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What resources do you use and what kind of investing method?


Arski
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I'm still a quite unexperienced investor and was first interested in Graham/Pabrai type of dollar for 50 cents investing, but I am now more interested in investing in great businesses and try to find great small cap stocks who are able to compound for 5 years or more at CAGR 20% or more.

 

The only problem is that I'm not able to find enough information to understand a company well enough to concentrate my money into it.

 

At the moment I use the research reports of Alta Fox capital, 'the making of a multibagger' as some guide and TIKR terminal and morningstar to value the companies but am not able to find valuable information on companies on my own. (I always wonder where the information comes from if a report, like Alta Fox's, is shared about a small/micro-cap)

 

I want to use this topic as a place for everyone to share our methods of researching companies and sharing our resources we use to understand a company better.

Maybe it's also better to say what kind of investor you are (growth, small-cap, big-cap, turnarounds, spinoffs etc.), so its more accurate for others why you use a method and specific resources.

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Being in a similar situation, I would say that it depends on how this hobby is going to fit in your life/regular work.

 

More important than the source of information is your strategy of how you are going to learn.

 

Concentrated investing in small caps requires lots of working knowledge of the industry, a track record of correct thinking, and lots of time monitoring the situation +/- access to management.

 

In the beginning, the best approach (after making plenty of mistakes and not listening to experienced investors coupled with an ego) in my opinion, are small bets across a continuum of styles with a structured investment process to evaluate how correct your thinking is with a 3-5 year holding period. The rest of your portfolio, just dollar-cost average in a index are regular interval. It is most probabilistic that you will have more FOMO and action at the beginning, and I would use this tendency to learn on a larger case series to inform your future self.

 

Once you prove to yourself that you can learn from your mistakes and successes, then re-evaluate your style. The appeal to concentrated investing is you don't have to track a large number of positions, but you have be damn sure you are right in the end, you can handle the volatility, possible long periods of underperformance, and have the ability to track the right things to inform your holding.

 

If you aren't in the industry and willing to dedicate hours analyzing, scuttlebutting, talking to management, it is probably better to have smaller positions, extremely long holding periods, learning a bit of technical analysis to placate your trading tendencies, and diversifying across very deep value <--> growth styles (or Peter Lynch's 4 different buckets).

 

 

 

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