Listen to Me

Written by Jimmy Mengel
Posted January 28, 2021

I was honored to be a guest on Nic Penrake's wonderful podcast A Trader's Life. Each week Nic dives deep into different investors' strategies and focuses. He's interviewed everyone from forex traders to institutional traders to currency options traders — and even a hypnotherapist who specializes in helping traders overcome adrenaline overload when trading.

It's a great podcast and I'd recommend digging into a few episodes.

Here's a glimpse at mine...

Nic Penrake: Just before the close of 2020, I got together with Jimmy Mengel. Unlike most traders I get to talk to on this podcast, Jimmy has an aversion for charts and intraday trading. He prefers the long-term trade. When he's not producing copy for Outsider Club, he's doing some boots-on-the-ground research in some far-flung parts of the world, talking to the CEOs of undiscovered companies that look like they could be well worth recommended to his readers as a strong buy.

In other words, Jimmy likes to get a sense of the people running the business he's thinking of investing in before he takes the trade. Hey, Jimmy, how's it going?

Jimmy Mengel: Hey, Nic, it's going great. I love the podcast. It's a privilege to be on.

Nic Penrake: It's good to speak. So, Jimmy, how did you get into trading? What were the early experiences? Talk me through that.

Jimmy Mengel: When I was a little kid, I was very interested in baseball, and like a lot of kids here in the States, I collected baseball cards. Over the years it turned out that I was very good at trading baseball cards for better baseball cards. I guess it started my trading career.

I traded about like five crappy cards for hall-of-famer Robin Yount's rookie card, which at the time was worth 500 or 600 bucks, and I probably gave away about a dollar in cards. So taking it from there, my father — who was working in an investment firm — said, "Hey, you're pretty good at this buying-distressed-assets kind of thing. Why don't you come in and give a presentation to my investing crew about what you look for in baseball cards and how you're able to turn that into a much larger collection?"

So I did that and from there started trading stocks.

Nic Penrake: How old were you at that time when you did this presentation?

Jimmy Mengel: Eleven.

Nic Penrake: Oh, wow. So very early!

Jimmy Mengel: I got started kind of early in that regard, and since my dad was very into investing himself, he's like, "Well, if you can do that with baseball cards, you can do that with stocks." So I kind of took it from there and started buying my own stocks, and I was maybe 12 or 13 when I really started getting into trading itself.

Nic Penrake: Yeah, OK, and what kinds of stocks? Was there any kind of sector at that time that you were more interested in, or was it whatever's a good buy on the day sort of thing?

Jimmy Mengel: I was a stupid little kid, so what I did first was think, "Walt Disney seems like an obvious choice. Everyone's going to these Disney movies." I think it was Aladdin, The Lion King — they just kept coming out, kept making hundreds of millions of dollars, so it seemed like a no-brainer to me as a kid. So what my dad taught me was, great, that's a good long-term investment, and then he told me about dividend reinvestment programs.

Nic Penrake: What is that? Can you talk us through that?

Jimmy Mengel: Sure. They're commonly known as DRIPs, so if you have a dividend-paying stock — let's say Disney for this example — instead of collecting a check from your dividends every quarter, you just roll it right back into the actual stock. Then it compounds and all of a sudden you're owning more and more stock instead of getting these little one-time payments, so you're just setting it and forgetting it.

Nic Penrake: Yeah, sort of like long-term hold isn't it. 

Jimmy Mengel: Right, so the Disney stock I bought when I was like 12 has treated me quite well. It actually bought me a car in college...

Nic Penrake: Do you generally hold stock for long periods of time?

Jimmy Mengel: So there are two things I do. I run a subscription service called The Crow’s Nest that is really focused on long-term dividend stocks like that, and to belabor the ship-and-pirate metaphor, it's kind of my anchor. So I'll have dividend stocks like that, and I'm really focused on Dividend Aristocrats, which are companies that have raised their dividend for 25 years in a row.

If a company can continue increasing its dividend for that long, they're strong, they manage cash well, and they're able to reward their shareholders, so I consider that kind of the anchor to the portfolio, and when you have that anchor you can have a little bit of fun elsewhere.

I have my anchor, I have the boat, and sometimes you just pull it up and set sail. So I go on trips all over the world looking for kind of those small triple-digit-gain-type companies that nobody's heard of, so I'll take a swing on some of those.

Nic Penrake: How do you find out about those companies? Do you have a network that lets you know about this kind of thing, or is it research, or a combination of the two?

Jimmy Mengel: It's certainly both. Let me give you a quick example. My very first trip as an investment analyst was to Collectors Universe, which is in Orange Country, California, and again, why not tie things back to baseball cards?

So I asked my company if I could fly out and visit them and they said, "Yeah, give it a shot." They were kind enough to let me loose, so I visited Collectors Universe's headquarters and while I was there, I held all sorts of amazing items: the Inverted Jenny stamp, which is worth $1 million; a Babe Ruth bat; the first pressing of a Beatles 45...

I really got to enjoy the fact that all of these people are sending in their collectibles, whether they be coins or cards or autographs, and I was like, "Wow, this is a pretty interesting business." They paid a really solid dividend at the time. So I recommended that to my Crow's Nest readers. It was early on — 2014 — and now my readers are up 580% on just a weird trip I took to look at baseball cards.

Nic Penrake: Wow. That must give you a bit of a kick. I mean, you have that whole sort of experience almost like a journalist or filmmaker going to find out about people's lives, and in the process, you pick up some useful information that can help you and also your readers. It's a cool experience. Do you do that on a regular basis still, that kind of a trip out somewhere like that?

Jimmy Mengel: Oh, man, I don't even know where to begin... There have been so many — from Transylvania to Copenhagen to Colombia. I'd be here all day.

Nic Penrake: Well, Jimmy, that was great talking with you.

Jimmy Mengel: Likewise Nic, totally my pleasure.

If you're interested in reading the behind-the-scenes stuff and get some wild stock picks like the one I mentioned in the interview, you can land a subscription to The Crow's Nest right here. I've just released a brand-new report detailing a company that could repeat my gains from Collectors Universe.

Also, Nic and I did speak for an hour, so if you want to hear the entire conversation — and my dulcet tones — you can listen to it here.

Godspeed,
jimmy-mengel-signature-fixed

Jimmy Mengel

follow basic @mengeled on Twitter

Jimmy is a managing editor for Outsider Club and the investment director of several personal finance advisories, The Crow's Nest, and The Adventure Capitalist For more on Jimmy, check out his editor's page.

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