Forum Topics The first 5 years
a month ago

The first 5 years 


I am prone to rambling so bear with me. 

As a young 23 year old who has only just started their investing journey ( About 1 year in). Just last year I started a job in a new career path, I’m now working in a warehouse and doing a diploma of logistics which has enabled me to start saving and investing. 

I’ve always enjoyed understanding businesses and how they work. However been so new to shares there is lots I still don’t know and need to learn but that’s the joy of it right. 

Since Strawman has lots of members all of who are probably older than me and have been investing for much longer. I thought it would be good to hear about people’s first 5 years of investing ( not a set time just thought that was a decent amount of time for returns to really show true). Anything from their experience, tips, tricks, books to read, podcasts to listen to ( already listen to motley fool money and the good oil) and how they do valuations.  I do find valuations tricky of course there is no one right way, but do wonder what is a good way for small cap company’s or company’s that don’t have a sales yet. 

I only run a small portfolio right now but I am saving well and adding to it often. I think investing into my knowledge/ learning is definitely the best thing I can do for the long term. 

If there is anything people think I have missed or should be asking please don’t hesitate to point it out. Thanks. 


a month ago

You've already done the best possible thing @SeanSchilling , which is to start early!

My first five years was full of mistakes, the biggest of which was hubris.

I started just as the late 90's tech boom was getting underway. Everything I touched went to the moon. How easy is this!? I'm a genius!

Of course, pride cometh before a fall, and virtually all the gains I had made, and then some, went up in smoke.

I was buying fads. All promise, no substance.

Working at a major broker, what really surprised me was how many of the supposedly more expert and experienced colleagues all made the same mistake.

I remain convinced that a big chunk of professional money managers are clueless. The realisation is that what the industry really sells is hope. And relies on convincing people that it's all too complicated for them to do themselves.

It's not.

Anyway, it's a journey and the learning process never stops. Stay humble, be curious and read as much as you can.

There's a lot of good places to start, but it's hard to go past the Berkshire shareholder letters for a good grounding (and they are all free).

Best of luck!


a month ago

> I think investing into my knowledge/ learning is definitely the best thing I can do for the long term. 

@SeanSchilling I think you already have the key insight right there

I view Investing as a long term learning journey - you are compounding your knowledge, experience along with your portfolio

If you read a book like The Talent Code by Daniel Coyle you will understand why actively learning to invest leads to long term success - you need to turn that learning into 'skills'

I can share some of my journey and learnings if that helps:

Ive been investing since 2000 - but its only been since 2009 that I seriously started investing into actively learning. Since then Ive managed to maintain a 15% CAGR in my portfolio over the subsequent 14 years. And each year I can see how far Ive progressed but realise that there is so much more to learn - my long term goal is to sustain 20% eventually over a 10 year period.

I try to focus on incorporating my learning into refining my investment process so it translates to skills and discipline (see Talent Code book)

Here are some of the things that I have incorporated into my process that I have found very valuable

  1. I compare companies in the same segment (I only invest in 3-4 segments) - and try and spot the patterns in fundamentals and business strengths and execution that indicate quality and sustained growth in this segment - this helps me filter out lots of companies and focus on the quality ones
  2. For those that pass this filter and may be candidates for investment I try to learn as much about the business as I can - including full history of announcements/acquisitions/cap raises, management, strategy, strengths/moats, risks, products, market, competitors
  3. For any company I am considering investing in - I model the historical fundamentals back 10 years and try to relate performance to the key actions they took in their history - and how they communicated this at the time. e.g. Small growing retailers revenue growth is driven by number of new stores opened as a percentage of total stores
  4. When buying shares I focus on expected annualised return over 5 years (vs risks etc) i.e. I try and forecast where the company will be in 5 years time (and note why the same or different to history). I keep this simple but it allows me to translate some basic assumptions into CAGR
  5. As companies I invest in make key announcements I review them against my forecast and what I expected to have happened - and try and understand whats going on if my forecast is significantly different
  6. When the market turns fearful, or the price on a quality company drops significantly lower for reasons I dont see as making much difference to the 5 year forecast (and consequently my 5year forecast of CAGR return goes up) - then I increase my holdings. Also when the opposite happens and the market is too optimistic I may reduce my holdings as the forecast CAGR goes down - but Im not so good at that yet so tend to do this slowly
  7. I use Sharesight to track my real returns - and also I use a 'Sold' portfolio to track what would have happened if I had retained the shares I sold. I do this so I can try and learn whether my SELL decisions were right (I want the return on this SOLD portfolio to much lower than what I hold obviously).

It might sound very intensive (and it is) but I have found this process forces me to actively learn - and be honest about my progress

Here is example of part of a the sheet I use to track the company fundamentals and make a basic foreast on 5 year valuation