1. Welcome!

2. Agenda Sharing Berkshire AGM Learnings
Shortening Learning Curve for beginners
The 7 Laws of Money Management and Warren Buffett
Value Investing Price You Pay Value You get: Stock Picking Warren Buffett Way.
The Characteristics of Excellent Businesses:
Walmart, Glaxo, Johnson & Johnson and Berkshire Hathaway

3. The Initial Stages: New Graduate
Current situation of graduated students aged 23-28
Paying off student loans
Focused on finding the best job possible
Ambitious to drive a nice car
Income is spent on bills + entertainment
Money is often spent on depreciable assets

4. Does a Good Job Equal a Good Future?
You are past the initial stages of adulthood, reaching the ages 29-35
Well paying job but after tax, mortgage, and bills savings are minimal
Saved money typically spent on entertainment
Build a relationship
Now more money is spent on significant other
Travel and marriage expense

5. Realization and Curiosity
As you reach the late 30’s and early 40’s more time is spent thinking about your future
May use some of your money to play around in the stock market, and valuable lessons will be learned!
Finally does some research!
Learns about the power of compounding, margin of safety, paying yourself first, owners mindset
Reads about legends like Warren Buffett, Prem Watsa and Charlie Munger and their focus on business price and performance
Still jumps ideologies between a speculative mind set and a business owner
Learns more valuable lessons and…

6. Finally I Understand!
Age 45 and now you believe that value investing is the best investing.
At this time kids are in high school and getting ready for post-secondary so it is harder to save
Mid-life crisis hits and suffer through emotional/physical pressures
Starts doing real investing to retire in years
Since by now you have learned about the power of compounding if this started years ago…
May or may not have a fully matured money tree which can bear fruit for your financial needs and wants.

7. Our Objectives To reduce your Money Management learning curve
To teach a balance of frugality and quality
To provide you with a foundation to build your financial health
We ask god to bless you with the knowledge to stay away from greed

8. You’ve spent your life learning how to make money
You’ve spent your life learning how to make money. Now let’s learn how to manage it. Financial Health = Making Money + Money Management

9. The 7 Laws of Money Management
Know Where Your Money Is Going
Keep Income > Expenses
Set Your Goals
Pay Yourself First
Buy Excellent Businesses
Use Other People’s Brain
Use Other People’s Money

10. Law 1: Know Where Your Money Goes
Your Income Cheque: I N C O M E T A X I N T E R S I N S U R A C E I N V E S T M I T E M S

11. The Benefit of Tax-Free Compounding
Assume a $1 investment doubles in price every year for 20 years
We sell it at the end of each year, pay capital gains tax, & re-invest the proceeds (Assuming a 34% tax bracket)
After the first year you reinvest $1.66 after paying tax of $0.34
At the end of 20 years, the gain would be $25,200 and taxes paid would total $13,000
For same investment, if not sold until the end of 20 years, the gain would be $692,000 with taxes of $356,000

12. Law 2: Keep Income > Expenses
Package ( Status not good for financial Health), expectation ( car pleasure and status quo vs JNJ , behavior ( Listen, think, do it, habit, behave, end result )
Lexus 450 H vs Toyota Avalon ( I bought used in US 54k and 22k)

13. Law 3: Set Clear Goals Home Debt Free Education Savings Retirement

14. Law 4: Pay Yourself First
40% Marginal Tax Rate
$10,000 Initial Deposit
$1,000 Monthly Deposits
10% Average annual rate of return
Saving until age 65
Registered (Tax Savings)
Non-Registered
Age 25
$8,042,089
$3,003,637
Age 35
$2,889,209
$1,462,172
Age 45
$956,640
$345,946

15. Law 5: Buy Excellent Businesses

16. Law 6: Use Other People’s Brain
There are three types of people
Stupid
Smart
Prudent
How can we become prudent?

17. Our Role Model Is Warren Buffet Chairman of Berkshire Hathaway
Current Net Worth > $100 Billion
More Than Money: Simple, Intelligent, High Energy and the most important Character Integrity for family, Employees, Shareholders, Country, World

18. Law 7: Use Other People’s Money
Simple Litmus Test: Appreciating Asset or Depreciating
Test: Education, Principal home, Furniture, TV, Start up Business, Car, Vacation, Friends help

19. Recap: The 7 Laws of Money Management
Know Where Your Money Is Going
Keep Income > Expenses
Set Your Goals
Pay Yourself First
Buy Excellent Businesses
Use Other People’s Brain
Use Other People’s Money

20. Of Owning a Public Business
The Ten Commandments
Of Owning a Public Business
Ravi Sodhi, MSc, LLM, CIM, FCSI

21. Commandment 1: Understand the Business
5 Minute Test
If you can’t understand the business within the first five minutes of learning about it, move on
Do you understand how the business makes:
Revenues
Profits

22. Commandment 2: Choose the right industry
Which industries are least conducive to success?
Commodities
Technology
Airlines
Automobile
Which industries are most conducive to success?
P&C Insurance
Financial Services
Healthcare
Consumer Products

23. Commandment 3: Invest in a stable country
Example: USA Vs. China
Which country has a better business infrastructure?
Which country has a better history of strong financial success?
Which country has a more stable political environment?

24. Commandment 4: Find a company with low CapEx
Companies with low capital expenditures:
Need less resources to maintain or grow revenues
Which company has lower capital expenditures?
Coca Cola Vs. General Motors
Geico Vs. Air Canada
Nike Vs. Apple

25. Commandment 5: Find a company with secular growth
Stay away from companies with cyclical growth
If a company can only go through innovation, move on
If Apple stopped releasing new and innovative products, would it still survive? No.
If Coca Cola stopped innovating, would it still survive? Yes.

26. Commandment 6: Search for a large Moat
Does the company have a stable position in an industry with:
High barriers to entry
Established economies of scale
Valued brand name
Market dominance

27. Commandment 7: Look at the Balance Sheet
Does the company have a strong balance sheet?

28. Commandment 8: Choose the higher market share
Market share of 40% - 20% Rule
More market share means better economies of scale, more pricing freedom, higher reliance on products by customers
100% greater market share typically means 400% increase in relative gross profit margin

29. Commandment 9: Choose the best business model
Geico
Johnson & Johnson
General Motors
Berkshire Hathaway: Solar government subsidies

30. Commandment 10: Buy at a reasonable price and hold forever
Achieve compounded growth
Think of investing in a company like investing in a life-long partner (marriage)

31. View Every New Investment As a Marriage
Forever...
Buying and selling an investment = transaction costs, reinvestment risks, capital gain tax, accounting expenses
It comes in a package
You can’t have all the growth with no volatility
Don’t try to change the innate behaviour
Keep expectations low

32. Questions

33. Thank You!