Here’s a list of useful tools and other resources I use in my day-to-day investment activities, plus a few interesting and educational bits and bobs.
Finding somewhere to buy shares
The first thing an active investor needs is somewhere to buy their shares. Obviously, this means some sort of stockbroker or an investment platform, but which one?
The site allows you to add reviews for platforms you already use, and you can read reviews from other investors.
You can also find out much more about the analysis behind that list of platforms by downloading September’s Boring Money Magazine (PDF).
To get a different perspective on brokers and platforms you could download the Investors Chronicle stockbroker survey (PDF), which is good but not as up-to-date as Boring Money’s.
Another website I like is BrokerCompare.info, which has a very snazzy tool for comparing broker costs under a range of scenarios such as portfolio size and number of trades.
Yet another source of broker and platform info is Compare Fund Platforms, which does exactly what it says on the tin.
Finding shares to buy
As a bottom-up, business-focused investor I’m interested in company accounts rather than share price charts, so my tool of choice here is SharePad.
It provides more than ten years of data (if a company has been around that long), and you can download all of that data (income statement, balance sheet and cash flow statement) as a spreadsheet with just a click or two.
If you’re not sure how to analyse company accounts or if you’re investment strategy is a bit shaky, you might want to read Phil Oakley’s super-massive and highly detailed step-by-step guide to investment analysis.
Another site I’ve used for many years is Sharelockholmes; simple, clean interface, and millions (almost) of figures and ratios to sort and select by, but not very pretty.
If you’d prefer to read an entire book I would suggest:
- The New Buffettology – Written by Mary Buffett, this is the book that really got me started as a defensive value investor. This is the best book on defensive value investing I’ve seen so far as it’s quite systematic and mechanical, which is right up my street.
- Warren Buffett and the Interpretation of Financial Statements – This is another Mary Buffett book. It works step-by-step through the income statement, balance sheet and cash flow statement from a “Buffett” point of view (which I would call a defensive value point of view).
- The Defensive Value Investor – Written by yours truly, it lays out just about every detail of how I invest.
And if you want a few more book suggestions then try any of these (I haven’t provided links as I’m sure you have your own preferred book supplier):
- The Intelligent Investor
- The Intelligent Asset Allocator
- Wall Street Revalued
- The Most Important Thing
- Fooled by Randomness
- The Essays of Warren Buffett
Rather than reading a stack of books, perhaps you just want a quick overview of company accounts, share and all the rest of it?
In that case you might want to watch Bill Ackman explaining “everything you ever wanted to know about finance and investing in under an hour”:
Once you have your strategy and data source in place you’ll need to crunch some numbers and do some detailed analysis.
You can use my investment spreadsheets to measure the defensiveness and value of either a stock or your whole portfolio.
And once you’ve crunched the numbers you’ll probably want to dig in a little further and understand what makes the company tick, in which case you could subject it to a series of questions to find out what it does and whether it’s a likely value trap or not.
Tracking your investments
Having pulled the trigger and bought a few shares in a few companies, you should track your performance to see if you’re investing efforts are making you money or losing you money relative to the passive approach.
Although ShareScope has a huge amount of functionality for stock market traders, it also has – I think – the best portfolio tracking functionality (when combined with my portfolio analysis spreadsheet, of course).
Once each month I just log into my various broker accounts, reconcile the amounts between the brokers and ShareScope, and make any adjustments as necessary. ShareScope then gives me total and annualised returns for each holding.
It can also display a nice chart of the overall portfolio’s performance, like this one for the UKVI Portfolio (each “B” and “S” on the chart indicates a buy or sell trade):
You’ll also want to stay up to date with the latest news on each of your holdings, and a good way to do that is with investegate.co.uk. Just search for a company and all of its RNS (Regulatory New Service) announcements appear, enabling you to see pretty much everything you need to know as an investor.
You can also register to receive alerts on stocks you own or are interested in, or you can subscribe to their RSS feed. You’ll need an RSS reader, of which there are many. I use Feed Demon on Windows, although it’s a bit out of date and not supported anymore.
Being aware of the economic and market cycle
Unfortunately, investing in shares can be a bumpy ride, so it’s a good idea to have an appreciation for its cyclical nature. There are booms and busts and booms and busts, and it more or less goes round and round in circles like that.
For a slightly more elegant explanation, have a look at Ray Dalio’s How the Economic Machine Works. The video below is pretty awesome, and the website includes an audio-only version and a downloadable near-300-page book version covering the same material but in more detail:
Even Bill Gates said the video was a worthwhile 30-minute investment.
Being aware of how uncertain the future really is
Nobody has a crystal ball that actually works, so while Ray’s economic machine is a good metaphor, the timing and magnitude of each cycle are unknowable in advance. The same is true – to an even greater extent – when it comes to the fate of individual companies.
I’ve already mentioned Fooled by Randomness above – an excellent book about uncertainty in life and in the stock market. But if you want a deeper look at uncertainty in complex systems (like a company or the economy) then have a look at Complexity Explorer’s free course, Introduction to Complexity.
Hurry though; the current course is only open until September 20th.
If a multi-week course sounds a bit like overkill, try this three-word summary of the uncertain future by Jack Bogle, founder of The Vanguard Group and a man whose achievements I admire enormously: