How to independently analyze the business of companies and their stocks

How to independently analyze the business of companies and their stocks?

This is the last post on my blog dedicated to general topics, so to speak, “an introduction to the subject”; then I will directly consider my portfolio and analyze individual issuers in detail.

So, if you decide to invest in stocks yourself and understand the business of companies, how to do it and where to start? In the old fashioned way, I will recommend several books that are on my shelf, the order in which they are read does not play a special role, but I would recommend sticking to it:

1️⃣ Benjamin Graham "Reasonable Investor. The Complete Guide to Value Investing." A very cool and difficult to read book of 500 pages, but this is where I would recommend starting your acquaintance with investing in stocks. It is quite possible that it will not be easy to read for beginners and there will be a lot of complex terms, well, then Google will help you 😊

On the cover of the book and everywhere in the descriptions there is a quote from Buffett that that this is the best book on investing. Well, Warren can indeed be considered a student of Graham. However, over time, Buffett realized that Graham’s principles cannot be applied “head-on” everywhere and always, for example, Graham recommended buying companies with low odds P/E and P/B without much regard for the specifics of the business, the state of affairs of the company, etc. If you follow only this logic of low odds, you can buy half of our market without looking, since according to them our companies seem to be terribly undervalued, but so far I don’t see stocks of Surgutneftegaz or Rostelecom in Buffett 😂😂

2️⃣ Buffett's books. Strictly speaking, Buffett never wrote a book. There is his letters to the shareholders of BERKSHIRE HATHAWAY INC. and biography books written by his relatives and colleagues.

Ideally you need to read the original source (letters), I personally also read his biographies:

👉"Warren Buffett's Rules of Investing" - Jeremy Miller

👉“Warren Buffett. How to turn 5 dollars into 50 billion. Strategy and Tactics of the Great Investor" - Robert Hagstrom class="emoji" style="background-image:url('//telegram.org/img/emoji/40/33E283A3.png')">3️⃣ Book-gun 💣💣💣“Peter Lynch method. Strategy and tactics of the individual investor" - Peter Lynch.

Lynch is less known than, for example, Buffett, but his methodology and style of presentation are much closer to me personally. In my subjective perception, Buffett is, roughly speaking, a “nerd” who always acts as conservatively and in accordance with the rules as possible, and Lynch is “the guy”, simpler and more relatable, open in life, ready to share his experience.

Buffett has a lot of philosophy in his letters, not always relevant, Lynch gives a lot of practical advice and recommendations, there is a very important gradation of companies and businesses into categories, certain and clear rules for selecting niches and stocks, a lot of parameters that he used while working at Fidelity Magellan Fund.

4️⃣ In the last point, I will recommend not so much a book, but rather an author - Nassim Taleb and his 3 books - “Fooled by Randomness”, “Black Swan” and “Antifragile”.

They are not required reading and concern not only investments in financial markets, but also contain a lot of philosophy and thoughts on other topics.

They are difficult to read, and the last two are quite voluminous, however, I highly recommend it, including for general development. Many thoughts in popular books by other authors regarding finance and self-development in one way or another copy and repeat the main ideas of each other, while Taleb’s views on the world and his thoughts are very unique and, in my opinion, deserve special attention.

Especially on the topic of Taleb now, when the markets are feeling, to put it mildly, restless 🙈

Tomorrow in a new post we will look at my portfolio and current positions 🤛💪💸💸💸