# Stock Investing isn't that hard

I've had a few people ask about my stock investing strategy. Even though I try to study as much as possible on making the best stock decisions, here are a few caveats:

1. I have a tiny portfolio
2. I'm not a finance expert
3. My purchases are for learning purposes
4. I'm not that smart

But if you're still interested in knowing how I choose stocks let's dive in.

## 1. Industry
My current portfolio is spread across
1. Tech
2. Energy
3. Precious Metals
4. Real Estate
5. Utilities

First, I identify what industry I would like to buy into, there's a few restrictions I impose upon myself mostly around ethics or faith. Right now, industries I'm looking into are Solar Panels and Renewable Energy, Semiconductors, Aviation and commodities. I often find industries that I personally feel are very relevant or would be relevant mostly through research or gut feeling. Once I have an industry, I begin my research and finding a company that meets as many of my checklist criteria

## 2. Financial Health
I'm quite an old school on this. But the reality is being a Nigerian, I'm not open to buying a company that's structured like Nigeria. For financial health, I try to look at a companies debt levels and see if it's reasonable. Debt for most companies is a good thing (esp. in a bullish market), but can be disastrous at the slightest economic tremor (a case study of Hertz). I often find companies that are in a good financial spot and don't have too much debt hanging over their head. I often aim for a debt/equity of under 70% depending on industry and industry averages, certain industries have higher debt exposure than others, but the closer it is to zero the better.

## 3. Revenue Growth
It goes without saying, I'm interested in companies that are still growing and have a high potential for growth. I'm more interested in a slow but steady growth around 5-20% annual growth in the last 3-5 years than a company that grows 90% one year and shrinks by 60% the following year. I of course love big numbers but prefer consistency. Consistent revenue growth gives me an (a perceived) indication that 
1. The company understands their market and is doing a good job solving a problem
2. The company is expanding: the bigger the pie, the bigger my bite
3. The company could become relevant in the industry if it's taking good market share

Rapid/Inconsistent growth often seems to me like a miracle or luck. Can be more rewarding but it's harder to time.

## 4. Valuation
Just like everyone, I love a bargain. I'd love to buy a good company on a discount, it's like paying 70cents on the dollar, who doesn't like a great deal?
On valuation, I find good companies that are trading below their fair valuation or great companies that are trading just around their fair valuation. There are several methods to calculating valuation but, personally, I use the valuation from simplywall.st. The higher the discount the more interested I am. I'd like to buy a company at a 20-30% discount from it's valuation and hold it for as long as I can.

## 5. How good with money
I learnt that when reading summaries, companies have legal yet deceptive ways of masquerading the true depth of their financial mess, while burying it in the fine print. Similar to how a company can bury crazy terms in their 50-page T&C document, auditors can also hide a mess making it less obvious but they still have to be truthful. I try taking a look at a companies cashflow over time, i.e where their money comes from and where it goes to, in more savvy terms I look at
1. Operating expenses: I'd love to see this relatively constant or better shrink
2. Earnings: I love to see this getting bigger
3. Free cashflow: I love to see a positive value getting bigger