Saturday, July 26, 2008

Where Do You Get Ideas From?

Good ideas are hard to come by. There are dry spells as well as an occasional monsoon of ideas. But how does one maintain a steady influx of ideas and knowledge?

Screens

The most popular would be a stock screener. There are a many free ones but here is a list that I refer to:
Although screens are an easy method of finding companies, I rarely use them.

Blogs and Sites

Another form of idea generation is obviously visiting other blogs and sites. Everyone has a different type and size circle of competence, so gathering a good range of sites that are not identical to your views and processes will keep you on your toes and will definitely help you expand your own circle of competence and see things from different angles.

For example, I'm a value guy but I still look into dividend, growth and even occasionally technical investing. The purpose isn't to apply it, but to know whether it can benefit my strategy. Plus, it's always important to know why something won't work.

You can view my list of recommended sites here.

Weekly & Monthly Journals

Reading company related news and short articles will help you get an overview of the company and all the noise that goes with it, but nothing much beyond that.

Reading high quality journals will help you get informed about many different issues beyond stock analysis. In weight lifting, you can't continue to increase your bench press by just performing chest exercises. You need to have an equally strong back.

Analyzing companies all day won't increase your ideas or increase your circle of ideas. You'll just end up looking for and at the same things.

Forbes, Smart Money, Wall Street Journal and even the free Morningstar articles are good places to start.

Books

I'm ashamed to say it, but until last year, I hadn't read a complete book for over 5 years. Ironically, it's through books where I get most of my ideas. Now I've been able to finish at least 1 book a month.

Good investing books often mention examples which I always jot down to review later and it isn't these companies that I find interesting, it's the competitors, suppliers or customers of the company that show up in my radar.

Conference Calls, Transcripts and SEC

This is probably the most time consuming, but what better way to learn about a company than to listen to the conference calls or read the transcripts. Seeking Alpha publishes conference call transcripts for free which EVERYONE should take advantage of. I even have the transcripts set up with my RSS reader so I receive all transcripts. I've also come across some ideas this way.

The SEC website is also another vital location. It won't necessarily give you ideas, but it will definitely plant conviction and understanding into your brain. The SEC site is quite daunting and confusing at first, but just browse through and you'll get used to it in no time.

Good Ideas Rarely Come From These

To finish off, here are some places where I do NOT get good ideas from.
  • Radio, TV, newspaper news announcements
  • People around the water hole
  • Brokers
  • Financial advisors
Do you have anything to add?

This article was written by Old School Value. You may email questions or comments to me at jjun0366@gmail.com

1 comment:

  1. Usually they come from "off the wall" thinking in my case. I thoroughly enjoy thinking outside of the box and looking for value in companies and investments that very few investors have thought to look for a value stimulus.

    I use stock screens, but often I track a stock for some time with confidence that the share price will go lower, but know through my analysis that the intrinsic value is much, much higher.

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