Back after a small gap.
Quickly realised from discussions with committed VP old-(&new)-timers that probably the fastest, and the most impactful work that we can do at re-invigorating quality work at VP would be get started back with Stock Stories.
Not everyone would be aware that at one time (way back in the past:)) we used to maintain updated briefs (Stock Stories, on valuepickr.com home page you will need to scroll down to access) on a set of some 25 of our favourite businesses. And most of them have gone on to be wealth-creators, at some or other point of time, in the last decade.
Why we started and persisted with Stock Stories:
- As Ayush first very discerningly pointed out to me sometime in 2009, Donald there is no place/site in our markets, where we can go and understand a business reasonably well in under 30 mins. All we would see at various sites are numbers, ratios, and they might mean something to a savvy investor, but again that would hardly equip him to understand the business, industry, competitive forces at play, barriers to entry, and so on.
- While explaining/taking feedback on our favourite story to/from someone, we could get away with (literally) anything while speaking; but the written brief forced a certain diligence on us; we had to be really convinced and think twice thrice before we put forward a bullish or a bearish viewpoint, and had to back that up with data; This obviously meant the rigour that went in was of a higher order and we had to double-check on our facts before putting up for public consumption
- The Structured Template (Check out this PI Industries story as an example) - Background, Main Products/Segments, Main Markets/Customers, Bullish viewpoints, Bearish viewpoints, Interesting viewpoints, Barriers to Entry - ensured that any sufficiently-interested reader could actually come to speed on the strengths (weaknesses) of the business in under 30 mins!
- The compact brief - also ensured - we could communicate crisply and draw in valuable insights and value-adds from gurus and domain experts, which added immensely on the analysis part; similarly these helped us draw valuable comments and insights on business models, business quality vulnerabilities, and the like from investment Gurus we chanced upon or had access to, and helped refine our investment perspective/thesis.
- While everyone in VP (and the larger investment community) benefited, those who were deeply involved in the stock stories benefited the most - we worked the hardest at our story, we engaged the contrary view with gusto and became somewhat better educated on what could kill our best ideas, because we took RESPONSIBILITY - that while we will never be experts on the business/domain but we would make sure that we caught hold of the best in the business/domain and incorporated their insights as much as we could, and kept the Stock Story UPDATED.
And then for a while (2015, onwards) moneymaking in our markets became too easy , and we lost track of the basics, ha ha. Then again hard reality hit us in 2018-2019. Meanwhile emphasis on technicals, and momentum, and algos have shifted to a different gear today. I am all for new learnings (especially if it can help structure and maintain my portfolio better), and there are undeniable aspects probably therein that I am told, every market participant should learn a bit about and have a healthy respect for (obvious say, from the way our @hitesh2710 Hitesh Patel keeps amazing us with absolute simplicity). But I can see some of us are again getting corrupted to thinking that there are free lunches, available. There aren’t!! Not on a sustainable basis, anyway
Our returns will normalise to the mean pretty soon, unless some of us (those naturally inclined on upping the Investor Learning Curve) get cracking on deep dives, and the art of capturing that crisply back for our own, and the communities benefit. We take up the responsibility to create/update the story on our favourite business and keep it updated on a event-basis, and/or regular periodic updates. And then engage others deeply interested in the business for more collaborative scuttlebutts, invite contrarian views, invite industry and domain experts to participate, and so on.
Am convinced, as we energise just 10-15 of us to take this up earnestly, this will create a momentum and snowball effect of its own, and engage many many folks to attempt a story on their own - even passionate newcomers. when we started in 2010, most of us writing the stock stories were investing greenhorns - even as we might have some penchant for structured thinking.
For those who might be thinking - how does this practically work? Well as mentioned before we have another part to VP site (which was dormant for last few years). our very own @pratyushmittal had beautifully enabled a simple CREATE-EDIT-PUBLISH workflow underlying this structured part - Stock Stories, Management Q&As (next on 2.0 Agenda), and the like (You will need to scroll down on the home page to reach these).
I am proposing that some maybe 30 of us are given CREATE permissions (any passionate hard worker as demonstrated in VP threads, with preferably slightly analytical bent of mind is welcome). Maybe some 10 guys/gals (more structured thinkers, better english ) re given EDIT permissions, and probably 2-3 guys/gals given PUBLISH permissions. This will ensure better collaborative efforts among participating seniors, and hopefully among passionate juniors and more seniors, too.
I can foresee some hands going up on improvements needed - after all if its VP Stock Story 2.0, what changes are we bringing in? I can think of a few - e.g we might have to ensure additional 4-5 new placeholders to the existing template - where we add a para or two on
a. Business Model - strengths/differentiated-ness, or otherwise
b. Valuation Model - some businesses like D’Mart deserve(?) elevated range
c. Current Market Trends - periodic scuttlebutt and/or from published figures
d. Corporate Governance Scan - debatable actions (if any) from publicly available records
e. Forensic Scan/Red Flags - Comments from VP Forensic experts @dd1474, @ashwinidamani, any more in-house experts here?
[Have been told to expect a VP Forensics Accounting 2.0 Framework initiation, with live practicals, soon]
Views invited on any more must-have placeholders in the stock story template that can help refine investment analysis.
The beauty of forcing a collaborative structured template on us, is that some pieces like business model and valuation models will naturally get collaboratively filled-in/refined by more senior investors after talking with the stock story creator/owner, but a passionate new learner is exposed to this right from the start!
That is probably invaluable!!
And I am excited to see where we can take this effort in the next 6 months by efforts of a committed few, and then how we will enjoy this snowballing into a regular investing activity by most passionate learners!!
Whole-hearted participation is invited; hard work and passion are the qualifying ingredients; refinements are achieved collaboratively, and magic is created Waiting for a good show of hands!!