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Friends,

The world has changed a lot over the past month. While a war still rages in Europe, the Middle East has once again entered the headlines for all the wrong reasons.

You'll never hear us argue that economic concerns are more important than human ones. We consider ourselves to be phenomenally lucky. The three of us have never had to experience what many in those regions are dealing with right now.

But we know you come here for investing insights. To that end, the best investing lesson the past month reiterates is the future is unknowable.

And no – we’re not talking about conflicts cropping up around the world. That – unfortunately – will continue forever. Instead, we’re talking about the second-order effects of those conflicts.

Consider this thought experiment: What if I told a 2020 version of yourself that these wars would arise – and that access to natural gas and oil could be compromised? What do you think that’d do to the price of a gallon of gasoline?

“Go up, of course!” is what we’d expect.

And yet, that’s not what’s happened. Yes, gas prices spiked on Russia’s invasion of Ukraine. But today:

• Gas prices are down 28% from last summer.
• Gas prices are down 6% from just last month.

What’s going on here?

The world adapts to bad news – often more quickly than you’d expect. Countries have accepted a world where Russian oil is less reliable, and Saudi Arabia came out saying they’d up production if they needed to in the wake of Middle East unrest.

That’s what second-order effects are.

The point of all this: in a world where it’s impossible to predict such second (and third) order effects, it’s best to focus on what never changes: companies that are mission-driven, with a wide moat, management with skin in the game, demonstrated optionality, and a non-ridiculous valuation will remain solid investments no matter what’s happening in the world.

Over the long run, you can bank on that. And in a world as unpredictable as ours, we find that to be a comforting thought.

Wishing you investing success,

- Brian Feroldi, Brian Stoffel, & Brian Withers

P.S. Enrollment in our newest cohort-based course, Advanced Financial Statement Analysis is officially open! Click here to enroll using the coupon code BBFRIEND300 (expires on Sunday, Oct 22nd at 11:59 PM EDT).

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One Simple Graphic:

One Piece of Timeless Content:

Before Morgan Housel wrote his bestselling book, The Psychology of Money, he frequently wrote short articles that appeared on the Motley Fool website. His piece, Financial Advice for My New Son, from 2015, is a classic.

One Thread:

​Cori Arnold not only became a millionaire in her early 40s, she overcame 6-figures of debt to get there. Her advice is worth reading if you want to increase your net worth.

Cori Arnold @iamcoriarnold I became a millionaire at age 41. I could have become a millionaire by age 34 if I had installed these 10 habits sooner. - thread - 8:0 AM • Aug 15, 2022 12281 Retweets 69140 Likes Read 683 replies

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One Resource:

The financial media has been predicting a recession for what seems like years. Recessions: Everything You Need to Know provides a great overview of the topic. It covers what a recession is, metrics that point to a coming recession, and what individual investors can do about it.

One Quote:

More From Us:

👨‍🎓 NEW! Our new course is now OPEN for enrollment -- Advanced Financial Statement Analysis -- starts on October 30th! Click here to enroll using the biggest discount we offer.

📗 If you've read Brian Feroldi's book, he'd love a review.

👨‍🎓 Need help getting your personal finances in order? Click here to start​ our 5-day Financial Wellness email course. It's completely free.