🧠 Could You Survive This?


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Welcome to Long-Term Mindset, the Wednesday newsletter that helps you invest better.

Today's Issue Read Time: <2 minutes

  • Lesson: Why emergency funds are so important
  • Timeless Content: Top cybersecurity companies analyzed
  • Thread: How to bullet-proof your finances
  • Resource: S&P 500 P/E Ratios
  • And more!

Together with Finchat​

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Finchat also allows you to take advantage of cutting-edge AI, drastically speeding up my research process. Finchat is free to try, but I find the site so helpful that I pay for the premium features.

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Friends,

This fall was a bit nerve-wracking for us. We purposely decided to forgo cohort-based courses to focus on the launch of Stock Investing Mentor. That meant our income was much lower during the summer.

In the end, our patience was rewarded: 4x more people joined Stock Investing Mentor than we expected. After a lean summer, we made up lost ground.

But this story comes with a hitch: while 50 days have passed since customers paid for their membership, Withers still hasn't been able to access his share of the revenue.

This summer, TikTok influencers spread memes demonstrating how to deposit fraudulent checks and withdraw money from ATMs. As a result, Withers' bank instituted a months-long wait period for accessing cash from deposited checks.

As a result of the above, Withers has had to endure:

  • Three months with roughly half of his regular income.
  • Two additional months with no access to any income.

Luckily, Withers always keeps enough cash in his emergency fund to handle such situations.

But we aren't writing this to focus on Withers -- we're writing to focus on you. The question you should ask yourself:

"Would I be able to survive such a period?"

This reminds us of a quote Nassim Nicholas Taleb shared with us when we interviewed him in 2018:

If you ever have an "uncle" point -- where you have to liquidate -- then your return will not be the stock market's. It will be the return to your "uncle" point -- which is negative.
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In other words: the market can have a positive expected return, and you have a negative expected return.

Emergency funds aren't sexy. They are just piles of cash sitting in the bank -- and not invested in the stock market.

But those "uncle points" -- losing your job, getting ill or injured, going through a divorce...or being unable to access your income -- tend to come at the worst times.

An emergency fund, for all its faults, eliminates the possibility of you succumbing to an uncle point. And in the long run, avoiding them is just as important -- if not more -- than being a great stock picker.

How much should you have set aside? Is it enough?

Check out our simple graphic below to provide a guideline that can be adapted to your situation.

Wishing you investing success,

Brian Feroldi, Brian Stoffel, & Brian Withers

Long Term Mindset

P.S. Have you consumed any great investing content recently? Reply to this email with the link, and we might include it in a future newsletter.

One simple graphic

One piece of timeless content

Cybersecurity isn't just a nice to have for businesses. Fortune Business Insights projects the industry will grow 14% per year to $560 billion by 2032. Francis, The Software Analyst, breaks down 7 of the biggest market cap companies in the space today.

One thread

One resource

The price-to-earnings ratio is a flawed metric, but it's also one of the most widely used ways investors determine whether a stock is under/overvalued. Yardeni Research publishes a set of P/E ratios for the S&P 500 and its history over the last several decades, providing some excellent context on the current market for investors.

If you've consumed some great investing content recently, reply to this email with the link, and we might include it in a future newsletter.

One quote

Brian Stoffel

Brian Withers

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Long-Term Mindset

I teach investors how to analyze businesses. Each Wednesday, I share six pieces of timeless content that can be read in less than 2 minutes. Read by 100,000+ investors from a16z, Amazon, Google, Microsoft, and more.

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