Keep searching for new ideas

Mike Schellinger wrote an article about why an investor should keep looking for new investment ideas all the time. 

What are the benefits of looking for new investment ideas?

1.     Peter Lynch indicated that the more companies you look at, the more good ideas you find. The person that turns over the most rocks wins the game.

2.     The more you look at companies, the better you become at analyzing companies. To become a good investor requires practice. I think that researching new companies is one of the best forms of practice for investors.

3.     Looking at more companies helps you find trends that may be helpful in finding ideas. Perhaps you are looking at several companies in the same industry and are seeing a positive trend that is happening in a few but there are some that haven’t reported it yet. It might provide you with an opportunity to buy the stock of the companies that haven’t reported the trend knowing full well that it is benefiting them too.

While looking at more companies will generate more good ideas, results likely will not be immediate. Mike believes that you should always be looking for new ideas. However, some times are better for searching for ideas than others. In general, the best times to be looking are when nobody else is looking.

While Mike believes that looking over a lot of ideas is a way to obtain better results as an investor, that doesn’t mean that you should purchase more companies as a result. Mike’s philosophy is: You should always be hunting for new ideas but that doesn’t mean you should always be pulling the trigger. Think sharpshooter. Mike suggests that essentially you should wait for your pitch while you go to bat as many times as possible (look at many ideas).

Mike cautions that turning over a lot of rocks is important but that should never come at the expense of doing homework on your existing positions. It is very important to keep up-to-date on what you own. If you start to look at more ideas, don’t neglect the ideas you own.