What stories do the stock markets tell us about companies?
In today’s episode, we will speak to my friend Alex Mason, host of the Stock Stories Podcast.
I only started to listen to his podcast about stocks and investing recently and really enjoy learning more about every company. While he focuses mostly on S&P500 companies (i.e. largest publicly traded companies in the US), the great thing for us in Europe is that he also dives into European stocks like Total, Nestlé, or Louis Vuitton amongst others.
We will talk about how he got into stocks, some of the myths surrounding the stock markets, the difference between a stock and a business, the different stock categories (or personalities), and finally Alex will share some great tips on where to start looking for information on individual stocks.
…or listen on Apple Podcasts
This episode is for you if you are looking at getting into investing in individual stocks but are not sure yet where and how to start yet.
- Stocks markets carry a mysterious aura, how does one get over the psychological barriers of starting? One excellent tip was to understand the difference between stocks and businesses.
- Stock prices = a market’s opinion on a particular moment (can be accurate or not).
- Businesses are driven by sales, assets, cash, net results, etc. Keeping those two definitions in mind can protect you when the stock crashes while the business still goes well (you’re buying shares at a discount).
- Law of large numbers: With time, it is harder to grow faster and faster for large companies such as Amazon.
- Metrics (like the PE or PEG ratios) and cyclicality matter but as well look at the personality of the company and the underlying economic characteristics that made the company a success. Will we see those characteristics again moving forward?
- View Stocks as categories (a concept from Peter Lynch): Look at businesses and identify the category: Fast Growers, Slow growers, Stalwarts, cyclical, turnarounds and asset plays. If you are a beginner, you are better to look at Stalwarts (familiar companies) and then branch out into the fast growers. Cyclical and the other categories may be too risky at first.
- Get started, it is okay to lose some money in the beginning (it is part of it), start with companies you are familiar with and if the company is publicly traded, go to the company’s website and head the investor’s section. Start with the annual reports.
Who is Alex?
Alex Mason is an investor and podcaster who hosts the Stock Stories podcast and writes at stockstoryteller.com. An MIT-trained engineer who became curious about investing, he is studying each component of the S&P 500 index and sharing everything he learns. You can contact him via Instagram or Twitter.
- Website: Stock Story Teller
- Podcast: Stock Stories Podcast
- Instagram: @stockstoryteller
- Twitter: @Stckstryteller
- PEG ratio: Investopedia page
- Book recommendations:
- Best purchase under 100 dollars: A Fountain Pen to clarify your thoughts even better and make writing more pleasant.
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