As an individual investor, coming up with an “investing strategy” for managing my own money has been an interesting exercise. Although I agree with the (definitely butchered) saying “Investing is as hard or as easy as you make it”, it’s tough to put this down into actionable rules. Indexing is great and is by far the best thing for most people to do, but as someone with decades to go for retirement, it just doesn’t seem right for me at the moment. But the question now becomes this: what, why and how to invest in individual stocks that allow me to take an appropriate and responsible amount of risk while also allowing me that upside I’m looking for? Here’s what I’ve thought of so far..
Why invest in individual stocks?
I’ve been investing in individual stocks for a little over three years now. After this carnage of 2021-22, I might not have enormous (Read: any) returns to show for how I’ve grown as an investor, but I do feel it. I’ve learnt so much about how some of the biggest businesses of our time were started, how some failed, how some almost failed and how some executed flawlessly to be what they are. These stories fascinate me and teach me so many things about accounting, markets, leadership and just the resilience of human innovation that I wouldn’t have known otherwise. I have started learning how to understand the language of businesses and how to study their health and future prospects. In my “previous” life, I wouldn’t have known about Content Delivery Networks, Programmatic Advertising, e-commerce penetration in Latin America, unit economics of food delivery services or whatever Palantir does. I promise I completely understand what Palantir does.
This journey has been about much more than just picking how to grow my money and that is why I want to continue researching and investing in individual businesses. My aim is to grow as an individual while also growing my money reasonably. My aim is not to beat an index fund.
(Psst.. Have fun staying poor, eh?)
How to invest in individual stocks?
This is where things get WAY more complex and a majority of people would read half of what I write, go “Ugh, amateur” and move on to their next read. And while that may be right, the truth is there’s no one way to invest. And I’ve seen as we grow as investors, the way we think is right also keeps on evolving and refining. So here’s what I have seen works for me.
I’m a subscriber to three of The Motley Fool’s investing services: Stock Advisor, Rule Breakers and Everlasting Stocks. I started with one initially and then added others as I started getting convinced of the value. I absolutely love the paid services from the Fool, and before you judge me, I HATE the clickbait-y articles that’s published on the free side of the website. But the paid services are the exact opposite. There are stock recommendations, live programs, access to member-only streams and events, access to some fantastic analysts etc. These services have made me learn an insane amount and I intend to continue keeping them the main source of well-vetted stock ideas for me.
Other sources of generating stock ideas for me are platforms like Twitter, Substack write-ups, industry reports etc. Overall all of these mediums come with different kinds of ideas, generated by people who might or might not be playing the same game as I am, with varying amount of trust I’d have in those sources. Which is again, why I love the Motley Fool services. I’ve come to consume a ton of videos, write-ups of the analysts there and the trust factor is really high. So when they recommend something, I know it comes vetted by an excellent team.
No, I don’t listen to Jim Cramer. And no, this is not a paid promotion for The Motley Fool.
Next part is my research. There’s quite a few tools I really like to use for my ongoing research and the continuous evaluation of any company. Here’s a list:
Company’s Investor Relations pages (FREE): I’m more of a investor day presentation person rather than a 10-k person. But that totally depends on how much information a company provides in these decks. Higher the Fluff:Substance ratio in presentations, more the dependence on a 10-k
The TIKR (PAID): Love this service. I use it like a retail investor’s version of YCharts. A ton of historical data on financial metrics, valuations, cash flows, analyst estimates, tracking institutional investors etc. I use it all time time to study companies’ financials and valuations
Stockrow (FREE): Similar to TIKR
Atom Finance (PAID): I use this to track my portfolios across multiple accounts and to consolidate all of that in one place. Also serves as a great source of earnings releases, push notifications for company-specific news. Also has some neat research, screening features
Podcasts (FREE): There’s quite a few podcasts that offer deep dives, business breakdowns of many companies. Wherever I come across a company which does have a podcast available from a trusted source, I definitely go through that as well
Quartr (FREE): This is a great free service for listening to earnings calls. I use my work commute times to consume these audio recordings, and a neat feature is that you can skip the prepared remarks and directly jump to Q&A as well. Listening to the management answer questions posed by analysts gives me a better sense of their tone as compared to reading transcripts of these calls
Motley Fool discussion boards (For subscribers): Great community of investors who post some really good quality news, insights or industry knowledge. Really good forum to leverage for stock discussions
Substack Write-Ups: There’s a ton of excellent content being produced by some really knowledgeable investors through their Substack newsletters. There’s a mix of free and paid subscriptions here to chose from. While I’m not a paid subscriber for any, I really enjoy reading all the ones I’m subscribed to and it has often been a source of ideas and/or conviction for my investments.
Miscellaneous: Like everything in life, sometimes you stumble upon some great stuff accidentally. Tweets, magazine articles, chat with family/friends, or some classical finance inspired Diamond Hands YOLO type stuff. Everything counts as “research”.
So that’s a lot of what goes into my research process while I’m trying to learn more about businesses. While going through these bullet points makes it seem like an enormous chore, I find it a lot of fun! I’ll leave it for Part 2 (relax, that’s the last one) to discuss how I’m going about constructing my portfolio.
Until then, feel free to leave comments or reach out via Twitter if you have any questions or comments! If you’ve made it this far, thanks for reading my first ever public write-up of any kind.
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