others, like myself, believe in the power of a few strong, well-researched bets.

In the end, it's essential to recognize that while diversification can be a tool for risk management, over-diversification might just be the risk you didn't see coming. Always align your strategy with your personal investment compass. After all, the best strategy is one that lets you wade confidently through the waters, regardless of how murky they might seem.

VOL.3 PAGE 5

I've always approached risk like a skilled chef seasoning a dish. It's a gradual process. Sprinkle a little, taste, adjust, and only then, maybe, go all in with the flavor.

Here's the deal: I believe in earning my stripes, or in this case, my risk. I've taken bets, sure, but they've always been the kind where I've let my winnings from smaller, successful trades lead the way. Instead of recklessly hurling my hard-earned money into the unpredictable whirlwinds of the market, I incrementally elevate my risk, especially as my understanding deepens.

I often witness young bulls in the market, charging at anything that glitters. They hear a few buzzwords like "Bitcoin" and suddenly they're ready to bet the farm.

Don't get me wrong, having zeal is great, but investing isn't a sprint; it's a marathon. Starting off with a diversified portfolio, like an index fund, provides a safety net while you're still finding your footing.

As time passes, as you marinate in the experiences, absorbing the highs and lows, you'll become more adept at spotting opportunities and managing risks. By then, you'll be ready to take calculated risks, having been forged in the financial fires of experience.

It's a journey, with its share of burns and triumphs. But remember, the best meals are slow-cooked. The market's no different. Let your strategies simmer in the croc pot of finance. Sometimes it might scald, but give it time, and you'll relish the flavors of success

www.greedyshow.com FRIDAY, OCTOBER 27, 2023

VOL.1 PAGE 6

In a week shadowed by fluctuating market movements, the virtues of patience and perspective become paramount. Despite a notable pullback from the top, many stocks remain high in value, making pickings slim for bargain hunters. Our Bull List features stalwarts like Netflix, Roblox, and Snap. Netflix stands out as a promising long-term investment, while Roblox and Snap hint at potential resurgence, having significantly retreated from their highs.

Conversely, the Bear Ticker List presents its own set of intrigues.

Dominant players like Apple, Home Depot, and PayPal have made their presence felt. Although Apple and Home Depot's P/E ratios suggest they might be on the pricier side, they are indispensable for any market recovery. PayPal, on the other hand, seems to offer more value, but caution is advised given the prevailing market conditions.

Upcoming earnings announcements from NVIDIA and Apple could act as critical turning points, offering clarity in these uncertain times.

The deterrent of historically high-interest rates continues to sideline fresh capital. However, markets are cyclical, and buyers will inevitably return. As we navigate this period, it's crucial to remain vigilant and strategically positioned. Stay with us, as we delve deeper into value metrics in our upcoming edition.

📈🔍

www.greedyshow.com

Catch Episode 3 on YouTube!