No. of Recommendations: 20
Hello everyone!

6 weeks ago I started a project in the Rulebreakers service to analyze a randomly-chosen company every week. Here's how I introduced that project:

I've learned a tremendous amount from TMF over the years, but I've come to realize that I lack practice. I would like to be more confident in evaluating companies on my own and choosing them for my portfolio. So I'm embarking on a long-term project: each week, I will start fresh with a random Rule Breaker recommendation chosen by computer, research it, and write up my thoughts on it along with a simple score of 1-5 stars reflecting my conviction as to whether or not I would want the company in a hypothetical real-money portfolio...

This is the kind of thing that I personally find more enjoyable as part of a group, so I'd like to invite anyone who wishes to join me. I've chosen 1-week periods so that we'll have some momentum, it's easy for new people to join in over time (or rejoin after periods when one is too busy to participate), and so we won't get bogged down too long on any one company.


I was recently asked in an email off-boards to expand the project into something public that everyone could participate in, so that's what this is! Obviously we won't be using Rulebreaker recommendations, though ;-)

So here's how it'll work to start, and we can evolve this as we go: each week, I'll let the computer randomly choose a company from a curated list, and then I'll post it here. We'll analyze it "reading club" style, where we all go off and do our own analysis as best we can, and then come back together at the end of the week to share our thoughts and discuss it. And I'm thinking maybe we can also do some supplemental discussions in the middle of our analysis week on the nuts and bolts of analysis, different approaches, various considerations, etc. if that's of interest to folks.

Over in Rulebreakers, I've been posting the new company on Fridays and then we've started our discussion the following Thursday. I'm going to start with that schedule here too, picking the first company this Friday (5/15) and then we can begin discussing it the following Thursday (5/21). We can adjust the schedule in the future if needed.

And remember, nobody is expecting perfect analysis! We all will just do the best job we can, with whatever knowledge and skills and time we have, and undoubtedly discover that there's a lot we don't know. ;-) That's what this is all about. So don't let yourself get stuck or discouraged -- if you run into a stumbling block, just move on and bring questions to the discussion! We'll all learn together. We're just a group of Fools having fun and getting better at analyzing companies, one week at a time.

Finally, I do want to mention that the point of this isn't to find new investments (though that may occasionally happen), but to get practice analyzing companies. Even when a company gets picked that is a clear loser, I think it's still worth analyzing it anyway and getting the practice: there's a lot to learn, even from losers!

Please let me know if you have any questions or suggestions. This is all very informal, and everyone's input is welcome.

Thanks!
Neil
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No. of Recommendations: 3
Hi Neil,

I am really excited about this board--thanks for creating it!

Here is a funny fact about me--I like putting myself in uncomfortable learning situations. For example, I am a weak swimmer, but completed a rescue diving scuba certification. I have "below average" genetics for strength, but have completed a performance-based strength course. You might see where this is going...I am not very good at analyzing companies. When people speak of an investing "circle of competency" I know right off the bat that I have none.

I am here to learn, but I'll contribute as well. I have no shame and am happy to share my analyses, such as they are.
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No. of Recommendations: 1
Thanks Neil for your work,

Look forward to (mostly learning) and participating on this board,

Great idea!!

Mark
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No. of Recommendations: 1
I have been a nevercontent fan for while. I am looking forward to the board, but I don't know how much I will be able to contribute, at least to start. I imagine I may begin by taking just a small part of analysis and expanding my repertoire over time.

If there are others who feel as I do, that may be a way we could take that approach together. I can take one aspect of analysis and you can take another...etc.... Send me a note and let me know.

I really appreciate Fools who take the time to do this and share with others.

Thanks Neil.

Love the board name, by the way.

Jeb

You can see all my holdings here: http://my.fool.com/profile/TMFJebbo/info.aspx
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No. of Recommendations: 2
I like putting myself in uncomfortable learning situations

I think that's a really great way to do it, as long as you're still having fun :-)

I have to say, I've really enjoyed the 6 weeks of doing this so far. And I've found the one-week pace to be about right to keep things fresh, though in the beginning it may seem like too little time. That's okay, we just do the best we can. I think that's one of the advantages of doing random companies: when it's a company you own or are seriously considering for your portfolio, there's a pressure to do a really complete and top-quality analysis. But with these random companies, you just do the best you can and be satisfied ending up wherever you end up knowing that, over time, you'll be improving.

Neil
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No. of Recommendations: 1
I'd like to throw Snap-ON (SNA) into the hat of randomness, if you please! And perhaps Diageo (DEO) too.

Thank you! This is a very exciting project Neil!

Karen
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No. of Recommendations: 0
I don't know how much I will be able to contribute, at least to start

Jeb, I know you'll have plenty to contribute :-) At the end of the day, no matter how much analysis one does, the important thing is one's conclusion about the business. And there's certainly nothing wrong with concluding that we just don't know!

Over in RuleBreakers, David Gardner encouraged me to also make CAPS calls on the companies after analyzing them. I've been doing that and will probably continue to do so with these companies too, but my huge complaint is that CAPS doesn't have an "I don't know" option -- it forces you into an outperform or underperform decision, and I think that's unfortunate.

Neil
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Mark and Karen, I'm thrilled to have you along! We're going to have fun :-)

Neil
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No. of Recommendations: 1
Hi Neil,

Thank you very much for creating this board. I'm excited about the process and learning opportunity. I hope to contribute when I can.

Cheers,
Chris
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No. of Recommendations: 1
Neil,

Will the companies offered on this board be in addition to the project in Rule Breakers? Or will the project move over to this board and take companies from a wider variety of sources?

Like others, hoping to jump in little by little. In depth analysis a skill I keep intending to develop, but keep feeling intimidated by. But, as you've suggested, here, or on Rule Breakers boards, if I can step in a start by just pitching little small throws just to get in the game, that will be a good start! Certainly know in all areas of life, once you put just one foot in the circle, you're halfway in and it doesn't take much before you put the other foot down, and once you do moving forward continues almost automatically.

okapimoon
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No. of Recommendations: 1
Chris and okapimoon, great to have you!

Will the companies offered on this board be in addition to the project in Rule Breakers? Or will the project move over to this board and take companies from a wider variety of sources?

I'll be moving the RB project over here. I'd be stretched too thin trying to do both.

I can step in a start by just pitching little small throws just to get in the game

That's exactly right! My personal experience was that it was slow-going at first, but I already feel more efficient and it's only been 6 weeks. So there's definitely hope ;-)

Neil
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No. of Recommendations: 1
Hey Neil -

Great to see your idea expanding and I like the idea of it being a public board.

I'll contribute as I'm able (I've missed the last few at RB because of, well, life - my apologies)

Greg
DAR & MRH Ticker Guide

See all of CMFGalapagos's holdings here:
http://my.fool.com/profile/CMFGalapagos/info.aspx
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Thrilled you're here, Greg!

I've missed the last few at RB because of, well, life

We're all going to have periods when we're too busy. My hope is that the weekly schedule at least makes it easy to jump back in when life allows ;-)

Neil
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No. of Recommendations: 1
So here's how it'll work to start, and we can evolve this as we go: each week, I'll let the computer randomly choose a company from a curated list, and then I'll post it here.

Just curious, where do the stocks from the curated list from which the study stocks will be pulled come from? Will they in general be stocks from Fool Universe, or stocks from broad market in general, perhaps fool recs in some service, perhaps not? How was list curated?

Thanks, Neil --- starting my research ---

okapimoon
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No. of Recommendations: 4
where do the stocks from the curated list from which the study stocks will be pulled come from? Will they in general be stocks from Fool Universe, or stocks from broad market in general, perhaps fool recs in some service, perhaps not?

Ah, at the moment that's my little secret! Since this is a public board, I don't think it's fair to just pull TMF recs from the premium services. I'm sure some of the companies we look at will also be TMF recs, but that's not a requirement.

But, it's also not just the broad market: the list is curated. I'm not ready yet to say how, though.

delving into all the company reports is skill I hope to develop

If you find them too intimidating, then maybe try the conference calls instead. I haven't gotten to ITG's yet, but they typically have a nice balance of management perspective and probing analyst questions, and there usually isn't a ton of financial talk other than maybe a couple paragraphs from the CFO going over various financial stats for the quarter -- and you can just skim or even skip those if you want.

But the annual report does contain more than just financials, so as you grow more comfortable I'd definitely encourage you to at least look at one. The very beginning will actually be an overview of the business. You can always just skip anything that looks like financials or that seems confusing: Rome wasn't built in a day!

I think annual reports are one of those things, though, that look really intimidating at first, but -- financial analysis aside -- actually aren't too bad once you spend some time with them.

By the way, for anybody who wants to get some basic knowledge of how to read the financial statements, there's a really easy book called Warren Buffet and the Interpretation of Financial Statements that provides a very gentle introduction to the different kinds of statements you'll see (Income Statement, Balance Sheet, Cash Flow Statement) and what the various items on it actually mean in plain english. What I especially like about the book is that it also talks about what those items might imply for the business (as Buffet would perhaps interpret it). It's a very quick, easy, and informative read. It's not going to turn you into a financial expert, but it'll at least make the financials a bit less foreign.

Neil
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By the way, for anybody who wants to get some basic knowledge of how to read the financial statements, there's a really easy book called Warren Buffet and the Interpretation of Financial Statements that provides a very gentle introduction to the different kinds of statements you'll see (Income Statement, Balance Sheet, Cash Flow Statement) and what the various items on it actually mean in plain english.

I actually took "Basic Accounting 1" at college level and had to study and do many (and I don't say that lightly!) (notice bold) exercises with both Income Statement and Balance Sheet (but not Cash Flow, that was reserved for Accounting 2) and I actually got an A in the class. But still, never quite pulled it altogether to bring into working process to analyze my own investments.

okapimoon
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