Motley Fool analyst Jason Moser chats with Rick Engdahl in a side-of-desk interview about developing a personal investment philosophy and shares his own four-point system for deciding whether a particular stock is right for his portfolio.
In this video segment, Jason recommends keeping a journal, or notes of some kind, as a way of learning about your own habits and preferences as an investor. Looking back at what you've done in the past can help you understand your priorities and set guidelines for future decisions.
A full transcript follows the video.
Jason Moser: Thankfully for me, this has been something I've worked on for a while, so I have it pretty well committed to memory.
The reason why I know it so well is because I was able to put it down in writing, so that's one thing I would encourage any investor to do, is to have a basic philosophy written down -- something that you can refer back to.
Even if it's just a journal of events or whatever, having a written record of what you do as an investor gives you a chance to look back on what you were thinking at a particular time, why you invested in this certain company.
Did you invest in a company that maybe met all of your qualifiers except for one? Why did you let them pass on that one? It can help you grow and change as an investor.
That's one of the beautiful parts about investing; it's this lifelong endeavor, a chance to just learn something new every day and really develop as you grow. I think keeping documentation of it is the most sensible thing to do.
It's not to say that this philosophy that I have won't change over time. I hope it does. I want to make it better. I want to make it smarter, and I want to make it more relevant.
Depending on what stage of life you're in, that's going to dictate how you view the world and how you invest, right? For someone who's younger, maybe they're looking to grow their wealth. Someone who's older maybe is looking to protect their wealth, so they have to consider different things.
For me, I'm still young enough to be in the "grow your wealth" stage, so that's where I look at these four factors.
There is no real priority. It's not that one begets another. They're just the four things that really matter to me the most. There is sort of a qualitative factor that has to go into it. The management team, for example -- some people just may not necessarily approve of a management's compensation structure, whereas I might give it a pass. Or somebody may be interested in a given market or a company where I'm not terribly interested.
Some people just have lines that they don't want to cross. People don't want to invest in tobacco companies, for example, and that's perfectly understandable. I don't, either. Those are the kinds of lines that you can help discover through time, and through using a philosophy like this.
Rick Engdahl: You're not suggesting that somebody follow your lines. You're asking everybody to come up with your own.
Jason: Right. That's just it. It's not to say that I came up with this magic formula that's all mine. This was something that was pieced together from all of these investors that I know in my life -- investors that I've read, investors that I work with. This is what really went into this philosophy that I had. That's how I built this.
It's not mine, really. I think this is just the product of the good fortune I've had in my life, to be around a lot of smart people. I think I owe virtually everybody that I work with and that I've read a little bit of thanks for this philosophy, and hopefully over time I'll continue to be able to develop it -- maybe even add a fifth or a sixth step along the way.