Small Cap Investor

[robertbanking]

Hello you very intelligent and amazing people that make up this forum. I truly hope you are doing well and keeping positive.

I asked a long term value investor how long he spends analysing a stock, competitors and the wider economy before investing in a stock, he mentions he does around 50 hours of research. I asked could he cut this down by skipping certain sections of Annual Reports, he says probably but he still reads Annual Reports word for word. I know its good to be thorough but if there is a way to skip irrelevant information to speed up your research surely this should help. For instance what would you say is a good amount of time to research a small cap stock please, its Annual Reports, looking into its management and the wider market trends for the company. If you was comfortable after 5 hours of research would this still be okay please? If anyone kindly had any thoughts on this i would be forever grateful and thankful.

I simply feel i over research stocks and sometimes spend time on research that is not necessary. Once i understand the business model, its competitors and financials, i feel like i can make a good decision.

Sending you lots of good wishes and i truly hope you have a wonderful life and become massively successful. Hope you enjoy the rest of your week. Very best wishes.

[1nvest]

Hello you very intelligent and amazing people that make up this forum. I truly hope you are doing well and keeping positive.

I asked a long term value investor how long he spends analysing a stock, competitors and the wider economy before investing in a stock, he mentions he does around 50 hours of research. I asked could he cut this down by skipping certain sections of Annual Reports, he says probably but he still reads Annual Reports word for word. I know its good to be thorough but if there is a way to skip irrelevant information to speed up your research surely this should help. For instance what would you say is a good amount of time to research a small cap stock please, its Annual Reports, looking into its management and the wider market trends for the company. If you was comfortable after 5 hours of research would this still be okay please? If anyone kindly had any thoughts on this i would be forever grateful and thankful.

I simply feel i over research stocks and sometimes spend time on research that is not necessary. Once i understand the business model, its competitors and financials, i feel like i can make a good decision.

Sending you lots of good wishes and i truly hope you have a wonderful life and become massively successful. Hope you enjoy the rest of your week. Very best wishes.

I consider myself with finite time and computational power/resources to be at a disadvantage to the collective markets time/processing power/resources. The chances of me finding something others had missed to be near impossible. Excepting if I had some for of inside knowledge (that would be illegal to trade anyway). More important therefore is to diversify, avoid over-concentration risk, and a general fund/tracker generally serves OK there.

For a relatively small proportion of 'fun money' however and no harm in trying to out-run the market, but in reality that's more of a heads-tails coin flip. But can provide a sense of feeling of having been clever when things do turn up heads, and a occupation of time that you might enjoy. Otherwise don't bother and spend that time elsewhere, family/friends/fun - whilst you can.

[doug2500]

Hard to put a figure on it but nothing like 50 hrs.

I accept I don't have the time for mega detailed research so try to identify quality companies at fair prices rather than overlooked bargains, which I think would take much more detail and time.

I accept the returns might be, and should be, greater in the second case but like I said - time constraint so what do you do? If I can out perform by a couple of percent annually over the long term it will compound to a worthwhile endeavour.

But it's an ongoing process, I start with a small position and scale up, or down, as time goes and I learn more or certain assumptions prove true or not.

I do read reports but concentrate on financials, relevant notes and reports. I glance at remuneration to get a feel but that's a wormhole you can get lost in, and it's the biggest part of the whole thing! Quick look at risks. Whiles away a wet afternoon.

[GrahamPlatt]

A very long time ago, I happened upon a bit of software that could predict the likely order in which horses would finish a race. It came on a 5 1/4 floppy disc, and ran on my 128k BBC Master. Anyway, you had to feed in all the data. So each weekend I bought the Racing Pink, a yellow one and something else (memory fails). Several hours of work later, and a long time processing, it spits out some possibilities (suggestions also depended on the odds you might get). It was actually pretty good, and did indeed bag some winners and places that were nicely profitable. But there were weekends when it didn’t as much as suggest one race worth betting on. And not putting big enough bets on (too cautious me), I found I was getting around 50p an hour for my time. Same goes for small caps I think. And yes, I do still “dabble” with small caps. But not the horses.