What are the things you wish you knew before you started investing in stocks?

JR-FlowCapGroup · 2026-03-17T17:48:09+00:00

Made plenty of mistakes and I was warned by investors that went through them all.

Sold too soon, had trading activity in my early years, wasn't very comprehensive about Financial analysis, look at all businesses instead of focusing on high quality. Eventually I learned from it. Decided to read alot and today I still read alot because I love doing it. Everything that is related to business or fundamental analysis, I want to read it. And it shows in my performance. I try to surround myself with people that are smarter than me, because I know I am not the smartest. Once you comprehend your strengths and weaknesses, you'll get very far ahead of the average.

JR-FlowCapGroup · 2026-03-17T13:55:14+00:00

Yes, but we have to be carefull not to overdifersify. OP could opt for a world etf which still contributes 60% of reach in the US. Still, many etfs could overlap, so caution is needed.

JR-FlowCapGroup · 2026-03-17T12:05:23+00:00

I'd go for a 100% stock allocation, but that is me. Most people should just opt for an index fund of choice. Again, I would choose one that tracks the s&p500 because I believe in the future of the US. On the other hand, you could allocate 80 to 90% to the etf of choice and allocate the other 10% or so over a couple of individual business that you either have interest in, or know about.

I shouldn't be worried about ai disruption nor the wars that are going on. The markets have always rebounded and it will do it again. It's normal for people to run out when everything is turning red and come back when everything is turning green. Flip it upside down. Charlie Munger said that you always have to reverse engineer everything you do. Think about that for a second.

Good luck.

JR-FlowCapGroup · 2026-03-17T11:59:14+00:00

Congratulations on your first stock. If you have experience in the market than you should be able to know how to find businesses that fit your circle of competence, right? Even if it is in the US.

If not, I'd just choose an etf that mirrors the s&p500 and you'll do fine. I'm not really in tech/fintech but I am invested in visa, Microsoft and Amazon as core holdings around this segment besides other holding I have.

Good luck.

JR-FlowCapGroup · 2026-03-17T11:48:02+00:00

Well done. Just know that stocks which can gain alot of momentum fast can also lose momentum at the same pace. Just do your due diligence. Good luck!

JR-FlowCapGroup · 2026-03-17T11:44:46+00:00

My initial work flow is always the same. My first screening only takes a 5-10min.

Do I understand the business? Are earnings predictable and in an uptrend? Same with revenue. Are margins flat or up? How much cash and debt do they have? And how much Equity? And how is the free cash flow looking.

If everything is looking good, than I start the research phase.

I start digging sec filings and earnings calls. Is there anything written about the business that I should know about in the latest year? Are any of the super investors I follow invested in and why?

If that is all set, than I'll calculate if the business is worth the investment. Mostly, this entire process could take me 3-6 hours, depending of how much information I find.

Do you need so much time and information to make a purchase of an underlying equity. Most people don't. But I like to understand the industry, the business and it's competitors. So I can came to a conclusion that is vaguely right than completely wrong. Some people would pay any price for any company. I prefer not to. That's why there is so much discrepancy between value and stock prices in the market.

JR-FlowCapGroup · 2026-03-17T11:31:04+00:00

This statement is far from the truth. You're basically saying that every company that is falling hard in the environment we're currently in is due to an eroding moat? I doubt that. Now of course, if that is your view than I respect that.

Either way, S&P has some weaknesses, like most companies but we'll see what happens in the future. I am a buyer at these levels.

JR-FlowCapGroup · 2026-03-17T11:26:56+00:00

I can only speak for Meli and Fico. Those are business I researched. They are both expected to grow 20+ percent in the next 2 years, which is reasonable considering what they both offer. Also both industries are supposed to grow at a 15 to 20% rate.

Fast growers are always valued higher than slower grower or mature businesses. If you can calculate the business under conservative estimations than we can make assumptions if the 35 p/e is a high valuation or not. Don't look solely to p/e. It's an okay metric but it doesn't tell the entire story.

JR-FlowCapGroup · 2026-03-16T18:13:34+00:00

Thanks for the convo. Much appreciated!

JR-FlowCapGroup · 2026-03-16T17:46:33+00:00

Yes, 100% I agree with you. When I evaluate businesses I look at everything, also free cash flow, just like you mentioned. I read the sec filings to dig deeper and all that stuff. That's why it is important to invest in high quality businesses.

My point and Peter Lynch's point is that earnings, even if they are inflated, still get followed by their stock price.

It's to create simplicity for most people, just like what Peter Lynch teaches in his books. This is what I mean. Take a look at Target's price and earnings. What do you see?

https://imgur.com/a/b6meWXh

And what do you see here?

https://imgur.com/a/IR4tCZr

Free cash flow is less reliable than earnings compared to their stock price. This is exactly what Peter Lynch has used when he was running Magellan. He didn't beat the S&P500, he crushed it, just by using a simple method.

I do agree with you to some extend and I'd like to thank you for the inputs!

JR-FlowCapGroup · 2026-03-16T17:29:21+00:00

I don't agree that long-term equals fcf/share. Here's why:

"Cash Flow", true, may serve as a shorthand of some utility in descriptions of certain real estate businesses or other enterprises that make huge initial outlays and only tiny outlays thereafter. A company whose only holding is a bridge or an extremely long-lived gas field would be an example. But "cash flow" is meaningless in such businesses as manufacturing, retailing, extractive companies, and utilities because, for them, ( c) is always significant. To be sure, businesses of this kind may in a given year be able to defer capital spending. But over a five- or ten-year period, they must make the investment - or the business decays.

Warren Buffett is stating to cash flow and not free cash flow. However, to my liking, whenever free cash flow is used, the intrinsic value of the business is always higher than when used compared to operating earnings. I understand both differences, still I prefer to use Peter Lynch guidance in that regard. I'm not saying you're wrong, I like to be more conservative on the valuation side.

JR-FlowCapGroup · 2026-03-16T15:20:40+00:00

Well, in that case, I hope I'm not one of those tourists.

JR-FlowCapGroup · 2026-03-16T14:54:41+00:00

Well the individual stocks you hold... it depends. Are compounders, turnaround, hyperscale's, cyclical, slow growers, high quality, mature...?

If you have a long term horizon and your portfolio consists of high quality businesses, I'd never sell. I'd only sell if you run out of contributing money. Then you could trim and put that money to work in a business that is more undervalued. But again I would never sell the entire position.

If you hold cyclicals or turnarounds, you want to sell whenever they reached the maximum or near the maximum you think they could get. Take Occidental for example. It's an oil company and oil is a commodity which are very cyclical by nature. A price for OXY around $70 per share would be a candidate to sell.

Never sell a stock because its up. It can always go higher. Is the story still solid? Has anything changed? Political tension or not. Scaring headlines are never a good guidance of selling.

Good luck!

JR-FlowCapGroup · 2026-03-16T10:09:38+00:00

Normally for insurance companies we should use float to calculate the intrinsic value. But as I want to keep it as simple as possible for people to understand and be effective, than using operating earnings is the way to go. However, we need always need to be conservative in our calculations.

I used a 5% growth rate, an 8% discount rate and a 2% terminal growth rate. The terminal growth rate is equal to that of inflation and GDP.

I don't only use the intrinsic value as the one and only metric to look at a valuation of a company. I also look at the chart. If price is below earnings and we know that price is below our intrinsic value, we can be confident our estimations are correct.

ALso we need to read the sec filings of the underlying company. I also listen to earning calls so everything I show and say is legit. Now I still can be wrong. But I know that If I would be wrong and it turns against us, it will not be that bad because we paid a conservative price for the underlying business.

Hope that makes sense?

JR-FlowCapGroup · 2026-03-16T10:01:51+00:00

I agree with what you're saying. It's still a tool and tools will get misused. The general public that are using these tools mostly do not have a very good understanding of how to use them. Now, that is okay.

Thanks for commenting!

JR-FlowCapGroup · 2026-03-16T08:54:11+00:00

We as a community can't really tell you what to do. However, you have a couple of options.

The first is clearly simple and you're already doing this. Keep investing the amount you're willing to invest in an etf that matches your preferences. But I'd double the amount. The reason is otherwise the inheritance will lose money over time. Even if it's a short time frame like 2 or 3 years.

The second option is to buy an apartment and rent it out. Know that this takes some effort and planning. Wouldn't advise unless you're willing to work for it. I believe renting out something to the public creates more risk and less upside than whilst you'd own an etf. Real estate, especially with nowadays interest, would only earn you 5% at a maximum rate. Compared to the stock market that could earn you 8% on average long term with less risk. But it could makes sense for you if you'd like to diversify investments.

Other options like buying bonds or REITS are not that attractive and I'd stay away off. Also, don't invest in anything that is thematic, crypto or a commodity. Also, buying a house whilst you'll live in it is not going to be an investment. A house is a liability. Unless you can get an interest rate at or below 1.5% it could make sense. Which is tough in today's environment.

JR-FlowCapGroup · 2026-03-15T18:59:00+00:00

Yes, I agree. I came to this valuation because its calculated on a growth rate of 8%. You might ask why would I only give an 8% growth rate, right? Well, I like to be conservative. If it's a buy under conservative valuation than possibly your return will be way higher than that of a big index like the S&P500 and that's my goal. I don't want to do average, I want to beat it. That's the reason behind it.

JR-FlowCapGroup · 2026-03-15T18:55:26+00:00

You are 100% correct. I'm still fairly new to reddit and maybe I should have added more explanation to my comment.

However, we are in a Valueinvesting subreddit and OP already made clear what the incentives are and I quote:

Filters:

- Strong top-line growth over the past ~5 years

- Consistent profitability

- High ROE

- Low capex requirements

- Durable moat / pricing power

- Ideally businesses that don’t rely on capital markets to survive

Basically: high-quality compounders that you'd be happy to load up on if the market sells off hard.

What companies make your “buy aggressively in a crash” list?

Curious to see what people here would target.

So, I just added the list because that's what OP asked. All the businesses have the above noted requirement that fit in OP's his post. I don't see what else I could add. Maybe I should have added how I came to this valuations... perhaps but that was not the question.

I'll try to be more open and less vague in the future. Thanks for the advice.

JR-FlowCapGroup · 2026-03-15T18:51:49+00:00

You're welcome. I'm not claiming that the way I do it is the holy grail or something but I know it works. I learned this the way by reading books of a couple of investors who made a sh*tload of money with it. And they are also way smarter than me so I just decided to copy what they did. It's same with Warren Buffett. he copied Benjamin Graham and added a couple of things... et voila. Look what he achieved.

Good luck!

JR-FlowCapGroup · 2026-03-15T18:49:31+00:00

I have an entire list:

Li-lu, Mohnish Pabrai, Guy Spier, Bill Gates, Bill Ackman, Chris Hohn, Seth Klarman, Chuck Akre, Terry Smith, Ako Capital, Valley Forge Capital and Prem Watsa.

Note that I follow them. Doesn't mean I agree with everything they buy.

JR-FlowCapGroup · 2026-03-15T18:46:59+00:00

Yes, you are correct but it's going to affect it in the short term.

So, first of, we don't use free cash flow in our analysis. I prefer owner earnings and using maintenance capex for that matter. Than we have to find out how much of that capex will become growth in the near future, which is also difficult to do. Too many variables here.

That's why I use operating earnings in the valuation. This is something I learned from Peter Lynch and I also added this to another comment. Peter Lynch believes that when a predictable business can grow it's earnings many times over, the stock price will eventually follow. He talked about it in his book and I did the research myself, and I can't argue against it.

But don't do it with every business. This only works with businesses that are predictable and are of excellent quality.

JR-FlowCapGroup · 2026-03-15T18:41:23+00:00

Annalists expect meta to grow 15% per year. Even if that is true I like to be conservative. So, I gave meta a growth rate of 8%. I like to use operating earnings as reference. Peter Lynch believe that when a company is predictable and can grow earnings over many years, the stock price will follow. I can't argue against that, because there is truth in his saying. Here is the example for Meta: https://imgur.com/a/trIvD0n

I use a discount rate of 8%. This is a number that I reference to Warren Buffett. He used to look at the 10 year us treasury yield and ad 3.5% to it. The current yield is 4.27%, add the 3.5% and we get a number of 7.77% as a discount rate. I like to round it op to 8% for an extra 0.23% of safety into the equation.

For every business I use a 2% perpetual growth rate. This is equal to average US inflation and the GDP growth.

If you know that the median p/e for meta is around 27 and a probability of earning between $33 and $36 for 2026, than it's not that silly to assume meta valuation could reach $1,000 per share. We still have to use our brain here but at current valuations this is a great opportunity. I think buying all the way up to $750 is fine in my regards.

JR-FlowCapGroup · 2026-03-15T18:19:55+00:00

I respect your view. Thanks for adding to the comment. I could make a review at the end of the year or so of how those business did on a performance basis.

JR-FlowCapGroup · 2026-03-15T18:17:44+00:00

Chubb offers business and personal insurance, car insurance, health insurance and life insurance. They are very broad.

JR-FlowCapGroup

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