How to pick shares for the future

TL;DR

Richard Bedard, the Share Sleuth at Interactive Investors, explains how he uses a decision engine to analyze company valuations and pick undervalued stocks.

Transcript

today I am talking to Richard Bedard he's interactive investors very own share sleuth I like to think of him more as a forensic analyst he's been ripping apart balance sheets company accounts for years he knows how to do it does incredibly well he runs the share sleuth model portfolio and has invented a decision engine which makes investing simple ... Read More

Key Insights

• 🥳 Share prices are not the main factor in Richard Bedard's investment decisions; he values other metrics like price-to-earnings ratio and earnings yield.
• 💁 Bedard's decision engine helps him visualize and assess companies based on their financial information and market valuations.
• 👋 Bedard looks for companies with sustainable competitive advantages and good valuations to include in his portfolio.

Questions & Answers

Q: Why does Richard Bedard not pay attention to share prices?

Bedard believes that share prices alone do not provide sufficient information about a company's value. He looks at other metrics like price-to-earnings ratio and price-to-book ratio to assess a company's worth.

Q: How does the decision engine work?

The decision engine is a spreadsheet that evaluates companies based on their financial information, market valuations, and Bedard's judgment. It ranks companies from top to bottom, with green indicating good valuations and red indicating potential concerns.

Q: Why does Bedard prioritize long-term investing?

Bedard focuses on long-term investing because he believes it is important for a company's strengths to be sustainable over time. He looks for businesses with lasting competitive advantages that can generate consistent returns.

Q: How does Bedard decide which companies to include in his portfolio?

Bedard looks at the top-ranked companies on the decision engine spreadsheet. While he might not pick the number one-ranked company, he aims to diversify his portfolio by selecting the top 15 or so companies that have good valuations.

Summary & Key Takeaways

• Richard Bedard does not focus on the FTSE 100 or share prices but instead uses other metrics to evaluate company value.

• The decision engine is a spreadsheet that ranks companies based on financial models and Bedard's judgment of their long-term potential.

• Bedard looks for companies with lasting competitive advantages and good valuations, and he diversifies his portfolio to reduce risk.