The Intelligent Investor course FAQ

edited May 2016 in General Questions
It's finally here guys!

Based on Benjamin Graham's "The Intelligent Investor" I created a video course where I go through the book chapter by chapter. My goal is to understand why the book has been so important for Warren Buffett, and how it has shaped his investment philosophy in a modern context. I use case studies of companies like Coca-Cola, Apple, and Starbucks.

Here is the very first chapter:

You can watch the second chapter for free on this page: https://www.theinvestorspodcast.com/the-intelligent-investor-video-course/

If you have any questions about the course or The Intelligent Investor in general, I would love to answer them below.

Thank you guys for the awesome support and making the course happen!

-Stig

Comments

  • I heard that if I buy the course it will automatically unlock "Intelligent investor 100 page summary" as a bonus. But what about the people who already bought the book? Some people would have not bought it if they knew it will get unlocked when you buy the Course.
  • Arefeen,

    Good question. The book is only a bonus to the main product which is the course. However, what we do is to provide this FAQ for those that only bought the book and not the course (clearly you can also use this FAQ is you have bought the course :)).

    Thanks for the kind words on the FB page too :)

    -Stig
  • thank you so much stig, i cant thank you enough to what you all did
  • skytran1979,

    Thank you for saying that!

    Please let me know if I can help you out in any way! TII is so much fun for me to discuss.

    -Stig
  • Hi Stig

    Thank you very much for this awesome course !
    I enjoy it very much and gain real value from it.

    I'd like to ask you about dividends,
    If I understand correctly, after one of these days - declaration,record,ex-dividend or payable the stock goes down in the same precised percentage as the dividend ,plus taxation comes into play of course but that may vary from one vehicle to another.
    Just as an example, if we put it a "lab" environment and let's clear out the stock's ability to move up and down for the sake of this question;
    let's say that company X has a stock traded for 100$ and pays out a 3 percent dividend, and let's say I bought one share of this company - meaning I invested 100$ and got 3$ in return via dividend before tax
    plus the fact that the stock goes down to 97$.
    So, looking at the broader picture - I invested 100 and now have 97 invested in the stock + 3 in cash (before tax)= 100 ?!
    hard to find the gain in real terms...

    Please let me know if my calculation is correct and what are your thoughts

    cheers,
    Tamir
  • Tcnabi,

    Thanks for the kind words and your awesome support!

    Yes, you are completely correct. In a world with no taxes and rational shareholder friendly management there is no change in the wealth regardless of the distribution policy.

    With taxes you experience a net loss (the tax). Especially if you want to reinvest in the company you might wonder what you benefit from.

    However the upside of the dividend is that the management might act more rational because it's not piling cash up and mismanage that.

    I hope it made sense :)

    Let me know if you have more questions!

    -Stig
  • edited October 2016
    Hi Stig,
    Thanks for the course. I have watched all the videos and want to learn more about value investing. Since I took the course already, would you suggest reading the book? Was everything from the book covered in the course? If you suggest reading the book which edition of TII should I try? Also since TII is Buffet's favorite book, Is the knowledge from TII alone enough to make good active investment decision? What other books would you recommend (for active investor) ? Thank you so much. :smile: -Jay Arefeen
  • Jay,

    Thank you for buying the course!

    I think the course should be okay. The content I left out from the original book is not as applicable today.

    After watching the course I might suggest Security Analysis which covers a lot of the same topics, but goes more into details with everything. I would definitely read at least a few more books before I started investing actively, but as I also say in the course you might be able to invest passively.

    -Stig
  • I would love to read Security Analysis but its a very long book (Over 700 pages). Is there any easier way such as summary guide or course to read Security Analysis. I just want to know the important concepts in this book without having to read the entire text. Thank you. -Jay
  • edited November 2016
    Jay,
    .
    I understand your pain. Not only is it long, - it is also very hard to read.

    Preston and I wrote a summary of Security analysis which you can find here: https://www.theinvestorspodcast.com/investing-books/

    We also consider creating a course about it similar to the course you have taken here. Do you think it would be a good idea?

    -Stig
  • Definitely!
  • edited November 2016
    Thanks Stig. I think it would be a great idea. Since I am a visual learner, courses help me out a lot rather than reading books. Also I would love if Preston and you consider creating an Accounting course. I am also interested in learning about real estate investing . Thank you so much. Looking forward to it :smile:
  • Arefeen,

    Thanks for the feedback! We're actually deciding these days which course we should create next, so this is a great input!

    -Stig
  • Stig,
    It would be a very good idea to make a course for "Security Analysis." One of the biggest reasons for which I am aware: B. Graham goes into great detail concerning interest coverage/preferred dividends coverage. And, shows how back then, in the '20's/30's, investors were mislead when a new bond/preferred share issue came out and were only given the company's coverage for that particular bond/preferred share vs. the sum-total of all the company's bonds/preferred shares. Unfortunately, it seems that same misleading information is resurfacing today. And, that's just one example of the power of this book. If your course is anything like your 32 lessons from Buffet (I'm just starting here), it will be very, very good.

    Thanks and Good Investing!!!
  • Seeker,

    Thanks for the feedback!

    Yes, a lot of misleading information for sure on this. It's really hard for people to validate - perhaps that is it, but as you suggest - the more reason to create the course :)


    -Stig
  • edited January 3
    Great Course Stig!

    I had a question on here but you answered it on chapter 5! lol

    Hope to have an active discussion! thanks for your hard work
  • I will also be interested in a course on security analysis.
  • andrewchoidds,

    Thanks for the kind message!

    I hope to have an active discussion too!

    -Stig
  • Stig,
    Thanks for the course - very informative!
    I just had a couple of questions:
    1.   Is there a practical way on how to estimate the discount rate?
    2. In chapter 11 of the book on page 295, the following formula is mentioned: Value = Current (Normal) Earnings * (8.5 + twice the expected annual growth rate).
    How does one come up with the expected annual growth rate?
    What is this 8.5 in the formula - how did they come up with it?
    Thanks,
    Kambiz
  • edited February 25
    Kambiz,

    Thanks for taking the course!

    1) Yes and no. You have to do an estimate. I typically use a discount rate between 8-17%. It's a combination of inflation, opportunity cost, and risk. The tricky thing is we don't evaluate companies the same way. Buffett says about Munger too.

    2) I wouldn't use that formula in the first place. Graham has been out several times and warns about the validity of the formula.

    In terms of annual growth rate for the long term, I would use 2-3%.

    Let me know if you have more questions!

    -Stig
  • Thank you for your answers!
  • No problem! - Keep 'em coming :)
  • edited March 2
    Stig,
    What is the WACC in relation to the discount rate?
    Why is the WACC needed for the DCF formula?
    Are the WACC and the discount rate essentially the same thing?
    Thanks!
  • Cambyses,

    In academia WACC is the same thing. I never use it, and Buffett thinks too it's a useless tool.

    -Stig
  • Thank you Stig!

    Sorry for throwing so many questions at you, and I have one more:
    You mentioned that you use a discount rate between 8-17%, and that It's a combination of inflation, opportunity cost, and risk. Would you mind explaining your or Buffett's perspective of 'opportunity cost and risk'? How do you quantify them?

    Thank you again for your time and a great course!
  • Cambyses,

    Sure thing.

    If I could make 5% risk-free in bonds I would require a higher return from stocks than if I could only get 2%. That is my opportunity costs. So I would use a higher discount rate. The same with inflation.

    A high-risk company says that has a lot of debt should also be discounted more since the cash flows are riskier.

    Please let me know if it makes sense.

    -Stig
  • Yes it does make sense, thanks!
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