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Without a doubt, the single most informative piece of advice in my formative years came from my uncle. Ironically, it came from asking dumb questions. In this blog I’m going to talk about asking dumb questions and why they are critical for your personal development and that of your startup.

How smart… are you?

My uncle was the smartest person I knew growing up. As a 10 year old, being picked up from boarding school in a convertible BMW with a different Swedish blond bearing exotic candy was also a plus. I was never terribly interested in what teachers wanted me to learn, I was however intent on getting smarter.

During my first internship, I was invited to a dinner party with another super-nerd friend of my uncle. This gent proceeded to take it upon himself to make every syllabu of conversation seem like torture to me, prima facie.

After his friend left, I commented on the fact the night was rather tough on myself and the chap was, in short, a ‘bit of a dick.’ In moderation I was told he was playing an intellectual game with me; he wanted to push me to see how smart I was. He also would disagree with everything I said, despite the fact of me not believing in his specious line of questioning. Wow.

The notion of playing such games was an epiphany to me; the thought had never crossed my mind. Much to the chagrin of acquaintances I have adopted this habit to amuse myself. Not that it is terribly ingratiating (sorry).

Knowing my uncle was smart and I was clearly missing a beat, I was implored to enquire, “How did you get so smart?”

The Secret To Not Being Ignorant

Pausing briefly, my uncle responded momentarily, “Whenever I am in a room and someone says something I don’t understand, I ask a question. I can only not understand something once. So if you keep asking questions, you will eventually know the answers. Also, I found most people in the room didn’t understand what was being discussed either, so were in fact happy I asked.”

That is clearly my paraphrase after several bottles of wine and post the commencement of whiskey, more than a decade ago, but the sentiment has persisted into forming an element of my personality.

The first job as an investor is to ask questions… all the time.

Investors know a little about some things and pretend to know a lot about everything. The difference between the good and great is the ability to ask the right questions to arrive at a cohesive investment thesis, on the basis of available information, at the time a decision is made.

At least once a day I chat with a founder to understand their business model. I do this by asking dumb questions about the startup, VC investment – asking, what I hope, are the right questions. I know what I don’t know, that I don’t know, and am not ashamed of it. I am not embarrassed by asking ‘dumb questions,’ because if I don’t understand, I know 99% of other people won’t get it either.

Founders need to sell their message not to just investors, but customers, journalists, potential and existing staff (continually justifying they don’t go to Google) and all other stakeholders. So my backstop rationalisation, is it’s the founders problem not mine if I come across a bit dim! At least that’s what I tell myself.

So why I am I writing this blog? This morning I received an email from a French entrepreneur I seem to have adopted in some form of mentor relationship and he asked me:

“My turn to be candid what would qualify as an elevator pitch?”

I responded: “lol. glad you asked. Maybe I want to work with you now. Explain what you do to a 10 year old. with the attention span a 10 year old has. Or better yet, I am Mark Z. you are in a lift and have 15 seconds to explain what you do to me to make sure I have a meeting with you. What would you say? That strips away all the BS you want to say. Strip to the absolute core. Why is this cool? Who do you focus on? Why you will be big?

You can google too about this.

This is key to pitching people – real clarity on what you are doing and why and how it is done.”

In Short

I appreciate if the founder asks something that is important to his fundraising.
I tell him it is ok to Google (He’s a smart guy and not an intern) because there are some questions you should Google

There Are No Dumb Questions

Only dumb people who don’t ask questions!

So many people coast through their life on artfully crafting a persona of not being perceived as stupid. A three-hour meeting can go by, which ends with a rhetorical: “Does anyone have any questions?” If a meeting ends like that, shoot yourself. The meeting should face a forced end due to too many questions!

As my uncle said, there are people in the room that are glad you asked, as they were too fearful to ask themselves. I have found once the first person asks a question everyone else in the room starts asking too, like I broke the ice. I half expect ‘the boss’ to pat me on the back and thank me for getting things going.

Furthermore, there are shy people. The extroverts get the ball rolling and the timid, who dumb questions are arguably more thoughtful, then feel more confident to chime into a debate. This is a great thing; you want everyone to contribute to making better decisions.

Let’s look at the downside when an employee doesn’t ask the right dumb questions. What happens when an individual, due to the fear of looking dumb, does not ask questions? He will use his partial (probably flawed) knowledge to continue doing his work, which will result in even greater dumb mistakes.

In the end, he ends up looking even dumber and the boss ends up having to clean up the mess. Perhaps the boss is dumb himself for not asking the question “Do you understand how to complete this task?”

As I address later, there are such thing as dumb questions (how and when you ask), but not asking them is generally stupider. Asking a question makes you a little naked, clearly revealing something you don’t know or understand. If that’s something you are eager to know, asking indeed might make you look dumb (if asked wrong).

But if you ask the question, you now know that thing, and have eliminated some of your ignorance. If you don’t ask it, sure, you don’t reveal your ignorance, but now you still don’t know. On one hand, you look dumb, but become smarter, on the other hand, you stay dumb, but keep it hidden. The question is whether you care more about being smart or looking smart.

Which is better – dumbness today or remaining super dumb tomorrow?

Dallas Cowboys’ owner Jerry Jones recently confessed that he was most effective early in his tenure “When I didn’t mind sounding stupid” asking questions. Clearly, he learnt a lot. Also, not he said he asked a lot early in his tenure, not a year later.

The Benefit Of Asking

You can only be dumb once if you learn: Treat every conversation as a learning opportunity. There is so much to learn in life that you need to keep learning and getting smarter. I love the quote “get busy living or get busy dying.” Apply the same to learning.

Tomorrow you will have something new to learn. You aren’t going to have the same opportunity to ask your question. In fact, you may be talking to an expert and that doesn’t happen every day. How great is it to learn something you can’t Google. Trust me, there is a lot you can’t Google.

Asking shows you are paying attention: People love attention. They want to feel they are being listened to. A lot of relationships arguably end, as one does not feel listened to.

Summarsing what someone said and asking if you understood his or her point is a great way to show this. Asking a pointed question, leveraging the content shared shows you listened, thought about it and is eager to know more. You want to listen even more.

Asking questions is indicative of a precocious mind: Smart people ask questions. They ask a lot of questions. It shows you are always thinking and paying attention to what people say. If you are dealing with smart people it is expected that you ask questions. You can start with dumb questions but work your way up to smart questions.

Reveal hidden ambiguity and question your assumptions: You climb a mountain from the bottom. You can’t comprehend the most complicated questions till you understand the fundamentals. Is a tomato a fruit or a vegetable? If you are discussing fruit, if you don’t ask the dumb question of categorisation you may come to an erroneous conclusion.

You can learn a lot from dumb questions- how do you know if you are talking about the same thing? I often learn more by answering such questions than more seemingly “smart” questions. The “stupid” ones force me to really dig into my prejudices and assumptions.

Most questions deepen when you progressively examine each word and phrase in them and consider their underlying assumptions. This process tends to reveal hidden ambiguity. What formerly seemed obvious may now be more complex and nuanced than first thought.

Relate on a plane of your current understanding: You may be on a totally different plane of comprehension with other people. Dumb questions help you relate on a level that you understand them. I don’t understand adtech, but I can ask simple questions that help me to frame a startup in a framework I do understand.

My questions may be dumb to the other person, but hopefully, they understand why I am asking. We are not able to have an intelligible conversation if we can’t get on the same page. I had a chat with a chap in AI.

I am upfront that I don’t understand, in fact I say it. ‘You’re the expert, not me, but to help you figure out how much to raise I need to understand the dynamics of your industry.’ The founder doesn’t mind that I don’t know and possibly appreciates my effort to get up to speed.

Isolation Is A Dangerous place

It is a scary place when you don’t ask basic questions and people tear off in different directions without a fundamental agreement. You need to ask to ensure you are on the track together. Asking dumb questions about how to solve a basic problem can save you an incredible amount of time.

Check out what Philip Greenspun had to say on this topic:

“I once encountered a group of 6 people who called themselves “engineers.” To solve what they thought was a new problem, they were going to build their own little database management system with their own query language that was SQL-like without being SQL. I pointed them to some published research by a gang of PhD computer scientists from IBM Almaden, the same lab that developed the RDBMS and SQL to begin with in the 1970s. The research had been done over a five-year period and yet they hadn’t become aware of it during several months of planning.

“I pointed them to the SQL-99 standard wherein this IBM research approach of augmenting a standard RDBMS to solve the problem they were attacking was becoming an ISO standard. They ignored it and spent another few months trying to build their enormously complex architecture. Exasperated, I got a kid fresh out of school to code up some Java stored procedures to run inside Oracle.

“After a week he had his system working and ready for open-source release, something that the team of 6 “engineers” hadn’t been able to accomplish in 6 months of full-time work. Yet they never accepted that they were going about things in the wrong way though eventually, they did deliver up on the project.”
Smart people like to be asked (smart) questions.”

Research has proven that “individuals perceive those who seek advice as more competent than those who do not seek advice.” Asking questions is good. There are caveats of course, but I’ll let someone smarter than me explain:

This is a great video on the syllabu based on Harvard research.

Questions Are Not All Born Equal… There Are Dumb Ways Of Asking

A dumb question is a matter of perspective. What may be an unreasonable question to one may arise at the highest curiosity level of someone else, might not be out of the box for another, and be a serious question.

Clearly, a person’s state of mind and their age and experience are important factors to level. The expectation from a child and an adult make this difference in expectation most evident.

These question types all seem quite reasonable: asking what a term means, how to fulfill a request, and trying to understand another’s position in order to relate to them and feedback? But if you ask what accounting is, how to open Excel so you can do the accounting, or ask your boss why you are the one who has to do the accounting, these are all dumb questions.

Why? You can Google accounting later if you don’t need to understand the concept during the conversation, it is expected if you are going to do accounting you would know how to open excel, and if you are an accountant that’s your job.

Dumb questions largely are perceived as dumb for the following reasons.

  • Lazy: You want someone else to do the work so you ask dumb questions because you are lazy and myopic (E.g. who was the fifth president of the US?).
  • Competence: Your level of knowledge is expected to be higher and raises questions about your competence.
  • Thoughtfulness: The question is not deemed thoughtful, that you don’t think before you open your mouth.
  • Timing: You ask at an inappropriate time (E.g. In front of a client).
  • Better alternatives: There are better questions to be asking.
  • Task difficulty: The more difficult a topic, the more questions are expected and vice versa.
  • Egocentrism: The most capable a recipient of a question is, the more they appreciate tough questions to show off. Alternatively, simple questions are irksome to them.

So the content and timing of a question can make you look dumb and whilst your question may be sincere, there are dumb ways of asking questions.

How To Ask Better Questions

Use Google for questions you can Google: Write the easy ones for later if you don’t know. Better yet Google whilst you are talking to people (if you can). If you are asked to do a complete task like set up a CRM, use the time to Google the basics and then be more informed to ask more meaningful questions at a later point.

Ask specific not broad questions: It’s better to ask how do you want the schema to work rather than what is Salesforce. Don’t ask what is Salesforce or “what should I do?” Better to say this is what my plan is; can you deliver me some feedback if I am approaching this right?

Observe first and then ask: You may find the question you want to ask will be asked by someone else, or eventually explained contextually. Just don’t wait till the syllabu of conversation changes. Asking later could be tricky and you lose the opportunity to understand the conversation.

Give context to why you are asking: And ask for context. ‘Just so we are on the same page, can you explain what you mean in by that in the context of adtech’

Show you made some effort beforehand to comprehend: In asking questions about a syllabu of which you are largely unfamiliar, show the audience that you’ve done some work. If you are talking about the benefits of PHP vs Python, say “In preparation for this meeting, I read that… I didn’t quite understand that. Can you explain why Python will be better in this context?’

Repeat a point and ask for an example: Don’t ask for clarity through details, ask for details that clarify. “Could you deliver me an example?” is a great stock question when you are thinking about looking dumb.

Make questions more open-ended: As you seek clarity through detail you’ll get more of both if you ask open-ended questions that encourage a longer answer. “What do you think about… ?” is a good one, as is, “What do you see as the reasons for that?”

Ask them to explain it to a child: When I really don’t understand what someone is saying, I ask the speaker to explain their point to a third party imaginary person. A child is a go to. “For the sake of clarity, can you pretend you are explaining this to a child.”

Summarise what they say into three bullet points: An ex-MD in banking said to me “there is always the rule of three. “Everything can be explained in three bullet points. Repeat what was said in three points and ask if that is a proper summary. Then ask “is that what they are saying?”

Ask dumb questions early: You get a grace period in any interaction of job. The earlier you ask the better. It is understood you don’t know how to work the coffee machine on your first day. After a year they will sneer at you. Ask early and often.

Think before you ask: The obvious answer or question is often not the best one. Read this great article from the New Yorker. “In a lake, there is a patch of lily pads. Every day, the patch doubles in size. If it takes 48 days for the patch to cover the entire lake, how long would it take for the patch to cover half of the lake?”

I always played lateral thinking games with my family. I took this up a notch when I fancied the idea of working at one of the big three consultants and studied complex questions. Over time, I learnt to not answer quickly and assume my first answer was wrong. It often is. I learnt to think more and if I wasn’t clear to ask more questions.

Ask dumb questions to challenge your assumptions before giving a dumb answer, which is way worse.

Conclusion

At the end of the day, most people are dumb. Who cares if they think you are too. You can only be dumb once. What matters is that you don’t stay dumb. Asking dumb questions is one of the great ways to change that, in addition to Googling everything you don’t get.

Near the start, I mentioned the founder who shared his candidness. I appreciated that he asked a dumb question because I knew he didn’t understand fundraising, no one really does. But most don’t ask questions to get smarter faster. I like that.

I also told him it is ok to Google. He was thinking he would learn something and thinks in the wrong way, as opposed to figuring out an answer himself. That’s an eminent opinion but fallacious. It’s almost always better to stand on the shoulders of others that have thought about a common question and hack forward. In this case he should have Googled first- he would have gotten better insight than a quick response from me.

Was his question dumb? Yes, a little. But he is going to get ahead because he is learning. Do the same. Be dumb. Get smarter. Win.

[This post first by Alexander Jarvis appeared here and has been reproduced with permission.]

Fri, 28 Oct 2016 06:59:00 -0500 Alexander Jarvis en text/html https://inc42.com/resources/asking-dumb-questions/
Killexams : Best Courses for Database Administrators

Database Administrator Courses

Database professionals are in high demand. If you already work as one, you probably know this. And if you are looking to become a database administrator, that high demand and the commensurate salary may be what is motivating you to make this career move. 

How can you advance your career as a database administrator? By taking the courses on this list.

If you want to learn more about database administration to expand your knowledge and move up the ladder in this field, these courses can help you achieve that goal.

Oracle DBA 11g/12c – Database Administration for Junior DBA from Udemy

Udemy’s Oracle DBA 11g/12c – Database Administration for Junior DBA course can help you get a high-paying position as an Oracle Database Administrator. 

Best of all, it can do it in just six weeks.

This database administrator course is a Udemy bestseller that is offered in eight languages. Over 29,000 students have taken it, giving it a 4.3-star rating. Once you complete it and become an Oracle DBA, you will be able to:

  • Install the Oracle database.
  • Manage Tablespace.
  • Understand database architecture.
  • Administer user accounts.
  • Perform backup and recovery.
  • Diagnose problems.

To take the intermediate-level course that includes 11 hours of on-demand video spanning 129 lectures, you should have basic knowledge of UNIX/LINUX commands and SQL.

70-462: SQL Server Database Administration (DBA)

The 70-462: SQL Server Database Administration (DBA) course from Udemy was initially designed to help beginner students ace the Microsoft 70-462 exam. Although that test has been officially withdrawn, you can still use this course to gain some practical experience with database administration in SQL Server.

Many employers seek SQL Server experience since it is one of the top database tools. Take the 70-462: SQL Server Database Administration (DBA) course, and you can gain valuable knowledge on the syllabu and deliver your resume a nice boost.

Some of the skills you will learn in the 70-462 course include:

  • Managing login and server roles.
  • Managing and configuring databases.
  • Importing and exporting data.
  • Planning and installing SQL Server and related services.
  • Implementing migration strategies.
  • Managing SQL Server Agent.
  • Collecting and analyzing troubleshooting data.
  • Implementing and maintaining indexes.
  • Creating backups.
  • Restoring databases.

DBA knowledge is not needed to take the 10-hour course that spans 100 lectures, and you will not need to have SQL Server already installed on your computer. In terms of popularity, this is a Udemy bestseller with a 4.6-star rating and over 20,000 students.

MySQL Database Administration: Beginner SQL Database Design from Udemy

Nearly 10,000 students have taken the MySQL Database Administration: Beginner SQL Database Design course on Udemy, making it a bestseller on the platform with a 4.6-star rating.

The course features 71 lectures that total seven hours in length and was created for those looking to gain practical, real-world business intelligence and analytics skills to eventually create and maintain databases.

What can you learn from taking the Beginner SQL Database Design course? Skills such as:

  • Connecting data between tables.
  • Assigning user roles and permissions.
  • Altering tables by removing and adding columns.
  • Writing SQL queries.
  • Creating databases and tables with the MySQL Workbench UI.
  • Understanding common Relational Database Management Systems.

The requirements for taking this course are minimal. It can help to have a basic understanding of database fundamentals, and you will need to install MySQL Workbench and Community Server on your Mac or PC.

Database Administration Super Bundle from TechRepublic Academy

If you want to immerse yourself into the world of database administration and get a ton of bang for your buck, TechRepublic Academy’s Database Administration Super Bundle may be right up your alley.

It gives you nine courses and over 400 lessons equaling over 86 hours that can put you on the fast track to building databases and analyzing data like a pro. A sampling of the courses offered in this bundle include:

  • NoSQL MongoDB Developer
  • Introduction to MySQL
  • Visual Analytics Using Tableau
  • SSIS SQL Server Integration Services
  • Microsoft SQL Novice To Ninja
  • Regression Modeling With Minitab

Ultimate SQL Bootcamp from TechRepublic Academy

Here is another bundle for database administrators from TechRepublic Academy. With the Ultimate SQL Bootcamp, you get nine courses and 548 lessons to help you learn how to:

  • Write SQL queries.
  • Conduct data analysis.
  • Master SQL database creation.
  • Use MySQL and SQLite
  • Install WAMP and MySQL and use both tools to create a database.

Complete Oracle Master Class Bundle from TechRepublic Academy

The Complete Oracle Master Class Bundle from TechRepublic Academy features 181 hours of content and 17 courses to help you build a six-figure career. This intermediate course includes certification and will deliver you hands-on and practical training with Oracle database systems.

Some of the skills you will learn include:

  • Understanding common technologies like the Oracle database, software testing, and Java.
  • DS and algorithms.
  • RDBMS concepts.
  • Troubleshooting.
  • Performance optimization.

Learn SQL Basics for Data Science Specialization from Coursera

Coursera’s Learn SQL Basics for Data Science Specialization course has nearly 7,000 reviews, giving it a 4.5-star rating. Offered by UC Davis, this specialization is geared towards beginners who lack coding experience that want to become fluent in SQL queries.

The specialization takes four months to complete at a five-hour weekly pace, and it is broken down into four courses:

  1. SQL for Data Science
  2. Data Wrangling, Analysis, and AB Testing with SQL
  3. Distributed Computing with Spark SQL
  4. SQL for Data Science Capstone Project

Skills you can gain include:

  • Data analysis
  • Distributed computing using Apache Spark
  • Delta Lake
  • SQL
  • Data science
  • SQLite
  • A/B testing
  • Query string
  • Predictive analytics
  • Presentation skills
  • Creating metrics
  • Exploratory data analysis

Once finished, you will be able to analyze and explore data with SQL, write queries, conduct feature engineering, use SQL with unstructured data sets, and more.

Relational Database Administration (DBA) from Coursera

IBM offers the Relational Database Administration (DBA) course on Coursera with a 4.5-star rating. Complete the beginner course that takes approximately 19 hours to finish, and it can count towards your learning in the IBM Data Warehouse Engineer Professional Certificate and IBM Data Engineering Professional Certificate programs.

Some of the skills you will learn in this DBA course include:

  • Troubleshooting database login, configuration, and connectivity issues.
  • Configuring databases.
  • Building system objects like tables.
  • Basic database management.
  • Managing user roles and permissions.
  • Optimizing database performance.

Oracle Autonomous Database Administration from Coursera

Offered by Oracle, the Autonomous Database Administration course from Coursera has a 4.5-star rating and takes 13 hours to complete. It is meant to help DBAs deploy and administer Autonomous databases. Finish it, and you will prepare yourself for the Oracle Autonomous Database Cloud Certification.

Some of the skills and knowledge you can learn from this course include:

  • Oracle Autonomous Database architecture.
  • Oracle Machine Learning.
  • SQL Developer Web.
  • APEX.
  • Oracle Text
  • Autonomous JSON.
  • Creating, deploying, planning, maintaining, monitoring, and implementing an Autonomous database.
  • Migration options and considerations.

Looking for more database administration and database programming courses? Check out our tutorial: Best Online Courses to Learn MySQL.

Disclaimer: We may be compensated by vendors who appear on this page through methods such as affiliate links or sponsored partnerships. This may influence how and where their products appear on our site, but vendors cannot pay to influence the content of our reviews. For more info, visit our Terms of Use page.

Thu, 21 Jul 2022 16:35:00 -0500 en-US text/html https://www.databasejournal.com/ms-sql/database-administrator-courses/
Killexams : Latest Memo From Howard Marks: I Beg To Differ
Financial portfolio and assets manager analyzing investment statistics and indicators on dashboard for trading products. Business and finance strategy. Data analytics for stock market investing.

NicoElNino

I've written many times about having joined the investment industry in 1969 when the "Nifty Fifty" stocks were in full flower. My first employer, First National City Bank, as well as many of the other "money-center banks" (the leading investment managers of the day), were enthralled with these companies, with their powerful business models and flawless prospects. Sentiment surrounding their stocks was uniformly positive, and portfolio managers found great safety in numbers. For example, a common refrain at the time was "you can't be fired for buying IBM," the era's quintessential growth company.

I've also written extensively about the fate of these stocks. In 1973-74, the OPEC oil embargo and the resultant recession took the S&P 500 Index down a total of 47%. And many of the Nifty Fifty, for which it had been thought that "no price was too high," did far worse, falling from peak p/e ratios of 60-90 to trough multiples in the single digits. Thus, their devotees lost almost all of their money in the stocks of companies that "everyone knew" were great. This was my first chance to see what can happen to assets that are on what I call "the pedestal of popularity."

In 1978, I was asked to move to the bank's bond department to start funds in convertible bonds and, shortly thereafter, high yield bonds. Now I was investing in securities most fiduciaries considered "uninvestable" and which practically no one knew about, cared about, or deemed desirable... and I was making money steadily and safely. I quickly recognized that my strong performance resulted in large part from precisely that fact: I was investing in securities that practically no one knew about, cared about, or deemed desirable. This brought home the key money-making lesson of the Efficient Market Hypothesis, which I had been introduced to at the University of Chicago Business School: If you seek superior investment results, you have to invest in things that others haven't flocked to and caused to be fully valued. In other words, you have to do something different.

The Essential Difference

In 2006, I wrote a memo called Dare to Be Great. It was mostly about having high aspirations, and it included a rant against conformity and investment bureaucracy, as well as an assertion that the route to superior returns by necessity runs through unconventionality. The element of that memo that people still talk to me about is a simple two-by-two matrix:

Conventional Behavior Unconventional Behavior
Favorable Outcomes Average good results Above average results
Unfavorable Outcomes Average bad results Below average results

Here's how I explained the situation:

Of course, it's not easy and clear-cut, but I think it's the general situation. If your behavior and that of your managers are conventional, you're likely to get conventional results - either good or bad. Only if the behavior is unconventional is your performance likely to be unconventional... and only if the judgments are superior is your performance likely to be above average.

The consensus opinion of market participants is baked into market prices. Thus, if investors lack the insight that is superior to the average of the people who make up the consensus, they should expect average risk-adjusted performance.

Many years have passed since I wrote that memo, and the investing world has gotten a lot more sophisticated, but the message conveyed by the matrix and the accompanying explanation remains unchanged. Talk about simple - in the memo, I reduced the issue to a single sentence: "This just in: You can't take the same actions as everyone else and expect to outperform."

The best way to understand this idea is by thinking through a highly logical and almost mathematical process (greatly simplified, as usual, for illustrative purposes):

  • A certain (but unascertainable) number of dollars will be made over any given period by all investors collectively in an individual stock, a given market, or all markets taken together. That amount will be a function of (a) how companies or assets fare in fundamental terms (e.g., how their profits grow or decline) and (b) how people feel about those fundamentals and treat asset prices.

  • On average, all investors will do average.

  • If you're happy doing average, you can simply invest in a broad swath of the assets in question, buying some of each in proportion to its representation in the relevant universe or index. By engaging in average behavior in this way, you're guaranteed average performance. (Obviously, this is the idea behind index funds.)

  • If you want to be above average, you have to depart from consensus behavior. You have to overweight some securities, asset classes, or markets and underweight others. In other words, you have to do something different.

  • The challenge lies in the fact that (a) market prices are the result of everyone's collective thinking and (b) it's hard for any individual to consistently figure out when the consensus is wrong and an asset is priced too high or too low.

  • Nevertheless, "active investors" place active bets in an effort to be above average.

    • Investor A decides stocks as a whole are too cheap, and he sells bonds in order to overweight stocks. Investor B thinks stocks are too expensive, so she moves to an underweighting by selling some of her stocks to Investor A and putting the proceeds into bonds.

    • Investor X decides a certain stock is too cheap and overweights it, buying from investor Y, who thinks it's too expensive and therefore wants to underweight it.

  • It's essential to note that in each of the above cases, one investor is right and the other is wrong. Now go back to the first bullet point above: Since the total dollars earned by all investors collectively are fixed in amount, all active bets, taken together, constitute a zero-sum game (or negative-sum after commissions and other costs). The investor who is right earns an above-average return, and by definition, the one who's wrong earns a below-average return.

  • Thus, every active bet placed in the pursuit of above-average returns carries with it the risk of below-average returns. There's no way to make an active bet such that you'll win if it works but not lose if it doesn't. Financial innovations are often described as offering some version of this impossible bargain, but they invariably fail to live up to the hype.

  • The bottom line of the above is simple: You can't hope to earn above-average returns if you don't place active bets, but if your active bets are wrong, your return will be below average.

Investing strikes me as being very much like golf, where playing conditions and the performance of competitors can change from day to day, as can the placement of the holes. On some days, one approach to the course is appropriate, but on other days, different tactics are called for. To win, you have to either do a better job than others of selecting your approach or executing on it or both.

The same is true for investors. It's simple: If you hope to distinguish yourself in terms of performance, you have to depart from the pack. But, having departed, the difference will only be positive if your choice of strategies and tactics is correct and/or you're able to execute better.

Second-Level Thinking

In 2009, when Columbia Business School Publishing was considering whether to publish my book The Most Important Thing, they asked to see a demo chapter. As has often been my experience, I sat down and described a concept I hadn't previously written about or named. That description became the book's first chapter, addressing one of its most important topics: second-level thinking. It's certainly the concept from the book that people ask me about most often.

The idea of second-level thinking builds on what I wrote in Dare to Be Great. First, I repeated my view that success in investing means doing better than others. All active investors (and certainly money managers hoping to earn a living) are driven by the pursuit of superior returns.

But that universality also makes beating the market a difficult task. Millions of people are competing for each dollar of investment gain. Who'll get it? The person who's a step ahead. In some pursuits, getting up to the front of the pack means more schooling, more time in the gym or the library, better nutrition, more perspiration, greater stamina, or better equipment. But in investing, where these things count for less, it calls for more perceptive thinking... at what I call the second level.

The basic idea behind second-level thinking is easily summarized: In order to outperform, your thinking has to be different and better.

Remember, your goal in investing isn't to earn average returns; you want to do better than average. Thus, your thinking has to be better than that of others - both more powerful and at a higher level. Since other investors may be smart, well-informed, and highly computerized, you must find an edge they don't have. You must think of something they haven't thought of, see things they miss, or bring insight they don't possess. You have to react differently and behave differently. In short, being right may be a necessary condition for investment success, but it won't be sufficient. You have to be more right than others... which by definition means your thinking has to be different.

Having made the case, I went on to distinguish second-level thinkers from those who operate at the first level:

First-level thinking is simplistic and superficial, and just about everyone can do it (a bad sign for anything involving an attempt at superiority). All the first-level thinker needs is an opinion about the future, as in "The outlook for the company is favorable, meaning the stock will go up."

Second-level thinking is deep, complex, and convoluted. The second-level thinker takes a great many things into account:

  • What is the range of likely future outcomes?

  • What outcome do I think will occur?

  • What's the probability I'm right?

  • What does the consensus think?

  • How does my expectation differ from the consensus?

  • How does the current price for the asset comport with the consensus view of the future, and with mine?

  • Is the consensus psychology that's incorporated in the price too bullish or bearish?

  • What will happen to the asset's price if the consensus turns out to be right, and what if I'm right?

The difference in workload between first-level and second-level thinking is clearly massive, and the number of people capable of the latter is tiny compared to the number capable of the former.

First-level thinkers look for simple formulas and easy answers. Second-level thinkers know that success in investing is the antithesis of simple.

Speaking about difficulty reminds me of an important idea that arose in my discussions with my son Andrew during the pandemic (described in the memo Something of Value, published in January 2021). In the memo's extensive discussion of how efficient most markets have become in accurate decades, Andrew makes a terrific point: "Readily available quantitative information with regard to the present cannot be the source of superior performance." After all, everyone has access to this type of information - with regard to public U.S. securities, that's the whole point of the SEC's Reg FD (for fair disclosure) - and nowadays all investors should know how to manipulate data and run screens.

So, then, how can investors who are intent on outperforming hope to reach their goal? As Andrew and I said on a podcast where we discussed Something of Value, they have to go beyond readily available quantitative information with regard to the present. Instead, their superiority has to come from an ability to:

  • better understand the significance of the published numbers,

  • better assess the qualitative aspects of the company, and/or

  • better divine the future.

Obviously, none of these things can be determined with certainty, measured empirically, or processed using surefire formulas. Unlike present-day quantitative information, there's no source you can turn to for easy answers. They all come down to judgment or insight. Second-level thinkers who have better judgment are likely to achieve superior returns, and those who are less insightful are likely to generate inferior performance.

This all leads me back to something Charlie Munger told me around the time The Most Important Thing was published: "It's not supposed to be easy. Anyone who finds it easy is stupid." Anyone who thinks there's a formula for investing that guarantees success (and that they can possess it) clearly doesn't understand the complex, dynamic, and competitive nature of the investing process. The prize for superior investing can amount to a lot of money. In the highly competitive investment arena, it simply can't be easy to be the one who pockets the extra dollars.

Contrarianism

There's a concept in the investing world that's closely related to being different: contrarianism. "The investment herd" refers to the masses of people (or institutions) that drive security prices one way or the other. It's their actions that take asset prices to bull market highs and sometimes bubbles and, in the other direction, to bear market territory and occasional crashes. At these extremes, which are invariably overdone, it's essential to act in a contrary fashion.

Joining in the swings described above causes people to own or buy assets at high prices and to sell or fail to buy at low prices. For this reason, it can be important to part company with the herd and behave in a way that's contrary to the actions of most others.

Contrarianism received its own chapter in The Most Important Thing. Here's how I set forth the logic:

  • Markets swing dramatically, from bullish to bearish, and from overpriced to underpriced.

  • Their movements are driven by the actions of "the crowd," "the herd," and "most people." Bull markets occur because more people want to buy than sell, or the buyers are more highly motivated than the sellers. The market rises as people switch from being sellers to being buyers, and as buyers become even more motivated and the sellers less so. (If buyers didn't predominate, the market wouldn't be rising.)

  • Market extremes represent inflection points. These occur when bullishness or bearishness reaches a maximum. Figuratively speaking, a top occurs when the last person who will become a buyer does so. Since every buyer has joined the bullish herd by the time the top is reached, bullishness can go no further, and the market is as high as it can go. Buying or holding is dangerous.

  • Since there's no one left to turn bullish, the market stops going up. And if the next day one person switches from buyer to seller, it will start to go down.

  • So at the extremes, which are created by what "most people" believe, most people are wrong.

  • Therefore, the key to investment success has to lie in doing the opposite: in diverging from the crowd. Those who recognize the errors that others make can profit enormously from contrarianism.

To sum up, if the extreme highs and lows are excessive and the result of the concerted, mistaken actions of most investors, then it's essential to leave the crowd and be a contrarian.

In his 2000 book, Pioneering Portfolio Management, David Swensen, the former chief investment officer of Yale University, explained why investing institutions are vulnerable to conformity with current consensus belief and why they should instead embrace contrarianism. (For more on Swensen's approach to investing, see "A Case in Point" below.) He also stressed the importance of building infrastructure that enables contrarianism to be employed successfully:

Unless institutions maintain contrarian positions through difficult times, the resulting damage imposes severe financial and reputational costs on the institution.

Casually researched, consensus-oriented investment positions provide the little prospect for producing superior results in the intensely competitive investment management world.

Unfortunately, overcoming the tendency to follow the crowd, while necessary, proves insufficient to ensure investment success... While courage to take a different path enhances chances for success, investors face likely failure unless a thoughtful set of investment principles undergirds the courage.

Before I leave the subject of contrarianism, I want to make something else very clear. First-level thinkers - to the extent they're interested in the concept of contrarianism - might believe contrarianism means doing the opposite of what most people are doing, so selling when the market rises and buying when it falls. But this overly simplistic definition of contrarianism is unlikely to be of much help to investors. Instead, the understanding of contrarianism itself has to take place at a second level.

In The Most Important Thing Illuminated, an annotated edition of my book, four professional investors and academics provided commentary on what I had written. My good friend Joel Greenblatt, an exceptional equity investor, provided a very apt observation regarding knee-jerk contrarianism: "... just because no one else will jump in front of a Mack truck barreling down the highway doesn't mean that you should." In other words, the mass of investors aren't wrong all the time, or wrong so dependably that it's always right to do the opposite of what they do. Rather, to be an effective contrarian, you have to figure out:

  • what the herd is doing;

  • why it's doing it;

  • what's wrong, if anything, with what it's doing; and

  • what you should do about it.

Like the second-level thought process laid out in bullet points on page four, intelligent contrarianism is deep and complex. It amounts to much more than simply doing the opposite of the crowd. Nevertheless, good investment decisions made at the best opportunities - at the most overdone market extremes - invariably include an element of contrarian thinking.

The Decision to Risk Being Wrong

There are only so many courses I find worth writing about, and since I know I'll never know all there is to know about them, I return to some from time to time and add to what I've written previously. Thus, in 2014, I followed up on 2006's Dare to Be Great with a memo creatively titled Dare to Be Great II. To begin, I repeated my insistence on the importance of being different:

If your portfolio looks like everyone else's, you may do well, or you may do poorly, but you can't do differently. And being different is absolutely essential if you want a chance at being superior...

I followed that with a discussion of the challenges associated with being different:

Most great investments begin in discomfort. The things most people feel good about - investments where the underlying premise is widely accepted, the accurate performance has been positive, and the outlook is rosy - are unlikely to be available at bargain prices. Rather, bargains are usually found among things that are controversial, that people are pessimistic about, and that have been performing badly of late.

But then, perhaps most importantly, I took the idea a step further, moving from daring to be different to its natural corollary: daring to be wrong. Most investment books are about how to be right, not the possibility of being wrong. And yet, the would-be active investor must understand that every attempt at success by necessity carries with it the chance for failure. The two are absolutely inseparable, as I described at the top of page three.

In a market that is even moderately efficient, everything you do to depart from the consensus in pursuit of above-average returns has the potential to result in below-average returns if your departure turns out to be a mistake. Overweighting something versus underweighting it; concentrating versus diversifying; holding versus selling; hedging versus not hedging - these are all double-edged swords. You gain when you make the right choice and lose when you're wrong.

One of my favorite sayings came from a pit boss at a Las Vegas casino: "The more you bet, the more you win when you win." Absolutely inarguable. But the pit boss conveniently omitted the converse: "The more you bet, the more you lose when you lose." Clearly, those two ideas go together.

In a presentation I occasionally make to institutional clients, I employ PowerPoint animation to graphically portray the essence of this situation:

  • A bubble drops down, containing the words "Try to be right." That's what active investing is all about. But then a few more words show up in the bubble: "Run the risk of being wrong." The bottom line is that you simply can't do the former without also doing the latter. They're inextricably intertwined.

  • Then another bubble drops down, with the label "Can't lose." There are can't-lose strategies in investing. If you buy T-bills, you can't have a negative return. If you invest in an index fund, you can't underperform the index. But then two more words appear in the second bubble: "Can't win." People who use can't-lose strategies by necessity surrender the possibility of winning. T-bill investors can't earn more than the lowest of yields. Index fund investors can't outperform.

  • And that brings me to the assignment I imagine receiving from unenlightened clients: "Just apply the first set of words from each bubble: Try to outperform while employing can't-lose strategies." But that combination happens to be unavailable.

The above shows that active investing carries a cost that goes beyond commissions and management fees: heightened risk of inferior performance. Thus, every investor has to make a conscious decision about which course to follow. Pursue superior returns at the risk of coming in behind the pack, or hug the consensus position and ensure average performance. It should be clear that you can't hope to earn superior returns if you're unwilling to bear the risk of sub-par results.

And that brings me to my favorite fortune cookie, which I received with dessert 40-50 years ago. The message inside was simple: The cautious seldom err or write great poetry. In my college classes in Japanese studies, I learned about the koan, which Oxford Languages defines as "a paradoxical anecdote or riddle, used in Zen Buddhism to demonstrate the inadequacy of logical reasoning and to provoke enlightenment." I think of my fortune that way because it raises a question I find paradoxical and capable of leading to enlightenment.

But what does the fortune mean? That you should be cautious because cautious people seldom make mistakes? Or that you shouldn't be cautious, because cautious people rarely accomplish great things?

The fortune can be read both ways, and both conclusions seem reasonable. Thus the key question is, "Which meaning is right for you?" As an investor, do you like the idea of avoiding error, or would you rather try for superiority? Which path is more likely to lead to success as you define it, and which is more feasible for you? You can follow either path, but clearly not both simultaneously.

Thus, investors have to answer what should be a very basic question: Will you (a) strive to be above average, which costs money, is far from sure to work, and can result in your being below average, or (b) accept average performance - which helps you reduce those costs but also means you'll have to look on with envy as winners report mouth-watering successes. Here's how I put it in Dare to Be Great II:

How much emphasis should be put on diversifying, avoiding risk, and ensuring against below-pack performance, and how much on sacrificing these things in the hope of doing better?

And here's how I described some of the considerations:

Unconventional behavior is the only road to superior investment results, but it isn't for everyone. In addition to superior skill, successful investing requires the ability to look wrong for a while and survive some mistakes. Thus each person has to assess whether he's temperamentally equipped to do these things and whether his circumstances - in terms of employers, clients and the impact of other people's opinions - will allow it... when the chips are down and the early going makes him look wrong, as it invariably will.

You can't have it both ways. And as in so many aspects of investing, there's no right or wrong, only right or wrong for you.

A Case in Point

The aforementioned David Swensen ran Yale University's endowment from 1985 until his passing in 2021, an unusual 36-year tenure. He was a true pioneer, developing what has come to be called "the Yale Model" or "the Endowment Model." He radically reduced Yale's holdings of public stocks and bonds and invested heavily in innovative, illiquid strategies such as hedge funds, venture capital, and private equity at a time when almost no other institutions were doing so. He identified managers in those fields who went on to generate superior results, several of whom earned investment fame. Yale's resulting performance beat almost all other endowments by miles. In addition, Swensen sent out into the endowment community a number of disciples who produced enviable performances for other institutions. Many endowments emulated Yale's approach, especially beginning around 2003-04 after these institutions had been punished by the bursting of the tech/Internet bubble. But few if any duplicated Yale's success. They did the same things, but not nearly as early or as well.

To sum up all the above, I'd say Swensen dared to be different. He did things others didn't do. He did these things long before most others picked up the thread. He did them to a degree that others didn't approach. And he did them with exceptional skill. What a great formula for outperformance.

In Pioneering Portfolio Management, Swensen provided a description of the challenge at the core of investing - especially institutional investing. It's one of the best paragraphs I've ever read and includes a two-word phrase (which I've bolded for emphasis) that for me reads like sheer investment poetry. I've borrowed it countless times:

...Active management strategies demand uninstitutional behavior from institutions, creating a paradox that few can unravel. Establishing and maintaining an unconventional investment profile requires acceptance of uncomfortably idiosyncratic portfolios, which frequently appear downright imprudent in the eyes of conventional wisdom.

As with many great quotes, this one from Swensen says a great deal in just a few words. Let's parse its meaning:

Idiosyncratic - When all investors love something, it's likely their buying will render it highly-priced. When they hate it, their selling will probably cause it to become cheap. Thus, it's preferable to buy things most people hate and sell things most people love. Such behavior is by definition highly idiosyncratic (i.e., "eccentric," "quirky," or "peculiar").

Uncomfortable - The mass of investors take the positions they take for reasons they find convincing. We witness the same developments they do and are impacted by the same news. Yet, we realize that if we want to be above average, our reaction to those inputs - and thus our behavior - should in many instances be different from that of others. Regardless of the reasons, if millions of investors are doing A, it may be quite uncomfortable to do B.

And if we do bring ourselves to do B, our action is unlikely to prove correct right away. After we've sold a market darling because we think it's overvalued, its price probably won't start to drop the next day. Most of the time, the hot asset you've sold will keep rising for a while, and sometimes a good while. As John Maynard Keynes said, "Markets can remain irrational longer than you can remain solvent." And as the old adage goes, "Being too far ahead of your time is indistinguishable from being wrong." These two ideas are closely related to another great Keynes quote: "Worldly wisdom teaches that it is better for the reputation to fail conventionally than to succeed unconventionally." Departing from the mainstream can be embarrassing and painful.

Uninstitutional behavior from institutions - We all know what Swensen meant by the word "institutions": bureaucratic, hidebound, conservative, conventional, risk-averse, and ruled by consensus; in short, unlikely mavericks. In such settings, the cost of being different and wrong can be viewed as highly unacceptable relative to the potential benefit of being different and right. For the people involved, passing up profitable investments (errors of omission) poses far less risk than making investments that produce losses (errors of commission). Thus, investing entities that behave "institutionally" are, by their nature, highly unlikely to engage in idiosyncratic behavior.

Early in his time at Yale, Swensen chose to:

  • minimize holdings of public stocks;

  • vastly overweight strategies falling under the heading "alternative investments" (although he started to do so well before that label was created);

  • in so doing, commit a substantial portion of Yale's endowment to illiquid investments for which there was no market; and

  • hire managers without lengthy track records on the basis of what he perceived to be their investment acumen.

To use his words, these actions probably appeared "downright imprudent in the eyes of conventional wisdom." Swensen's behavior was certainly idiosyncratic and uninstitutional, but he understood that the only way to outperform was to risk being wrong, and he accepted that risk with great results.

One Way to Diverge from the Pack

To conclude, I want to describe a accurate occurrence. In mid-June, we held the London edition of Oaktree's biannual conference, which followed on the heels of the Los Angeles version. My assigned syllabu at both conferences was the market environment. I faced a dilemma while preparing for the London conference because so much had changed between the two events: On May 19, the S&P 500 was at roughly 3,900, but by June 21 it was at approximately 3,750, down almost 4% in roughly a month. Here was my issue: Should I update my slides, which had become somewhat dated, or reuse the LA slides to deliver a consistent message to both audiences?

I decided to use the LA slides as the jumping-off point for a discussion of how much things had changed in that short period. The key segment of my London presentation consisted of a stream-of-consciousness discussion of the concerns of the day. I told the attendees that I pay close attention to the questions people ask most often at any given point in time, as the questions tell me what's on people's minds. And the questions I'm asked these days overwhelmingly surround:

  • the outlook for inflation,

  • the extent to which the Federal Reserve will raise interest rates to bring it under control, and

  • whether doing so will produce a soft landing or a recession (and if the latter, how bad).

Afterward, I wasn't completely happy with my remarks, so I rethought them over lunch. And when it was time to resume the program, I went up on stage for another two minutes. Here's what I said:

All the discussion surrounding inflation, rates, and recession falls under the same heading: the short term. And yet:

  • We can't know much about the short-term future (or, I should say, we can't dependably know more than the consensus).

  • If we have an opinion about the short term, we can't (or shouldn't) have much confidence in it.

  • If we reach a conclusion, there's not much we can do about it - most investors can't and won't meaningfully revamp their portfolios based on such opinions.

  • We really shouldn't care about the short term - after all, we're investors, not traders.

I think it's the last point that matters most. The question is whether you agree or not.

For example, when asked whether we're heading toward a recession, my usual answer is that whenever we're not in a recession, we're heading toward one. The question is when. I believe we'll always have cycles, which means recessions and recoveries will always lie ahead. Does the fact that there's a recession ahead mean we should reduce our investments or alter our portfolio allocation? I don't think so. Since 1920, there have been 17 recessions as well as one Great Depression, a World War and several smaller wars, multiple periods of worry about global cataclysm, and now a pandemic. And yet, as I mentioned in my January memo, Selling Out, the S&P 500 has returned about 10½% a year on average over that century-plus. Would investors have improved their performance by getting in and out of the market to avoid those problem spots... or would doing so have diminished it? Ever since I quoted Bill Miller in that memo, I've been impressed by his formulation that "it's time, not timing" that leads to real wealth accumulation. Thus, most investors would be better off ignoring short-term considerations if they want to enjoy the benefits of long-term compounding.

Two of the six tenets of Oaktree's investment philosophy say (a) we don't base our investment decisions on macro forecasts and (b) we're not market timers. I told the London audience our main goal is to buy debt or make loans that will be repaid and to buy interests in companies that will do well and make money. None of that has anything to do with the short term.

From time to time, when we consider it warranted, we do vary our balance between aggressiveness and defensiveness, primarily by altering the size of our closed-end funds, the pace at which we invest, and the level of risk we'll accept. But we do these things on the basis of current market conditions, not expectations regarding future events.

Everyone at Oaktree has opinions on the short-run phenomena mentioned above. We just don't bet heavily that they're right. During our accurate meetings with clients in London, Bruce Karsh and I spent a lot of time discussing the significance of the short-term concerns. Here's how he followed up in a note to me:

...Will things be as bad or worse or better than expected? Unknowable... and equally unknowable how much is priced in, i.e. what the market is truly expecting. One would think a recession is priced in, but many analysts say that's not the case. This stuff is hard...!!!

Bruce's comment highlights another weakness of having a short-term focus. Even if we think we know what's in store in terms of things like inflation, recessions, and interest rates, there's absolutely no way to know how market prices comport with those expectations. This is more significant than most people realize. If you've developed opinions regarding the issues of the day, or have access to those of pundits you respect, take a look at any asset and ask yourself whether it's priced rich, cheap, or fair in light of those views. That's what matters when you're pursuing investments that are reasonably priced.

The possibility - or even the fact - that a negative event lies ahead isn't in itself a reason to reduce risk; investors should only do so if the event lies ahead and it isn't appropriately reflected in asset prices. But, as Bruce says, there's usually no way to know.

At the beginning of my career, we thought in terms of investing in a stock for five or six years; something held for less than a year was considered a short-term trade. One of the biggest changes I've witnessed since then is the incredible shortening of time horizons. Money managers know their returns in real-time, and many clients are fixated on how their managers did in the most accurate quarter.

No strategy - and no level of brilliance - will make every quarter or every year a successful one. Strategies become more or less effective as the environment changes and their popularity waxes and wanes. In fact, highly disciplined managers who hold most rigorously to a given approach will tend to report the worst performance when that approach goes out of favor. Regardless of the appropriateness of a strategy and the quality of investment decisions, every portfolio and every manager will experience good and bad quarters and years that have no lasting impact and say nothing about the manager's ability. Often this poor performance will be due to unforeseen and unforeseeable developments.

Thus, what does it mean that someone or something has performed poorly for a while? No one should fire managers or change strategies based on short-term results. Rather than taking capital away from underperformers, clients should consider increasing their allocations in the spirit of contrarianism (but few do). I find it incredibly simple: If you wait at a bus stop long enough, you're guaranteed to catch a bus, but if you run from bus stop to bus stop, you may never catch a bus.

I believe most investors have their eye on the wrong ball. One quarter's or one year's performance is meaningless at best and a harmful distraction at worst. But most investment committees still spend the first hour of every meeting discussing returns in the most accurate quarter and the year to date. If everyone else is focusing on something that doesn't matter and ignoring the thing that does, investors can profitably diverge from the pack by blocking out short-term concerns and maintaining a laser focus on long-term capital deployment.

A final quote from Pioneering Portfolio Management does a great job of summing up how institutions can pursue the superior performance most want. (Its concepts are also relevant to individuals):

Appropriate investment procedures contribute significantly to investment success, allowing investors to pursue profitable long-term contrarian investment positions. By reducing pressures to produce in the short run, liberated managers gain the freedom to create portfolios positioned to take advantage of opportunities created by short-term players. By encouraging managers to make potentially embarrassing out-of-favor investments, fiduciaries increase the likelihood of investment success.

Oaktree is probably in the extreme minority in its relative indifference to macro projections, especially regarding the short term. Most investors fuss over expectations regarding short-term phenomena, but I wonder whether they actually do much about their concerns and whether it helps.

Many investors - and especially institutions such as pension funds, endowments, insurance companies, and sovereign wealth funds, all of which are relatively insulated from the risk of sudden withdrawals - have the luxury of being able to focus exclusively on the long term... if they will take advantage of it. Thus, my suggestion to you is to depart from the investment crowd, with its unhelpful preoccupation with the short term, and to instead join us in focusing on the things that really matter.

Original Post

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

Thu, 28 Jul 2022 02:10:00 -0500 en text/html https://seekingalpha.com/article/4526834-latest-memo-from-howard-marks-i-beg-to-differ
Killexams : 11 Higher-Yielding And Far Better Blue-Chip Alternatives To AT&T
Happy businessman and flying dollar banknotes

Prostock-Studio

AT&T (T) is one of the most controversial stocks on Seeking Alpha and for good reason. This failed aristocrat succumbed to poor management and costly and debt-laden empire building that showcases that even the mightiest blue-chips can fall.

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Charlie Bilello

AT&T was once the largest company in America, and so was IBM (IBM). Sears was once the 6th largest and is now bankrupt as are former dividend kings Winn Dixie and Kmart.

General Electric (GE), another former aristocrat, is still down almost 90% off its tech bubble highs, after briefly becoming the most valuable company on earth.

There are no sacred cows in finance, and the prudent long-term investor follows the fundamentals wherever they lead.

"When the facts change I change my mind, what do you do sir?" - John Maynard Keynes

Several Dividend Kings members have asked me to take another look at AT&T, to see whether or not this fallen aristocrat has a chance of rising like a Phoenix from the ashes and soaring to new heights.

To answer that question there are three things we must look at:

  • the balance sheet
  • the dividend safety
  • the long-term return outlook

So let's take a look at the three things prospective AT&T investors need to know, and why 11 higher-yielding and far superior blue-chips are the best place for your hard-earned savings today.

Fact One: The Balance Sheet Is Improving Slowly But Surely

There is nothing more important for long-term investing success than a strong balance sheet. If a company defaults on its debt, it almost always files for bankruptcy and the stock goes to zero.

"In order to win the game first you must not lose it." - Chuck Noll

AT&T Credit Ratings

Rating Agency Credit Rating 30-Year Default/Bankruptcy Risk Chance of Losing 100% Of Your Investment 1 In
S&P BBB Stable Outlook 7.50% 13.3
Fitch BBB+ Stable Outlook 5.00% 20.0
Moody's Baa2 (BBB equivalent) Stable Outlook 7.50% 13.3
Consensus BBB Stable Outlook 6.67% 15.0

(Source: S&P, Fitch, Moody's)

Rating agencies estimate AT&T's fundamental risk at 6.7%, a 1 in 15 chance of losing all your money in the next 30 years.

Why? Because the spinoff of WarnerMedia along with some of its debt and that nasty dividend cut has helped set AT&T on the path to financial health.

AT&T Consensus Leverage Forecast

Year Debt/EBITDA Net Debt/EBITDA (3.5 Or Less Safe According To Credit Rating Agencies)

Interest Coverage (4+ Safe)

2020 2.88 2.70 0.81
2021 3.46 3.06 3.39
2022 3.69 3.03 3.64
2023 3.44 2.77 4.29
2024 2.88 2.54 4.93
2025 2.86 2.48 4.70
2026 2.89 2.64 3.61
2027 2.62 NA 4.81
Annualized Change -1.37% -0.38% 29.03%

(Source: FactSet Research Terminal)

AT&T's leverage peaked at 3.7 pre-spin-off and is expected to fall rapidly. Its interest coverage ratio is expected to remain stable around the 4 minimum safety guideline for stable BBB-rated companies.

AT&T Consensus Leverage Forecast

Year Total Debt (Millions) Cash Net Debt (Millions) Interest Cost (Millions) EBITDA (Millions) Operating Income (Millions)
2020 $157,245 $9,740 $147,505 $7,925 $54,546 $6,405
2021 $177,977 $21,169 $157,379 $6,884 $51,469 $23,347
2022 $155,499 $19,970 $127,519 $6,202 $42,154 $22,569
2023 $148,884 $20,063 $119,858 $5,601 $43,247 $24,015
2024 $127,251 $16,795 $112,489 $5,140 $44,245 $25,347
2025 $127,251 $19,874 $110,491 $5,482 $44,535 $25,744
2026 $127,251 $31,778 $116,500 $7,067 $44,080 $25,520
2027 $127,251 $82,067 NA $6,194 $48,613 $29,815
Annualized Growth -2.98% 35.59% -3.86% -3.46% -1.63% 24.57%

(Source: FactSet Research Terminal)

Rising interest rates in the future are expected to keep AT&T's ability to service its debt manageable, but not so easy as to likely result in credit rating upgrades.

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(Source: FactSet Research Terminal)

The bond market is getting a bit more thinking about AT&T's ability to service its debt, possibly due to rising recession concerns.

1-year default risk has risen by 150% in the last six months according to the bond market and 10-year default risk is up 49%.

However, the bond market is estimating a 30-year default risk at just over 4.5%, which is consistent with its existing credit ratings.

Or to put it another way, analysts, management, rating agencies, and the bond market all think that AT&T's turnaround plan remains on track, though management's initial guidance for 5% long-term growth appears to be unlikely.

Fact Two: Dividend Safety Remains Shaky At Best

The safest dividends are often the ones that's just been raised and the most dangerous can be from companies that have already cut in the accurate past.

With AT&T almost halving its dividend and breaking the hearts of many dividend aristocrat investors, one of the most important questions we need to be answered is how safe is the dividend and is it likely to grow over time?

AT&T Dividend Consensus Forecast

Year Dividend Consensus FCF/Share Consensus FCF Payout Ratio Retained (Post-Dividend) Free Cash Flow Buyback Potential Debt Repayment Potential
2022 $1.22 $2.11 57.8% $6,372 4.34% 4.1%
2023 $1.10 $2.48 44.4% $9,879 6.73% 6.6%
2024 $1.10 $2.36 46.6% $9,020 6.14% 6.1%
2025 $1.09 $2.50 43.6% $10,094 6.87% 7.9%
2026 $1.18 $2.32 50.9% $8,161 5.56% 6.4%
2027 $1.20 $2.90 41.4% $12,170 8.28% 9.6%
Total 2022 Through 2027 $6.89 $14.67 47.0% $55,697.02 37.91% 37.41%
Annualized Rate -0.33% 6.57% -6.47% 13.82% 13.82% 18.47%

(Source: FactSet Research Terminal)

The good news is that most analysts don't expect AT&T to cut more. The bad news is that some due and the consensus is that the payout will basically stay flat for the next five years.

That's despite a payout ratio of under 50% compared to 70% that rating agencies consider safe for telecoms.

AT&T is expected to retain $56 billion in post-dividend free cash flow over the next five years. That's enough to potentially pay off 37% of its debt or buy back up to 38% of its stock at current valuations.

But don't get too excited about the potential for mega-buybacks.

AT&T Buyback Consensus Forecast

Year Consensus Buybacks ($ Millions) % Of Shares (At Current Valuations) Market Cap
2022 $205.0 0.1% $146,903
2023 $74.0 0.1% $146,903
2024 $111.0 0.1% $146,903
2025 $611.0 0.4% $146,903
2026 $611.0 0.4% $146,903
Total 2022-2026 $1,612.00 1.1% $146,903
Annualized Rate 0.16% Average Annual Buybacks $322.40

(Source: FactSet Research Terminal)

Analysts only expect $1.6 billion in total buybacks through 2026, roughly enough for 1% of the shares at current valuations.

So where is that retained cash flow going? Well, management hopes into growing the core telecom business. On that front, there is some good and bad news.

Fact Three: AT&T MIGHT Make A Decent Long-Term Investment If You Have Realistic Expectations

x

(Source: FactSet Research Terminal)

AT&T's spin-off of WarnerMedia means that it's not expected to recover that free cash flow, not even close. Even in 2027, analysts expect free cash flow will be 24% below 2020's record, eight years of negative free cash flow growth.

But that doesn't mean that analysts don't expect AT&T to grow its earnings.

x

(Source: FactSet Research Terminal)

It will take until 2027 according to analysts for AT&T to hit a new record EPS, surpassing 2019's $2.7 per share.

But over the long-term, the median consensus from all 29 analysts is that AT&T can grow at 3.4%.

  • Verizon (VZ)'s consensus is 4.0%

What does this potentially mean for long-term AT&T investors?

Investment Strategy Yield LT Consensus Growth LT Consensus Total Return Potential Long-Term Risk-Adjusted Expected Return Long-Term Inflation And Risk-Adjusted Expected Returns Years To Double Your Inflation & Risk-Adjusted Wealth

10-Year Inflation And Risk-Adjusted Expected Return

AT&T 5.4% 3.4% 8.8% 6.2% 3.7% 19.5 1.44
Verizon 5.0% 4% 9.0% 6.3% 3.8% 18.8 1.46
Dividend Aristocrats 2.6% 8.6% 11.2% 7.8% 5.4% 13.4 1.69
S&P 500 1.8% 8.5% 10.3% 7.1% 4.7% 15.4 1.58

(Source: Morningstar, FactSet, Ycharts)

That AT&T could potentially deliver decent long-term total returns of about 9%, slightly less than Verizon and a lot less than the dividend aristocrats or S&P 500.

How realistic is it to believe that AT&T can deliver 9% long-term returns?

AT&T And Verizon Total Returns Since May 1985

x

(Source: Portfolio Visualizer Premium)

AT&T has underperformed VZ by 0.3% annually for 37 years, and analysts expect it to keep doing so in the future.

It's delivered 9% long-term returns just as analysts expect from it today.

x

(Source: Portfolio Visualizer Premium)

AT&T's rolling returns are consistent with what analysts expect in the future, with modest returns almost all coming from dividends. However, remember that these are long-term returns, and in the short-term, any company can disappoint, even for a decade.

x

(Source: Portfolio Visualizer Premium)

AT&T is finally having a moment in the sun, up 19% in the last three months and up almost 17% YTD. But it's delivered almost zero inflation-adjusted returns over the last decade, thanks to former management's penchant for expensive debt-funded M&A.

Now AT&T is focused on its circle of competence, telecom, and analysts and rating agencies are the most optimistic they've been in about five years at AT&T's prospects, though admittedly that's damning with faint praise.

But the good news is that AT&T investors likely don't have to wait for decades to earn solid returns, potentially even Buffett-like short-term gains.

AT&T 2024 Consensus Return Potential

x

(Source: FAST Graphs, FactSet Research)

AT&T offers about 20% annual total return potential according to analysts over the next 2.5 years.

However, just because AT&T isn't a dumpster fire of a company doesn't mean it's actually worth buying.

Let me show you how to stop settling for low-quality yield and instead harness the power of the world's mightiest and highest quality high-yield blue-chips.

How To Find Some Of The World's Best High-Yield Blue-Chips In All Market Conditions

I use the Dividend Kings Zen Research Terminal to always find the best blue-chips for any given goal, time horizon or risk profile. This super easy and convenient tool runs of the Dividend Kings 500 Master List.

The DK 500 Master List is one of the world's best watchlists including

  • every dividend aristocrat (S&P companies with 25+ year dividend growth streaks)
  • every dividend champion (every company, including foreign, with 25+ year dividend growth streaks)
  • every dividend king (every company with 50+ year dividend growth streaks)
  • every foreign aristocrat (every company with 20+ year dividend growth streaks)
  • every Ultra SWAN (wide moat aristocrats, as close to perfect quality companies as exist)
  • 40 of the world's best growth stocks

Let me show you the screen I used to find higher-yielding and far superior alternatives to AT&T.

  1. yield of 5.5+% (vs 5.4% AT&T): 33 companies remain
  2. 8.9+% long-term consensus return potential (vs 8.8% AT&T): 30 companies remain
  3. investment-grade credit ratings: 23 companies remain
  4. good buys or better (margin of safety is sufficient to compensate for each company's risk profile): 15 companies remain
  5. safety score 81+ (very safe dividends): 0.5% historically average recession cut risk and 1% to 2% risk in a severe recession: 11 companies remain
  6. 80+ quality score (Super SWAN quality or better): 11 companies remain

Total time: 2 minutes

11 Higher-Yielding And Far Superior Alternatives To AT&T

x

Dividend Kings Zen Research Terminal

I've linked to articles about each company's investment thesis, long-term growth prospects, risk profile, valuation, and total return potential.

Note that LGGNY is the ADR version and LGEN is the London Stock Exchange version. The ADR fees on LGGNY amount to about 5% of the dividend, so if your broker allows it, buy LGEN to avoid the ADR fee.

ENB, MFC, and PBA, have 15% dividend tax withholdings.

  • not in retirement accounts
  • in taxable accounts, you get a tax credit to recoup the withholding

ALIZY has a 26.375% dividend withholding.

  • a tax credit is only available in taxable accounts
  • optically own non-Canadian foreign dividend stocks (except the UK which have no withholding) in taxable accounts

FAST Graphs Up Front

Magellan Midstream Partners 2024 Consensus Total Return Potential

x

(Source: FAST Graphs, FactSet Research)

Altria 2024 Consensus Total Return Potential

x

(Source: FAST Graphs, FactSet Research)

Legal & General 2024 Consensus Total Return Potential

x

(Source: FAST Graphs, FactSet Research)

Enterprise Products Partners 2024 Consensus Total Return Potential

x

(Source: FAST Graphs, FactSet Research)

British American Tobacco 2024 Consensus Total Return Potential

x

(Source: FAST Graphs, FactSet Research)

ONEOK 2024 Consensus Total Return Potential

x

(Source: FAST Graphs, FactSet Research)

Allianz 2024 Consensus Total Return Potential

x

(Source: FAST Graphs, FactSet Research)

Enbridge 2024 Consensus Total Return Potential

x

(Source: FAST Graphs, FactSet Research)

Manulife Financial 2024 Consensus Total Return Potential

x

(Source: FAST Graphs, FactSet Research)

Pembina Pipeline 2024 Consensus Total Return Potential

x

(Source: FAST Graphs, FactSet Research)

Bank of Nova Scotia 2024 Consensus Total Return Potential

x

(Source: FAST Graphs, FactSet Research)

  • average 2024 consensus return potential: 21.% CAGR
  • literally, Buffett-like short-term return potential from 11 high-yield blue-chip bargains hiding in plain sight.

S&P 500 2024 Consensus Total Return Potential

x

(Source: FAST Graphs, FactSet Research)

Analysts expect about 12.5% annual returns from the S&P over the next 2.5 years, nearly 50% less than what these high-yield blue-chips potentially offer.

They also offer about 4% higher return potential through 2024 than AT&T, though with a far better track record of actually delivering market-crushing returns and dependable income growth.

OK, so now let me show you why these are such better alternatives to AT&T.

Some Of The World's Highest Quality And Most Dependable High-Yield Blue-Chips

x

Dividend Kings Zen Research Terminal

These aren't just 7% yielding blue-chips, but 7% yielding Ultra SWANs (sleep well at night), as close to perfect quality dividend growth stocks as can exist on Wall Street.

How do I know? Because they are higher quality than the dividend aristocrats.

Higher Quality Than Dividend Aristocrats And Much Higher Quality Than AT&T

Metric Dividend Aristocrats 11 High-Yield AT&T Alternatives AT&T Winner Aristocrats Winner 11 High-Yield AT&T Alternatives Winner AT&T
Quality 87% 88% 57% 1
Safety 89% 90% 56% 1
Dependability 84% 88% 55% 1
Long-Term Risk Management Industry Percentile 67% Above-Average 73% Good 75% Good 1
Average Credit Rating A- Stable BBB+ Stable BBB Stable 1
Average 30-Year Bankruptcy Risk 3.01% 4.09% 7.50% 1
Average Dividend Growth Streak (Years) 44.3 15.3 0 1
Average Return On Capital 100% 478% 20% 1
Average ROC Industry Percentile 83% 87% 60% 1
13-Year Median ROC 89% 296% 19% 1
Forward PE 18.8 8.4 8.1 1
Discount To Fair Value 8.0% 26.0% 18.0% 1
DK Rating Good Buy Very Strong Buy Reasonable Buy 1
Yield 2.6% 7.0% 5.4% 1
LT Growth Consensus 8.6% 6.6% 3.4% 1
Total Return Potential 11.2% 13.6% 8.8% 1
Risk-Adjusted Expected Return 7.6% 9.1% 5.7% 1
Inflation & Risk-Adjusted Expected Return 5.1% 6.7% 3.2% 1
Years To Double 14.0 10.8 22.3 1
Total 4 13 2

(Source: Dividend Kings Zen Research Terminal)

These aren't just safe 7% yielding blue-chips, they are some of the safest 7% yielding companies on earth. How safe?

Rating Dividend Kings Safety Score (162 Point Safety Model) Approximate Dividend Cut Risk (Average Recession) Approximate Dividend Cut Risk In Pandemic Level Recession
1 - unsafe 0% to 20% over 4% 16+%
2- below average 21% to 40% over 2% 8% to 16%
3 - average 41% to 60% 2% 4% to 8%
4 - safe 61% to 80% 1% 2% to 4%
5- very safe 81% to 100% 0.5% 1% to 2%
11 Higher-Yielding AT&T Alternatives 90% 0.5% 1.5%
Risk Rating Low-Risk (73rd industry percentile risk-management consensus) BBB+ stable outlook credit rating 4.1% 30-year bankruptcy risk 20% OR LESS Max Risk Cap Recommendation (Each)

(Source: Dividend Kings Zen Research Terminal)

In the average recession since WWII, the approximate risk of these high-yield blue-chips cutting their dividend is 1 in 200. In a severe Great Recession or Pandemic level downturn, it's approximately 1 in 67.

Their average dividend growth streak is 15 years. How significant is that?

x

Justin Law

During the pandemic, companies with 12+ year dividend growth streaks were significantly less likely to cut their dividends.

  • all of these companies have a progressive dividend policy
  • dividends are never cut unless absolutely necessary
  • and grow in-line with earnings over time

Joel Greenblatt considered return on capital his gold standard proxy for quality and moatiness.

  • annual pre-tax income/the cost of running the business

One of the greatest investors in history, 40% annual returns for 21 years, used valuation and ROC as his core investing strategy.

For context, the S&P 500 has 14.6% return on capital and AT&T 20%.

The dividend aristocrats have 100% ROC and these high-yield Ultra SWANs a spectacular 478%.

Their 13-year median ROC is 296% vs the aristocrats' 89% and AT&T's 19%.

Their ROC is in the 87th industry percentile vs the aristocrats' 80% and AT&T's 60%.

What does this mean? Some of the world's highest quality, most profitable, and widest moat companies.

S&P estimates their average 30-year bankruptcy risk (Buffett's definition of fundamental risk) is 4.1%, a BBB+ stable credit rating vs the aristocrats' A- stable and AT&T's BBB stable.

And six rating agencies estimate their long-term risk management is in the 73rd industry percentile vs 75% for AT&T and 67% for the dividend aristocrats.

Classification Average Consensus LT Risk-Management Industry Percentile

Risk-Management Rating

S&P Global (SPGI) #1 Risk Management In The Master List 94 Exceptional
Strong ESG List 78

Good - Bordering On Very Good

Foreign Dividend Stocks 75 Good
AT&T 75 Good
11 Higher-Yielding AT&T Alternatives 73 Good
Ultra SWANs 71 Good
Low Volatility Stocks 68 Above-Average
Dividend Aristocrats 67 Above-Average
Dividend Kings 63 Above-Average
Master List average 62 Above-Average
Hyper-Growth stocks 61 Above-Average
Monthly Dividend Stocks 60 Above-Average
Dividend Champions 57 Average

(Source: DK Research Terminal)

OK, so now that you understand just why these 11 higher-yielding and much higher quality companies are so much better than AT&T, here's why you might want to buy them today.

Wonderful Companies At Wonderful Prices

x

Dividend Kings Zen Research Terminal

AT&T trades at 8.1X forward earnings, an anti-bubble valuation, that Morningstar estimates is an 18% discount to its fair value of $25.

The S&P trades at 16.0X forward earnings, a 4% historical discount to its 10, 25, and 45-year average forward PE.

The dividend aristocrats trade at 18.8X forward earnings, an 8% historical discount.

These high-yield blue-chips trade at 8.4X earnings, a 26% historical discount.

That's why analysts expect 32% total returns in the next 12 months, but 44% total returns are fundamentally justified by their fundamentals.

If these companies all grow as expected and return to their historical fair value within 12 months, then investors will make 44% returns in a year.

What about the aristocrats?

  • average 12-month median analyst forecast: 22.4%
  • fundamentally justified 12-month total return: 14.9%

But my goal isn't to help you earn 32% or even 44% in 12 months, though these high-yield blue-chips are fundamentally capable of that.

My goal is to help you retire in safety and splendor by earning potentially 45X returns over decades.

Long-Term Return Potential That Puts AT&T To Shame And Can Help You Retire In Safety And Splendor

x

Dividend Kings Zen Research Terminal

Not only do these 11 blue-chips yield 7%, 33% more than AT&T, but analysts expect them to grow 6.6%, almost 2X as fast as AT&T.

That means 13.6% consensus return potential and 6.7% risk and inflation-adjusted expected returns. What are real expected returns?

  • analyst consensus adjusted for the probability of companies not growing as expected
  • not returning to fair value
  • going bankrupt
  • the bond market's 30-year inflation forecast

In other words, it's a reasonable estimate of what you can expect to make.

Dividend 72% by the real expected return and you get how long it's likely to take for you to double your inflation-adjusted savings.

  • S&P 500's doubling time is 15.3 years
  • aristocrats 14.0 years
  • AT&T's 22.3 years
  • these 11 high-yield blue-chips 11.2 years

Think that doubling your money 3 or 4 years faster than the aristocrats or S&P 500 doesn't matter? Well just take a look at what kind of life-changing difference in wealth it could mean for you.

Inflation-Adjusted Consensus Total Return Potential: $510,000 Average Retired Couple's Savings Initial Investment

Time Frame (Years) 7.7% CAGR Inflation-Adjusted S&P Consensus 8.7% Inflation-Adjusted Aristocrats Consensus 11.1% CAGR Inflation-Adjusted 11 Higher-Yielding AT&T Alternatives Consensus Difference Between Inflation-Adjusted 11 Higher-Yielding AT&T Alternatives Consensus Vs S&P Consensus
5 $740,037.07 $775,027.51 $864,423.86 $124,386.79
10 $1,073,833.07 $1,177,779.68 $1,465,154.15 $391,321.08
15 $1,558,188.78 $1,789,826.76 $2,483,361.20 $925,172.42
20 $2,261,014.63 $2,719,931.31 $4,209,169.97 $1,948,155.33
25 $3,280,852.25 $4,133,375.65 $7,134,327.39 $3,853,475.14
30 $4,760,690.75 $6,281,332.99 $12,092,319.31 $7,331,628.55

(Source: DK Research Terminal, FactSet)

For the average retired couple, it means potentially $7.3 million in inflation-adjusted wealth over a 30-year retirement.

Time Frame (Years) Ratio Aristocrats/S&P Consensus Ratio Inflation-Adjusted 11 Higher-Yielding AT&T Alternatives Consensus vs S&P consensus
5 1.05 1.17
10 1.10 1.36
15 1.15 1.59
20 1.20 1.86
25 1.26 2.17
30 1.32 2.54

(Source: DK Research Terminal, FactSet)

That's potentially 2.5X more than the S&P 500 and 2X better than analysts expect from the dividend aristocrats.

Do you see how the right high-yield blue-chips can help you retire in safety and splendor?

OK, but that assumes these companies deliver almost 14% long-term returns for decades. What evidence is there that they can actually do that?

Historical Returns Since November 2003 (Equal Weighting, Annual Rebalancing)

"The future doesn't repeat, but it often rhymes." - Mark Twain

Past performance is no ensure of future results, but studies show that blue-chips with relatively stable fundamentals over time offer predictable returns based on yield, growth, and valuation mean reversion.

valuation is axlmost allx that matters for long-term stock returns

Bank of America

So let's see how these 11 higher-yielding AT&T alternatives performed over the last two decades when 91% of their returns were the result of fundamentals, not luck.

x

(Source: Portfolio Visualizer Premium)

Analysts expect 13.6% long-term returns and they delivered...13.4% CAGR. That's more than 2X the annual return of AT&T and almost 4% higher than the S&P 500.

And they did it with slightly lower volatility than AT&T and 2X higher negative-volatility-adjusted total returns (Sortino ratio).

  • 32% higher negative-volatility adjusted annual returns than the S&P 500
x

(Source: Portfolio Visualizer Premium)

Analysts expect about 4X inflation-adjusted returns from the S&P in the next 20 years. Over the last 11 years, the market delivered 3.3X returns.

Analysts expect AT&T to double your money roughly every 22 years, and in the last 19 years, it delivered exactly 2X inflation-adjusted returns.

Analysts expect these 11 high-yield blue-chips to potentially deliver about 8.3X inflation-adjusted returns. Over the last 20? 6.6X and that's factoring in their current 11% bear market.

  • without the current bear market, they would have delivered 7.5X inflation-adjusted returns.
  • within 10% of what the Gordon Dividend growth model predicted
  • over 19 years
  • the most accurate long-term forecasting model ever devised
  • which is used by almost every asset manager
  • BlackRock, Vanguard, Oaktree, Brookfield, Fidelity, Schwab, etc.
x

(Source: Portfolio Visualizer Premium)

Their average rolling returns were 12% to 15%, 2X more than AT&T's.

Their worst 15-year returns?

  • 3.82X return for these 11 high-yield blue-chips
  • 1.4X return for AT&T
  • 2.9X return for S&P 500
x

(Source: Portfolio Visualizer Premium)

In 2022, when the market is down almost 20%? These 11 high-yield blue-chips are up 4%. Does that mean these blue-chips are bear market-proof?

No company is bear market proof, as you can see from how poorly these companies did in the Pandemic.

x

(Source: Portfolio Visualizer Premium)

  • which is largely why they are still such attractive bargains today
  • and yield one of the safest 7% yields in the world

But does that mean these aren't defensive blue-chips? Not at all.

x

(Source: Portfolio Visualizer Premium)

x

(Source: Portfolio Visualizer Premium)

x

(Source: Portfolio Visualizer Premium)

These high-yield blue-chips are currently in an 11% bear market vs 33% for AT&T and 20% for the S&P.

The longest they've ever taken to recover record highs after a bear market is 2.5 years, vs 5 years for the S&P 500 and 11.5 years for AT&T.

So higher and much safer yield, stronger returns, smaller declines (usually), and faster bear market recoveries.

And let's not forget the most important part about high-yield investing, long-term income growth!

High-Yield Dividend Growth Blue-Chips You Can Trust

x

(Source: Portfolio Visualizer Premium) 2008 was MO's PM spin-off

If your goal is maximum safe income why would you choose AT&T over these 11 high-yield blue-chip alternatives?

Portfolio 2004 Income Per $1,000 Investment 2021 Income Per $1,000 Investment Annual Income Growth Starting Yield

2021 Yield On Cost

S&P 500 $21 $77 7.94% 2.1% 7.7%
AT&T $53 $222 8.79% 5.3% 22.2%
11 Higher-Yielding AT&T Alternatives $83 $654 12.91% 8.3% 65.4%

(Source: Portfolio Visualizer Premium)

They delivered almost 2X the annual income growth of the S&P and AT&T and turned an 8.3% starting yield into a yield on cost of 65% over the last 17 years.

What about future income growth?

Analyst Consensus Income Growth Forecast Risk-Adjusted Expected Income Growth Risk And Tax-Adjusted Expected Income Growth

Risk, Inflation, And Tax Adjusted Income Growth Consensus

13.1% 9.2% 7.8% 5.3%

(Source: DK Research Terminal, FactSet)

Analysts expect 13% income growth from these blue-chips in the future, just as they've delivered for almost two decades. When adjusted for the risk of it not growing as expected, inflation and taxes is about 5.3% real expected income growth.

Now compare that to what they expect from the S&P 500.

Time Frame S&P Inflation-Adjusted Dividend Growth S&P Inflation-Adjusted Earnings Growth
1871-2021 1.6% 2.1%
1945-2021 2.4% 3.5%
1981-2021 (Modern Falling Rate Era) 2.8% 3.8%
2008-2021 (Modern Low Rate Era) 3.5% 6.2%
FactSet Future Consensus 2.0% 5.2%

(Sources: S&P, FactSet, Multipl.com)

  • 1.7% tax and inflation-adjusted S&P consensus income growth

What about a 60/40 retirement portfolio?

  • 0.5% consensus inflation, risk, and tax-adjusted income growth.

In other words, these 11 higher-yielding superior AT&T alternatives offer

  • almost 4X the market's yield (and a much safer yield at that)
  • 1.33X AT&T's yield (and a much, much safer yield at that)
  • about 3X the S&P's long-term inflation-adjusted consensus income growth potential
  • 11X better long-term inflation-adjusted income growth than a 60/40 retirement portfolio

This is the power of high-yield blue-chip investing done right.

Bottom Line: Don't Gamble On AT&T's Turnaround Story When You Can Buy These Higher-Yielding, Far Superior Alternatives Instead

Let me be very clear, AT&T is not a dangerous company that's likely going to zero. Rating agencies estimate a 92.5% probability AT&T will survive the next three decades.

But what I am saying is that after a careful examination of its fundamentals, I can think of just one group of investors who should own AT&T right now. Index fund investors who own it as part of an ETF or mutual fund.

We all have limited funds, and for new money today there are almost no reasons to buy AT&T over these 11 higher-yielding, much higher quality, much faster growing, and much safer Ultra SWANs.

The Evidence Is Clear: These Are 11 Much Better Alternatives To AT&T

Metric Dividend Aristocrats 11 High-Yield AT&T Alternatives AT&T Winner Aristocrats Winner 11 High-Yield AT&T Alternatives Winner AT&T
Quality 87% 88% 57% 1
Safety 89% 90% 56% 1
Dependability 84% 88% 55% 1
Long-Term Risk Management Industry Percentile 67% Above-Average 73% Good 75% Good 1
Average Credit Rating A- Stable BBB+ Stable BBB Stable 1
Average 30-Year Bankruptcy Risk 3.01% 4.09% 7.50% 1
Average Dividend Growth Streak (Years) 44.3 15.3 0 1
Average Return On Capital 100% 478% 20% 1
Average ROC Industry Percentile 83% 87% 60% 1
13-Year Median ROC 89% 296% 19% 1
Forward PE 18.8 8.4 8.1 1
Discount To Fair Value 8.0% 26.0% 18.0% 1
DK Rating Good Buy Very Strong Buy Reasonable Buy 1
Yield 2.6% 7.0% 5.4% 1
LT Growth Consensus 8.6% 6.6% 3.4% 1
Total Return Potential 11.2% 13.6% 8.8% 1
Risk-Adjusted Expected Return 7.6% 9.1% 5.7% 1
Inflation & Risk-Adjusted Expected Return 5.1% 6.7% 3.2% 1
Years To Double 14.02 10.80 22.30 1
Total 4 13 2

(Source: DK Zen Research Terminal)

Don't get me wrong, I'm not saying that you have to buy all of these companies.

This article is about providing 11 higher-yielding and far superior quality alternatives to AT&T and that's exactly what MMP, MO, LGGNY, EPD, BTI, OKE, ALIZY, ENB, MFC, PBA, and BNS represent.

Some investors absolutely detest K1 tax forms, and if that describes you then ignore MMP and EPD.

Some investors just can't stand dividend tax withholdings and extra complexity at tax time, and if that's the case then ignore PBA, BNS, and ENB.

Some investors avoid tobacco for personal ethical reasons, and in that case MO and BTI are not for you.

The point is that any one of these high-yield blue-chips is a superior alternative to AT&T.

  • higher yield
  • faster growth
  • a safer dividend
  • faster growing dividends
  • credit ratings as good or better (in some cases much better)
  • much higher quality and dependability
  • higher long-term return potential
  • superior long-term returns

When you have limited capital you need to be reasonable and prudent with where you invest it.

Can AT&T make a good investment from here? That depends on whether the turnaround succeeds and the company delivers on its expected growth.

  • 8.8% long-term consensus return potential is in-line with its historical returns

Could AT&T make a potentially fantastic short-term investment? Sure, because a return to fair value could mean 20% annual returns for the next 2.5 years.

  • 24% from these higher-yielding alternatives

But whether you are shooting for huge short-term upside or life-changing long-term wealth and income compounding by earning thousands of percent over decades, one thing is clear.

These 11 higher-yielding blue-chips are far superior alternatives to AT&T today.

Wed, 13 Jul 2022 22:00:00 -0500 en text/html https://seekingalpha.com/article/4523270-11-better-blue-chip-alternatives-to-att
Killexams : Full-stack developers continue to be hot property across firms We wrote several months ago that full-stack developers are in big demand. We went back to industry to check how the demand is now, and we found that demand has only become stronger, both in India and the world.

Pravin Yashwant Pawar, assistant professor of computer science at BITS Pilani’s Work Integrated Learning Programmes division, says full-stack developer roles have become one of the most sought after because of the tremendous growth potential and attractive pay-scales. “A survey conducted last year by popular online developer community platform Stack Overflow found that 50% of the respondents to the survey were terming themselves as full-stack developers. One can see over 10,000 job openings on popular portals for job hunters like LinkedIn, Glassdoor, Naukri and the like for fullstack skills for a wide range of experience levels,” he says.

Full-stack developers continue to be hot property across firms

What exactly is a full-stack developer? Ed-tech platform upGrad’s MD & co-founder Mayank Kumar says full-stack developers are proficient in both front-end and back-end development, and are also experts at a variety of coding niches – from databases to graphic design and to UI/UX management. Think of the backend as the plumbing of the website or app you are using that deals with data storage and processing, and the front end as the interface you interact with. It’s this versatility and ability to work on different aspects of web or app development that makes them so sought after.

When it comes to programming languages to learn, Hari Krishnan Nair, co-founder of Great Learning, says a full-stack developer needs to have in-depth knowledge of at least one programming language. “Java and Python are the most widely used programming languages. Object oriented programming, data structures, algorithms, database design, and server-side framework are crucial from a backend software development point of view. HTML, CSS, Javascript and AngularJS/ ReactJS from a front-end point of view. Apart from this, cloud computing fundamentals, Python basics, and SQL are highly sought after in the market today,” he says.

Apart from programming languages and software developer tools, there are other factors that are equally important when it comes to becoming a successful full-stack developer, says Skandh Gupta, senior software engineer at Optum Global Solutions. “Two personal characteristics that always top my mind are curiosity and zeal to learn. One should always focus on two questions: Why? and How? Curiosity helps you gain knowledge of technologies and how the application functions. The question “Why?” to every single step – from choosing tech to designing the application – gives deep knowledge of the flow of the application, and “How?” helps you gain insight on all parts of the application, like front-end, back-end, web architecture to designing applications, servers, databases and test and debug. Full-stack engineers know best practices of engineering excellence and where to apply what,” he says.

Aspiring full-stack developers do need to be aware of a few potential hurdles during their journey though, says Girish Dhanakshirur, IBM distinguished engineer & CTO of IBM India Software Labs. And all of them relate to the rapid changes that take place in the tech world. “First, rapid innovation in browser and server technologies leads to languages and frameworks evolving quickly, hence they must constantly keep their skills current across several technologies. Second, as open-source libraries make up almost all full-stack frameworks, there will be instances when they are not updated. Full-stack developers should be willing to debug and update such libraries when bugs are found. Finally, at times, as part of transitions, developers will end up inheriting projects and source code developed in a language and framework different from the one they are familiar with. In such circumstances, full-stack developers should be able to skill up and switch to deliver on the projects. ”

Wed, 20 Jul 2022 14:40:00 -0500 en text/html https://cio.economictimes.indiatimes.com/news/strategy-and-management/full-stack-developers-continue-to-be-hot-property-across-firms/93016732
Killexams : Communication, Media and Design

The Communication, Media and Design undergraduate bachelor's degree program encompasses 36 of the 120 credit hours required for a bachelor's degree.
This provides you with the opportunity to pursue multiple majors, minors or concentrations while working toward your Communication, Media and Design degree. All courses are 3 credits unless noted.

Clarkson Common Experience
The following courses are required for all students, irrespective of their program of study. These courses are offered during the fall semester, with FY100 First-Year Seminar being required of only first-year students. Both FY100 and UNIV190 are typically taken during the fall semester of the first year at Clarkson.

  • FY100  First-Year Seminar (1 credit)
  • UNIV190 The Clarkson Seminar (3 credits)

Communication, Media and Design Core Requirements
Students majoring in Communication, Media and Design are required to complete the following courses:

  • COMM210 Theory of Rhetoric for Business, Science & Engineering
  • COMM217 Introduction to Public Speaking
  • COMM490 Senior Communication Internship
  • COMM499 Communication Professional Experience

Communication, Media and Design Core Electives
The following are electives students are required to complete for the Communication, Media and Design major.

300-Level Communication, Media and Design Course:
Students must complete one Communication, Media and Design course at the 300-level from the following:

  • COMM312 Public Relations
  • COMM313 Professional Communications
  • COMM314 Placemaking, Marketing and Promotion
  • COMM330 Science Journalism

400-Level Communication, Media and Design Course:
Students must complete one Communication, Media and Design course at the 400-level from the following:

  • COMM410 Theory & Philosophy of Communication
  • COMM412 Organizational Communications & Public Relations Theory
  • COMM428 Environmental Communication

Courses with Technology Expertise:
Students must complete at least 6 credits with information technology expertise.

Mathematics/Statistics Electives:
Students must complete at least 6 credits from the mathematics (MA) and/or statistics (STAT) subject areas.

Science Electives:
Students must complete at least 6 credits, including a lab course, from the biology (BY), chemistry (CM), and/or physics (PH) subject areas.

Knowledge Area/University Course Electives:
Students majoring in communication will have approximately 42 credit hours available to use toward Knowledge Area and/or University Course electives.

Free Electives:
Students majoring in communication will have approximately 42 credit hours available to use toward courses of their choice.

Communication, Media and Design electives (21 credits) chosen from the following:

  • COMM100 2D Digital Design
  • COMM217 Introduction to Public Speaking
  • COMM219 Introduction Social Media
  • COMM226 Short Film Screenwriting
  • COMM229 Principles of User-Experience Design
  • COMM245 Writing for New Media
  • COMM310 Mass Media & Society
  • COMM322 Typography & Design
  • COMM326 Feature Film Screenwriting
  • COMM327 Digital Video Production I
  • COMM329 Front-End Development for the Web
  • COMM345 Information Design
  • COMM360 Sound Design
  • COMM391-395 Special Topics
  • COMM420-425 Communication: Independent Study (1-9 credits)
  • COMM427 Digital Video Production II
  • COMM429 Full-stack Development
  • COMM447 Design-Driven Innovation
  • COMM448 Portraying Innovation Through the Lens
  • COMM449 Narrating Innovation
  • COMM450 Leading Innovation
  • COMM470 Communication Internship
  • COMM480 Undergraduate Teaching Assistantship in Communication & Media (1-3 credits)
Thu, 26 May 2022 08:40:00 -0500 en text/html https://www.clarkson.edu/undergraduate/communication-media-and-design
Killexams : Best Python online courses for 2022

The best Python online courses make it simple and easy to learn, develop, and advance your programming skills.

Python is one of the most popular high-level, general-purpose programming languages. Named after the comedy troupe Monty Python, the language has a user-friendly syntax that makes it very appealing to beginners. It’s also very flexible and scalable, and has a very vibrant, global community of users.