SIP003: Charles Fournier on How He Reached Financial Freedom - Sure Dividend Sure Dividend

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SIP003: Charles Fournier on How He Reached Financial Freedom

In this episode I interview Charles Fournier is a retired executive from the Canadian financial services industry who left the workforce in his mid-fifties thanks to a high-quality portfolio of dividend growth stocks. He currently shares detailed information about his investment journey on his website,

In this episode, we discuss his investment due diligence process, his current holdings, and how Charles managed to engineer an early retirement primarily through investing in dividend stocks.

Full Transcript Below

Nick: all right well Charles I just wanted to begin by saying thanks so much for taking some time to be on the sure investing podcast we’re really happy to have you.

Charles: well not a problem my pleasure.

Nick: I thought we could begin by just asking you how you got started in the investing world and how things have changed since you began those years ago.

Charles: well we have to go back to the horse and buggy whip era. So I started investing back in the 1980s. I completed my MBA in finance in 1986, and that was after having worked for a major Canadian financial institution out in Calgary from 1980 to 1984. And I guess unbeknownst to me my parents had expected me that I would work for four years and then I would be going back for my MBA and when they didn’t hear from me that I was planning on going back I got a phone call saying so what are your plans?

I was quite enjoying myself out there, and I really had completely forgotten that I had made any kind of commitment I don’t know if I ever did I think it was probably just my parents saying that was the deal.

so what I did was I went back to University, and I got my MBA, and you know what attracted me to investing is I really could not envision myself working until I was in my 60s. I mean I started thinking about how I could stop working almost from the day I started working full-time in 1980.

What I ended up doing was I I kind of mapped out where I was and where I wanted to go. Let me back up a minute. Nobody wants to do equity investing. The reason you’re doing it is because you want something out of it. It’s just like when you go to a hardware store, and you buy a drill. You don’t want to drill. You want a hole. The drill is going to give you the hole.

Equity investing was the route that I chose that I thought would help me achieve financial freedom. You know what I’m going to be saying on this call people may not agree with. That’s not a problem. I just chose equity investing to help me achieve financial freedom. Other people might do real estate investing.

So what I did when I started investing I determined my risk tolerance level, and before I even started investing, I said 1 I can’t have any debt, and 2 I have to have a cash cushion. You know to me it made absolutely no sense to invest in companies with the hopes of achieving some kind of return if I had debt and I had to pay out from my cash flow with certainty debt that was being charged – going back to there in the 1980s – it was double-digit rates. Prime in Canada was probably around 14 to 15 percent. I said it makes no sense to invest in equities unless I know that and a cash cushion and then despite me graduating with a degree in finance you know an MBA in finance in 1986.

I realized that what I learned was primarily from academics so what I had to do was I had to start reading from people who had actually been successful equity investors. You know sitting in the classroom and listening to professor’s you learned you learned stuff but it’s not always real world stuff. After working, I started working full time after my MBA in 1987, and I immediately joined the bank’s employee share ownership program after my six-month probationary period.

That was really my first experience with equity investing and then what I also did was I enrolled in an investment with a Canadian shareowners association which it was started up by my wife’s former introductory to finance university professor.

He left academia, and he started up the Canadian shareowners association, and it was it was great you know there was education involved there but Nick yeah I don’t think you were around before the advent of the Internet. But back then if I wanted to buy shares I had to cut a check. I had to mail in the check with a form indicating what securities I wanted to buy and there was only a handful of companies from which I could choose from. And not only was that but there they stipulated when they were going to buy the shares during the course of the month.

So if I wanted to purchase shares in BCE that’s Bell Canada Enterprises in Canada you know they would buy shares let’s say every second Tuesday and every fourth Thursday the month, and selling shares was not easy either.

I’m laughing when I say the Internet and how you probably haven’t been around prior to the advent of the internet. But I remember starting to work in 1987 and we didn’t even have a fax machine at the office. Eventually, when we got a fax machine you know, we had to use a roll of paper on which the ink would fade over time.

So we had actually to photocopy faxes to save them and then we had to ask clients to courier the originals to us, so I’m talking dark ages here, and I know there’s probably going to be some listeners who are gonna say Dark Ages I go back even to the 60s and 70s but to me that was the dark ages.

I also invested a little bit of money in mutual funds, but I didn’t have a whole lot to invest at the time because you know one of the priorities that my wife and I had was to pay off our mortgage as quickly as possible, so we didn’t want to be paying a mortgage in perpetuity. Yeah, all the free cash flow that we had went toward the repayment of the mortgage.

I had a little bit of money in mutual funds but I wasn’t overly enamored with it because of the fees you know there were deferred sales charges on some of these mutual funds it was on a sliding scale. But if you invested today and wanted to take your money out let’s say in a year’s time they would charge you a 5% fee and it was only after you held the mutual fund for let’s say five years that there was no longer deferred sales charge so I really wasn’t wild about mutual funds.

So that’s how that’s how I got started investing in the dark ages.

Nick: You mentioned that you are not overly enamored with mutual funds. What are your thoughts on other passive investing products like exchange-traded funds or other more complex products? Do you own any of them or do you think there’s a place for other investors to own them in their portfolios?

Charles: I think there is a place for exchange-traded funds. Personally I don’t have any mutual funds I only have like about a thousand dollars in an iShare global energy exchange-traded fund, that’s the only ETF that I own.

But for for some investors out there who may not feel comfortable in individual stock picking or if you don’t have a whole lot of money probably the best way to get going is in an ETF. In the last couple of months I had a friend of mine who indicated that his 19-year-old son had accumulated about $8,000.

And he wanted some suggestions as to where his son should park the money and his son had identified these two or three companies and he was thinking of putting his money in there. And I said well you know these companies that he’s identified they’re pretty speculative. What you don’t want your son to have as a terrible experience from the get-go why don’t you just go in a broad-based ETF you’ll have a basket of stocks that’s probably the best way for him to start off.

Personally, I prefer to analyze companies and pick and choose the ones that I want to invest in. You know when you take a look at a lot of the ETF’s like let’s say the S&P 500 ETF. If you actually look at the composition, the top 30 stocks probably comprise a fairly sizeable proportion of the total ETF. I don’t speculate I like to go for companies where I can put my head on the pillow and sleep well at night.

So I figured that out of those 500 companies in the S&P 500 for example, I figured I could probably analyze a few and find some really good companies.

And so I’ve decided that I don’t do mutual funds I don’t do ETFs, and I just wrote a post for a guest post for Sure Dividend where I told where I wrote about the shotgun approach and the rifle approach to investing. You know the rifle approach which is something that I’ve learned from you know Warren Buffett and Charlie Munger from reading countless books about them.

That’s my approach, and there are some listeners here who might prefer the shotgun approach. To me, the shotgun approach is like taking mud and throwing it against the wall and hoping some of it sticks that’s just not me.

Nick: for people who haven’t had the pleasure of reading that post would you mind elaborating a little bit on what the differences are between the shotgun approach and the rifle approach?

Charles: sure. So the shotgun approach is where there are so many companies out there and when I first started investing I saw all these companies that I wanted a little piece of the action of all of them. So what I would do was I would go out, and I buy you know one or two hundred shares of Company A, and then I would accumulate a little bit more money, and then I’d buy one or two hundred shares of Company B, and I would do that.

And then eventually what happens is you know you have a basket of stocks, but you don’t have a whole lot of money invested in these stocks. So you’re getting all these little drips and drabs of dividends that are coming into your account, and there’s usually not enough dividend to be reinvested to acquire another share of a company.

I did the shotgun approach for the first little while and then when I realized that I could properly analyze companies. I decided that I would focus on just a few companies so if you read that post in there I list the top 10 stocks that we that we have in our in our portfolio.

You know altogether we have about well I guess maybe somewhere around 50 shares in 50 different companies. But the top 10 you know we have about 53 percent of our investments in the top 10 companies. There’s Visa (V), Bank of Nova Scotia (BNS) – that’s my former employer – 3M (MMM), Royal Bank of Canada (RY), Church and Dwight (CHD). For people who aren’t familiar with Church and Dwight I just wrote a post about them on my site. They’re the Arm & Hammer, Trojan condom folks.

Johnson & Johnson (JNJ), Chevron (CVX), Walmart (WMT), Canadian National Railway (CNI). Backing up I just bought a couple hundred additional shares at Church and Dwight and Canadian National Railway I just bought another 400 shares in Canadian National Railway I think on January 26th. And then we also have Canadian Imperial Bank of Commerce (CM) and Becton Dickinson (BDX).

Now with Canadian National Railway the way I look at it I look for companies with wide moats and sustained competitive advantages and if you look into Canadian National Railway, and you look at you know their their tracks they run from you know the east coast to the west coast in Canada and then they go through the Midwest in the States.

So they have pretty good coverage, and you know when you think about it back in 1980 there’s three different classes of railroad, so you have class one two and three back in 1980 you had I think there was 40 class 1 railroads. now you’re down to 6 or 7 so you’ll have Canadian National, Canadian Pacific (CP), Union Pacific, Norfolk Southern, CSX and Burlington Northern.

You know that would be another one, but Berkshire Hathaway (BRK.A) (BRK.B) bought that outright. Becton Dickinson the last one that I mentioned in the top ten super company. Your listeners should, however, take into consideration that Becton Dickinson has changed considerably in recent years, so you know their credit rating used to be AA two or three years ago, and they bought CareFusion, and then just recently they closed the acquisition which is an acquisition of CR Bard.

Now you know S&P, and Moody’s the credit rating for Becton Dickinson is non-investment grade speculative. So if you’re going to buy Becton Dickinson, you know the great company. But just be aware of its credit rating now management has indicated that the game plan is to get their credit rating back to triple B within the next three years or so.

That’s the top 10: Visa, Scotia, 3M, Royal, Church and Dwight, Johnson & Johnson, Chevron, Walmart, CN, CIBC and Becton Dickinson. What I didn’t mention in my article is the next top ten are TD Bank (TD), ADP (ADP), MasterCard (MA), Exxon (XOM), AT&T (T), Total, UPS (UPS), BCE (BCE), PepsiCo (PEP), and, JM Smucker (SJM).

I think all your listeners will probably recognize if not all of them probably 17 to 18 out of the 20 of them. So those are the types of companies that I go for.

Nick: one name that surprised me from that list is Total. Would you mind elaborating on your investment thesis there?

Charles: so I bought Total ages ago. In hindsight probably not the wisest move because it’s an American deposit receipt and so canadians get hit really hard from a tax perspective on American deposit receipts.

I just bought it because it was another giant oil and gas giant I bought it when the price was depressed you know a lot of these stocks I bought when the financial crisis was happening.

What I had done was I was extremely nervous back in 2007, and this is something that is totally out of character for me but I liquidated a huge component of our portfolio in 2007, and I sat on cash. And you know I kept hearing rumblings about you know what was happening south of the border. So I built up some cash I bought to Total when it was really low.

I liked energy. I knew I was going to invest in in Chevron and Exxon and I was I was looking for a number three. Why did I not buy Shell or BP? I don’t know maybe you can answer it for me. I really don’t know.

Nick: all right thanks for uh thanks for giving some color there.

Charles: yeah well let me back up. I just want to I just want to mention something about you know 2007 when I liquidated a huge component of our portfolio. We happened to be on holidays down in Florida and I met a couple, and their daughter was playing at the pool with our daughter. And this guy had taken over his mother’s appraisal business I think it was in in Ohio or whatever and he said you know I’m going to check out some properties down here I’m thinking of investing in some real estate. Do you want to join me?

I went uh no I’ll pass. The next day I meet him at the pool. I thought he was going to buy one. He bought three! So here’s a guy whose income was derived from the real estate industry and his investments were in the real estate industry.

I don’t know the guy I have never met him again I just don’t think things panned out too well but I was just seeing all sorts of crazy stuff in 2007, so that’s why I did something that was totally out of character.

Nick: interesting that man’s mistake is clearly putting his eggs all in one basket. His active income was derived from the same place as his passive income which is dangerous.

With that in mind what would you say are the top three investing mistakes that most investors make?

Charles: not knowing what they’re doing. I think it’s important that people learn how to properly analyze companies before they start investing in companies. I think what happens in a lot of cases is people go online and they look at stock screeners, and over the last few years, I would strongly suspect that a lot of investors out there have been chasing yields.

Because you know the typical yields that they used to derive from you know term deposits and GICs just went down to basically nothing. So they started turning to companies that were yielding north of six-seven percent.

You have a coin on one side as risk the other side is returned if you see something that is going to generate a double-digit yield in this low rate interest in low-interest rate environment you better stop and think before you make that investment.

One I think you know people have been chasing yield they haven’t been doing their research they do their stock screeners and then they look you know for the highest yield. I also think what happens is the flavor of the day, so you read a lot of people going into cryptocurrencies and in Canada it’s like the marijuana stocks a flavor of the day.

And people employing the use of leverage you can go online today and read stories like within the last two or three days I was reading stories about you know people who just blew their brains out because of this recent correction and they were employing leverage.

That’s a mistake that I see the other mistake that I see a lot is people don’t have they don’t have a cash cushion. Get rid of those things before you start investing.

Nick: you mentioned that one of the big mistakes is people not knowing what they’re doing when they’re buying stock. I was wondering if you had any suggestions for listeners who are looking to develop their knowledge of how to analyze stocks.

Charles: you guys are at Sure Dividend have a couple of great courses on your site. So I mean I’m not trying to you know flog your course or anything like that. But I’ve looked at the courses you asked you had asked me to review the courses before you went live with it.

Anybody who is not totally familiar with how to analyze financial statements. I strongly suggest they check out your courses it’s a small price to pay in in the grand scheme of things before you start investing thousands of dollars invest a few hundred dollars in yourself. Learn what the heck you’re doing before you start investing.

The other thing is read, read, read & read, read & read some more. I’m the type of person where my eyes glaze over when I read really technical books. So I made a list of a few books that I read I got something out of it and it the content of the books actually kept me captivated and there’s a little bit of humor and some of them too.

The leaf the first one I’d like to mention to your readers is Damn Right: Behind The Scenes With Berkshire’s Billionaire Charlie Munger. A lot of your readers may have also read The Snowball: Warren Buffett and the Business of Life. The author is Alice Schroeder.

Charlie Munger, the Complete Investor by Tren Griffin, Tap-Dancing Into Work which is Warren Buffett on practically everything and that’s by Carroll Dumas. Creating a Portfolio Like Warren Buffett, A High Investment Return Strategy and that’s by Jiva Ramaswamy. Warren Buffett on Business Principles from the Sage of Omaha by Richard Connors. Are you detecting a theme here there’s a lot of Munger and Buffett, Poor Charlie’s Almanac Peter Kaufman.

The Dhando Investor that’s the Dhando Investor it’s the low-risk value method to high returns by Mohnish Pabrai, Daring to Succeed Gijon John Wall. So he is the founder of Alamut a Alimentation Couche-Tard, Circle-K, and right now I’m reading the Breakthrough Company by Keith MacFarlane.

The other thing your readers might want to look at is, and they have a lot have probably already done this. You go on YouTube, and you look up Charlie Munger Berkshire Hathaway and Mohnish Pabrai and listen to some of the talks that they give to you know students at various universities, and you’ll learn a lot from them.

You know some some people love things like the Intelligent Investor I’m sorry Nick but I my eyes glaze over when I read that.

Nick: you know it’s funny you mention that book because it’s widely touted as one of the best investing books of all time. But I personally think it’s a little it’s quite a bit overrated.

Charles: yeah and you know I know Warren Buffett has probably read this thing like 20 times or so but he’s his personality is very different from mine I can’t sit there and read more than ten pages at a time, and even then I start to lose interest.

Nick: yeah definitely the book is certainly monumental in the sense that it introduced many philosophical pinnacles of the investing world like Mr. Market and margin of safety and those sorts of things.

But like I said before I’ve personally found it to be a little bit overrated.

Charles: yeah I look it’s it’s a great book and a lot of people love it so you know if you want to for those who haven’t read it check it out and you make your own decision.

I just want to go back to some of the others you had the question about you know what are some of the things that people should maybe do before they start investing and I was talking about like don’t chase yield don’t chase flavor of the day.

Tune out the noise unless you enjoy some talking head yelling at you and pressing all sorts of buttons that make weird sounds. Stop watching those shows on TV unless you enjoy it.

But these types of shows it’s all about where’s the market going today where is it going tomorrow and where is it going next month.

Focus on where is the company going to be five years down the road ten years down the road the other thing is, and I know there’s people out there who love these types of companies.

It’s not for me, so this is I’m just giving you my take on what I do. But I avoid Business Development Corporation’s Master Limited Partnerships REITs and closed-end funds I avoid them like the plague.

The reason being is all the money that they generate gets paid not all of it, but a big chunk of it gets paid out to the unitholders so if you’re going to grow you have to raise debt or issue more units. And you know if you if you drill down into some of these entities and you look at what is being paid out to you it’s not always a return on capital.

In some cases, it’s a return of capital, and these types of entities have attracted a lot of people because of their yields. But I suspect that as it as interest rates start to creep up some of these entities will suffer I’m not saying you know they’re all bad there’s probably some great ones out there I have not analyzed all of them.

But I go back to Buffett and Munger do you think they invest in this stuff?

Not a chance.

They don’t invest in this stuff, and you know why would you want to invest in companies that distribute most of their free cash flow. You want companies that are using their free cash flow to the best advantage of the shareholders that’s either acquiring new entities paying down debt increasing dividends repurchasing shares.

If you are one of these MLPs, and you’re paying out most of your free cash flow how do you grow so and then another thing is you know I came across you know this-this is what Buffett had said too since at least the 1990s when he was visiting college students and giving advice on how to get rich.

He said if I could improve your ultimate fine and I’m quoting him verbatim if I could improve your ultimate financial where welfare by giving you a ticket with only 20 slots in it so that you had 20 punches representing all the investments that you got to make in a lifetime. And once you’d punch through the card, you couldn’t make any more investments at all.

Under those rules, you’d really think carefully about what you did, and you’d be forced to load up on what you really thought about yeah so you’d do much better.

So I ask you this you know when I was telling you about the top ten holdings that we have like Visa and 3m and Johnson & Johnson and Walmart what would possess somebody to invest in BDCs and MLPs instead of those types of companies that will probably still be around long after I’m gone.

Nick: on the topic of long-term investing what’s your longest held stock right now?

Charles: I remember when I was very young I don’t think I was even ten years old my mother brought me to a BCE annual shareholders meeting I had no idea what was going on I just went into this room and saw all these people that’s all I recollect. But my parents bought me some Bell Canada enterprise shares way back in the early 1960s.

Other than that honestly I really don’t know which is the longest because I’m going back to you know the oldest statements that I have and the oldest statements that I have show you know I had 3m ADP Exxon Mobil of the five major Canadian banks Walmart and Johnson & Johnson. But BCE if I have to go back to the 1960s I still have those.

The other thing is it was slightly off topic but going back to when I said don’t chase yield. I’m not yield-hungry I have a lot of shares in our portfolio where the yield is sub 2%. But I think something’s working out ok because I keep track of the dividends that we get every single month and then what I do is I compare it year-over-year to see how things are progressing.

And just the other night before you know when you sent me today the questions that you want to ask today I thought I would I would bring this up. In 2007 our portfolio generated about 90 well ninety-two hundred and sixty-seven dollars in dividends in 2007. By 2012 it was generating thirty-one thousand eight hundred and fifty do in annual dividend income, and now it’s generating six figures an annual dividend income.

And I don’t have, and I don’t have eight nine ten eleven percent dividend yield errs.

Nick: all right lets I’m going to the last question I asked you was what’s your longest held stock I’m curious if I flip that question and say if you had to buy one stock knowing that you were never allowed to sell it right now what stock would it be?

Charles: Visa, number two MasterCard. These guys you know I had one of my former team members went to India in November and December, and when he came back I was speaking with him, and he said Charles you’re not going to believe this I was in the middle of nowhere India and street vendors weren’t accepting cash it was all mobile payments.

You wanted to buy bananas you paid them with a mobile payment, and it funneled through you know either a Visa or a MasterCard Network. If I could, I would buy China Union China’s Union pay, but it’s not publicly traded. But Visa and MasterCard you know they’re there technology companies that just facilitate the flow of money, and you know when I when I was working the Visa flow of funds used to go through our bank.

We were the bank in Canada through which all of Visa payments flowed big numbers, and you know it keeps growing it’s it’s not going to shrink and when you take into consideration that they get a little sliver out of every payment good that goes through the system.

You know you take into consideration inflation, so you’re going to buy something today for a buck I’m willing to bet you that ten years from now that product or service will be more than a dollar it might be three dollars. So Visas just naturally going to benefit from the increase in prices due to inflation so Visa number one MasterCard number two.

Nick: let me ask you the opposite question now is there any particular part of the stock market whether it’s an individual company or a sector or a trend that you are dead set on staying away from right now. Other than the after-mentioned REITs an MLPs and those unusual corporate entities if you have to stick with corporations what are you avoiding right now?

Charles: I shy away from the mining sector, and the real estate sector and the reason I do that is I remember from my banking days, so I used to head up the corporate cash management team, or one of the corporate cash management teams at a major bank in Canada and our partners were the corporate bankers. And what I noticed was the corporate bankers in mining and in real estate they very rarely moved from that industry to another industry.

It took years and years to become really knowledgeable and in those sectors, and I don’t have the knowledge that those folks have. But I saw corporate banker is that would move from you know you know consumer products over to I don’t know let’s say industrials.

I saw that transition but you know I just think it takes a special a lot of knowledge acquired over several years to become truly knowledgeable when it comes to mining and real estate. The other thing is I find that those two sectors are probably more cyclical than then I can stomach.

Nick: would you say that there’s any sector of the stock market that’s kind of the opposite in the sense where investors can safely park their money there and really sleep well at night without they’re worrying about it?

Charles: I think I think it’s important that you always be vigilant because you know too there are so many disruptors out there so you know I could talk about you know like UPS and FedEx their Amazon is encroaching into their space.

So you can’t just say I can park my money in this in this company in this industry and not worry about it at all you always have to be vigilant. But if-if I did have to choose a couple of sectors or do you want sectors or companies because there are a few companies out there that I think will be long-term holds for me. And that would be like I talked about Visa MasterCard then you have Canadian National Railway and then Union Pacific.

Then there’s another company that I am in the process of analyzing right now, so I won’t mention the name because I’ll probably have a post going up on my site shortly. But it’s an it’s a spinoff from ADP.

Those are the companies, so you’re looking for companies with wide moats sustainable competitive advantages and deep pockets. You know, and other great companies would be like Johnson & Johnson and Microsoft, and I don’t go down market to you know the one in two billion dollar companies.

Nick: now in terms of key metrics when you’re analyzing a company what are the things that you consider to be the most important?

Charles: free cash flows number one so I like I like free cash flow you know I think in my recent article I mentioned something about you know revenue being vanity and profits being you know reality.

But free cash flow is sanity so I like I like free cash flow. Return on equity I know a lot of people look at that but you know that that can be that can be somewhat misleading, and I know there was omebody recently who sent me an email, and I and I found an interesting article as to how companies can manipulate their ROE so don’t I don’t focus entirely on that.

I look at you know earnings per share diluted earnings per share I look at leverage ratios interest coverage I look at you know what is the company doing as far as share repurchases so I look at the weighted average number of shares outstanding basic and diluted and you know over the last few years, and you’re probably well aware of this there’s companies out there that have been borrowing billions of dollars to repurchase their shares. And that inflates the stock price you know all of a sudden you your earnings per share go up dramatically because you’re buying back all these shares.

But I can’t help but wonder what’s gonna happen down the road when these companies have to start repaying that debt. What if interest rates aren’t as low as they are today?

Nick: I guess at that point only cash will do the trick.

Charles: exactly and you just better hope and pray that they’re still able to generate tons of free cash flow and who knows what the environment will be like you know 15 20 years down the road because a lot of this stuff is long-term debt.

I’m thinking of you know a company like Home Depot for example I’m not saying Home Depot is not a good company I’m just saying I think it was last year where they the board approved 15 billion dollar buyback program and you know also Home Depot is they don’t have 15 billion dollars kicking around to buy back all these shares.

They’re going to have to borrow it, and at some point in time, you know companies can’t always be going to the well to borrow money to buy back the shares otherwise their the credit rating agencies are going to downgrade them.

That’s just my take on things I might be totally out to lunch, but I’m very wary when I look at companies buying back tons of shares with debt. That’s why I always look at you know the credit ratings and the trend of the credit ratings and whether they’re on the rating agencies watch list for possible, down grades.

Nick: your emphasis on credit ratings is something that really stands out about your investment style I mean as you know there’s only two companies right now that sport that coveted triple-a credit rating from S&P Johnson & Johnson which I know you own and Microsoft which I suspect you probably own as well.

Charles: Yeah.

Nick: if you had to pick a third company to join that list of two who would it be?

Charles: well I like Visa, but I’d really have to sit back and think about it there’s I’d I’d say I’d say Visa interesting I have to say Visa is a company I haven’t analyzed in any detail and I had no idea that their balance sheet was that strong well it what I like about them is they have you know it’s it’s the type of company that is highly unlikely to be displaced. And there’s huge growth potential in the upcoming regions of the world you know you think about Visa being used in Europe and North America, but you go to places like Nigeria and India and you know Kazakhstan people are starting to use Visa services out there.

So there’s I think huge growth potential for Visa and you know they don’t take on any credit risk they don’t take on your credit risk in my credit risk. They just move the money I’d have to give more thought but off the top of my head I just like Visa tonight, and I think I’ve mentioned this to you before it’s one of those companies where I never really want to sell my shares.

I just I just I just take a look at you know I bought I bought Visa shares shortly after the IPO, and I look at the return that I’ve generated on it you know you never want to fall in love with a stock, but it sure is hard not to follow in love with Visa,

Nick: yeah it sounds like one of those buying holds stocks forever for sure.

Yeah so I mean we’re kind of getting overtime here I thought I’d ask you one last question before we wrap things up and the question is this.

If you could give one piece of advice to an investor who’s just starting out today what would it be?

Charles: invest in yourself learn to read don’t jump into the market and start investing. You know take a step back talk to talk to successful investors you know don’t talk to your friends. The reason they’re your you know the last thing you want to do is to talk to somebody who’s in the same boat as you. So if you can find somebody who is successful at investing yeah educate yourself.

And you know I mentioned earlier in in the in the call check out the Sure Dividend courses where they’re really easy to follow you know they actually have screenshots of financial statements and it shows you where to look to find out the details to calculate various metrics to determine whether a company is you financially sound or not. They’ll show you how to calculate you know the current ratio the working cap at all the cash flow and all that kind of stuff you know that that’s important.

And the other thing too is I I know some people you know their eyes will glaze over just like my eyes leave its glaze over when I read the Intelligent Investor.

But you know pick up an annual report and don’t just read the glossy stuff at the front look at the ten case the ten case the notes to the ten case if you start reading a 10k for a financial institution it’s really complex. But if you start reading a 10k for a company like Fastenal for example you know it’s relatively easy to understand go on the company’s website you know listen to listen to conference calls look at the investor presentations it’s all about knowledge.

Learn how to read financial statements and then actually go on you know a couple companies websites and look at real live material.

Nick: awesome though that’s all advice that I echo very strongly. Thanks a bunch for your time today Charles I learned a lot talking to you, and I think that most of our listeners are going to be able to say the same thing so thanks.

Charles: oh you’re very welcome.

Nick: thanks so much for listening to today’s episode everyone.