Hi Reader,

Welcome to the 3rd edition of the Stockstartr newsletter. We launched on Bluesky. Follow us here to get the latest tips and to connect with like-minded people. In today's edition, you learn where to find the financial report, why you don't need to win with every stock pick, and why you should know the story behind figures.

Fundamental

You don't Win with every Stock Pick

There is this belief within the novice investing community that every stock pick must be a winner. Only picking winners isn't achievable, not even for professionals. That is the reason investors hold shares of multiple companies in a portfolio. Of course, you always have to aim for all stock picks to win.

The likeliness of becoming a winner has much to do with your security analysis. But it doesn't guarantee a winning stock. We can't predict the future, and neither can you.

Do you know what groceries you will buy in two weeks? If you can't, how can you predict consumer spending for the next 3 years with high reliability? Predicting a company's performance is challenging. Thus, we stick to likeliness and spread our investment money between some companies with the highest probability of returning money to the investors without destroying the company.

A successful stock picker like you only needs a few winners per decade to make a difference. In a portfolio of 5 stocks, of which four go nowhere, only one stock has to become a 10-bagger for your investment to triple. A 10-bagger is a stock growing 1000% based on your initial investment. 10-baggers on Wall Street is a common occurrence in a decade.

What you shouldn't do: don't expect to pick winners consistently. Most stocks under or overperform based on your expectations. Focus on your stock analysis:

• What can cause the stock price to increase?
• What can cause the company's growth to stall?

Probabilities of the company will decide which to invest in and which one to let go of (for now). You want investments in stocks with the greatest potential.

Why you should know this: you might be disappointed when some stock isn't performing as you had hoped. I certainly had this when I started out. Even with thorough analysis, the future has unforeseen events. Does it mean your analysis was terrible? No.

Conclusion: have a few companies in your portfolio with a high likelihood of winning. Do you have only one winner per decade? You still can triple your money every 10 years, which is an 11.6% return. Better than the average investor!

Glossary

Annual Report

The annual report is a comprehensive document on the company's activities and financial health that public corporations must provide to shareholders annually.

The report contains general corporate information, financial statements, management notes, director's reports, accounting policies, and more from the past year. In the United States, the annual report is referred to as 10-K.

Practical

Find the Financial Reports

The annual report is available to you in several ways. Paid security analysis tools, like Tikr, provide the reports as part of their service. But it is also available for free.

The financial securities law obliges companies to make their financials publicly available. Besides, it is also in the company's interest to share the reports freely to raise capital with new investors.

Here, we discuss two methods to obtain the annual reports freely. The first method is through the SEC, which applies only to American companies. The second is helpful for all companies around the globe.

​

The SEC

Through the SEC's website, you search for American public companies. Fill in the company name or the stock symbol in the search bar (1). We choose Coca-Cola (KO) for this example.

A drop-down menu suggests multiple securities with the same or similar name. Select Coca-Cola stock (2).

A new page opens what looks like the photo below. Click on the 10-K (annual reports) and 10-Q (quarterly reports) in the right column (3). The most recent reports pop up. Here, you choose the desired financial report. In this case, we want the last annual report (4).

Do you want to look into an older report? Click then the green button 'View all 10-Ks and 10-Qs.' The entire list shows up below under filings. Set the period to get the list of all the financial reports during the filing period (5). A list appears where you select the report you want to analyze.

​

The Investor relations page

The second method is through the company's investor relations page. Every public company has one. This page provides annual reports, presentations, investor calendar dates, and more. The investor relations page is accessible through your preferred search engine. Simply search for 'investor relations' + company name. The first or second result is the desired page, as shown in the Porsche Investors Relations search result below.

The layout of the investor relations page is different for every company. As a standard, unfortunately, it is nonexistent. With minimal scrolling through the page, you find the latest annual report.

Exercise: find the latest annual report for your favorite company. Do you want extra help? Feel free to email by replying to the newsletter.

Principle

Know the story behind the figures

Investor Peter Lynch once said: "You can't see the future in the rearview mirror." By this, he means you shouldn't set high expectations based on past performance.

​

​

When you analyze a company, looking only for high growth is appealing. Your brain paints a favorable picture, with a trend continuing for several years. The same applies to the stock price, dividend growth, or other emerging patterns. What happens is that you extrapolate data based on past results. A common trap to fall in.

How to avoid falling into the trap. A company with high growth over the last decade may or may not have a different growth for the next 5 years. You can't tell by only looking at the figures.

You have to wonder what caused this high growth:

• Is the company active in a new trend (recently AI)?
• Extended or created a new product line?
• Is the company expanding overseas?

When you find the reason for the high growth, you question whether this growth continues.

For example, in the case of expanding overseas. Is it still in the beginning stages, or is the majority of the overseas market already exploited? When it is the former, it is more likely that the company's growth will continue. With the latter, the growth will slow down till they find a new way to increase profits.

There is always a story behind the figures. Knowing the story makes the figures valuable. Without it, it doesn't tell you a thing.

Thanks for reading Stockstartr. For questions, suggestions, or feedback, please reply to this email. We will gladly take the time to listen to you. Please ask your friends and colleagues to sign up.

No investing advice is given at any moment. The newsletter is purely for informative purposes only.​
​
Was this email forwarded to you? Sign up here to get Stockstartr in your inbox.
​
You received this email because you signed up for the Stockstartr newsletter.
To stop receiving this newsletter, unsubscribe or manage your email preferences.
​
Hausergasse, Klagenfurt, Carinthia 9020