Everyone prepared a presentation on one of three topics (A strong business, lessons learned in last one year, investment strategy). I prepared a presentation on investment strategy and tools that I use, most of it is already shared elsewhere on VP.
Here is the presentation.
Investment Process.ppt (1.1 MB)
Brief outline of the process as discussed at the meet:
- I generally start with a visual screener to screen stocks and generate ideas.
- Using this screener, I build white lists of companies that I like and understand.
- I collect key non-financial data like capacity, production, order book etc in a google sheet . Few other members contribute as well.
- Using the information collected, I value the company using my valuation model.
- I use a set of price multiple charts to see how market has valued the company historically.
- Outcome of valuation model is expected return over next 3-5 years. I build virtual portfolios of stocks with highest (risk adjusted) expected return. Real portfolio is periodically aligned with one of the virtual portfolios.
- Using a set of macro indicators, decide % of net worth to be invested in equities. Rest is parked in liquid debt funds.
Personally, I found discussions around lessons learned most useful. Almost everyone learns from their own mistakes so it is always enlightening to learn about other people’s mistakes. That’s lot easier than committing the same mistakes and learn the hard way.