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.
Now let’s start with the A’s…and let’s do it! 🙂