What’s the Best Way to Keep Track of Your Investment Theses?

If Abigail Van Buren and Ann Landers had teamed up and become personal finance and investing experts -- and if they'd kept working into the podcast era -- one can imagine the result might have been a little bit like the Motley Fool Answers' monthly mailbag episodes. (Though they probably would have done less "awfulizing.") Certainly, there are plenty of us who could use some guidance in the money realm -- so many, in fact, that two advice givers are hardly enough. So for this podcast, hosts Alison Southwick and Robert Brokamp have brought back one of their more popular guests, senior analyst Emily Flippen, to chime in.

In this segment, the question is one that reflects an idea at the core of how we invest -- you need to keep accurate score, and measure your performance against the right benchmarks. But that's not just a matter of dates and share prices: Smart investors keep track of each investment thesis that led them to buy (or sell) a stock, so they can look back and reflect on if they did the right thing for the right reasons. So, asks Carlo: What tools or software should one use to keep track not simply of the numbers but of the narratives?

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At The Motley Fool, there's no one right answer to that question, but based on what they and their colleagues are doing, Southwick, Brokamp, and Flippen have a few suggestions.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. A full transcript follows the video.

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This video was recorded on May 29, 2019.

Alison Southwick: The next question comes from Carlo. "In various Fool podcasts, it has been mentioned that it's a good idea to keep track of one's thesis for investing in stocks or funds. For me, the thesis consists of various numbers as well as text. Spreadsheets work well with numbers, but don't do well with holding a lot of text. Do you have a recommendation for a format or apps to keep thesis notes?"

Robert Brokamp: Yes, a lot of Fools talk about this and on this show, one Fool who talked about it was Buck Hartzell, who was on the last mailbag episode and he's talked about keeping a journal. Since Buck sits right next to me, I asked him. "So, tell me about your journal." He pulled it out. It's a Word doc and at this point it's almost 600 pages.

He's kept it for years, but he showed me what he just entered yesterday. He sticks with a Word doc, and whenever he makes any sort of purchase or sale, he records it, he records the reasons why, and he says the most important thing is to look back at it in a year or two to think, "Based on what I knew then did I make a good decision?" If generally you're making good decisions, great. If not, you need to change your process.

I put the question out to other folks in the investment group to see how they keep their journals. David Kretzmann does it in Google Docs. The same sort of thing. He puts down whenever he buys or sells. He puts valuation metrics. Any sort of price information. Any sort of information he used to make the decision just to keep track of things.

Tim Beyers uses a combination of Airtable, Notion, and Box, which he acknowledges is probably too complicated. He says Notion is a great catch-all because you can embed Google Docs and PDFs, write notes, and all kinds of things.

A few folks use OneNote, which is great because it integrates with all the Microsoft products and others, like me, use Evernote, which is generally free, but if you have too much information in there, you do have to start to pay.

The good thing about Notion, OneNote, and Evernote is they do have capabilities of integrating a spreadsheet, so if that is something where you want to have a spreadsheet and text, those should work. If you're often using Excel, I imagine OneNote is probably best. As they're both Microsoft products, it probably makes the integration a lot easier.

Southwick: Emily, do you keep an investing journal?

Emily Flippen: I do. I tend to do it very similar to the way Buck does it, though. Most of my investments I make for qualitative characteristics, so it's really valuable to me to look back on what I was thinking when I made the investment and why I chose to buy it. But I do keep an Excel sheet, and it's not just for my investments. It's for all of my finances, actually. But I keep my stocks in a tab in that spreadsheet and I track their performance there.

But when I think about looking at my investments and gauging performance, I tend to look back on what's changed since I made that original investment vs. what I'm thinking now. I will say I have not been investing as long as Buck, but it already is getting a little disorganized.

Southwick: 600 pages. Wow!

Brokamp: The value is -- both he and David Kretzmann said the same thing with his big Google Doc -- it's just so easy to search it. As long as you include the ticker and things like that, it's just easier to find whatever you're looking for in that one, big doc.

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