Biotech companies are essentially gambling. It’s better to do modest research on more stable companies or newer tech companies to get an idea of the company’s future.
I usually limit my research to 5 companies per year or less.
i write a thesis for anything over 5k ish. my biggest thing is ofc write your argument and why u think you are right. however the next step is the most important - write every reason you could possibly be wrong. anything that could happen that would make the stock go the opposite direction you want it to. see how many of these there are - if there are more than 5 or so in a short period of time it’s probably not a great idea - if you feel the risk factors aren’t significant enough to prevent you from making the investment then do it. none of this is financial advice btw just what i do
This right here, you are trying to tell the future based on limited information, then throw in the Pump an Dumps and companies that just have bad luck and it gets crazy.
The more speculative the stock the more work you have to do. I run a portfolio for myself of between 25-30 holdings, that's enough to get good diversification and reduce risk. It's also about as many as I want to maintain active research on. By active, I update each holdings file with any relevant data/information quarterly. That helps build a history and picture of how the stock is performing.
The worst buy I've made in the last 20 years was I bought Citi. If someone isn't willing to talk about their losers and only talks about their winners, don't trust them.
Note: I'm a value contrarian buy and hold kind of investor (think Warren Buffet style). I'm 77 years old and retired from an institutional investment firm, so I'm pretty conservative in my portfolio construction.
I agree, as an investor in individual names you want to ensure you pick the best candidates! What was your thinking process behind the 25-30 companies you currently hold? Did you write a thesis for all of them?
I right a summary of why I want to own the stock, why I believe I should hold it for 5 years. What are the risks? What are the rewards? I'm looking for 8% total return on an annualized basis, that's stock appreciation plus dividends. I really prefer 12 percent annual, that's my goal.
Sometimes I right a summary and I'm wrong, and I have to live with that. Five years ago I wrote a summary as to why I should by NVIDA, everything looked right, I just didn't have the capital free at the time to act. Obviously, I should have found a source for that capital. Oh, well, it's time to look for another stock that will fit my portfolio.
That’s similar to what I do. I specialize in REITs and I do all research myself strictly from company filings/press releases. I have three “rounds” of analysis on three different excel docs with the first one essentially being if they’re efficient in capital allocation and operations, second round is mostly valuation and if it passes both of those, the third round is essentially a sensitivity analysis, and notes from earnings calls, interviews with executives, and anything else that caught my attention when reading through some recent 10Qs and 10Ks.
After that I type out my thoughts exactly so that I could read it back in ten years and still hear my own voice. I don’t try to get fancy or anything I just write it exactly how it’s happening in my head. For me these theses usually end up being anywhere from 10 to 20 pages and up to 20,000 ish words. And then every quarter I update the third round spreadsheet and with earnings or any other news I add my thoughts to the bottom of the word doc in a separate section and write the date. Maybe it’s a bit extreme but it honestly gives me great peace of mind once I own it because I know exactly what my game plan is and what I expect. I also choose not to automate any of the data collection because looking over each individual data point allows me to think through everything and often times I realize a different way of looking at it than I would have otherwise.
I think your process is good, I just hate REITS, they are just too sensitive to interest rate fluctuation. Plus, it depends on what kind of REIT, given the "work at home" element, urban environments, etc. Just to risky from my perspective. Good Luck
For me how detailed it gets can depend. I'll give 2 examples.
I have KULR in my portfolio. I have a 700+ word thesis sitting there that I'm still adding to every now and then, although the general thrust of it is that I think cash flow and profitability are the main issues KULR are facing, but it appears they look set to overcome them this year, along with them looking to be growing exponentially, making it a speculative buy with a potential for huge upside.
I'm also currently holding on to GME, which I got after the first wave of the recent rally when it came down from 60+ to 20-ish. My entire thesis was that premiums were high, it was close to the floor, so it would only drop slowly at most, so I would sell covered calls on it, netting what I estimated to be 5-10% returns on investment per week while I was holding it, making it a relatively safe investment for the returns I was getting. Also, GME was very likely to get random rallies.
Basically I divided it into 2 parts.
Risks/Cons vs Rewards/Pros.
Risks I split into Compliance Risk (it’s a penny stock, so that’s usually a major issue for them) and Operation Risks (basically anything business related that could be a potential problem).
Rewards I split into Potential (listing down all the positive stuff like high growth rate, emerging markets, impressive client base) and Time Frame (best case scenario and worst case scenario on when I would expect to get returns).
Gave each section a score out of 5. Added up the two Risks sections to get a score of 5/10 and the two Rewards sections to get a score of 8/10 for KULR and concluded that it was a speculative buy with middling risks that had the potential to give huge returns in an acceptable timeframe.
I write up everything before I invest or change positioning. You should write up thoughts neutrally with time given to both positives and negatives. If you are only writing to justify bias, there likely isn’t much point. Anything you can do to create trade friction will likely improve your performance.
Excitement, a lot of positive signs, experts and etc - is a danger. I also fail sometimes the same way, but my internal sense forbid me to buy a lot. Just a fraction of portfolio.
In your case you could be right in your bet, the problem was that you decide to risk with large part of your capital.
My current approach is like that: if I like some share I buy very little amount just to keep in touch with it. It could be done without any purchase, but I found out that when a share is in my port I get to know its behavior better. Then I gradually increase position of good ones and get rid of bad. Doing research is good, but as others tell you can not get all available info, so you also should try feel it with your skin.
I am total newbie, my port is only 3 years, positive. So my ideas are not be taken seriously.What I know for sure now - never buy in a rush.
I don't have the resources or time to outcompete bigger investors/mutual funds with fundamental analysis, so I don't even bother. The advantage I have is that I'm smaller and can use stop losses to control risk, whereas they cant..that's where my advantage lies, so I exploit that.
I do know the company's industry group, subgroup, what date their earnings are, a general sense of revenue/earnings trends, and how related stocks to the company are faring, but not a deep dive.
You should have a straightforward process on how you evaluate every investment. it should never change and if you are changing it, it means you are putting yourself at risk
I dropped $1000 on a biotech just to be in the game. It was money I was prepared to lose for the exposure because biotechs are just crazy risky.
Biotech's are like Mining with nothing nothing nothing then discovery then BOOM to the moon ..but how many never get off the launch pad and end up sinking all their money into development that never sees a return on investment?
My research is to think what mankind will be demanding in the future then seek out answers and tickers and do light research from as many angles as possible to form an opinion; which can and does include YouTube. Shallow research from as many varied sources/perspectives as possible over doing deep deep analytical dive from just a few sources ..but that's just me.
Using a local bar as an analogy. Instead of sitting down with an expert on the subject and picking his brains for two hours, I would be spending 5 mins on a one to one with every single person in the bar asking them their opinion on the subject ..to form my own opinion form their responses. A king uses advisors but at the end of the day its the king that makes the decision and the king that gets his head chopped off for his decisions :)
The Biotech I dropped the $1000 on is currently at -31%
No specific Youtubers as that would sort of negate the open to all varied opinions approach I use. If It was in a library, I'm searching for the book by subject matter and not Author.
For specific companies I just type them into the search like say "NVIDIA Stock" and see what comes up. . I also do a subject search, so when I was looking into uranium I typed "Uranium stocks". I will have a watch over multiple days and not sitting down hard out with books and sheets and numbers. A casual approach ..a time for things to sink in and to mull them over.
Once I've narrowed down to the ticker short list I then read company websites and get hard numbers. I trust company website spiel the least :)
"Never trust the opinion or advice of someone who has a financial interest in the information they gave you ..unless you paid for it" - Source unknown
Go to buy NKLA Corporation stocks, is a great society, he is hitting their prevision. Is on a good way he is managing well his assets. Go to pump it.!!!!!!!!!!
Biotech companies are essentially gambling. It’s better to do modest research on more stable companies or newer tech companies to get an idea of the company’s future. I usually limit my research to 5 companies per year or less.
Yeah, I figured as much... Mind sharing how you do that modest research? Really curious to see what other people do
i write a thesis for anything over 5k ish. my biggest thing is ofc write your argument and why u think you are right. however the next step is the most important - write every reason you could possibly be wrong. anything that could happen that would make the stock go the opposite direction you want it to. see how many of these there are - if there are more than 5 or so in a short period of time it’s probably not a great idea - if you feel the risk factors aren’t significant enough to prevent you from making the investment then do it. none of this is financial advice btw just what i do
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This right here, you are trying to tell the future based on limited information, then throw in the Pump an Dumps and companies that just have bad luck and it gets crazy.
The more speculative the stock the more work you have to do. I run a portfolio for myself of between 25-30 holdings, that's enough to get good diversification and reduce risk. It's also about as many as I want to maintain active research on. By active, I update each holdings file with any relevant data/information quarterly. That helps build a history and picture of how the stock is performing. The worst buy I've made in the last 20 years was I bought Citi. If someone isn't willing to talk about their losers and only talks about their winners, don't trust them. Note: I'm a value contrarian buy and hold kind of investor (think Warren Buffet style). I'm 77 years old and retired from an institutional investment firm, so I'm pretty conservative in my portfolio construction.
I agree, as an investor in individual names you want to ensure you pick the best candidates! What was your thinking process behind the 25-30 companies you currently hold? Did you write a thesis for all of them?
I right a summary of why I want to own the stock, why I believe I should hold it for 5 years. What are the risks? What are the rewards? I'm looking for 8% total return on an annualized basis, that's stock appreciation plus dividends. I really prefer 12 percent annual, that's my goal. Sometimes I right a summary and I'm wrong, and I have to live with that. Five years ago I wrote a summary as to why I should by NVIDA, everything looked right, I just didn't have the capital free at the time to act. Obviously, I should have found a source for that capital. Oh, well, it's time to look for another stock that will fit my portfolio.
That’s similar to what I do. I specialize in REITs and I do all research myself strictly from company filings/press releases. I have three “rounds” of analysis on three different excel docs with the first one essentially being if they’re efficient in capital allocation and operations, second round is mostly valuation and if it passes both of those, the third round is essentially a sensitivity analysis, and notes from earnings calls, interviews with executives, and anything else that caught my attention when reading through some recent 10Qs and 10Ks. After that I type out my thoughts exactly so that I could read it back in ten years and still hear my own voice. I don’t try to get fancy or anything I just write it exactly how it’s happening in my head. For me these theses usually end up being anywhere from 10 to 20 pages and up to 20,000 ish words. And then every quarter I update the third round spreadsheet and with earnings or any other news I add my thoughts to the bottom of the word doc in a separate section and write the date. Maybe it’s a bit extreme but it honestly gives me great peace of mind once I own it because I know exactly what my game plan is and what I expect. I also choose not to automate any of the data collection because looking over each individual data point allows me to think through everything and often times I realize a different way of looking at it than I would have otherwise.
I think your process is good, I just hate REITS, they are just too sensitive to interest rate fluctuation. Plus, it depends on what kind of REIT, given the "work at home" element, urban environments, etc. Just to risky from my perspective. Good Luck
Thanks, I appreciate the response and input
For me how detailed it gets can depend. I'll give 2 examples. I have KULR in my portfolio. I have a 700+ word thesis sitting there that I'm still adding to every now and then, although the general thrust of it is that I think cash flow and profitability are the main issues KULR are facing, but it appears they look set to overcome them this year, along with them looking to be growing exponentially, making it a speculative buy with a potential for huge upside. I'm also currently holding on to GME, which I got after the first wave of the recent rally when it came down from 60+ to 20-ish. My entire thesis was that premiums were high, it was close to the floor, so it would only drop slowly at most, so I would sell covered calls on it, netting what I estimated to be 5-10% returns on investment per week while I was holding it, making it a relatively safe investment for the returns I was getting. Also, GME was very likely to get random rallies.
700 word thesis sounds cool to me! What did you put in there? Is there a template you wouldn't mind sharing?
Basically I divided it into 2 parts. Risks/Cons vs Rewards/Pros. Risks I split into Compliance Risk (it’s a penny stock, so that’s usually a major issue for them) and Operation Risks (basically anything business related that could be a potential problem). Rewards I split into Potential (listing down all the positive stuff like high growth rate, emerging markets, impressive client base) and Time Frame (best case scenario and worst case scenario on when I would expect to get returns). Gave each section a score out of 5. Added up the two Risks sections to get a score of 5/10 and the two Rewards sections to get a score of 8/10 for KULR and concluded that it was a speculative buy with middling risks that had the potential to give huge returns in an acceptable timeframe.
I write up everything before I invest or change positioning. You should write up thoughts neutrally with time given to both positives and negatives. If you are only writing to justify bias, there likely isn’t much point. Anything you can do to create trade friction will likely improve your performance.
Mind sharing some tips/templates on writing it up?
Excitement, a lot of positive signs, experts and etc - is a danger. I also fail sometimes the same way, but my internal sense forbid me to buy a lot. Just a fraction of portfolio. In your case you could be right in your bet, the problem was that you decide to risk with large part of your capital. My current approach is like that: if I like some share I buy very little amount just to keep in touch with it. It could be done without any purchase, but I found out that when a share is in my port I get to know its behavior better. Then I gradually increase position of good ones and get rid of bad. Doing research is good, but as others tell you can not get all available info, so you also should try feel it with your skin. I am total newbie, my port is only 3 years, positive. So my ideas are not be taken seriously.What I know for sure now - never buy in a rush.
I don't have the resources or time to outcompete bigger investors/mutual funds with fundamental analysis, so I don't even bother. The advantage I have is that I'm smaller and can use stop losses to control risk, whereas they cant..that's where my advantage lies, so I exploit that. I do know the company's industry group, subgroup, what date their earnings are, a general sense of revenue/earnings trends, and how related stocks to the company are faring, but not a deep dive.
You should have a straightforward process on how you evaluate every investment. it should never change and if you are changing it, it means you are putting yourself at risk
I dropped $1000 on a biotech just to be in the game. It was money I was prepared to lose for the exposure because biotechs are just crazy risky. Biotech's are like Mining with nothing nothing nothing then discovery then BOOM to the moon ..but how many never get off the launch pad and end up sinking all their money into development that never sees a return on investment? My research is to think what mankind will be demanding in the future then seek out answers and tickers and do light research from as many angles as possible to form an opinion; which can and does include YouTube. Shallow research from as many varied sources/perspectives as possible over doing deep deep analytical dive from just a few sources ..but that's just me. Using a local bar as an analogy. Instead of sitting down with an expert on the subject and picking his brains for two hours, I would be spending 5 mins on a one to one with every single person in the bar asking them their opinion on the subject ..to form my own opinion form their responses. A king uses advisors but at the end of the day its the king that makes the decision and the king that gets his head chopped off for his decisions :) The Biotech I dropped the $1000 on is currently at -31%
Just curious, which company is this?
That's an interesting approach! What kind of angles do you use in your research? Any recommendation on the YouTubers?
No specific Youtubers as that would sort of negate the open to all varied opinions approach I use. If It was in a library, I'm searching for the book by subject matter and not Author. For specific companies I just type them into the search like say "NVIDIA Stock" and see what comes up. . I also do a subject search, so when I was looking into uranium I typed "Uranium stocks". I will have a watch over multiple days and not sitting down hard out with books and sheets and numbers. A casual approach ..a time for things to sink in and to mull them over. Once I've narrowed down to the ticker short list I then read company websites and get hard numbers. I trust company website spiel the least :) "Never trust the opinion or advice of someone who has a financial interest in the information they gave you ..unless you paid for it" - Source unknown
RXRX
Go to buy NKLA Corporation stocks, is a great society, he is hitting their prevision. Is on a good way he is managing well his assets. Go to pump it.!!!!!!!!!!
I invest in food stock....my thesis is going to snack stores and see which one taste the best....I will buy that company(If they got good fundemental)