IV Simple Steps Used In My Investment Routine

IV Simple Steps Used In My Investment Routine

I wrote a post yesterday about some of the tools I use on a daily basis in my investment routine. To summarize, here are the tools I use while looking for stock ideas:

  • Value Line (Great info all on one page-great place to hunt for ideas)
  • Morningstar, Magic Formula, Google Spreadsheets (for screening and watchlists)
  • Spinoffs (I keep a watchlist of spinoffs and research them individually)
  • 13-F’s (I go through a few filings from value managers I follow)
  • Blogs (Great source for learning and also specific ideas)
  • Wall Street Journal (general news, ideas)

That covers the basic method I use for screening and searching for stock ideas. My basic process in using these tools is:

  1. Search for ideas using the above tools (usually I use Value Line, the newspaper, and Morningstar screens/watchlists first thing in the morning)
  2. Write down ticker symbols in a notebook that might be ideas to research further, making quick notes
  3. Then I go through the list of stocks one by one, quickly scanning the 10 year financial history using Morningstar, and reading an article or two on the stocks that look interesting. This narrows the list down further, and I might add these stocks to my watchlist.
  4. I might end up with an idea or two each day that I want to research further. I read more about those stocks, and each week I try to research the best ideas by going through the annual reports and 10-K’s.

It’s a residual process flow that repeats over and over. The idea is to continually look at ideas, some of which might be worth adding to the portfolio, or displacing a current position in the portfolio. Others might get added to one of the watchlists I track. Some I discard, knowing I’ll come across it again later in some scan or list. It’s a conveyor belt of ideas that just keeps coming.

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I go through stocks one at a time. After my final list of potentials is established, I try to finish my research on one company before moving on to the next. I think of them like pitches in baseball. Each stock is a pitch I can swing at or not. I look at one pitch at a time. And as Buffett says, “There are no called strikes on Wall Street”.

My goal this year is to become more diligent at researching individual stocks. One of my favorite quotes I heard recently is “All knowledge is cumulative”. The more you study individual stocks, the more you learn, and this knowledge compounds, making each learning exercise more efficient, faster, and more productive.

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