0:00 So, let's take someone, who's let's say is is just getting started in their career. Um, maybe, you know, they've got that first job out of college. So, perhaps for the first time in their life, they've got a little bit of extra money. What would you recommend for someone in in that situation in terms of how they approach uh, you know, in invest in their money and and presumably looking toward the future. Who are you? And where are you going?
0:36 What do you want? Together, we'll find the ideal path. On the way to wealth show with your host Kevin Bamel. If you're going to invest, it's best to have a philosophy. Rather than just buying or selling on hunches willy-nilly, when you have a plan, you can invest according to that plan. Dmitry Farberov is going to talk to us
1:11 about how to develop that investment philosophy. But first, we're going to talk to Diane Quiñones and she's going to make a cocktail for us and I'm thinking it's going to be mezcal. Mezcal, you know it. right. How are you doing? Good. Uh, how did you know? Uh, yes. mezcal lady. The whole the whole the whole production team is is the mezcal lady coming? Is the mezcal lady coming? Uh, yes, we cover mezcal, we talk about tequila and mezcal is agave spirits. So, today I'm making a cocktail that I'm very excited to show you guys. It's the
1:46 espresso martini. So, this is very very popular. It's having a resurgence. Uh-huh. Um, typically done with vodka base, but we're going to do a mezcal base today. Just to kind of play around with it. And um, just show some nuance. And this is going to We're going to make two of these, all right? Uh, yes. Well, you know, and then you'll have to make some on the side for the the team to keep them happy. We don't want, you know, rebellion I'll be a cocktail partying all all all afternoon. Oh, good. Yeah, for the long haul. So, we're going to do an ounce and a half of the mezcal. Okay. We will add
2:23 a half an ounce of of the coffee liqueur here. This is really beautiful um, Caribbean coffee liqueur. So, And that's for each cocktail, right? cocktail, correct. So, half an ounce of a coffee liqueur. It could be anything. So, if you have a Starbucks one, you can use that or Mr. Black or any of the newer ones you'll see. Um, and then we're going to use 1 oz of fresh pressed espresso. So, this is very important. You could use coffee. It's a It's a trick to do something different, but you want to use espresso because it's going to have that punch and that power. So, you want 1 oz of espresso for
2:58 each drink. Okay. Yeah, going to keep you up. And I guess the the the I was going to say the caffeine will The caffeine will get you going, yes, exactly. And then we're just going to add a little bit of simple syrup. The coffee liqueur already is a little bit sweet. So, you're just going to add just a hair of simple syrup, about a quarter ounce for each one. Okay. So, we'll put two in there. And then that's it. And then the secret to this is the shaking. Oh. Because the sugar and the coffee liqueur are going to mix together and they're going to become frothy and it's going to whip almost whip together. Oh, okay. Yeah, so you'll see the texture is very
3:35 important here. So, this is this is a little bit like an ice blended mocha without the blending. Exactly. So, yes. It's going to be like a frappuccino. So, you'll definitely have to shake it hard. You want that frothiness to come into the shaker. You want to see that it's going to be hard to hold because it's so cold. That's why Oh, all right. This is this is like, you know, you can have the margarita blended or you can have it what, straight up and this is All the ice is doing the blending here for you. So, that's going to create the texture, like I said before. And the the other important thing is that that fresh
4:10 espresso is going to create that texture. Okay. So, you'll see. Oh, yeah. Wow. There's no cream or anything, but just that shaking with the sugar and the fresh espresso will give you that beautiful frothiness. it's actually there's a head on it. Oh, yeah. Yeah. Wow. Voilà. Espresso martini. Yeah, can't wait. And if you notice, it should almost cascade like that Guinness. It is. Almost like a Guinness. from, yeah. Yeah, from very light to go light to dark and then it'll change as you drink it. So, there you are. Cheers. Cheers.
4:52 So, Diane mixed this up. I think you will like this. All right. You can uh You smell the coffee in it. Perfect. Ah, wow. Nice way Fantastic. Yeah. Great coffee flavor. Just what the doctor ordered. Yeah. So, you know, there was a time when you came home from work and that well, you probably weren't greeted with something quite this fancy, but at least a martini. Yeah. So, I'm going to I'm going to read a little uh biography of you here. Dmitry Farberov is a
5:28 uh, decided underachiever. He graduated [ __ ] laude from UCLA and earned both the Chartered Financial Analyst and the Chartered Financial Planner designations. I I I should say my mother is has a um uh, certified financial planner designation. It was a load of work and I understand the Chartered designations were even more work than that. So, wow. Um, at Miracle Mile Investors, which is a registered investment advisor with over $2 billion under management, Dmitry
6:04 personally manages about $80 million for individuals and institutions, including a mixed martial arts champion, the producers of the most popular show on Netflix, and entrepreneurs and founders of some of the most successful businesses in Los Angeles. Over the decades, I've met I don't know how many stock brokers, financial advisors, wealth managers. What sets you apart from the thousands and thousands of these guys is that you have a philosophy that undergirds your practice. And that's that's really where
6:41 I'd like to start is is talking about this investing philosophy because I think that's where a lot of people go wrong. So, so talk to us about that if you would. Sure. I would say investing is very hard. And people think that investing is easy. Depending on when they come into the cycle of of the general markets, they they think they can just ride a wave and and and make a lot of money. But, countless mistakes over 20 plus years in my life has taught me that philosophy is critical to having long-term success in
7:16 the markets. Right? Warren Buffett has a philosophy, which means he doesn't flinch when markets turn against him because he knows that his philosophy is what's going to be it's going to be standing after all the volatility is done. Most people don't have a philosophy. They defer to others to help them determine what that philosophy is. They they focus on the next hot stock or the next hot sector. But when volatility comes into play and when blood is on the streets and when they they they turn on the TV or read the newspaper and it says sell because X is going to happen in the world and and and you see your portfolio down 10, 20,
7:52 30% and that could be countless hundreds of thousands, if not millions of dollars in my world, that changes people. People don't know how they're going to react under those circumstances. And so, that's where for me and my personal investing has I've learned to to really understand what my core philosophy is, right? It's only when times are really hard that we understand kind of what makes us tick. And I I've learned that through through all the volatility in the markets over the last two decades, whether the great financial crisis or the corona crisis or any any any periods of volatility in
8:27 between, clients that don't have a philosophy will fail. Nine times out of 10. And that's where that's where having an advisor is so valuable, who does have a philosophy. But it's important to find that advisor who helps educate you about what your philosophy ought to be. Helps understands what your psychology is. Um, that will really determine how you react to in times of stress. So, every philosophy every individual is different. There going to be folks that have a philosophy of momentum. There There going to be folks that have a value philosophy. They want to They want
9:03 to be the contrarian. They want to do what what folks are not doing. They want to invest away from the herd. Some have to be a part of the herd. And so, that's where it's critical. I think that's what differentiates the quality advisor and the successful investor from that individual who's going to make the mistake that's going to make the difference in in long-term returns over time. So, let's take someone, who's let's say is is just getting started in their career. Um, maybe, you know, they've got that first job out of college. So,
9:39 perhaps for the first time in their life, they've got a little bit of extra money. They can, you know, go on a big vacation, they can, you know, spend it on this or they could, you know, start in investing some money. So, um, what would you recommend for someone in in that situation in terms of how they approach uh you know, in invest in their money and and presumably looking toward the future. Maybe they're not married yet, but you know, hope hope to get married and and have a family all that kind of stuff. first and foremost, that individual, their number one investment is is in
10:14 herself or himself. I think that's that's the key. That's that's going to be the biggest return of on on principal or on invested capital will be the investment that they make in themselves. Their education and so on. But assuming they have a career and they have they have ample income and to to pay for the day-to-day and they have savings, at that point the value is not in the underlying investment itself, but it's in the process with which someone approaches uh investing for the long run, which is save. Save as much as you possibly can. And and and when you have money to save,
10:50 do it consistently. And then at that point the question is what savings what investment is going to get you the best return on on on your principal over time. And that and and that is a question of diversification. Uh that's where philosophy is also important because diversification is not going to bring uh riches overnight. Diversification is going to bring riches over 30 plus years. But if your philosophy is one that's not going to be satisfied with slow slow uh returns and and and
11:27 wealth that's going to be accumulated over a very long period of time, then you have to know that in advance. And then and then find the strategy that makes sense for you. And so that might be uh investing in angel investing as just as an example. That's more aggressive, but that's going to have a different return uh characteristic than a diversified stock and bond portfolio. So that's where philosophy is a critical element of things. Um but in general, I think to get started you have to just understand how to react to volatility, which is inevi- inevitable in any part of our lives. So that's why I tell anybody, get started
12:02 in the market. A diversified portfolio to to one individual might be boring, but to someone who's never experienced any volatility, seeing a 5 10% decline in any amount of capital is significant and will cause you to lose sleep. So get used to that. And then over time, you can divers- diversify into other investments that have a different risk profile. So how does one determine whether his his philosophy is is valid or
12:37 he's made a mistake and actually does need to you know re-adjust his portfolio or or you know, change his outlook. How how how how do you how does one determine that? Right. Well, that that depends on a a number of factors. The first is are they doing it on their own? Are they investing with alongside somebody else, an advisor? And and I think that that's a critical element. If if you if you own a bad individual investment
13:12 and the market turns away against you, you should be able to cut your losses and and and leave, but you need to know what makes a bad investment, what makes a good investment. And and most people don't even ask those questions. Like when are you willing to exit your investment? If you have a long-term horizon and you've got a diversified portfolio like in in your ins- in your case, you know that any volatility will be short-lived. It might be a couple months, days, or years potentially. But it'll in the grand scheme of things will be short-lived. But if you have a one one stock that you own, I know folks that have millions of dollars in Tesla.
13:49 Right? How do you know if Tesla's a quality investment? It's a great car. Right? It's a great product, great CEO, but it it's a it's an investment that can drop and has dropped 40% and and potentially, if we look back 3 years ago, was on the verge of bankruptcy if starts in the line in in the right way now, Elon looks like a genius and the company's great, but several years ago that wasn't the case. So I I think it's it's about knowing what your why you're investing, how long you're investing, and what eventual outcome
14:24 that you want to get accomplished. If Again, if you're if you're investing in a single company versus a collection of companies based on uh global macro trends in in general economy. And we know that you look back over the last hundred thousands of years, human progress is forward. And therefore, the companies that participate in that human progress, if you're diversified in all of them across different asset classes, different geographic regions, you'll be fine. Uh but that's that's a philosophy, right? That's um I'm investing in the long-term growth of society. Mhm. I want
15:00 to participate in that as opposed to a speculation on one stock or one one sector that you believe will do well. Robotics is an example. Well, what if trends move away from that direction? How do you know? You have to answer those questions before you come into that investment. And if you don't if you don't have those answers, then you're speculating and you will make mistakes without a doubt. So I mean it's interesting of all things you brought up robotics. I I I would think that today um it it it's virtually a given that something like robotics is going to grow
15:36 and and become ever more a part of not just uh American business or worldwide business, but even here in the home. You have, you know, robotic vacuum cleaners and you've got I don't know, you've got Alexa and I all these things where, you know, I don't know. I guess it's not one where you can say, "Mix me a martini, Alexa." You know? But maybe maybe there will be soon. So wha- what determines or what kind of um information guidelines should we be looking for as we you know, size up those
16:14 so you know, because even within a macro strategy, we still have to make individual investment decisions, right? I still have to decide whether I'm going to buy, you know, uh Procter & Gamble or whether I'm going to buy, you know, Apple. So where do I what what what kind of guidelines should I be looking for there? Well uh I I think I think there a big factor is how are you investing? If you're buying individual companies, what how are you approaching
16:50 understanding their their balance sheet? Are you are you buying their balance sheet for a future growth or you buying it for value relative to more expensive competitors? Uh and and so so there most people don't invest based on balance sheet analysis like years ago like Warren Buffett does or has done. Most people invest in trends. And and so that's that's critical. For example, my clients, they won't know the I mean they everyone knows Apple, but they won't know the difference between Teladoc and I don't know, Siemens, right? Um but yet
17:27 they participate in that growth. Other individuals, they gravitate toward individual stocks that they want to own. And and those individuals need to be able to identify markers for success. So if you're buying based on future cash flow, uh if you're analyzing current cash flow and you're discounting it based on certain interest rates, then you have to understand what factors might change that might change the investment thesis. If it's interest rates, so for example, the Nasdaq and we're going to get just a little bit wonky here. Sure. But but the Nasdaq is is largely not largely, but uh
18:03 big majority of the name names right now are growth names. They're not necessarily creating uh cash flow uh and and revenue to the to the investor. Their focus is on growth and reinvesting their earnings over time. So therefore, their future earnings are dependent upon interest rates. So as interest rates go up, the the value of Google, for example, is is lower if interest rates go higher uh because they're not paying cash flow to to the investor. Whereas the so that so there's a shift currently, for example, going from certain growth names
18:40 with expected rise in interest rates to to more income names. And and and so knowing why you invested in Google uh is is critical or in your case, Procter & Gamble, it's critical to know are you investing because there are a lot of factors that play into a return profile. The reality is these days, most of the return profile is tied to the sector, not to the underlying company. So Procter & Gamble will do more or less as well as Johnson & Johnson or whatever companies are in the in are in the space. But if there's an underlying reason why you like Procter & Gamble over over the competition, you want to
19:16 make sure that those factors continue staying in place and perhaps improving. Are they starting to Do you have a better CEO? Do you have uh is it market share that you're buying for? And therefore, you're looking for market share. But other than that, if you're not looking for So if are you doing bottom-up analysis? Are you doing economic top-down analysis? And so there are so many different factors, but the key is know why you got into the investment in the first place. And so my clients, they could care less about the individual names because they're buying the overall trends. There are other investors on
19:51 Robinhood, right? So a lot of the younger audience that that you have might not be They're not analyzing the company's cash flow, but they like they For some reason, that audience has gravitated towards Robinhood. They've gravitated towards crypto and and Tesla and those names. The These are These are momentum investors. That's their personality. For whatever reason, they're attracted to it. And others will say, "I can't stand crypto. I don't understand it. I don't want to have anything to do with it." These are the individuals most likely that are more value-oriented individuals, contrarian. And knowing what your gut tells you at these levels is is very often an
20:27 indicator where you're going to go naturally gravitate to. And then how you invest. But the key is you got to study. You have to I mean, it's a it's a process. People think investing is so easy. And it's it's probably the hardest thing one can do over time because human psychology is barely nearly impossible to to really It's a It's a life It's a life's journey, right? To really understand that psychology. Oh, so um I I I've got about 10 questions I want to ask you, but I I have got time for only one more quick question. For someone who wants to get started on their investing journey,
21:03 what's what What would you recommend as being the first thing they should do? I would say pick up a book on psychology. I though the the one that comes to mind is is Daniel Kahneman's Thinking, Fast and Slow. Uh it's it's just really understanding your perception of the world. And and and that that's critical. Of course, it's it's important to have an understanding of of money, just the very basics of money. And uh there there are a lot of great books about uh the basics
21:38 of money. Um but knowing the basics of money is not enough. You have to know what pitfalls you're going to face. And that The only way to do that is really understanding your own uh elements of fear and greed and and and how you're going to react under those circumstances. Say Say the name of the book again? So, Thinking, Fast and Slow by Danny Kahneman Okay. is is probably my favorite book in because it's so applicable to
22:13 uh any any facet of life. Excellent. Dmitry, thank you so much for coming and talking with us today. It's such a pleasure. Thank you for the opportunity. And so, that's our show for this week, folks. I I I after the interview, I told Dmitry he's just the kind of person I think is ideal for managing investments. Unflappable. I've known him for quite a while, and I tried to even throw a curveball at him. Just took it right in stride. So, I think we can literally take Dmitry's advice to the bank. Especially his his tip on how to get
22:49 started. The book by Daniel Kahneman, a Nobel Prize winner, Thinking, Fast and Slow. I honestly haven't read it. I'm going to pick up a copy cuz I'm always interested in in resources that can help me better understand how we as human beings think and act. Send us a a message at at our website, thewaytowowshow.com. Tell us what you think about our guests, what you're getting out of it, what you'd like to see. We're always interested to hear your input. Courage at all times, my friends.
23:25 Marie, you're still my belle, darling.