Stockomendation is a share-tipping site I’ve followed for ages. In fact, most of the tipsters on it I’ve followed for even longer, but in a very fragmented way. Dipping in and out of various websites, publications and social media feeds to see who is saying what about the “hot stocks”. But, then along came Stockomendation and has aggregated them all together, in one handy place. If you’re looking for stock tips, trading ideas or just want to get a second opinion on what the pundits are saying about a company in your portfolio, Stockomedation is the answer.
So, I caught up with Stockomendation’s founder Paul Roberts, to get his thoughts on how people can become better investors and stock pickers.
How can people use Stockomendation to be better investors?
If it was going to be one thing, you’ve just got to follow the absolute best investors and share pickers in the market and replicate what they do. That’s the simplest thing.
I’m not just talking about an index tracker over a period of time, which is clearly a very smart strategy and a very proven strategy. I’m talking about individual sharepickers who are really, really good.
The challenge with that, of course, is always trying to find those people and also replicate what they’re doing in as close to real-time as possible so you can get the greatest returns.
The second thing I would do when following the best share pickers and replicating success would be to keep it simple and increase your knowledge. But on the understanding that as a DIY or retail investor, we are time-poor.
We might be cash-poor at times as well, but we’re generally time and knowledge-poor and maybe we’ve got some cash want to stick in the market.
It’s about how do you trade off the time, the knowledge and the cash in order to create success?
Which is where the copying strategy works, but also keeping it simple from understanding some of the key principles of investing, rather than needing to understand everything about investing.
I think it’s impossible for anyone, or any analyst or broker to understand everything. Nobody does. Otherwise, they’d be the richest person on the earth.
Just getting the right basic knowledge in play and using some good, simple platforms, that’s what I’ve seen as a winning strategy time and time again.
Do you think books can help people improve their investing?
I like Alpesh Patel’s book. The Mind of a Trader. There are so many books out there.
You slog through some of the Benjamin Graham books (The Intelligence Investor) and some really complex stuff. But, as a DIY retail investor, it’s really hard to get through all that stuff when you’re running businesses and families.
We have to be realistic, so that’s why copying the best is always the best strategy. But, also then understanding when the best make a decision, and why they’re making a decision.
One of my favourite books of the last couple of years is The Art of Execution by Lee Freeman Shor. That is the best book I’ve ever read on investing. It’s great, and it was really interesting, and I think a must-read.
I met with Lee after reading it, and we gave away a load of his books, as part of a Stockomendation project.
That really helped me to understand a bit more about the three types of traders that he witnessed. What we found with the statistics that he’s got in terms of success rates from fund managers is that it replicates with what we’re seeing with share pickers on Stockomendation.
Lee was really interested in what we were doing and seeing what our stats were compared to his analysis, and it was very similar. Interestingly, a hit rate doesn’t necessarily mean you’re not going to make money. The ones that made the most money in Art of Execution were the traders with a 30% or 40% hit rate, but whose order execution was really smart, really fast and really quick. They had the right temperament, I think they were the best traders.
What’s your view on investing versus trading?
I think the last point is in relation to understanding, the best bit of advice is understanding who you are. Are you an investor, are you a speculator, or are you a trader?
Most people are speculators. The difference between speculators and investors is that an investor without any knowledge is a speculator.