Ep809: Pieter Slegers – A Teen’s Investing Nightmare Becomes His Greatest Teacher

Andrew Stotz 00:01
John, hello fellow risk takers, and welcome to my worst investment ever. Stories of loss. To keep you winning in our community, we know that to win in investing, you must take risk, but to win big, you've got to reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reduce risk in their lives, and I want to thank you, especially those people from Belgium joining to the mission today, fellow risk takers, this is your worst podcast host, Andrew Stotz from a Stotz Academy, and I'm here with featured guest, Peter slagers. Peter, are you ready to join the mission?

Pieter Slegers 00:36
Yes, let's have some fun today. I'm truly looking forward to it, and thanks for having

Andrew Stotz 00:42
me. Yes, I'm looking forward to I really, really admire what you're doing, and I want to talk a little bit about it before we get to the questions. So, but let me introduce you to the audience. So Peter is founder of compounding quality newsletter. He studied financial management at KU Leuven and graduated summa cum laude. He worked for three years at a Belgian asset manager before focusing full time on his investment newsletter, which he started in July of 2022 compounding quality has more than 1 million followers across social media and almost 500,000 email subscribers, including me now, and the goal of the newsletter is to help others investors by focusing on quality investing. Peter, take a minute and tell us about the unique value you are bringing to this wonderful world.

Pieter Slegers 01:34
Sure, first and foremost, Andrew, I loved your intro, and I think it's amazing that you are doing this podcast and allowing people to listen to this for free, and helping other people so, so that's lovely. So I truly appreciate your introduction. So that's exactly what I'm doing today. So I'm writing on the compound and quality. What's in a name? Well, compounding on the one hand, let the magic of compound interest work for you, and then quality on the other end, well, quality investing. I try to do that by investing in quality stocks. And I always say to people, well, I'm the most lucky person in the world. Why? Because I have two big passions in my life. One is investing. Obviously, that's why we are here, and investing is it's my job, but it's also it's my hobby, it's my passion, it's my everything. Once my ex girlfriend said, Well, you love the stock market more than you love me. And yeah, it's a shame, but she was probably right, because we broke up a few months later. So the stock market is definitely a passion. Now, the other hand, it's teaching. As a kid, I always wanted to become a teacher. And as a matter of fact, when I would go to university, when I was about to go to university, wasn't that should I go? Should I pick the teaching part or the investing part? Well, I studied financial management or the local version of an MBA, so I picked the best thing, but the teaching passion also never left me, and now with the newsletter, well, people can follow your portfolio. You're writing about it, and you're teaching people how to do it themselves. So I'm combining the two passions, and I'm probably the most lucky person in the world, because I'm always very excited on Monday morning. And that's a very luxury thing to have, right?

Andrew Stotz 03:25
Yeah, as I always say, T, G, I m, thank God it's Monday. Then you got a dream life, right? If you love Mondays and getting back to work, then you know you've got, you'll definitely love every other day of the week. So that's awesome. Let me ask you, when you look at your stocks, that you consider for your you know, for your newsletter, how many markets are you looking at? I mean, are you looking globally, or is there a narrow set of markets, or markets that you can trade through? I don't know. Let's say Interactive Brokers or some others. Or how do you narrow that universe? Or how narrow is the universe?

Pieter Slegers 04:05
Yeah, it's an interesting question. Andrew, you are based in Thailand. I'm based in Belgium, near Antwerp. Some other people will be based in the US or Australia, what have you. And the same is for me regarding my investment philosophy. So I'm truly a bottom up stock picker. And I don't care whether a stock trades in the US or in Belgium or in Poland or in Thailand or in Australia, you just try to find the best companies in the world. And when I find them, I try to invest in them. Well, one side note I would make is, for example, when we are talking about Thailand, and I also get a lot of questions about India, China and so on. Well, I prefer, personally, to stay within the developed countries. Why? Because I don't think emerging markets are within my circle of competence. So one thing that's really important to understand and to master, I think, as an. Investor is that you truly understand the culture of a company, and to do that, you need to truly understand the culture of a country as well. Well. For me personally, it's a pity, and hopefully that will change soon. But I've never been to China. I've never been to Thailand before, so I just don't know how the culture works there. While been to the US three times this year already? Well, I live in Western Europe, so it's way easier for you to get a feeling there. So that's what you're trying to do. And what you try to do as a quality investor is try to find companies that can grow their intrinsic value year after year, and when you hold them long enough, and you are right, well, stocks will always follow the evolution of the intrinsic value. So that's the essence of the strategy there. And when I look at my portfolio today, it's invested in 16 companies, some companies from the US. I have a company in Australia. I have two companies in the UK, one even in Poland. So it's very diversified in general. And one extra thing you could say is, well, look what's happening with the USD, for example, it's weakening. It's very weak right now. How do you think about all the VIX movements? Well, I know quite some people, and have quite some friends who became very wealthy by investing in stocks, for example. But I've never met a person who has become very wealthy by trading ethics or trading foreign currencies. So my point I want to make there is you just don't know. You don't know how the dollar will move compared to the euro or another currency. And some in that perspective, sometimes you lose, sometimes, sometimes you win, sometimes you lose. Meaning the VIX movements are volatile. But in the end, for example, maybe you will win in five years from now, from the Polish slotty, which is appreciating and the dollar is weakening. But in the end, in the long term, well, I think the effect will be very limited, and it will be all about the evolution of the intrinsic value and how much shareholder value is created by those companies.

Andrew Stotz 07:08
Yeah. And one, you know, one concept behind that is that foreign exchange is a zero sum game, exactly in the sense, if one's going up, another one's going down. And so if you look at the long term returns on forex investing, in theory, it should be zero, as opposed to investing in stock markets. So I think there's a strong argument say, if you invest globally in equity, you're going to have the equity and the foreign exchange exposure to those so that makes sense. And as far as the companies are concerned, curious, you know, one of the hard parts about looking at quality companies is that quality companies are not cheap, right, like, and they're, it's not like they're, I mean, yeah, yes, we can find one or two or three in our lifetime that goes from, you know, average to great quality, high quality. And that's, you know, that's a dream, right? Because we're riding not only the revenue growth, but we're riding the margin expansion, as the company is getting better and better and charging a higher rate for, you know, for their products and services. But I'm just curious, like, how do you deal with the fact that quality can be expensive?

Pieter Slegers 08:24
Yeah, I think for quality investors, it's always you first start with looking at the quality of the business, and then the second point is valuation. But as you mentioned, it's also even the best company in the world can be a terrible investment if you overpay. Well, I always use three methods to value a company. First, is very naive. Just compare the forward PE with its historical average. It's naive because you don't look at changes within the company, the outlook and so on, which might be different. And that's also why you're using earnings growth model and a reverse DCF. Well, maybe that would go too far, and if not, please elaborate on it. But people can also find out about that on the website, about how to execute those models. But the general point I want to make is, well, why is quality if you are right, and if it's actually quality stock, and if the company has a moat, structurally undervalued in the long term. It's because when you, for example, do a discounted cash flow model, and I'm sure, I'm sure you've done hundreds of them in your life, Andrew, you make the assumption, look, I'm going to predict the free cash flow over the next 10 years, and after year 10, I will use a terminal growth rate which is in line with the economic growth. Well, the great thing about those quality companies is often they can grow at above average rates for way longer than 10 years. And I don't encourage people to do that. But what happens is, if you predict above average growth rates for 15 years or 20 years in a DCF, for example, you can try it on. Almost every company is undervalued. So that's a very important thing to make. It's a dangerous thing, but sometimes it can, yeah, you can get rewarded to pay up for quality. And a funny story I have about that. For example, when I was 16 years old, I worked for a local security bank in Belgium. And to me, that was so cool, but because it felt like I was working in the Wall Street of Belgium. And in hindsight, Belgium is, is obviously quite, uh, small compared to Wall Street. But anyway, I still recall that it was, yeah, 2016 2017 that I needed to create a report about everything related to EVs, electric vehicles and everything with batteries and so on. And I was writing an investment case about BYD, so one of the favorite stocks of Charlie Munger. And my thinking there was, I was doing the case. I analyzed the entire space, and I came to the conclusion, look, I think BYD is the most interesting one in this space, so I want to buy it. But what I thought, Look, what I thought back then, 10 years ago, well, everyone knows that electric vehicles and batteries will become so important, and BYD is so expensive, and everything is priced, priced in already. Well, in hindsight, I should have bought BYD, because I think the stock is up, depending on where you start, exactly 6x plus 600% more or less. So the point I want to make there is some of those structural trends can last way longer than most people think. And don't get me wrong here, I don't want to say that valuation isn't important. It actually is, and especially in the short term, there can be huge stock market fluctuations, but you try to pay well, as Buffett said, you want to buy a wonderful company at a fair price over a fair company at a wonderful price. So you will almost never find those companies at very cheap valuation levels, but when you just pay a reasonable valuation level, that can also be very rewarding already. And that's the last point I want to make on this one. Then it's you have a very important or very impactful thing in the stock market and investing called reversion to the mean. So if something performs above average for long periods of time, it will go down and the other way around. But the interesting thing about quality is, well, reversion to the mean usually doesn't take place for companies with a mode, for companies with a high return on invested capital, and that's usually because those companies are so strong that other companies rivals competitors. They see that they are strong. They want to enter the market, but they just can't, because the company has such a wide moat, it's as Buffett said, Well, if you gave me 100 billion to take away the market leadership of Coca Cola, I would just give you back the money. And said, it's impossible. And those are the companies that you are looking for in the quality investment, quality investing framework.

Andrew Stotz 13:03
Yeah, in fact, I looked at 5000 companies across the world over a 20 year period, and I set 10 years ahead, and I looked at where their ROIC was at that first year of the 20 years. And then I looked ahead and said, Where was it in the second year, third year, all the way to the 10th year, and said, and then I broke the companies into quintiles, and what I found was that the highest ROIC quintile did fall as we went years ahead. But instead of calling it reversion to the mean. I call it reversion towards the mean. Yeah. So high quality companies remain high quality companies. You know, generally low ROIC companies remain low Ric companies, generally, they get closer to the average over time as a group, right? And that helped me to understand it's the same thing with, you know, whether you're looking at, you know, something like beta or whatever. If you look at that and people do valuations, and they use a beta that's, you know, high or whatever the current one is, betas also revert towards the mean. So these are important things to understand when you're valuing that, you know, things do change, but premium, you know, performance tends to last for a very long time. What about risk management? I know, you know, one of the typical risk management is, of course, the number of companies that you have in a portfolio, the concentration risk. Then there's, you know, sector. Some people do, you know, I don't want to be overexposed to any one sector, any one country or, you know, in more of a trading portfolio, they have stop losses. I'm just curious, like, what, how do you view risk management?

Pieter Slegers 14:47
Yeah, sure. And I think regarding risk management, multiple roads that lead to Rome or multiple roads that lead to heaven, just take Warren Buffett, for example, on the one hand, was very concentrated. And said, well, diversification doesn't make any sense for those who know what they are doing, right? It doesn't make any sense to invest in your 20th best Id just saying something. And then, on the other hand, you have Peter Lynch, who invested in more than 100 or over 100 stocks at the same time. I was very successful there as well. I think it's really important, in general, to just look at yourself and what kind of investor you are, and what how comfortable you feel to be concentrated. And I think in general, I'm more in the buffet camp, meaning, I think the more experienced you are as an investor, the longer you are investing, and this more successful your track record, the more sense it makes to be more concentrated and follow up very closely on those companies. While I'm today, I'm invested in 16 companies. Maybe it will increase to 1718, but not too many more. Um, I'm probably, this is my hobby. This is my passion. So I'm probably spending, I don't know, I'm not keeping track, but let's say 80 hours a week on doing this, and I have a hard time to follow up those 16 companies. So I can't imagine how you would follow up 100 companies, or over 100 companies like Peter lynchwood. And I also completely don't agree with, for example, like you look in universities, tracking the beta, the sharp ratio, the drawdowns and so on. Well, that's not risk. Risk is the permanent loss of capital, and that's the most important thing. And this is a bit different. But one thing that I really took away from work in the asset management industry as well, and in general, with compounding quality. Well, once again, as an investor, I think you should go over competition this week. Where is competition weak in the small and mid cap space? Because everyone is looking at Apple, everyone is looking at Microsoft. The market is way more efficient and way smarter there and when you can find those great compounding machines with a market gap of just saying something below 3 billion. Well there you won't find any information on the internet or almost non information, so you need to do your own homework. But when your homework is correct there, well things can be very lucrative. And I also see that in my portfolio, I have a small house trading company, my portfolio that is up 200% over the past two years, and that company is driving the majority of your results. If you take out that company, my performance would be very mediocre, but you'd only need a few very big winners to be very successful. And the same is true with Berkshire Hathaway, for example, Charlie Munger said at once, if you take out the 14 best, or the 14 most successful investments of Berkshire Hathaway, well, nobody, or almost nobody, would know Berkshire Hathaway. And I've went to Alma. I've been to Amma, physically for the AGM for the third year in a row this year, I probably wouldn't have gone to Alma when you would take away Gecko and Coca Cola and so on out of Berkshire, because then the returns would be very average. So letting your winners run in general is also Yeah, a very important one to move, versus

Andrew Stotz 18:13
Yeah. In fact, what's interesting is that in the last I asked my students this in my classes, I asked him, in the last 20 years, did Buffett outperform, perform in line or under perform the s and p5 100? And the answer that question is, he performed in line with the s and p5 100, and yet he still got a 20% average annual return over from 1965 so 60 years compared to the S and PS 10% return. But what was remarkable is, if you go back to 1973 1979 I think you had a couple years back then where there was massive returns, 100 100 or one year was over 100 so this also has to do with the sequence risk, and that is the idea that if you get your winners when you're young and at the beginning of your period, and you let that compound, you still end up a winner at the end, even if you didn't outperform the market for 20 years. So as opposed to if you had, if he had had those winners at the end of his investment career, then I think Warren Buffett would have been just another very great, you know, very good investor, you know, definitely above average, but without those couple of winners. And so that's part of what you're talking about, is this, you know, that that there's, you can't expect all of them. You know, you don't hit a home run with everything. But some, some are just sitting there waiting, and then they, they take off so And last thing, just uh, compounding quality.net, that's the best place for people to go.

Pieter Slegers 19:45
Yeah, it's probably the best way to go. So that's the website. There's where, and I think that's also important. What I just do is just like you would think, you people pay a certain subscription fee that's all in and I. Just try to provide you as much value as I possibly can. And I'm also sharing my personal investment portfolio there, and a lot of people have told me, Peter, that's a very stupid idea. Why would you do that? Because by definition, every active strategy will underperform from time to time. And when you share your portfolio and underperform, well, people will be mad at you, or they think, Okay, this, this guy doesn't know what he's doing, or something like that. But I also think, well, in finance and investing, just honesty and integrity is so, so important. So I thought people have the moral right to know what you are investing in, and if I don't outperform I shouldn't charge anything for that. And I would rather I should go fishing or do something completely different. And the fact that all your money, all your own money, is invested in that portfolio, it doesn't mean by definition that the stock picks will do well. I hope they will do well, but it's a guarantee that some will be a disappointment. But what it does mean is that when a stock doesn't do well, I will be the first one to have the negative consequences as well. So just aligned incentives that's so important. Related to everything in investments, whether you choose a fund or you're investing with an asset manager, always ask him or her, Well, are you invested in the Fund yourself? Do you have all your investable assets in that company or in that fund, and that tells you so so much.

Andrew Stotz 21:23
Yeah. And one last question on your on compounding quality.net, you have our portfolio, and then you have ETF portfolio. What is the ETF portfolio?

Pieter Slegers 21:32
Yeah, I think that our portfolio speaks for itself. Individual stocks. Well, for some people, I'm not sure whether it's the same in Thailand, for example, in the US. ETF investing is very, very popular in Belgium, for example. So some people also want to have an ETF portfolio. So there, I think 98% of my money is invested in individual stocks, and then there's an ETF portfolio. And the ETF portfolio is very simple. There are just five ETFs, where I think they can outperform the market by using small factors like small caps, quality and so on. And I just add 500 USD every single month to that portfolio, but the majority of the energy, the time and so on is in the stock portfolio.

Andrew Stotz 22:14
Great. Well, now it's time to share your worst investment ever. And since no one goes into their worst investment thinking it will be, tell us a bit about the story leading up to then. Tell us, yeah, what happened?

Pieter Slegers 22:26
Yeah, sure, not sure. I want to share Andrew, maybe I hope that appearing in this podcast won't be my worst investment.

Andrew Stotz 22:32
No, it will. Not. Just kidding.

Pieter Slegers 22:35
No, I think my worst invest. I always say my worst investment ever, is my best investment ever. So when I was 13 years old, then I started to get interested in investing, because I just couldn't understand, how can you put money in something? And if you do well, if you put money in the right thing, in the right company, your money increases. So to me, as a 13 year old kid, it sounds like, oh, that's money without having to work for it. That's exactly what I want to do later in life. That was a bit the philosophy I had. So what happened there is, at 13, I was doing my first job as a student and get paid for that, and I needed to store shelves in the local supermarket. So I did that for two weeks, and I earned some money, and I thought, Look, I'm going to invest this money. So work two weeks there. I'm going to invest in that in Belgium. You can't open an account at the online broker under the age of 18. So I convinced my parents to open an account for me. I opened the account, very excited, and then I only had one problem. I didn't know anything about investing. I had no clue what I was doing, and had no clue which stock I should buy. So I was looking at a broker platform back then, and they had some kind of topic lists, and I wasn't out. I don't know what to do. I don't know what to do. And the week thereafter, the broker add a new company to the stock pick list. And I thought, well, those people, they probably know what they are doing, right? So I just put all my money I earned during those two weeks, which was a lot of money for me back then, into that one stock. So I probably made every mistake you could possibly make, no diversification. Had no idea what I was doing. I didn't do my own homework. I didn't even understand the company I was buying because it was active in oil and gas transportation. And on top of that, we were just before the financial crisis. So you can already, you can already guess the outcome there, I guess so I bought the stock, then the financial crisis happened, and I think after one year, I sold the stock, but I sold with a loss of 60% so minus 60% and I felt so bad about it, because. Also my parents, they said, Well, what are you going to do with investing? It's gambling. It's very risky. My grandfather, for example, said, Well, I always said, I want to do something in Investing. Investing also back then, he said, No, you won't do that. You want. You're going to be to work for the government and look into the taxes of people and do those kind of things. So that happened to me, and then my parents and my grandfather said, look what we told you. And it was very, very painful, especially since I was also quite a frugal guy, and I don't like to spend money, and also don't like to lose money. But I think when something like that happens to you, you have two options that you can take. The first one is, you say, Look, my parents and my grandfather's right, investing is risky, and I just quit, and I don't do it anymore, and I just keep all my money on a savings account, which is very stupid, I think, by the way. And the second direction you can take is just look, I made a huge mistake here. I didn't do my homework. So I'm going to learn about investing and make sure that this never happens to me again. And I think that happened to me. I should. I chose the I picked the second option, and I became completely obsessed with the stock market. So I was that investment was worse, the worst investment I've ever had, and from a percentage point of view of what you lost, but also the best one, because individual investors, people who invest in individual stocks, you will make mistakes. There's no doubt about that, but it's way better to make a mistake with a few hundreds of USD compared to 100,000 USD. So from that moment in time, I really started to digest a lot of investing books. Started to read the financial newspapers every single every single day. So I'm very grateful that I had a very painful experience, and also in general life. I think a lot of very painful experiences often form you as a person and form you as an investor, and using those painful experience to learn from and to grow from. That's something that's so powerful in every aspect of life.

Andrew Stotz 27:08
This reminds me of episode 62 Jeremy Newsome, and that was back in 2019 and Jeremy was a young man, and he's his dad. He convinced his dad to give him some money. He put it in the market, and he invested in Apple, and it went up, and they made good money out of it. And so his first trade was strongly profitable. Then is he started getting interested in nickel, and he asked his dad again for money. Since they'd done so well, his dad gave money. He went into the market. He bought nickel. He, as he said, 15 minutes from the peak, and then it proceeded to crash. But he didn't buy nickel. He bought a derivative instrument that went to zero, yeah, in his second trade. But to make matters worse, the money that his father had given him was 100% of his retirement savings, yeah. And then you realize, like, Okay, I think your situation is beautiful in the sense that, you know, yet you had your confidence. You went in there, you got knocked down, you know, and it was a wake up call, but it was only with a small amount of money, and therefore, and you know, it's only you and your pride that got hurt. Yeah,

Pieter Slegers 28:31
exactly, exactly. And that's also one small extra story I have there, and I love the story of your friend, by the way, as well. When I joined the industry, the asset management industry. I was, I read everything I you possibly could about buffet and Munger, and you know the statistics, 90% of all investors underperform the markets do worse than the markets. But I was still a bit naive and a bit arrogant. Probably back then, I thought, well, I'm different. I will show those guys how it's done, and I will try to use Buffett's philosophy and outperformed that way. And what was a real aha moment for me was when I was at the Goldman Sachs headquarters in London, and I was sitting in the room listening to some CEOs speaking. But there were 1000s of professional investors, there 1000s fund managers, analysts and so on. And I was looking in the room, and I thought, look statistically, 900 out of those 1000 people here will do worse than the market, and this while we are all working very hard, all very ambitious. Most of them are quite smart, way smarter than I am. So that was something. What would make me different? Why could I do better than 90% of the guys in this room. It made me afraid, but I think the answer there is a lot of people on Wall Street are playing the short term game, and it's a bit like Charlie Munger. He was a huge fan of checklists. So what you can do, and what you try to do, is you try to use a checklist to try and be as. Nationals as you possibly can as an investor, and within that checklist you or use all you lose multiple criteria that have proven that in the long term, they tend to outperform the market, like companies, where we already talked about that, companies with a high return on invested capital tend to outperform companies with skin in the game as well, where the founder is still involved in the company. This is a Harvard Business Review study that states, well, those companies do 4% per year on average, better than the market. I think this makes complete sense, because from a gut feeling, well, when this founder has still all his money in the company, well, the incentives are aligned, so he also thinks in the long term, and you're combining all those criteria that makes sense from a gut feeling and are very intuitive, and that way you can hopefully build, yeah, a watch list and over time, a portfolio that hopefully does better than the market.

Andrew Stotz 30:55
So here's the question for you, let's think about parents. You know, young parents who have a kid, and they come to them and say, I want to try to invest in the stock market. And, you know, they decide they're going to help them open an account and they're going to let them do it. What advice would you have for those parents to make sure that the experience, you know, is valuable?

Pieter Slegers 31:19
Yeah, I would say two pieces of advice. One is let them be and let them do their thing and let them make their mistakes, because it's a certainty that they will make mistakes, but those mistakes will be painful, but also a very great learning school. So I think that's so powerful in life, when you make costing mistakes early in your life or your career. And the second point, I would probably say, is especially when they are still very young, and maybe they can't invest from themselves yet, let them invest in companies that they understand, companies that they use in their daily lives. I'm just saying something like, everyone knows. Our kids know Netflix, they know McDonald's, they know Coca Cola and so on. And to me, I don't have kids yet. Hopefully I will one day, but when I would invest for my kids, it wouldn't be the most important for me to have to generate the highest returns from them, but just make them familiar with the stock market. And when you invest in Coca Cola for them, that's very easy. Every time your son or daughter drinks a Coke, you can say, Look, you may be a very, very small piece of this Coca Cola. That's part of you, and you're earning some money because of that. And when you watch Netflix, you can tell the different the same story. And when you go to a Walmart, for example, look, look, this brick, this brick of this store, that's yours, because you are a very small, for a very small percentage, the owner of all the Walmarts in the world. And hopefully that way they get a bit more excited and interested in investing. So, so that's what I would do personally.

Andrew Stotz 32:57
Yeah. In fact, Coke's an interesting one, because for every $100 that they bring in of product revenue, 27 goes to net profit. Yeah, incredible, incredible numbers. So what's a resource that you'd recommend for our listeners, either of your own resources or anything else.

Pieter Slegers 33:16
Yeah, it's always feels weird to obviously mention yourself. I think there are multiple things and we discussed before we recorded Andrew, just reading as much as you possibly can is such a gift. So that's also about trying to do with compounding quality. So last year, I read 84 books. This year, yeah, I just started my 61st book of the year. And

Andrew Stotz 33:41
is there any, is there any book that stands out that you really res, that really resonated with you more than another one? Or how do you feel about that?

Pieter Slegers 33:49
Yeah, a lot of people ask me that question. I think it's a very difficult one, because you I just try to read a lot of different subjects, and also the stories of founders and so on, and after a while, everything starts to connect and starts to click with each other. So doing it, yeah, regularly is so important for example, I always also read multiple books at the same time. Right now, I'm reading Elon Musk biography, the innovators dilemma, the four hour work week, the book of Alex Morris about Buffett and Munger and scripted so reading all those kind of things at the same time is so interesting. But I would say one investment book that really clicked with me recently, that thought was phenomenally written, is what I learned about investing. I think that's a unique insight about the stock market. Who is what I learned about investing from Darwin, I think it's from pulak Prasad. On top of finance, it's an amazing book. I'm lucky that I love to read, but I also say that I have the moral obligation towards readers of compounding quality as well, to keep learning and keep exploring. Exploring. So that's what I try to do, via compounding quality as well. Look, this is my passion. I will spend 8090 hours a week on this. I will keep learning, keep exploring, and I try to digest everything for you and send it out to you in a very digestible way, via compounding quality. For those who want don't want to read 80 or 90 books a year themselves, or read the 10k a day, because that's also something I started doing two years ago, I guess. And it's all there, you we know the power of compound interest, but what's really important is knowledge compounds too. So that's important that everything in life compounds, as a matter of fact, my signature and my email knowledge compounds your network, compounds your money compounds, hopefully, your health compounds too. So everything in life compounds, amen.

Andrew Stotz 35:51
Well, just for the listeners out there, the book is what I learned about investing from Darwin, and it's pulak Prasad. It's got 4.7 out of five on Amazon, with 1000 reviews and 4.6 on Goodreads, which is exceptionally high. So that's a good one. I'll have a link in the show notes. In fact, I was always asked by people, what are my favorite books on investing and what I'll list them out in order. And I created a course where I did a course on each one of these books. And the first one is the theory of investment value by John burr Williams, where he talked about the dividend discount model. The second one was the Intelligent Investor. Third one was A Random Walk Down Wall Street. The fourth one was one up on Wall Street. And then the fifth one was a little book that beat the market, which was Joel Greenblatt, which he's supposed to come out with a new one, but I'm waiting for that. Then it was William Green with Richard wiser, happier, which was an amazing book. I highly recommend it. He was also episode 563, and then there's the education of a value investor, 100 baggers. Those are some of the ones that were interesting to me. So yeah, the books are just incredible. So what a great, what a great experience. Let me ask you the next question is, what is your number one goal for the next 12 months?

Pieter Slegers 37:12
Sure, and before I forget, I will, I forgot to mention that, but I will also send you a copy of The Art of quality investing. It's something la Cruz and a friend of mine and I worked on. So hopefully you will like that as well. Well, what am I working about on, on the next 12 months, more of the same in general. So keep learning. Keep reading. Keep reading the 10 Ks. Keep reading books, listening to podcasts and so on. So doing that. And one thing that I'm noticing with compounding quality, and that's the same with Warren Buffett, we talked about it, and the same with other great investors, like Charlie Munger, Terry Smith and so on. What you see all the time is, during the beginning of their career, their outperformance is ridiculously high, and then because they become more successful and well known, their assets under management increase and that our performance is still there, but it goes down and down and down and down. And unfortunately, I'm experiencing something similar with compounding quality, because so many people read it when I write about the company, often it influences the stock prices. So last week, I published something about computer modeling group. It's a CLI choir where constellation software, some people of constellation software are involved. It increased 7% because I published an article when last time, when I wrote something about churches scientific it was up 10% so that's something that's tricky, and that's also a pity, because, as we discussed, the differences are made in the small cap space. So now, probably in September, I want to do something very exclusive for a limited amount of people to do the quality investing philosophy on, yeah, on small caps and micro caps, probably only 200 people will be allowed to read it and to join because otherwise we will have the effect on the stock prices once again, and that will be called a tiny Titan. So I'm really looking forward to that, because I'm a true believer that just if you do your homework in the smaller market cap space, there are so many companies that look so great, and also the valuation is way cheaper because they are not well known yet. And hopefully the goal is to find some of those smaller micro caps that, over time, become a large cap, and then you have a double edged thing in the positive sense, meaning they are creating their they're increasing their intrinsic value, but all but also, yeah, their multiple can go, can double or triple just because they're so cheap, and when the institutional investors start to buy it, that also has a positive effect for the valuation. And that's how most of the multi baggers are created. You talked about the book, 100 baggers for Chris Mayer. Well, that's the secret of the multi baggers, high growth, high intrinsic value per share growth in combination with most. Multiple expansion, yeah, then you get a Yeah, a compound effect as well there,

Andrew Stotz 40:05
yes. And Chris Mayer was episode 249, and he talked about building a list of five quality companies and wait to the next market fall. Well, listeners, there you have it. Another story of laws to keep you winning. Remember, I'm on a mission to help 1 million people reduce risk in their lives. And as we conclude, Peter, I want to thank you again for joining this mission. And on behalf of a Stotz Academy, I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Pieter Slegers 40:37
No, I just want to generally thank everyone for following, and hopefully you had some fun. And I think everyone listening, it's also amazing what Andrew was doing. So please also give him a hand or send him an email or support him in any way you can. So I had a lovely time, and for if people have questions for me, always happy to help via combining quality.

Andrew Stotz 40:57
Fantastic. I love the name compounding quality. That's what we want to be doing in our lives. And that's a wrap on another great story to help us create, grow and protect our wealth. Fellow risk takers, let's celebrate that. Today, we added one more person to our mission to help 1 million people reduce risk in their lives. This is your worst podcast host, Andrew Stotz, saying, I'll see you on the upside. You.