In an interview with Warren Buffett in 1993, Adam Smith, author of Supermoney, asked how the small investor can find good investment ideas.
Buffett said, “I’d tell him to do exactly what I did 40-odd years ago, which is to learn about every company in the United States that has publicly traded securities, and that bank of knowledge will do him or her terrific good over time.”
Smith asked, “But there are 27,000 public companies! Where should one start?”
Buffett replied, “Well, start with the A’s.”
Fifty years ago, when Buffett was starting out as a new investor, he was not the go-to guy if you wanted to sell your company or raise capital for your failing bank.
He was a small investor who was clawing his way up the investing street by reading whatever annual report came his way, and then finding his investment ideas that worked wonders in the subsequent years.
So, he started with the A’s and read up on all listed companies in the US.
The result? I don’t need to elaborate on that!
Now, can we do what Buffett did – read up on a lot of companies to find those hidden gems?
I think, together we can.
StockTalk 2.0: Let’s Do What Buffett Did
While it’s a very tough ask for most of us to read about all listed companies in India given the business of daily life, let’s at least make a start.
Here’s a simple way I propose.
You don’t need to read about all listed companies, just a few of them, and get help from other tribesmen in understanding other companies.
How do we do it?
Well, in the true spirit of this tribe, I propose that we cover one business/stock per fortnight through a collaborative work. Here’s how we can do it…
- I have created a list of BSE-500 stocks in this Google Spreadsheet, where you just need to write down your name in front of the companies you would like to research and write upon over the next few months. (Give the overwhelming response, we have our quota of two years full :-)…so I have stopped taking more entries for the list. You can however email me your list of stocks that you would like to write upon).
- If you wish to research and write on any other company that’s not part of the BSE-500 list, mention that in the second table on that sheet.
- Choose a maximum of five companies.
- Choose companies that are under your circle of competence…and please avoid companies whose stocks you want to promote. 😉
- Based on the response, I’ll create a list of of a few tribesmen who will be writing the analysis reports over the next one year. Then, I’ll draw out a schedule of publishing the reports for the next few months. Tribesmen who will be writing the reports can submit their analysis that I will publish on the website. Tribesmen who will not be writing the reports can read on the companies beforehand so that they can contribute to the discussion after a specific report is live.
Please volunteer only if you have some past experience in doing independent research using the value investing principles, and also some experience of writing out your analysis.
This is not to disappoint those who have not done this in the past, but just because otherwise it’ll make my editing part long 🙂 that can be a time consuming affair as this is intended to be a fortnightly exercise!
For tribesmen who would like to volunteer to present their analyses, know that there is no burden on you to “recommend” stocks. All you need to do is help the tribe with your business analysis and, if possible, rough intrinsic value estimates.
Format of the Report?
I am working on a minimalist format that we can follow in writing our reports in the future, and will release that soon.
Till that time, just fill in this Google Spreadsheet for the companies you would like to research and write on for the tribe over the next few months. (Give the overwhelming response, we have our quota of two years full :-)…so I have stopped taking more entries for the list. You can however email me your list of stocks that you would like to write upon).
Even if five tribesmen would volunteer to cover five companies each, our learning quota for the next one year will be complete, plus we would have enhanced our circle of competence…and we may as well find a few great businesses worth investing at the right prices.
Sounds good?
Now let’s start with the A’s…and let’s do it! 🙂
Vishal,
It is nice to see that the stocks against your name are the ones under my radar (Asian Paints, Amaron, NTPC, Bajaj Auto, Havells etc).
Though I would like to contribute I do not have any real experience in doing independent research. I think my investing process is pretty lame and simple – less analytical.
My circle of competence is small, You would notice that majority of the stocks in my radar are consumer goods (Paints, Battery, Automobiles, Electrical Appliances). That is because I do not understand other areas well – Pharma, Infra, Capital Goods etc.
1. First I look for stocks based on my personal experiences, and my looking around – Peter Lynch style.
2. I try to identify moat based on the criteria identified by Pat Dorsey (The Little Book That Builds Wealth). For example, Bajaj Auto scores on cost advantage (in a price sensitive market), network and a strong brand (to some extent).
3. I look at the annual report and the financials to see if the company is doing well financially- Net Profit/ Sales, Cash Flow, DEBT over years (very important), Current Assets and Liabilities. Financial Analysis is an area I really look forward to improve with Mastermind course.
4. Then I wait for a good price. I have been waiting for a long time to get a good deal for Asian Paints, Titan, Bajaj Auto etc. (2008 like market would be ideal). 😀
Any suggestions are welcome.
Shamil, we intend to keep it lame and simple here 🙂 Regards.
Hi Vishal,
This is your perfect response to your earlier post “Where Have All the Tribesmen Gone?” Yes it is true that all of us Tribesmen love reading about real companies and what they are doing in real time. This will definitely keep us glued to this tribe together. Well I had two companies under my Radar since the past three years – Opto Circuits (Loser) and Yes Bank (Winner). Will definitely provide my inputs under the comments section.
Well this is your winning move !! Congratulations !! Lets see if we exceed the standards set by TheEquityDesk in this field. Wish you luck and will support through my humble comments!!! 🙂
Amit Goyal
Thanks Amit! 🙂
Awesome thought Vishal!
Regards,
Jana
Thanks Jana! And thanks also for your willingness to contribute. Regards.
PEEERRRRRRRRRRRRFECT…. 🙂
This will surely bridge the gap between Theory and Practice that many of us tribesmen have been feeling for quite some time. I have always believed that the real life situation/problem/activity only can make you understand the nuances better, the way mnemonics work in helping us remember things.
Great Step. 🙂
Thanks Sanjeev! Amen. 🙂
Excellent initiative, Vishal. A large number of people learn through “hands on” and their circle of competence is “learn by playing”, and these ‘games” will help them a lot, in both learning faster, and enjoying the journey 🙂
Let’s start this new and seemingly exciting surf…Hurray 🙂
P.S: I strongly belong to this category, and I don’t learn unless I get hurt while playing 😉
Thanks a lot Sunny! 🙂 Great to see that you have the max number of companies under your name. 🙂
Done.
Thanks Nishanth!
Wonderful Initiative – Very helpful for newbies like me
Thank you Srikanth!
Great idea to unleash the power of tribe vishal ! Just entered my name to your sheet 🙂
Thanks Pradeep!
Good initiative Vishal.
I think this is what I was looking for when I wrote to you last time about discussing specific stocks or companies. We learn a lot of concepts, gyan, etc… but until we put them in to practice it will lose relevance overtime.
The google groups was a wonderful initiative. This is another good one.
Choose Companies under your Circle of Competence: I think this must be relaxed, because I also have found companies that are not fully under my CoC, but I still like to expand my knowledge by sharing it and getting views and suggestions to expand my Coc. Getting views or advise from other experts will help in this.
Thanks Sridhar!
Not sure if it will be good to relax the circle of competence part, for that will defeat the entire purpose of the initiative – that tribesman who can understand and write in businesses help others. So if a company is not under your circle, you may learn about it and then present your analysis…and only then seek views.
Thanks for understanding! 🙂 Regards.
Hi Vishal,
Though you have mentioned people with previous experience to participate,i have still included my name into the sheet.I will try my best to give my complete analysis. I havent choosen all the stock based on my Cricle of Competence or those in my radar. I have chosen for their history and variety of business
1.A2Z MAINTENANCE & ENGINEERING SERVICES
2.UNICHEM LABORATORIES LTD.,
3.WOCKHARDT LTD
Thanks Prabeesh! Stocks have to be under your circle of competence if you wish to write an analysis. So, it’s good to first learn about businesses and then you may write on them sometime in the future. 🙂
Superb initiative..I would love to learn and be part of it …
Thanks a lot, Abhishek!
Hi Vishal,
It’s a great initiative. You don’t know how much this will help people like me.
I propose we have more hands working on this and try giving a simple report ever week. Fortnight may be a bit long.
For example, i’ve been observing Suzlon for almost a year and think it’s a good long term stock, but haven’t invested in it yet.
If i were to assume that reports will be published alphabetically Suzlon’s turn would come after several fortnights if some tribesmen were to volunteer for it.Whereas today may be the right time to buy.
Is there a way where we can tweak this process and bring out on-demand reports in shorter frequency?
Thanks,
Padmesh.
Yes Padmesh, given the response, this will be a weekly thing. 🙂
There will be a strict criteria on the quality of business, and we may not go in an alphabetical order anyways.
I don’t see it as an “on-demand” initiative for the simple reason that this is not a stock recommendation or a stock review service. It’s simply about business analysis and enhancing our circle o competence. Regards.
Will be a very insightful journey. Will enjoy learning the companies!
Thanks Biswajeet!
Hi Vishal,
I would say it’s a nice move.
If you can provide a framework or checklist on which we should analyze companies, it would be more focused approach, I think.
Best,
Avadhut
Thanks Avadhut! Will do that soon.
HI Vishal,
looks like great way to share learning and also get to know about what other tribemans think about various companies.I am definetly in.
Regards
Nitin Kumar
Indeed, Nitin 🙂
can we define some filters using value investing principles ? some very very broad parameters. like DE less than 1 (unless all other parameters are excellent). we need to trim 500 to 50 stocks , otherwise we lose focus and we spend time and energy on some stocks which we will not be interested. like lot of real estate, infra, construction, metal, mining, education sectors have lot of debt and corporate govt issues. why waste time on these ?
That’s the second stage, Bala 🙂
If you see the list of stocks that have been, most will fulfill most quality criteria (valuations aside).
I don’t see any of the stocks (maybe 1-2) from the sectors you’ve mentioned in that list. 🙂
Great collaborative idea.
I too hope to contribute.
Thant will be great, Sudhir! Thanks!
Great!
Please publish the guideline/template for the analysis soon.
Will do it soon, Paari!
Dear Vishal .
Good Evening to you…oh that is whole lot of comments…..Safal niveshak feeling rocking and hot….but let the core of safal niveshak be remain as it is..please i would advise anyone who is seeking advise…put something worthwhile…and not such companies….who annual report we may like to put in trash at the first look itself…well we may try to identify what is wrong with those type of companies also.So let this endeavor move forward and enlighten all the tribesmen in carrying on a detailed analysis after a short period of time.
Thanks and Regards
Happy Investing
Reni George
Hi Vishal,
Thats a great idea and I can already see the sheet getting filled up with so many stocks I would love to know more about. I was thinking of your earlier post last evening and was about to suggest a similar initiative to open up stock talk to the amateurs so that we could practice the process. I dont have any experience in independent research and writing the analysis but i’m going to give it a try….and then compare it with the analysis that makes it to safal niveshak. Thanks, I’m really looking forward to this.
Great idea to have a community which can share and learn. I would surely like to contribute. Just one suggestion do maintain the quality of the inputs.
Haven’t seen much action on this after Bata India. I eagerly wait for the posts.
Have we tuned out of this initiative ?
cheers
~N