This podcast is dedicated to John Bogle  

Michael and Andrew would like to dedicate this podcast episode to the icon who passed away just before this recording was made, John Bogle, founder of the Vanguard Group, and author of such classics on investing as The Little Book of Common Sense Investing was a real Vanguard and revolutionary. Bogle started the world’s first index fund so they tip their hats in tribute.  

Guest profile  

Michael Falk is a CFA charter holder and a certified retirement counselor. He is a partner at the Focus Consulting Group and specializes in helping investment teams improve their investment decision making, investment firms with their strategic planning, and mediating firms’ successions. Previously, he was a chief strategist at a global macro fund and a chief investment officer in charge of manager due diligence and asset allocation for a multibillion-dollar advisory practice. Michael is an author, co-author and frequent speaker. in 2016.  He wrote the CFA Institute Research Foundation monograph Let’s All Learn How to Fish…to Sustain Long-Term Economic Growth. He is on the CFA Institute’s approved speaker list. In the past, he has taught on behalf of the CFA Society Chicago in their Investment Foundation Certificate program. He has been a contributing member of the Financial Management Association’s practitioners’ demand-driven academic research initiative group and taught at DePaul University in their Certified Financial Planner Certificate Program. He’s frequently quoted in the financial press and presents in industry events. 

Moneyball man 

Michael was an athlete who played competitive baseball until he was 31 years old. But in his early 20’s, he realized that he couldn’t make a career of this, so he decided to get an education, and graduated from the University of Illinois with a B.S. in Finance, adding to his interest in growing wealth. It caught his attention, but it wasn’t about getting large amounts. It was about how money drove behavior. But still, he played ball and was working on the side until his body’s aches and pains started to surface.  

Summary 

In this episode, Michael recounts his experiences as a private wealth manager advising a client on what to do about holdings in two big companies. The story revolves around what is seemingly his not-so-lucky share-price level, US$8/share. He shares his take on the fortunes of these huge companies and the reasons why he didn’t take the risk of investing in them, even though he was an educated investor and had advised his client to hang on to the stocks. Andrew will tell add why execution is a vital part of building an investment plan through his six-step process. Inherent in that is how crucial it is to avoid taking huge positions aggressively so you don’t end up in the same sad state as do most investors. 

“Lose profitably. Use your takeaways and your learnings from those losses to not repeat the same mistakes. They say there’s no such thing as failure if you’re learning. So, my parting comment is, if you’ve got to lose, at least lose profitably.” 

– Michael Falk 

W$8/share investments and the odd stories behind them 

Apple Inc. (AAPL:US) is now trading at US$199.23/share 

Apple was starting to drop, before Steve Jobs returned and saved the company. It was trading at around $8/share. Michael was a fan of Apple computers and so his friend who was curious about the drastic consequences if the company should fall. He was confident that it wouldn’t. Buying the stock was an absolute steal, given these two probable scenarios: 1) The company would rebound, or 2) Microsoft would buy them because of the value of the technology. Surprisingly, he didn’t follow the instructions that he gave to his friend. He didn’t follow the instruction he gave to his friend.  

Philip Morris 

Philip Morris International Inc. (PM:US, $86.19); Altria Group Inc. (MO:US, $56.94) 

Michael started his career in private wealth management. He had a client named Jack, who inherited a stock portfolio from his father. As he was doing an audit on the low-cost basis portfolio, they were unable to decide whether or not to hedge out the risks. One of the companies they were looking at was Philip Morris, which was also trading at $8/share too. Philip Morris had started to take a BD (broker-dealer) at that time because that was when the US government was going after the tobacco companies in terms of the healthcare lawsuits. 

Michael’s analysis: 

1.The dividend payment at that time was 8%, and he believed it wouldn