How You Can Manage Your Own Stock Research

There are about 800 companies listed on the stock exchanges in Singapore. Even if you spend a day to understand one company, it will take you a little more than two years to know the basics of all the publicly-listed companies here.

But by that time, you might need to restart the whole process as most of the companies will have changed, sometimes drastically.

So how can you successfully manage your own stock research in a time-efficient manner? These are just some of the methods that might help improve your investing process.

Your Circle of Competence

We have to acknowledge that we would not able to know all the listed–companies out there. More importantly, we have to realise that we might lack knowledge in certain industries to fully understand the inherent dynamics and challenges.

Therefore, it is important for us to create our circle of competence – the industries that we are able to understand and feel comfortable investing in. The most basic way is to start from your line of work.

If you are a doctor for instance, the healthcare industry might be inside your circle of competence. If so, then companies such as Raffles Medical (SGX: R01), Healthway Medical (SGX: 5NG), IHH Healthcare( SGX: Q0F), Religare Health (SGX: RF1U) and Pacific Healthcare Holdings (SGX: P47) can fall within your circle. As you learn more about other industries, your circle of competence can be expanded as well.

Grouping Cross-Holding Companies Together

Another method is to group companies that have cross holdings together.

If say we are looking at CapitaLand (SGX: C31), we can include its subsidiaries such as CapitaMalls Asia(SGX:JS8), Ascott Residence Trust (SGX: A68U)CapitaCommercial Trust (SGX: C38U), CapitaRetail China Trust (SGX: AU8U), and CapitaMalls Malaysia Trust (REIT)  into our research list.

There are many other companies listed in our local stock exchanges that have cross holdings. Another example would be the famous Jardine Group, which includes Jardine Matheson Holdings (SGX: J36), Jardine Strategic Holdings (SGX: J37), Jardine Cycle & Carriage(SGX: C07) and Dairy Farm International Holdings (SGX: D01). Such grouping can help us to understand a large basket of companies with only minimal additional information.

Foolish Bottom Line

These are just some of the ways that might help you to create a more effective system for your investment process. As you improve on your own processes over time, you might even be able to create a unique set of methods that works just for you.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.