Can Wisdom Bridge Generations in Finance?

“Helen, let’s take a look at these companies,” Alex said. “BYON is Bed Bath & Beyond. You've been to their stores before. Did you like it?”

“I did?”

Alex said, “Yes, when we were in Utah,way back when.”

“We used to shop there often, Mama and I.? But? that? was a long time ago, before your time. They sell home accessories, but not furniture.”

“ ? Anyways,let's? get started.”

“First, I like to look at the price. Everything goes back to March 2020, before the government started printing money. You see the price here,” Alex said, perplexed and mincing his words to keep his explanation simple.

“It was $4.99,” Alex pointed at the dip, the lowest price for the stock.

“It’s now $23. It has gone up almost 4 plus times.”

“I like to look at the big picture first. I’m looking for a reason to sell, not to buy.”

“It’s like decluttering; you have to get rid of things you don’t love to make room for what you do love.”

“Don’t clutter your list of stocks. In basketball, every year, they vote for the Most Valuable Player (MVP). We do the same, which is why we have to rank them. Let’s call our list MVC, for Most Valuable Company.”

“So, first, the price to put things into perspective. Next, I look at Free Cash Flow, or FCF; it’s trending down.”

“Does that mean that their normal customers do not go there anymore?”

“Kind of, yes.”

“This is the money they make from what they do best, their core business. It's not good,” he thought about explaining what Free Cash Flow is but decided against it, as Helen would normally ask if she did not know about something.. “It's alright if Helen? doesn't know about that? yet. For now, up is good, and down is not. This is an important subject, and it's not the time to get lost in the details that are not as important. There will be? time to go over this later.”

“At this point, the performance of this company hasn’t been ideal. Let’s get rid of it to make room for something better. We can only have 10 companies, so we have to make close inspection and make sure that all the companies we choose? later are “worthy”..”

“Do you mean to sell it?” Helen asked.

“Yes, just to complete the story. Next, I like to look at the Net Income,” Alex didn’t want to pause; his goal was to finish the process, no matter how much Helen understood all of the information that was being thrown and processed out of Alex’s mouth..

“In 2020, they made $56 million, then jumped to $123 million, then it was downhill from there. We don’t know why, and we don’t care. That means they can't make as much money as before.” By this time, Helen was getting more and more curious yet confused.She seemed to know some parts of it, but not know the other more confusing parts..

“Look at Total Stockholders Equity; it has gone up from 2020 to 2021, then down again. This confirms what we saw earlier about their income. So, it's not good.”

“So, if they can't make money, then we need to sell them?” asked Helen.

Alex said, “Think back to our MVC; our list can only have 10 players. They all have to be good. If they're not, then we make the change.” Alex paused only long enough to reply, then went right back.

“Lastly, we look at Price/Book (P/B), which is 2.06. This is like saying if you have $1 worth of something you own, how many times are you willing to sell it for. One times means you are willing to sell it for $1, two times means $2.”

“We need to rank everything based on this P/B; the cheaper, the better. Remember, on our list of companies, we only keep the best companies in the world. This is the easiest; it might not be the best, but it's the fastest. Later, we can refine this process.” Alex kept reminding himself to keep things simple.

“That’s it for today. We can look at others another time. I will finish this list on my own.”

Helen went off, and Alex continued, “SQ, Square, this one I like. It was $43 in March 2020. Now it’s $65, reasonable. Free Cash Flow went from minus $15 million to $795 million. Net Income has gone down massively. Why? Their expenses in Research & Development and Selling, General & Admin have gone up. Maybe they have hired too many people? It's something to find out. For now, it’s a keeper. Need more research to continue to buy. Equity has gone up a lot between 2020 and 2023. Price/Book is 2.27. They owe $14 billion and have $31 billion, that's 45 percent. I want to cap that at 40 percent. Keep and watch for now; I rank these based on the price-to-book ratio.

Helen was just glad that she could be away from all of that ,her brain needed a break.It takes about 10 minutes to go over each company. Alex went to the next company, until he was done. He went to Bard to try to output a spreadsheet, but couldn't get it done.? He even tried to change mode to OpenAI, but? Chat just didn't want to do it.? Finally, he gave up and did it manually, inputting the data.

Alex called Anne, he asked, “did you see the list?”

“I’m done.”

“What do you mean?”

“I bought and sold what was on the list.”

“What about the flagged companies?”

“I’ve sold them.”

“Let’s make sure we are on the same page. You have a list of 10 companies. Take $12 thousand and divide by 10, that is $1200, this is the max that you can buy for a given company. Half, or $600, is part 1 of your buying. The other part is to wait and see what happens.”

“I have existing companies that are worth more than that.”

“If it is on the wait-and-see list, then reduce the amount to $600.”

“Alright. I have to go, I will do it next week.”

Alex was going to talk about Tesla but decided against it. He was aware of the price trending downward, so he decided to lump it with Qualcomm and MediaTek as “Need More Research.”

Back at Baker Street, Blue said, “You have to be careful about telling people that.”

“What do you mean?”

“Not everyone can generate that kind of return. Most hedge funds can do about 5 to 7 percent per year. What you are telling people is four times more than that.”

“She is family. I’m just telling her from my perspective. I’m not forcing her to do anything. I’m only trying to help.”

“Are you sure you won’t get in trouble?”

“I’m not making any money from her. I’m just sharing my notes with her.”

“I think you need to be careful.”

“These hedge funds and investment houses are powerful institutions. You don’t want to cross them.”

“I’m not fighting with anyone. I only have love for everyone.”

“You shouldn’t be writing about these things.”

“What do you mean?”

“It is now so easy for people to find out who you are, by a click of a button.”

“I don’t understand why I shouldn’t. It’s fiction. I made things up.”

“Yeah, but not everything.”

“That’s fiction, sometimes real life gets in the way.”

“Fiction or not, I don’t think you should be writing so much.”

“It’s fun and a way for me to vent.”

“What if you need to raise funds?”

“I’m not saying anything controversial.”

“What about the stuff about Bill Maher and Palestine?”

“Those were narratives of experts in those areas. I just don’t like wars in general. I think nothing justifies the killing of people.”

“They will come after you.”

“I’m nobody. There are only a handful of people reading.”

“What do you want to do?”

“Even the playing fields, help people make money, be a participant. In a capitalist world, you have to own stocks. There is no other way.”

“Only the rich own stocks, everyday people don’t, only 10 percent of the people own stocks.”

“That needs to change.” Alex knew the stats were higher but didn’t want to correct Blue.

“Look, I’m just saying. Do what you think is right.” Blue didn’t mean what he said; he didn’t like the idea of standing out.

That evening, Alex asked Helen, "Do you ever wonder what it was like during the industrial revolution, where workers were stuck working manual labor for long hours, stuck in unimaginable conditions? How terrible was that? Now, we have it good. We don’t have to labor hard; most of us are office workers. Do you know how easy that is?"

“Not really. Daddy, you are not tired physically, but you are thinking too much, aren’t you tired?”

“That is the point. During the industrial age, you are tired, but your mind is in a better place. You might be on the assembly line, catching up with a friend as you move parts from one place to another. The day goes by with ease. You are tired, but you go home, and you don’t have to worry about much. The next day is the same.”

“Do you like what you do now?”

Alex said, “I’m tired mentally, it is true. I think we are no different from our ancestors in physical labor; we are tired at the end of the day mentally, which is more or less the same difference.”

“Do you know what I mean? We worry about what will happen to our jobs.”

“There is so much wage insecurity in this country that the anxiety is so thick your generation will look back with wonder at how we managed to survive.”

“Your generation would try to imagine being stuck in a cubicle for 8 or more hours per day for years and years.”

“You would say it with joy that thank God your life is different, that the mental agony is handled by AI and the physical labor is also managed by AI.”

“The only thing to do is to make decisions and try to create a better world."

“Really, Daddy?”

“I asked Mama to buy a device that is called Rabbit; this thing just came out, and it has already changed the world. I have to look into Qualcomm and MediaTek, they both make chips, I will tell you more tomorrow, along with Tesla.”