How I Research Stocks - Step-by-Step Fundamental Analysis

This video is sponsored by Morning Brew - use the following link to sign up for their awesome newsletter: morningbrewdaily.com/theplain...
00:00 - Introduction
02:02 - Screening for ideas
03:09 - Understanding the business
05:51 - Understanding the finances
09:50 - Understanding the strategy
13:00 - Stock Valuation
15:44 - Review and finalize notes
17:11 - Conclusion
Resources (no current affiliation):
- Free Screener: finviz.com/screener.ashx
- Free Data Terminals (some with watchlists/screeners)
- www.tikr.com/
- app.koyfin.com/
- wallmine.com/ (an old sponsor)
- Free Watchlist: www.bloomberg.com/markets/wat...
If you'd like to support the channel, you can do so at / theplainbagel :)
DISCLAIMER:
This channel is for education purposes only and does not constitute financial advice - Richard is not responsible for investment actions taken by viewers. Please seek out a registered advisor if you require assistance (while Richard is a registered portfolio manager at WDS Investment Management, he does not provide advice through The Plain Bagel, which is not affiliated with his employer).

[@ThePlainBagel]

Happy Friday everyone! Visit morningbrewdaily.com/theplainbagel to sign up for Morning Brew's awesome newsletter (today's sponsor)!

[@LavaCreeperPeople]

How I Research Stocks - Step-By-Step Fundamental Analysis

[@RomanNumural9]

I'm legitimately impressed you summarized all that in 20 minutes

[@lowwastehighmelanin]

Right? Complex

[@IntegralKing]

yeah but some of his (great) advice is like "analyze the cash flow" That by itself is like half a college accounting class. So he basically laid out like 1/2 of an MBA courseload and you can go figure it out for yourself =D No snark intended, I love Plain Bagel, but his advice isn't exactly trivial to absorb

[@RomanNumural9]

@@IntegralKing yeah I'm studying my PhD in math finance. What impressed me is he was able to talk about it in a way where people who don't know that stuff still learned enough to begin researching it

[@dirtydan6098]

@@RomanNumural9rip your PhD… not a great area for work. Prove me wrong

[@RomanNumural9]

@@dirtydan6098 it's great because I want to do research. I'd rather love what I do

[@aaronfirtz2963]

Exciting times for semiconductor stocks TSMC, AMD and NVDA. which are all experiencing a surge in value. It's interesting to watch the competition develop, given these stocks are major contributors to Al chip growth. On the increase of my personal holdings, I've witnessed amazing impact on my shares.

[@ericgrinwis1630]

Intel and AMD will definitely have their share of the market. TSMC is at max capacity and investing in other semiconductor companies will be an absolute power move, Different chips are good at different things and Nvidia has been very specialised, which leaves other aspects of Al open.

[@paulhelfer8145]

This is the type of in-depth detail on the semiconductor market that investors need, also the right moment to focus on the rewarding AI manifesto.

[@aaronfirtz2963]

certainly, i had bought NVDA shares at $300, $475 cheap b4 the 10 for 1 split and with huge interest I keep adding, i’m currently doings the same for PLTR, POET and AMD constructively. Best possible way to get ahead, is participating behind top experienced performers.

[@kaylagarrison9267]

I agree, i own three business, right now I'm compiling and picking stocks that l'd love to hold on to for a few years before retirement, do you think these stocks would do better over the years? My goal is to have at least $2 million saved for retirement.

[@andrescastillo2043]

Amazingly, people are starting to get the uniqueness of Palantir.

[@ericjordan1tv1]

“How the bagels are made” 😂😂

[@LavaCreeperPeople]

How I Research Stocks - Step-By-Step Fundamental Analysis

[@lowwastehighmelanin]

That made me giggle too

[@sb_dunk]

Gotta get that bread

[@TopShot501st]

Disappointed no actual bagels were made in this video...😢

[@user-op6zz6ue8j]

(remember they called their baby bagel bite)🤔🤨

[@lolechi]

This video made me realize just how outrageous those investment TikToks and internet gurus really are when they talk about investment being easy. It really is a highly-technical job with years of experience required and not something you can do by finding silly "patterns" on a graph in your bedroom. Thank you Bagel, for opening my eyes.

[@USMCHolo]

Which is why I'm perfectly content to just throw my money in an ETF and let it ride. I ain't got the time nor the skill to run with the professionals, so why would I think I can beat them at their own game?

[@ArawnOfAnnwn]

@@USMCHolo Which ETF tho? Loads of different funds out there, and that's just one type of fund among many others.

[@btookie350]

@@ArawnOfAnnwnmarket index funds of course, like QQQ and IVV

[@warrenbuckley3267]

@@ArawnOfAnnwn I've had decent success with my 3 fund (Boglehead) portfolio. The three ETF's I currently own are: VTI, BND and VXUS. There are of course different ETF's you can use (like VOO instead of VTI for example).

[@MJ-uk6lu]

Either that or you just ignore everything and put your money to VTI and bonds.

[@TheMightyKawama]

You demonstrate just how much work goes into your job beneath the veil, the fact you can do this and run a youtube channel is a testament to your work ethic - thank you Richard

[@matth8924]

Holy shit, FINALLY a video that explains what Analysts/portfolio managers ACTUALLY DO.

[@potatoskunk5981]

It would be interesting to do a walk-through of this process on a particular stock, just to show how it actually works in practice.

[@ajithpr4909]

That would be helpful ❤❤❤

[@alexweitz]

You would probably need a 30 hour video

[@potatoskunk5981]

​@@alexweitz To go in-depth, yes. But that kind of depth would also involve revealing proprietary information from his employer that he would not want to reveal. But a basic overview could be done in a normal-length video or short series. And I wouldn't want one of the very top stocks that gets all the headlines anyway. Something random from the bottom 100 of the S&P 500 or somewhere around there would be ideal.

[@leviathan7477]

This is why I love this channel. An actual professional showing how actual research is done. So many people these days say they “researched” something when they really just mean they read what other people said about it on Twitter 😂

[@odomobo]

Not only is this video informative, it helps put into perspective that my day job isn't really that boring after all

[@fanban2926]

I think it's the opposite, this is fun!

[@odomobo]

@@fanban2926 it's very cool, but if I had to do it for 8+ hours a day, I would be miserable. But I can see how some people would enjoy it!

[@connordewhirst2332]

curious what u do for work?

[@connordewhirst2332]

@@odomobo ^

[@odomobo]

@@connordewhirst2332 I maintain order-processing software

[@DomDomChekwa]

This is a really good concise guide on how to do fundamental analysis. When people say “do your own research”, they never say how to do it. Kudos to you for changing that!

[@connor8018]

really great info. I think it's also worth pointing out specifically that the important thing is understanding how to evaluate a stock and not just blindly following a method you find online. Too many people just try to copy what they think successful people do without having any idea of what any of it means and seeing it just as abstract numbers. I know you talk about this a lot in other videos.

[@fanban2926]

Yeah. I've found for me looking at valuation first is best since I can then remove a lot of unnecessary contenders for more interesting ones. Like if something is down 99% all time or it's at a 200 PE growing 30%/y then I'll look into it for a very short time and often conclude it's not worth it. Then I don't waste time.

[@jhoncadalin5887]

Wow, I really needed this content, I am currently studying Financial Management and I want to work in the field of investment management soon. I have searched and watched a lot of videos to know what the work process is like in this field and all they told are just some broad terms which is hard to understand clearly. I am lucky that I subscribed to this channel and I am now confident in my career knowing what it will be like in the workplace.

[@giovonnicolantonio5852]

Literally the best KZbin channel I’ve ever watched, should have 1 billion subscribers

[@Lordblow1]

Cool to see you touch on a bunch of stuff I had during finance classes at uni for valuing a company

[@AKJR770]

This is by far the most thorough and comprehensive analysis breakdown I’ve ever seen. Really great job

[@muks277]

I hope this is a continuing series , would love to see more of such videos

[@nicholasdean3467]

Totally agree. Bloom Berg excel plug in has saved me so much time. All I have to do is input the ticker and all of the data I am interested in is organized instantly. (Instead of spending 10 minutes inputting different commands into bloomberg)

[@BBruh2001]

Now make it a series doing a deeper dive into each step!

[@JohnDoe-ev8fk]

While I agree, that starts getting into paid content and he'd like a job lol

[@TheReefsFromSMC]

Martin shkreli

[@Immabeast714]

Watch Martin Shkreli do a DCF analysis for more in depth

[@ajp642]

There's a lot of books. The Swedish Investor channel has u covered. For deep dive into valuation Aswath Damoderan is all free classes!

[@me0101001000]

@@ajp642 I was literally going to suggest Prof. Damodaran, too. Though fair warning, the classes are long, detailed, and sometimes they get boring. But that's the nature of the beast when you really want to learn something, isn't it? It isn't always exciting.

[@methos-ey9nf]

Really impressive summary - went in my permanent save watch-list for all the useful information. IMHO though, I think this level of analysis can present the risk of analysis paralysis for the somebody interested in picking stocks. It's often been said by the like of Buffet and Lynch that temperament plays a hugely important role - can do all the analysis in the world but if somebody doesn't have the nerve they'll end up selling the moment there's a slight downturn. In my own experience I've found learning and expanding my understanding makes it much easier to not worry. Perfect example was last year and the tech sell-off. I understood why a profitless Uber would be losing market share but Microsoft made no sense at all. Sure interest rates were climbing and again companies operating off debt will be in trouble but Microsoft sits on more loot than Smaug and has a credit rating better than the US Government. So I wasn't worried in the slightest over the tech stock price slide, I knew much of my portfolio would be coming back.

[@tradergurlnancy1551]

Thanks for sharing! That's a lot of great info crammed into 20 minutes!

[@rinkalagrawal]

loved this !! thank you for summarizing this and sharing the free to use tools

[@Zadeska]

Thank you so much for making this! These type of videos are great.

[@knowthenewz903]

Now that I know for sure how to do analysis real good, I feel even more confident in putting all my money into NVIDIA. Thanks.

[@thegreat9481]

Smh

[@someguycalledcerberus9805]

Make sure to leverage so you don't leave any money on the table. It literally cannot go tits up.

[@bakmyster]

Beware confirmation bias

[@IntegralKing]

... NVDA has some of the WORST metrics in the semiconductor space. It's so overpriced and growth-oriented I don't know how you got to that conclusion based on this video. I'm not saying it's bad; I'm saying the principles laid out in this video doesn't support your conclusion

[@thegreat9481]

@@IntegralKing this guy just ready to “invest” in a large company that just had a big increase which wont sustain

[@arjavjain5671]

what I love about this channel is that it guides instead of directing me

[@21Alansi]

Thank you brother. I do like how you cover current events and your original content but some practical know how from you is valuable. I know I still have to do the legwork but this helps. Wishing you continued success.

[@tristanalenus8909]

What an absolute unit of a bagel!

[@sampy602]

Great video! I would add that the stock analysis on the short run is highly driven by market dynamics, so a stochastic model is needed (like montecarlo or black-scholes-merton). The process in this video is better for the stock's asymptotic convergence, an ECM origination or to better value the company, but for stock transactions, modeling is pivotal.

[@antman7673]

What I appreciate about the bagel: -He didn’t fall into the honeypots of sponsorships alike FTX or the Scottish lords thing. When the bagel stays plain without sugarcoat, that is credibility.

[@user-wp5tm2ne3s]

whats that about Scottish lords?

[@MadeAnAccountOnlyToReplyToThis]

​@@user-wp5tm2ne3sThe whole "Established Titles" grift

[@acatreassuresyouthateveryt7842]

​@@user-wp5tm2ne3s Established Titles drama. Iirc you pay them to buy part of land in scotland, then you can call yourself a lord as per scottish culture.

[@kingenma8731]

Exactly the kind of video I asked for! THANK YOU!

[@malec8517]

Still prolly one of the best if not the best and most honest information

[@HighTide_808]

Yea he is probably the only one left besides how money works

[@ROMANTIKILLER2]

Great summary, very informative. Something I have learnt very quickly after starting to tip my toes in the world of financial investments is that doing it right is really complicated, and if it was as easy as some "gurus" claim it to be, then everyone would be filthy rich.

[@sa.377]

Yes!!! You really are one of the KZbinrs whose opinion I respect the most on investing and I'm really interested to know how you think on the matter and what is your strategy!

[@Adrian-cn5rk]

FINALLY, I HAVE BEEN WAAAAITING FOR THIS. HUGE Thank You

[@hazeldavis3176]

So stoked to watch this!

[@vladrazym9955]

Great educational content, thanks a lot! Would like to watch one about selecting etf as there are a lot of them atm.

[@pongop]

Wow! This is so valuable and helpful! Thank you for sharing!

[@djben928]

Thank you. I learned a lot. I will share this channel to my friends.

[@Bullish2024]

Amazing Amazing presentation !Thank you! Please Keep it coming where you can make it easier and easier for many new investors to understand the importance of researching a stock before getting into it.

[@mrsmith6532]

THIS is the content I've been wanting

[@matiasiozzia9547]

Thanks Richard. Solid & constructive information. Love the channel.

[@joshuawalker6863]

I know next to nothing about stocks or how to analyze them. But man I swear I could teach a class after this. Not one word you said was wasted. And there is something about your voice that’s easy to listen to. As a auditory learner this is profoundly helpful

[@pablomorales748]

This video is so golden! Thank you for your dedication.

[@dolevmazker736]

Hope you make a full 40 minute series. Love you brother❤

[@spacecowboy2483]

This is gold, thank you very much for sharing this knowledge.

[@damianjez9574]

This is a great video. Could you apply this formula over a sample company, so we can see an example of how you analyze a stock?

[@benjaminfranklin329]

Probably not with the frankness required. I imagine some of the conversations about some stocks are pretty brutal, and would likely just be a headache to have to deal with the PR backlash from said company or fans of the company. Additionally, I think this falls into the category of not giving stock picks.

[@David.Marquez]

Yes thank you for this video! It's pure gold!

[@Joe-ly3si]

Great video! Thank you very much for the very useful and detailed information you have shared!!!

[@davidduffy1097]

Thank you so much Richard, always quality content and this video is a fantastic insight I was keen on learning about.

[@user-be3ty8lk2h]

Excellent video as always Plain Bagel, Im gonna stop right now at the beginning and watch it later.

[@mohitjoshi9739]

Thanks for sharing the invaluable insight!

[@feliciachen4636]

Such a valuable video! Thank you so much 🙏

[@zozomo6307]

Great video exactly the kind of detailed dive I was looking for

[@giancarlonealmaru7303]

Thank you so much, even though I'm young I'll cherish this knowledge you have given us🎉

[@jamessifter3314]

Really appreciate this video, great to compare research approaches. Thanks!

[@Llaucha]

This is a really useful and unique video, thanks dear Bagel

[@danraes5661]

Amazing content as always!

[@austinharmanmixes]

I’ve been waiting for this one!

[@PavelYarema]

This is a great video!!!! Thank you for sharing your process. Very informative!

[@deanthroop8054]

Thank you for sharing with regular people a path to better investing.

[@ashleycribb5793]

I really enjoyed this video, very focused on the topic and not drifting off topic for humor sake. Awesome stuff, you gained a new subscriber

[@fqtarantino]

Great video, it would be interesting a video comparing pros and cons of fundamental analysis and quantitative investing especially for bigger account that can afford to diversify in hundreds of equity (in this case I see several advantages of the quant investing in particular for the less experienced investors)

[@bosswavegaming8536]

Thank you so much for this video! Very, very helpful!

[@dreameryoung38]

Just checking what different people mention about how to research stocks,on point

[@aydzz]

Thanks, I'll sure to go back to this video once I have an idea on most of what you have said :D

[@ExpatStacker]

Been wondering this. Good topic. Thank you!

[@adc9270]

Excellent as always. (And humble too.) Thx.

[@boricua4pr686]

This is amazing, thank you for sharing!

[@reecedrystek2992]

This sort of takes me back to my first week in Corporate Finance Course. Someone asked how can we tell which stocks and shares to invest in? And almost with missing a beat the prof replied, you are in the wrong class then you need to take Administrative Policy which was more the business strategy class that would discuss business fundamentals. It's like "The Big Short" when the advisor is talking to the stripper about mortgages and immediately cuts to him on the phone "He's right there is a bubble."

[@Trewq79]

0:53. I REALLY appreciate you starting with the statistics of how strong the S&P500. Back when I knew absolutely nothing about investing, all I saw were channels from people going over what to do. Had I known that it would be extremely difficult to beat the S&P500, I wouldn't have spent all that time researching company reports.

[@alexdavis2020]

Thank you for doing this really helps!!

[@MrMaks18]

Thanks it was very useful for me as it highlighted to me some processes that I was missing

[@jahetravel]

This is extremely useful!

[@andrescast]

great content, Richard. thank you.

[@NarendranN]

Thank you for the great video!

[@MrMineHeads.]

Very Damodaran approach

[@egal1780]

thanks really much for this step by step guide

[@KariLPVideos]

Thanks for sharing this, insightful!

[@Peter-CDs]

Thank you so much for sharing the resources, such as EDGAR! It would be amazing if you could do a video doing an overview of open source informational resources that are available and reliable

[@Ben-cp8de]

Fantastic content here, it will help with future stock picks. Thanks for taking the time to summarise the amount of work that goes into picking potential investments.

[@TuEIite]

Curious about the execution side of things. How do you size up a position, do you DCA into it or buy-in over time using technicals/quant indicators, or do you lump-sum all of the allocation. And is that done in-house or via S&T/block trades. When would you go for derivatives, debt instruments, or warrants over just the equity/shares, etc. You could definitely add many parts to this and do a video series.

[@nlucianohchaves2229]

Very interesting process, thanks for sharing !

[@jeffreym3233]

Well done! Bring on the bond analysis video!

[@crispycikn]

Fantastic video, thanks!

[@All_Cylinders]

My favorite video of yours so far :)

[@henrybeall5023]

I thought this was one of your best videos so far :)

[@Christopher_TG]

I would love for you to do a video comparing the main investing approaches: growth vs value, technical vs quantitative vs fundamental, etc.

[@MrSongbird]

For some criticism you asked: 8:39 I wouldn't say "adjusted" means "not adhering to accounting rules". Iirc, IAS 1 literally prescribes management to report these adjustments if the prescribed methods would materially misrepresent the company's position. So I agree it that it could be used to make company look good, but it can equally make a successful company not look bad. This is doubly important for the US, as GAAP IFRS double reporting can present two entirely different sets of ratios.

[@nivekg992]

Always top tier videos.

[@user-lm9ii2hn3g]

I was looking for a tutorial on making plain bagels, but this video was interesting too

[@johnattanlafontant9412]

Thank you for this vid!

[@eshaanghoshfushtukli]

Really appreciate this video, thanks a lot

[@jhatt939]

Like I said before best financial educational content on you tube.

[@kt6332]

Great help, thanks😊

[@johnhutchinson7343]

I'd be interested in maybe hearing your Top 10 Financial Ratios that you think are most important in analyzing a stock. There are what seems to be an infinite number of ratios that can be calculated about stocks. It would be interesting to hear your top choices.

[@HolyisMyGOD-yl6so]

Awesome video! Extremely detailed and concise .... Plain Bagel would be permit to make this video a video series breaking down what you can and the process

[@Ill2006]

I've been watching this channel for a while every now and then when KZbin recommends it, but this video actually made me subscribe, nice job! I have two questions I think could make a couple new videos: 1 - After the research, once the valuation becomes attractive, how do you think about position sizing? You mentioned dollar cost averaging within an acceptable valuation range, but how big are you willing to make the new position in a portfolio and how big are you allowing it to grow? And how do you decide the appropriate size for different stocks? 2 - What makes you think about selling? Maybe position sizing (previous question) has a role, but what about extreme overvaluation, fundamental changes in the company and the need to raise cash for an even more attractive opprtunity? Or do you see other situations where selling is necessary? Thanks!

[@ThePlainBagel]

I appreciate the subscription! Sizing is usually pretty easy; we’ll either take a full position (a set amount based on the portfolio size that leaves room for further buying up to a limit), or half a position if we think the stock may come down further but want to hedge our exposure. As for selling, that’s a tough one - we usually give a stock at least three years and then evaluate how it’s performing. I’ve trimmed when valuation became stretched but don’t often sell on valuation alone. The biggest thing I consider is whether management followed through on promises, or risks of permanent impairment (eg fundamental changes in the business/industry)

[@logans_beastmaster]

Thank you SO MUCH for authentic, realistic information. For a future video could you provide examples of ideal investments and problematic investments based off of your criterion?

[@TheDavidlloydjones]

A good look at how a sane and intelligent person works in this field.

[@joeissac3934]

Thank you. I learned so much from you & George Gammon/Rebel Capitalist.