The following is an assorted list of advice I’d give myself if I knew nothing about investing and wanted to get started as quickly as possible. Some of it is specific to investing in the U.K. but most applies more broadly (I should note that this is written from an investing-in-individual-stocks slant):

  • Open an Interactive Brokers Stocks and Shares ISA (or your country’s equivalent) and contribute as much tax-free cash up to the £20k annual cap as is feasible each year. They’re amongst the best low-cost brokers available and are miles better on FX fees compared to Hargreaves Lansdown, AJBell etc. if focusing on U.S. stocks.
  • Aside from exceptional circumstances, don’t bother with investing in UK shares. The markets are thinner, the investors more skeptical, and the time taken for a thesis to play out - or at least, to be recognised as playing out by the market - is generally far longer than for U.S. listed companies. This might be fine for some, but I prefer a shorter feedback loop!

  • It’s possible, and indeed, very easy, to overcomplicate investing. All it really boils down to is whether the market’s expectations of a business’s future cash flows differ from yours. [Astrology for Men.png]

  • The ‘reverse DCF (Discounted Cash Flow)’ model is a great way of assessing this by using a business’ current share price to discount future cash flows back to the present in order to find an implied growth rate.
  • ‘Multiples’ (this can mean price-to-earnings (P/E), price-to-sales (P/S) etc; the most appropriate multiple to use will vary depending on the growth stage of the business) and how they compare between similar companies within a sector are important to understand. i.e. why does Company A have half the multiple of Company B? The answer is almost never that the market has missed something, but it does often overstep in one direction or the other.
  • ‘The market’ is a collection of institutions and individuals, very few of whom are playing the same game as you. Weight any third-party analysis of a business accordingly.
  • In the absence of an informational edge, your greatest opportunity for outperformance is through identifying great businesses (those that currently, or in the future, generate substantial (and hopefully growing) cash flows) and practicing patience. Nowadays, existing great businesses are already known and future great businesses are rapidly identified.
  • Quarterly updates are worth paying attention to (more so for software businesses, where developments are rapid) but don’t often affect a long-term thesis. Remember, quarterly reporting is a legal requirement (in the US).
  • As with debating, knowing the counterargument is essential for building a strong case, though here for the purpose of thorough analysis rather than to convince anyone else (though that can also be a useful exercise to identify your blindspots).
  • Cultivate a preference for founder-led businesses. They generate better returns.
  • As futile as it may be to attempt to predict macro-economic changes (such as interest rates), they should be closely observed given the potential impact on future cash flows.
  • There are a few ways to generate investment ideas: personal experience with a product, stock screeners, online blogs/services etc. It’s worth spending the time to sift the wheat from the chaff. Scuttleblurb and MBI Deep Dives have particularly good blogs.
  • Investing is as much an art as it is a science; I personally think it’s weighted more toward the former. ‘Astrology for men’ might be going a little far, but there’s some truth to it.
  • You don’t need any qualifications to start investing but a healthy reading habit is a big help. Morgan Housel’s The Psychology of Money is as good a place to start as any.
  • All of the above is meaningless until you invest some money at which point you discover, if you weren’t already aware, whether or not you have a temperament suited to investing. Start with a small amount and see how it goes.