In this episode of the Investing for Beginners podcast, Dave welcomes Thomas Chua, the founder of Steady Compounding, to discuss the principles of long-term investing. Thomas shares his journey from discovering investing through books to building a successful investment philosophy centered on steady compounding. Tune in to learn why focusing on the fundamentals, understanding economic moats, and valuing businesses conservatively are key to achieving sustained financial success.

[00:00:46 ] - Why Invest in Stocks?

• Thomas explains why he chose to invest in stocks over other assets like real estate or Bitcoin, influenced by his reading of "Rich Dad Poor Dad."

[00:02:40 ] - Influential Investing Books

• Thomas discusses key books that shaped his investment philosophy, including Warren Buffett’s letters, "One Up on Wall Street" by Peter Lynch, and "The Joys of Compounding" by Gautam Baid.

[00:05:08 ] - Why Steady Compounding?

• Thomas explains the concept of steady compounding and why he prefers this approach to get-rich-quick schemes.

[00:08:38 ] - Thomas’s Background and Motivation

• Thomas shares his personal background, including growing up in poverty, and how it motivated him to pursue financial independence through investing.

[00:11:40 ] - Pitfalls for New Investors

• Discussion on common mistakes new investors make, such as checking stock prices too frequently and getting swayed by market narratives.

[00:17:05 ] - Investing in Resilient Businesses

• Thomas emphasizes the importance of investing in businesses with strong fundamentals and the ability to recover from temporary setbacks.

[00:22:19 ] - Analyzing Companies

• Thomas outlines his process for analyzing companies, including the importance of understanding a company’s total addressable market (TAM) and economic moat.

[00:27:01 ] - The Importance of Being a Generalist

• Thomas argues that being a generalist in investing allows for a broader understanding of multiple factors that contribute to a company’s success.

[00:31:02 ] - Evaluating Brands

• Discussion on the current state of brands like Nike and Starbucks, and the challenges they face in maintaining brand strength.

[00:34:55 ] - The Role of Valuation

• Thomas shares his approach to valuation, stressing the importance of keeping it simple and being conservative with growth projections.

[00:43:43 ] - Constructing a Portfolio

• Insights into how Thomas builds his portfolio, including his strategy of buying in tranches and diversifying across 15-20 stocks.

[00:50:33 ] - Exciting Investment Opportunities

• Thomas talks about his current interest in finding opportunities outside the “Magnificent Seven” and his analysis of companies like PayPal.

[00:52:12 ] - Writing and Communication Skills

• Thomas shares tips on how he developed his writing skills to effectively communicate complex investment concepts.

[00:54:38 ] - Where to Find Thomas Chua Online

• Thomas shares how listeners can connect with him through his website, SteadyCompounding.com, and social media platforms.

Get more from Thomas:

X: @SteadyCompound

Blog: Steady Compounding

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