As investors, we commonly face the dilemma of assigning time to different tasks, however, given that our time is limited, we need not only to prioritise, but also be very efficient in our research. How much time should we spend on researching companies, and how deep should our research be? In "Margin of Safety," Seth Klarman (Trades, Portfolio) comments upon this and provides us great insights on how to move faster as we do research.
"Some investors insist on trying to obtain perfect knowledge about their impending investments, researching companies until they think they know everything there is to know about them. They study the industry and the competition, contact former employees, contact former employees, industry consultants, and analysts, and become personally acquainted with top management. They analyze financial statements for the last decade and stock price trends for even longer. This diligence is admirable, but it has two shortcomings. First, no matter how much research is performed some information always remains elusive; investors have to learn to live with less than complete information. Second, even if an investor could know all the facts about an investment, he or she would not necessarily profit. Continue Reading »