Building a comprehensive picture with investment case studies

[i4value]

There are several dimensions to the fundamental analysis of stocks. You can analyse companies form the short-term vs long-term perspective. Some focus on the macro angle while I cover the micro side. Then then are many who invest in dividend kings while I am more of total return person.

A comprehensive approach should consider all dimensions in order to make informed decisions about individual stocks. For example, investors need to understand how company-specific factors interact with broader economic conditions.

For a retail investor, the comprehensive picture is easier to say than to do. This is because you need different skills and expertise to do all of them. In practice we tend to focus on a particular analytical path based on our expertise and experience.

For example, I am a bottom-up stock picker based on a micro long-term perspective. I know it is not the full picture and to make up for it, I do spend time looking at reports by others – bloggers, investing sites and stock broker.

That is why I believe that every one can benefit from investment case studies.

[i4value]

I come from the view that if you are going to beat the crowd, you have to behave differently from the crowd. As such, I am a contrarian fundamental investor.

I focus on the long-term view of the business performance when analysing and valuing a company. I find that most people are short term investors even if they are investing based on fundamental.

But being contrarian does not mean being biased. Being bias is about taking a particular point of view even thought the evidence does not support it.

How do I ensure that I am not biased while being a contrarian? One way is to have a comprehensive analysis. Look at the company from various angles.

In practice, it is very challenging to do this as we tend to have skills and expertise based on our experience. That is why I do spend a considerable amount of time looking at other analysts reports.

I am good at only one analytical and valuation niche. But this is not the full picture. So, I rely on others to provide the different perspective. I do these by reading other analyst reports – stock brokers, blogger and investing blogs. This is where investment case studies come in.

When I have the comprehensive picture, I am in a better position to judge whether I have covered all angles when arriving at my contrarian view.
Being contrarian does not necessarily mean being biased.