To The Moon

Let me introduce the "investing information onion." It is a practical tool that helps you classify sources of information commonly used by investors based on relevance, trustability, and usefulness. 

I am a firm believer in the idea that primary sources published by the company you are researching should be THE go-to resource for investors. 

These filings allow investors to learn more about a company's 

✅ mission, 

✅ business model, 

✅ competitive environment, 

✅ management team, 

✅ underlying incentives, and 

✅ risks 

without introducing too many preconceived notions or biases.

Unfortunately, I suspect that far too many investors DO NOT read annual reports before they make investment decisions because these reports are "too boring" or to some extent too daunting.

Steve Clapham , author of the book “The Smart Money Method”, has pointed out that according to SEC data, within the first 24 hours after an annual report is released, the 10-K is only downloaded like 28 times or some other absurdly low number.

Of course, company-specific write-ups provide a lot of value too, but you should first and foremost start with the filings released by the company itself in order to form your own independent opinion.

Let me quote Aswath Damodaran here: "In addition, confine your background research on the company to information sources rather than opinion sources; in other words, spend more time looking at a company's financial statements than reading equity research reports about the company. If you are looking at someone else's valuation of a company, always consider the reasons for the valuation and the potential biases that may affect the analyst's judgments.

As a general rule, the more bias there is in the process, the less weight you should attach to the valuation judgment."

Twitter MAY be an exception. I think Twitter is an incredibly valuable learning tool IF you follow the right people and IF you are able to filter out the noise (probably 95% of the content on Twitter is just noise). 

The trick to Twitter is finding the people who actually know what they’re talking about and keeping your follows to those people. Once you do that, it is an incredibly valuable screening methodology: crowdsourced from a crowd of hypercompetent experts.