This Is Why You'll Never Be a Great Investor

There is a rather key point missing in this article. Whilst I agree that time is always an issue, invest in the right companies in the first place and invest your time 'upfront', get it right and you don't need to read 970 pages a week.

You only need to read 970 pages or more in companies you are considering investing in, but have not yet done so, and that is what most people don't seem to do.

However, I do agree that time is an issue in the sense that unless you have several millionaire family members willing to hand you a very large amount of cash to invest as Mr Buffet did when he first started, you are unlikely to see the kind of returns that value investing and compounding can provide to the wealthy elite.

Stuck in an airport myself recently due to the transport chaos caused by the snow I took a moment to reflect on how long it would take me to accrue the kind of wealth I want based on some reasonable and conservative assumptions about returns going forward, and my conclusion was that I needed at least 120 years.

Perhaps I should take your lead and get to the gym more.

A wise man once said "It's more profitable to give advice than to take it".

Caveat emptor

If you read these annual reports, will you understand them. Not the obvious bits of course, but the bits they don't want you to notice that they hide away. Of course you should read the annual reports (annually!), but you may find more useful information in the articles.

I think the point is not how many pages of company reports you read a week, month, year,or on Tuesday evenings between 7-9pm, but rather that the effort is made to investment the time in securing the knowledge and understanding of a prospective investment prior to investing in it, and that having taken the decision to do so unless something fundamentally shifts in the business it is reasonable to expect to invest less time researching the business after you have invested than before.

In effect, the investing equivalent to think first, jump later.

I am sure Warren Buffet does not investigate and research Coca Cola in as much detail now as he did prior to aggressively investing billions in it.

Do the research part right, understand the business in as much depth as you can, and you shouldn't need to aggressively pour over everything that is said or written about it, although of course I am looking at this from the perspective of an investor, not a trader.

And this is why fool ain't half what it used to be.

You've just read an advertising feature for Champion Shares PRO - a Fool product - exhorting the reader to do their homework - or join up.

But if the author had done HIS homework, he would know that the Champion Shares PRO shut their doors on new members some considerable time ago !!

It seems the Fool doesn't even know what the Fool's doing - let alone being competent to advise on other companies! So how can anyone any longer have any faith in any of the advice given on this site ??

Wakey Wakey MF!! You were great when in the ascendent - seems to me you've started down the slippery slope of sloppiness already. Beware....

I think this may raise a few eyebrows, but I believe you don't need to read company reports at all.

In most cases, it's a complete waste of time, as many are designed to mislead anyway.

There are some simple fundamentals you need to know;

Does the company make consistent net profits?

How much debt does it carry and is it manageable?

And YES! I do like to see a dividend, preferably rising.

I then personally look at how much the directors are paid and if I consider it excessive; stop there. They're not using my money to get rich on!

Most importantly, where is the company share price within the trend at this point in time? If it's been towards the bottom and it's definitely rising; I'm interested. If it's already near a peak; I'm not.

And that's it folks!

Now you could argue that's insanity, but is it?

The market is a gambling den. Sure, it's dressed up as something special, with all sorts of gobbledegook peddled by interested parties. But at the end of the day, it reacts in exactly the same way as buying apples at the local market. If there's too many of a given product, the price goes down and visa-versa. If those apples are already old and are likely to go bad within a day or so, they won't sell.

So, does this strategy(?) work? It does for me. If I compare myself to professional fund managers, I probably average about the same, without their fees. I don't do as well as the top people, but most professionals don't either. I get more winners than losers which is what counts. Importantly, it costs me very little time.

I've got better things to do with what remains of my life, without pouring over company accounts. How boring can you get?

Time is money. If you can't earn more per hour than driving a bus, then some thing's wrong with your time management.

abrahamisaacs, yes it's true, the information I use is directly derived from company reports, but I don't usually plough through them to find it. Straight forward information such as I've quoted, can be found almost anywhere on financial sites all over the web.

The point I'm making is, it is (imho) not necessary or even desirable to send many hours wading through company reports, particularly when at the end of it all, you may well decide, that particular company is not for you anyway.

If you want to unearth hidden gems, then yes, you will probably have to go down that road, but, I would suggest, that hour for hour, pound for pound, at the end of the day, you probably won't have done any better than me.

To me, it's about efficiency of time, and in fact there was a recent podcast with a guest that suggested something very similar. Take your profit after a year, divide it by the hours you have spent in total on investment decisions and then decide if it's been financially worthwhile. If you come out at a couple of quid an hour, then you may as well have cleaned cars. It's more profitable!

I agree with Lastchip, its almost impossible to read right though and digest the whole report. Look for the main fundamental items that you consider important,to hell with the rest, I also follow up on their latest news items to ensure there isn't something I may have missed.
I also back up the fundamentals and view the technical charts to ensure the market also currently favours the stock or appear to be favourably changing thier minds.