Key insights
- An investor reflects on the challenges of using lengthy research notes for stock analysis, noting difficulty in making clear buy/sell decisions due to information overload and emotional biases. The investor seeks alternative portfolio management strategies. While focused on Indian equities, the issue of research documentation impacting decision-making is broadly relevant, with a slightly negative influence due to highlighting potential pitfalls of relying too heavily on extensive research without clear decision-making frameworks.
I am an investor investing solely in indian equities. I used to write nothing in my initial years, nor did I research much before buying a stock. As I grew as an investor, I realized the importance of researching your own stocks and having a strong hold on its business, future plans, and the industry landscape. This has genuinely helped me noticing relevant news, articles etc. because I developed some context and independent opinion on my stocks. Plus it gave me joy learning about the businesses I was investing in.
My problem has been the research documentation. I generally go through the company's PPTs and reports they publish in their earnings calls. I also take a fair bit of help from LLMs to summarzie these reports for me and help me with my questions and do a thinking exercise. It covers vast topics like the risk, the competition, valuation, the industrial cycle and macro company operates in, margin profile etc. etc. Then I put together the research notes in a few pages of google docs. I took LLMs help to generate the lengthy research notes that cover my findings along with source. I tried a few different formats to distill my research into simpler versions with no real clarity.
What I observed about myself is that when I am reviewing one of my stock a few months down the line I skim through the long research notes and the longer it is, the harder it becomes for me to invalidate and exit. I am not able to figure out the most important factors that should derive my action - hold / sell / accumulate / trim. All i get is a list of pros and cons which makes me confused and take decision in the moment clouded by my emotional state at the time.
Does anybody else feel the same? What works for you guys as a disciplinary system for your stock portfolio? What kind of workflows or structure do you guys follow before buying a stock?