Financial Frameworks addresses the question "What is a wide moat stock?" in the first of a two-podcast discussion by providing an overview of how professionals define moat stocks - with a particular nod to Warren Buffett. And by taking a concrete and practical approach to the matter by looking at one stock in particular - Occidental Petroleum - using criteria outlined in the podcast and by present some professional investment opinions as to whether it qualifies or not. Guess what? There is considerable disagreement. The significant stake that Berkshire Hathaway has in Occidental (34% at this writing) is evidence that Berkshire is looking at Occidental in that light.

The discussion around Occidental makes it an excellent learning example because it is not a cut and dried proposition like a Coca Cola or Google. As Financial Frameworks always does, there are questions for listeners to answer. And all sources cited will be posted on Financial Frameworks website, https://finframeworks.com.

The next podcast will look at selecting moat stocks from the other end of the telescope by investigating how we - you and I - employ our investing skills in searching for moat stocks and counteract our biases to best analyze the information presented in this podcast. The next podcast will draw heavily from Daniel Kahneman and the late Charlie Munger. Who is currently being greatly missed at today's Berkshire Hathaway annual meeting. The reason for combining an examination of how you and I use our intuition to find and sort data with the objective information itself is my belief that both engines of our brains need to work together in order to succeed. Just having the data without examining how we make the "moat stock sausage" is only half of the process. Avoiding biases, counteracting impulses and selecting moat stocks in a disciplined process requires discipline as well as valuable information. I think you will enjoy both podcasts together.

Thank you for selecting Financial Frameworks as part of your financial education journey.

Mike Lehan

Financial Frameworks is focused on helping value investors integrate their skills and decision-making styles with solid fundamental financial concepts. This podcast provides a way to determine if an investment is close to meeting a person's criteria for making a solid, possibly exceptional, investment, but must be passed on because, while it is close, something is missing. Dr. Lehan, the author, is mindful of Warren Buffett's and the late Charlie Munger's admonition that "saying no most of the time" is a perquisite for excellent value investing.

The podcast walks through an example, then outlines the steps for listeners to walk through their own "mini-simulation" for applying one Buffett tool and two Philip Fisher tools to a prospective investment to see if it fits or is a near miss.

Financial Frameworks has been discussing what Dr. Lehan sees as difficult tasks when performing value investing. This podcast outlines his third hardest task, committing to the decision in a way that is self-aware, rational and available for review and future learning. Dr. Lehan points out Daniel Kahneman's research that proves that we don't always remember things correctly. Like other Financial Frameworks podcasts, Dr. Lehan focuses on things to do to make the clearest possible decision and learn for better decisions in the future.

"How do I know that I am making the right decision?" Financial Frameworks continues its highlights of Dr. Lehan's most difficult tasks by presenting research and suggestions on how to answer that question when making an investment. This podcst focuses on behavioral finance research that has shed light on how a person learns to trust their judgement and avoid overconfidence when information is conflicting, or absent, or, as is often the case, just plain confusing. Financial Frameworks' purpose is to help investors create frameworks that are durable, thorough and solid. This podcast describes common errors in decision-making processes and outlines PROSPECT THEORY research done by Daniel Kahneman and Amos Tversky that illuminates how our brain makes connections that aren't really there and how to avoid making those mistakes. What occurs when we are making decisions about money is not complicated, but is a process that most of us are unaware of - if we didn't know what to look for. Financial Frameworks job is to make the connections from the abstract, conceptual level to the point of action. This podcast does that - or at least begins to - regarding why and how to trust our judgements when investing.

Financial Frameworks is now focusing on two topics: Value investing and how we learn about investing - for the purpose of getting better at it. This podcast outlines Dr. Lehan's "Four Hardest Value Investing Tasks" - for him anyway, and then discusses his first hard task - insuring a margin of safety in an investment. After a brief tribute to Charlie Munger - who definitely believed in margin of safety - Dr. Lehan outlines his three basic criteria, then presents three examples of different techniques that are widely, and successfully, used. This is followed by a problem - the learning portion of the podcast - to apply the concepts to their own investing thinking.

The examples are Benjamin Graham's Net-Net approach, Dr. Bruce Greenwald's three-step valuation approach and a review of the principles applied by The Baupost Group, run by Seth Klarman. Dr. Lehan presents his assessment of Berkshire Hathaway's margin of safety using his three criteria and provides a blank template on his website - https://finframeworks.com .

The podcast alternates between clear, basic, concepts for investors new to value investing and a detailed overview of Dr. Greenwald's thought for more experienced investors interested in refining their thinking.

Financial Frameworks is narrowing its focus to cover two topics - one of which Dr. Lehan sees as not well covered on the Internet - how to learn better - and the second, the core of Financial Frameworks work, value investing. Dr. Lehan believes that most of us would be more successful by applying learning techniques that have been developed in the recent past. This podcast provides value investing content and a problem to solve that are designed to test the learning skills covered in this podcast (Active Listening tools) and increase a person's experience in applying them to a value investing exercise.

Financial Frameworks presents fundamental financial concepts in a practical, applied format and has been focusing on value invest both for its own sake and as a solid way to learn about broader applied and behavioral finance.

This podcast outlines Professor Bruce Greenwald, Directo of Columbia University's Heilbrunn Graham & Dodd Value Investing Center, approach to estimating and calculating the potential growth of an investment/stock. The goal of his method is to find an undervalued stock that will produce long term gains, similar to Warren Buffett's experience with Coca Cola.

Dr. Lehan outlines the central calculations in Greenwald's method and provides key concepts Greenwald uses in making informed judgements about a stock and its industry.

Financial Frameworks continues looking for ways to apply margin of safety when selecting investments by looking at Professor Bruce Greenwald's approach to value investing. Prof. Greenwald divides a company into three parts for valuation. He measures assets first, then current earnings and finally makes future growth estimeates separately. Today's podcast outlines Prof. Greenwald's thinking, the underlying logic and changes in markets that guide his thinking and suggests how you can apply his method. Because his future growth estimates is so interesting, and more detailed than Discounted Cash Flow projections - which we discussed earlier - I will spend the next podcast on the hows, and what I think are the why's of Prof. Greenwald process for estimating future growth a company's future growth. The context for my analysis is to build a margin of safety into investing. I may be being repetitive in reminding you of the context, but I don't think emphasizing margin of safety can be done often enough.

Additionally, in response to listener comments, the podcast considers why most people look at savings accounts and investing as different activities - more like a fork in the road than as different stores on the Main Street of investing - and why we shouldn't. That topic brings me to a review of our loss aversion bias as the podcast's final topic. Financial Frameworks focuses on being clear about our decisions and understanding our values. This discussion is part of that process.

As always, if you find this useful, please mention it to a colleague.

Mike Lehan