By Stig Brodersen

10 November 2016

I’m currently reading the book The Lean Startup, which is one of the best startup books I’ve read in a long time. Actually, it is so good that we’re going to review it in a podcast episode before too long. Not just from reading the book, but I’ve realized lately that while Preston and I might still see The Investors Podcast as simply “running a podcast,” we might soon need to reevaluate our perception. With the various projects that we’re working on (including software, online courses, and a team that seems to expand rapidly), we might soon need to think of The Investors Podcast as a “startup company.”

One of the things that I learned reading through The Lean Startup is the concept of “validated learning.” It’s simple. All startup companies (and I guess companies in general) have their theses about which products and services their customers like, but they base this on their own assumptions and not on facts. If something goes well, for instance, they sell more of a product. It’s easy for the engineers to think it’s because they added a new feature, whereas the marketing team might claim it’s because of a brand new campaign they just launched. When things turn bad, however, it seems like everyone’s pointing their fingers at each other. In the end, whether things are good or bad, it doesn’t solve the fundamental problem: How do we know?

There are a lot of different steps in validated learning, but the first step is basically to ask the customer. Ask what they want, and then track and measure everything to make sure that the company delivers the best possible product.

So why am I telling you all of this? I really don’t like the idea of addressing the TIP audience as “customers.” It has wrong connotations to it. If that was the case, the more than 100 emails I get a week asking for advice would make me a customer service person rather than a person providing free information for kindred spirits! But I like the idea of providing as much value as possible. For instance, I previously asked the TIP audience what they liked, mostly for the episodes, and they wanted us to talk about the current market conditions. So we decided to focus more on that. Since we’re doing the episodes anyway, why not focus on what the listener wants to listen to?How to Invest in ETFs Main Picture

So this is where I need your help. I need your help in making me take the first and second step of validated learning. Not too long ago, I wrote a blog post called The Future of The Investors Podcast Part 2. In that blog post, I mentioned various projects that the team behind TIP has been setting up recently and which projects we might continue with. Perhaps, it was the blog post or perhaps, it was something completely different. But the feedback we got on our two courses The Intelligent Investor and How to invest in ETFs have been outstanding.

Especially, creating the latter course was a good experience. I feel that ETF investing is an important transition for newer investors that would like to start investing without risking a significant amount by picking a bad individual stock. I personally wish I had looked into ETFs before investing individual stocks. Not only would I’ve not lost that much money in the early days(!), but it’s simply a less complicated way to invest.

Still, if you look at my inbox, I’ll say that the ratio of questions between individual stock picks and ETFs is easily 10-1. It seems like people really want to learn more about individual stock picking. Preston and I have thought a lot about how to respond to this need, and we’re considering creating a course where we take you through the entire process of analyzing and valuing 10 different companies.

To continue our validated learning process, we would like your personal take on which companies you want Preston and I to value for you. We’re thinking to create a thorough A-Z video lesson for each stock. I came up with some of the stocks I imagine you would be interested in a valuation of. But if you have other suggestions, please feel free to add that in the comments below the post.

We’ve come up with three categories of stocks where we will take most picks from, and then one or two picks in the small to mid cap segment as well. The plan is that Preston will do 5, and I’ll do 5… but which stocks should we analyze?

-Stig

Our video analysis of which Nasdaq stock? (Vote up to 3 times)

    Our video analysis of which Dow Jones stock? (Vote up to 3 times)

      Our video analysis of which small and mid cap stock? (Vote up to 2 times)
        2018-02-23T23:17:53+00:00

        11 Comments

        1. Peter
          Peter November 11, 2016 at 4:03 am - Reply

          Please analyze BAM, Brookfield Asset Management, a global real asset investment and management company with a market cap of $33 billion that trades on New York and Toronto. BAM has the added value of adding diversification into real assets for a typical portfolio of stock and bonds. Like Buffet, BAM also takes a long term value approach and has performed very well over this long term.

          • Stig
            Stig November 13, 2016 at 1:33 am - Reply

            Peter,

            Thanks for the suggestion!

            -Stig

        2. Yaokai
          Yaokai November 14, 2016 at 10:08 am - Reply

          Could you give an analysis on UIHC and / or IX (Orix)? Thanks.
          UIHC as a typical regional insurance player and IX and a diversified Financial Services in overseas market.

        3. Daniel Olshansky
          Daniel Olshansky November 19, 2016 at 4:18 pm - Reply

          If you have the time, I would be really interested in hearing your analysis on Scorpio Tankers Inc. (STNG). They own a fleet of ships for delivering oil.

          The reason I bring up this company is because this company is contrarian to the types of companies I would otherwise invest in. Successful investors often say that they would be able to make much larger returns today if they were managing less capital, so I’ve been trying to look in places where others would not. It has a market cap of $750MM, so billionaires wouldn’t even look at it unless they were considering a complete takeover.

          The stock is trading at a relatively low P/E and a P/B of 0.5. It’s also worth noting that most of their equipment is relatively new, so while there is room for depreciation, I don’t think that expenditures on maintenance are going to be high in the near future. Liabilities are high, and they do have quite a bit of long-term debt, so I wouldn’t call it a low risk investment.

          Thanks!

          • Stig
            Stig November 20, 2016 at 7:26 am - Reply

            Daniel,

            Interesting pick. Thanks for suggesting it!

            -Stig

        4. Chari
          Chari November 22, 2016 at 4:45 am - Reply

          Could you please analyze SRG. Especially seeing so many Gurus owning it.

          • Stig
            Stig December 29, 2016 at 5:48 am - Reply

            Sounds like a very interesting pick. Thank you for bringing it to our attention!

            -Stig

        5. Kris
          Kris January 2, 2017 at 8:23 am - Reply

          I would love for you and Preston to analyze AT&T, especially since the CEO is trying to transform the long-time telecom giant into a company that will compete with tech giants such as Google and Apple.

        6. joe
          joe January 4, 2017 at 3:14 am - Reply

          I would love to hear thoughts on Gilead, Or Skyworks, or maybe Intel, or the hack etf?

        7. Daniel
          Daniel January 26, 2017 at 6:03 pm - Reply

          Dear Preston and Stig,

          I am very interested in a smaller Chinese company: Jinko Solar. It is a vertically integrated company in the solar power business with a market cap < 500Mio. It is trading at a PE < 4, little debt (after a part of the downstream business in China was sold). To look at the price chart makes you dizzy – speculants all over, it is also heavily shorted. The Solar market is very complex, small margins, and dependent on RD, world politics.

          It would be interesting to analyze this company, tell about risk, value, growth and socio-ecomomic determinants connected to this interesting company. Further: "why would Buffett (most definitely) not buy this business?".

          Daniel

          PS: thanks for all – buffetsbooks and your podcast were my starting point to (value) investing (even though I like growth companies alot) – pure gold!

        8. Jean-Francois
          Jean-Francois February 10, 2017 at 4:23 pm - Reply

          As a value investor, I am definitely puzzled and intrigued by First Solar (FSLR). It is currently a market cap of 3.42B, a P/E of 6.6, and price-to-book ratio of 0.59. This appear to be a bargain to me, but as a inexperienced investor, I think I might forget to consider some variables. The price of the stock is currently about 32$, but most intrinsic value calculator gives a price of about 50$ per share. I am afraid to miss something here! This stock is incredibly cheap for a technology company that is a leader in its field. It sits on more than 1B of cash too! What are you thoughts?

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