Outside The Stock Methodology
At StockBoxFinancial, our slogan is “think outside the stock.” Instead of trying to come up the silliest motto on the internet we wanted a message that actually meant something to our readers. This ruled out ridiculous ideas such as “StockBoxFinancial: The investing equivalent of Tiger Woods.” We came up with the “think outside the stock” slogan when we were trying to decide what kind of investment atmosphere we wanted to create and which philosophies we wanted to convey to our readers. That’s when we came up with our name StockBoxFinancial and our corresponding slogan. Our methodology is very simple: We try to think of investing as buying businesses. Instead of saying “We invest in the stock market” we want to say “We buy businesses.” If you can think this way we believe you will leave the world of mediocre investment returns and start matching those of the world’s greatest investors.
There is no way we could ever guarantee you monumental investment returns in the range the 30 or 40 percent range, but we do believe you can beat the market averages and a lot of professionals out there. With over thee-quarters of professional money managers underperforming the market, your money is best left in your own hands.
The idea of buying businesses may sound familiar to you; especially if you are an avid reader of Warren Buffett. Some people may say that we are just copying the legendary investor’s techniques, but if you are going to copy anyone why not copy the best? In fact, Buffett readily admits that his investment strategy just comes from the teachings of his mentor, Benjamin Graham. All this copying would have earned us a seat in the principal’s office in grade school, but it’s perfectly acceptable here. Hence, we feel no shame in imitating the greatest investor ever.
Buffett often discusses how an investor is an owner in a company rather than just a shareholder. When you are going to buy a business you look at the company’s strengths and weaknesses, rather than things like price momentum and analysts’ buy and sell recommendations. Also, when you go to buy a business you are going to look for companies that you understand. Once you do find a company worthy of investment you are not looking to sell it the next day. This is the mantra we want to live by at StockBoxFinancial. Whether we are looking for new stocks to recommend or analyzing stocks that we already own, we always consider ourselves in the business of buying companies.
In our analysis, very little is dependent on 52 week highs or lows, price momentum or stock market trends. These things overcomplicate the process. Instead, we analyze the business and buy it at an attractive price. Here is a flow chart that outlines our stock analysis procedure:
StockBoxFinancial Analysis Methodology
This is just a generic outline that we like to follow. Obviously for every company our analysis is a little different. This chart just provides the steps so you, the reader, can use to understand what we are thinking when we make a stock recommendation or investment. When we use this flow chart we like to be able to answer every question clearly before we invest. If the answer to any question is not clear then more research needs to be done. If you find this flow chart useful then we encourage you to download it and add to it as you see fit. We believe that following a basic outline for every company allows investors to better choose which companies to invest in since a similar method of research is almost always used.
Overall, at StockBoxFinancial we are looking to have fun while removing ourselves from the temptations that lead to sub par returns. Thinking in a different way, “outside the stock,” will lead to a more exciting investment world and superior portfolio results.