From time to time i am reading your old articles, which by no means are old when it comes to meaning.
This particular one helped me to improve my tables where i write down the companies' numbers.
If I may propose something really minor, cosmetically - in the cells where there is #DIV/0! you can put IFERROR(<CURRENT_FORMULA>,""), where the string between "" will be shown in the cell, while the input cells in the <CURRENT_FORMULA> are empty. If you want blank just use "". Once the input sales of the <CURRENT_FORMULA> are fulfilled you will get the result.
Cheers and thank you for spending time for enlightening us!
Hi StockNovice, Amazing work, and amazing success since Dec 2018. You have educated all of us a lot and interestingly the way you are looking at the financial number using this sheet, I have pretty much similar approach after reading a bunch of fool board articles. I am thinking that there is so much of this information that so many of us are doing repetitively. Have you thought about doing some collaboration on maintaining this, it will definitely help the broader community as well.
I've seen some collaboration efforts in the past, but most seem to start off well and then peter out. I think it's because the information can get muddy quickly for most companies. Different people can interpret the same information differently when breaking it down, so group sheets can get too vague when trying to represent everyone's opinion. I'm not saying it can't work, but I'm guessing it would need to be limited to 2 or 3 people who have similar investment philosophies.
As far as repetitive work, that's a good point. However, that also means it's independent work. I find independent peer review is a great tool for testing conviction. I find I have more conviction if my own work is verified by others than if I only had those other opinions by themselves even if they were from people I trust. I've seen some Google sheets that collect and warehouse info. I've just never found that helpful given the way I prefer to gather and process info. That's just me though.
Hi StockNovice, Completely make sense. The other approach is to publish your own google sheet in view-only mode and then as more and more people start publishing it will become a reference point for each other. People can still continue to maintain their own but can get help from each other sheet. Thoughts?
That's a really good idea. Probably a little beyond the scope of what I personally have time to manage right now. I have had people ask about sheets for specific companies offline before. I tend to manage those case-by-case if I have an active sheet for the company.
To your point though, a collection of Google sheets would be an excellent tracking method for some sort of organized club.
I didn't have any specific group in mind. I don't view this blog as that organized (yet?). Maybe I am selling that idea short.
I would encourage anyone else reading this to reply if they are interested. I also would not have a problem sending a post to everyone offering whatever collaboration you set up and make it clear you are leading it. I will gladly email you a blank template sheet and the AYX sheet I posted to get you started if you'd like, but I'd be hesitant to post all my sheets for a number of reasons.
Hi StockNovice. Thanks for sharing you portfolio, strategy, thoughts, etc with the world. I've learned so much from you. I do have a question about your spreadsheet from this post. I've been reading your write-ups for the past several years (including Saul's board), so I know you are always concentrated. I struggle tremendously in this area. I think part of the reason is because my notes have always been scattered and unorganized. I've decided I need to take it more seriously so I have recreated your spreadsheet in hopes it will give me a higher conviction to allocate more money to my winners. My question is multi-part:
1. On average how many companies do you keep track of? I have a problem trying to push the limits and follow everything. The detriment is two-fold. One, I end up buying small pieces of companies I vaguely follow and two, my knowledge of my top holdings is more shallow than I would like.
2. How do you prioritize companies/When do you stop keeping track of a company? For example, I know you sold out of AYX this month. I'm sure you will be interested in Snowflake, Palantir, your current holdings and watch-list etc, so you will need to allocate your time accordingly. Will AYX make the cut? Based on your comments (getting back on board in 2021) I assume it will, but how do you decide?
Any advice on your process is greatly appreciated. Thanks again for everything. It has changed my life.
Thanks for the note. Lots to unpack, but I’ll try my best. Obviously, this is nothing more than my opinion but hopefully some of it is useful. As far as concentration, your number is your number. Try not to focus on anyone else’s. When I first committed to concentration, I had about 25 holdings. I got to 15 fairly quickly, but it’s taken roughly 2 years to get to where I am now. Everything is based on conviction. Eventually I gained the confidence to sell smaller, lower conviction names and put the proceeds into higher conviction names. Honestly, I think most people travel that path. In the end, you will find your sweet spot, whether it be 5 stocks or 50.
1. On tracking, I have about 15 active sheets outside my holdings. Some of them I have held in the past, so I have already done the work and have a pretty good baseline. Since all I am really doing is dumping in new earnings reports every three months, it is manageable. I let the numbers dictate whether I need to read the call. I can always go back and review transcripts if I am considering a purchase.
2. As far as prioritizing, I guess my most basic filter is the relationship between top line growth and bottom line profits. If a company is posting losses but growing 50%, I’m probably interested (like NET). Likewise, I’ll keep tracking something growing 30% and posting consistent profits (like TTD). It is the companies in-between I discard. A good example is PD. It has slowing growth with continued losses at a relatively small run rate. Why keep following it when I have a dozen companies with a better combination? That’s not to say PD can’t be a good investment. It just means it doesn’t fit for me given my initial screening filters. Right now, AYX’s past growth/profits combo keeps it alive. Its present combo is unattractive, which is why I sold. I will only reconsider AYX if it regains something close to its past growth/profits relationship. If it can't do that over the next few quarters, I’ll cut it from my list. Make sense?
Hopefully that's clear. Feel free to follow up if it's not or I left anything out.
Thanks for the quick and thorough response. You did a great job of outlining and explaining your process in relation to my question(s) and everything is clear. I can't thank you enough for taking the time to respond!
Excellent exposition of a clear methodology for investment analysis. Its not Graham & Dodd nor Burton Malkiel nor John Bogle but it works for the sector you appear to be most interested in. SaaS and related companies. In a way I envy your diligence in carrying out this program. For my own investments I review the same information but tend to be more intuitive in coming to a, conclusion about purchase or sale. This can be problematic. So I applaud your approach as well as your generosity in sharing your results with others.
One suggestion. Change your name. You are no novice.
I view every decision as some combo of info and instinct, even something as simple as what I had for breakfast this morning. These are my choices, now what do I feel like eating? I consider myself more intuitive in many areas but such a concentrated portfolio has created a high info bar companies must clear to earn final consideration. That being said, it's still very much a gut-feel plunge when adding or subtracting a position.
And as far as the name, it's one I picked at the Motley Fool in 1997 and have just rolled with ever since. I tried to change to "intermediateinvestor" one time, but it was too many characters. If there’s one thing I’ve learned since, it’s that the market can humble you in a hurry. In that respect I think the name is a pretty good reflection of my overall perspective. I find "stockexperts" are much more likely to make major mistakes. 😃
What a good summary of how to put in the work. I believe this is the hardest thing to do as an investor. The transition from trader to owner and from disinterested to interested should require a more informed view with more consideration of the information at hand.
This is going back to college to work for yourself, vs. an offer or promise of a promotion in somebody else's company. Great article.
From time to time i am reading your old articles, which by no means are old when it comes to meaning.
This particular one helped me to improve my tables where i write down the companies' numbers.
If I may propose something really minor, cosmetically - in the cells where there is #DIV/0! you can put IFERROR(<CURRENT_FORMULA>,""), where the string between "" will be shown in the cell, while the input cells in the <CURRENT_FORMULA> are empty. If you want blank just use "". Once the input sales of the <CURRENT_FORMULA> are fulfilled you will get the result.
Cheers and thank you for spending time for enlightening us!
Thanks for the tip. I didn't have that one. I'll take a look at my template and see if I can dump it in.
Hi StockNovice, Amazing work, and amazing success since Dec 2018. You have educated all of us a lot and interestingly the way you are looking at the financial number using this sheet, I have pretty much similar approach after reading a bunch of fool board articles. I am thinking that there is so much of this information that so many of us are doing repetitively. Have you thought about doing some collaboration on maintaining this, it will definitely help the broader community as well.
Hi Yogesh.
I've seen some collaboration efforts in the past, but most seem to start off well and then peter out. I think it's because the information can get muddy quickly for most companies. Different people can interpret the same information differently when breaking it down, so group sheets can get too vague when trying to represent everyone's opinion. I'm not saying it can't work, but I'm guessing it would need to be limited to 2 or 3 people who have similar investment philosophies.
As far as repetitive work, that's a good point. However, that also means it's independent work. I find independent peer review is a great tool for testing conviction. I find I have more conviction if my own work is verified by others than if I only had those other opinions by themselves even if they were from people I trust. I've seen some Google sheets that collect and warehouse info. I've just never found that helpful given the way I prefer to gather and process info. That's just me though.
Thanks for the note.
Hi StockNovice, Completely make sense. The other approach is to publish your own google sheet in view-only mode and then as more and more people start publishing it will become a reference point for each other. People can still continue to maintain their own but can get help from each other sheet. Thoughts?
That's a really good idea. Probably a little beyond the scope of what I personally have time to manage right now. I have had people ask about sheets for specific companies offline before. I tend to manage those case-by-case if I have an active sheet for the company.
To your point though, a collection of Google sheets would be an excellent tracking method for some sort of organized club.
Yes, I will be happy to do it. Let me know if you have thoughts on which club?
I didn't have any specific group in mind. I don't view this blog as that organized (yet?). Maybe I am selling that idea short.
I would encourage anyone else reading this to reply if they are interested. I also would not have a problem sending a post to everyone offering whatever collaboration you set up and make it clear you are leading it. I will gladly email you a blank template sheet and the AYX sheet I posted to get you started if you'd like, but I'd be hesitant to post all my sheets for a number of reasons.
Just let me know what you decide. Happy to help.
Okay, ya please share a blank template sheet and AYX sheet. I will share the one with you that I have created, and may be we can start from there.
Hi StockNovice. Thanks for sharing you portfolio, strategy, thoughts, etc with the world. I've learned so much from you. I do have a question about your spreadsheet from this post. I've been reading your write-ups for the past several years (including Saul's board), so I know you are always concentrated. I struggle tremendously in this area. I think part of the reason is because my notes have always been scattered and unorganized. I've decided I need to take it more seriously so I have recreated your spreadsheet in hopes it will give me a higher conviction to allocate more money to my winners. My question is multi-part:
1. On average how many companies do you keep track of? I have a problem trying to push the limits and follow everything. The detriment is two-fold. One, I end up buying small pieces of companies I vaguely follow and two, my knowledge of my top holdings is more shallow than I would like.
2. How do you prioritize companies/When do you stop keeping track of a company? For example, I know you sold out of AYX this month. I'm sure you will be interested in Snowflake, Palantir, your current holdings and watch-list etc, so you will need to allocate your time accordingly. Will AYX make the cut? Based on your comments (getting back on board in 2021) I assume it will, but how do you decide?
Any advice on your process is greatly appreciated. Thanks again for everything. It has changed my life.
Hi Chris –
Thanks for the note. Lots to unpack, but I’ll try my best. Obviously, this is nothing more than my opinion but hopefully some of it is useful. As far as concentration, your number is your number. Try not to focus on anyone else’s. When I first committed to concentration, I had about 25 holdings. I got to 15 fairly quickly, but it’s taken roughly 2 years to get to where I am now. Everything is based on conviction. Eventually I gained the confidence to sell smaller, lower conviction names and put the proceeds into higher conviction names. Honestly, I think most people travel that path. In the end, you will find your sweet spot, whether it be 5 stocks or 50.
1. On tracking, I have about 15 active sheets outside my holdings. Some of them I have held in the past, so I have already done the work and have a pretty good baseline. Since all I am really doing is dumping in new earnings reports every three months, it is manageable. I let the numbers dictate whether I need to read the call. I can always go back and review transcripts if I am considering a purchase.
2. As far as prioritizing, I guess my most basic filter is the relationship between top line growth and bottom line profits. If a company is posting losses but growing 50%, I’m probably interested (like NET). Likewise, I’ll keep tracking something growing 30% and posting consistent profits (like TTD). It is the companies in-between I discard. A good example is PD. It has slowing growth with continued losses at a relatively small run rate. Why keep following it when I have a dozen companies with a better combination? That’s not to say PD can’t be a good investment. It just means it doesn’t fit for me given my initial screening filters. Right now, AYX’s past growth/profits combo keeps it alive. Its present combo is unattractive, which is why I sold. I will only reconsider AYX if it regains something close to its past growth/profits relationship. If it can't do that over the next few quarters, I’ll cut it from my list. Make sense?
Hopefully that's clear. Feel free to follow up if it's not or I left anything out.
Joe
Joe
Thanks for the quick and thorough response. You did a great job of outlining and explaining your process in relation to my question(s) and everything is clear. I can't thank you enough for taking the time to respond!
great post...very helpful insight...
Excellent exposition of a clear methodology for investment analysis. Its not Graham & Dodd nor Burton Malkiel nor John Bogle but it works for the sector you appear to be most interested in. SaaS and related companies. In a way I envy your diligence in carrying out this program. For my own investments I review the same information but tend to be more intuitive in coming to a, conclusion about purchase or sale. This can be problematic. So I applaud your approach as well as your generosity in sharing your results with others.
One suggestion. Change your name. You are no novice.
Thanks, Arnold. I appreciate the comments.
I view every decision as some combo of info and instinct, even something as simple as what I had for breakfast this morning. These are my choices, now what do I feel like eating? I consider myself more intuitive in many areas but such a concentrated portfolio has created a high info bar companies must clear to earn final consideration. That being said, it's still very much a gut-feel plunge when adding or subtracting a position.
And as far as the name, it's one I picked at the Motley Fool in 1997 and have just rolled with ever since. I tried to change to "intermediateinvestor" one time, but it was too many characters. If there’s one thing I’ve learned since, it’s that the market can humble you in a hurry. In that respect I think the name is a pretty good reflection of my overall perspective. I find "stockexperts" are much more likely to make major mistakes. 😃
I may not have been serious about the name change but I am when I say you are no longer a novice. Thank you again for your magnanimity. Cheers.
c
What a good summary of how to put in the work. I believe this is the hardest thing to do as an investor. The transition from trader to owner and from disinterested to interested should require a more informed view with more consideration of the information at hand.
This is going back to college to work for yourself, vs. an offer or promise of a promotion in somebody else's company. Great article.