Rank & File
Using Watchlists to Keep Yourself Organized (And Us Accountable)
“A body of men holding themselves accountable to nobody ought not to be trusted by anybody.” - Thomas Paine
You see watchlists everywhere. Google Finance, Yahoo Finance, and your brokerage account. You can create them for separate purposes or functions. Things you are looking at this month, different sectors, targeted short-term holdings, prospective long-term holdings, the possibilities are endless. I have one named "Hmmm…" dedicated to companies I have heard of but know nothing about. Within those watchlists, you can set alerts by price or movement to be notified of whatever criteria you are looking for to make your next move. They are an excellent tool for keeping yourself focused, your research organized, and I am officially boring myself…
You already know what a watchlist is and what it is for. I want to talk about how we use them here at Ledger Island. Weekly, we profile nano, small, and/or mid-cap stocks. We use them as working examples of how a retail investor can interpret the mountains of data found on a company to devise a plan forward. Our two biggest goals for Spotlights when we launched were:
To offer two points of view on every stock. Sometimes, Phil and I agree. Most times we don't. Ultimately, another perspective may be the speed bump you need from making a costly mistake. Even with due diligence in research we, as individuals, are all susceptible to confirmation bias.
To be accountable. Our Spotlights are now and will remain single posts. The most current information will be found at the top as we update. Scroll down, and you will see our brilliance or recognize our error. Can't shy away from it. Can't love it in January and pretend we never heard of it in March. The process is continuous and transparent.
But how do we maintain transparency without becoming cumbersome and constantly posting updates? We use the Ledger Island Watchlists not only as a measuring stick of how we view particular equities but also as a tracker for our readers to find our most recent additions and updates. A "Table of Contents" that lives and breathes. Here are our watchlists by category:
Checking My Math: These are stocks we believe to be poised for sustained mid to long-term growth. At this point, we are focusing on an entry point balanced between individual portfolio needs and finding a value-insulated price against future volatility. The stock price may be a little sticky or stubborn, but we generally have a target we'd be willing to pay in mind. If the company's value or potential changes, it may get downgraded, and we will be sure to make that clear.
Prove It to Me: These are companies we see future value in, but at this exact moment in time are still missing some elements. That may mean a lack of stabilization in the stock price and movement or a clearer path forward to profitability. Should any of those pieces fall into place or miss their mark, stocks here can move up or down the watchlist categories.
Backburner: These companies have caught our eye but are still a long way from any sustained growth. They may have promising data points, innovative/novel product solutions, or "game changer" possibilities, but it's just too early to say for sure. Stocks here usually get a comprehensive spectrum news alerts set up on our end from different providers (i.e., major outlets, financials, sector, or trade-specific). Companies here will often leave breadcrumbs to when a time of higher value and lower risk is on the way. When we know something, you'll know something.
Bad Habits: Inflated market value. Inconsistent price movement. Undelivered promises. Poor management. Unstable volatility… These stocks have a long list of reasons to avoid them, even if they are riding a positive news cycle or meme-like following. Now, there isn't anything inherently wrong with trading meme stocks. The vibrations GameStop (GME) and AMC (AMC) made in the market can still be felt. But just as we said in our initial "Welcome to Ledger Island" post, we don't like or intend to promote that level of volatility as an investment "strategy."
And there you have our breakdown for how we rank the companies we profile as well as the quickest way to find updates and new Spotlights by visiting Ledger Island Watchlists. As we add information, be sure to be on the lookout for Watchlist Update posts.
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