SIMON SHEPHERD | From The Investment Newsletter Group

When you start delving into the world of investing, you quickly realize how many newsletters are available to help you choose stocks for your portfolio. But how do you find the one that's right for you?

Simon Shepherd is principal and senior partner at Providence Advisory. He's a financial advisor, planner and personal wealth coach to a wide variety of clients, including senior executives, self-employed professionals, and self-funded retirees. He's also the creator of The Investment Newsletter Group or TING.

TING conducts detailed stock by stock, newsletter by newsletter tracking of many of the top buy recommendations from some of the leading investment newsletters

There are many different styles of investing, some tell stories, some are for data nerds, and others are visual. They are all represented amongst the newsletters covered.

TRANSCRIPT FOLLOWS AFTER THIS BRIEF MESSAGE

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EPISODE TRANSCRIPT

Chloe (1s):

Shares for Beginners. Phil Muscatello and Fin Pods are authorized reps of MoneySherpa. The information in this podcast is general in nature and doesn't take into account your personal situation.

Simon Shepherd (12s):

The key to successful investing or successful use of one of these newsletters, i e making money is finding the one that, that fits with your type of personality or more specifically the way you think, the way your mind works. So what I mean by that is some people love storytelling, some people love number crunching and analysis and deep thinking. Some people love pictures and graphs and the, and they're a visual type thinker. So the great thing about the newsletter market in Australia is there's pretty much something for everyone.

Phil (42s):

Good day and welcome back to Shares for Beginners. I'm Phil Muscatello. When you start delving into the world of investing, you quickly realize how many newsletters are available to help you choose stocks for your portfolio. But how do you find the one that's right for you? My guest today is doing the work so that you don't have to, Hello Simon.

Simon Shepherd (1m 1s):

Hi Phil, how you going?

Phil (1m 2s):

Simon Shepherd is principal and senior partner at Providence Advisory. He's a financial advisor, planner and personal wealth coach to a wide variety of clients, including senior executives, self-employed professionals, and self-funded retirees. He's also behind the investment newsletter group or TING. So tell us about TING. Where did the idea come from?

Simon Shepherd (1m 24s):

What we found with, you know, the investment newsletter market in Australia is, I guess we're really spoiled for choice. There's an abundance of products and services out there

Phil (1m 34s):

All promising, all promising wonderful gains, aren't they?

Simon Shepherd (1m 37s):

Oh, that's exactly right. Yeah, that's, you know, that's why, that's why they're in business, of course. And you know, but backdrop for me is I've been a, a, a personal investor since I was 16 years old and you know, I love the data, I love the, the, the stuff that's out there. But what I found when I started doing my homework was there was no way to really compare how they were doing. You know, you sort of subscribe or do a trial subscription on a, on a wing and a prayer and hope that what you buy goes up because

Phil (2m 3s):

You, because you just responding to the marketing really, aren't you? Exactly. Whether you like the color scheme or the, it's, they're talking, you know

Simon Shepherd (2m 8s):

And that's fair enough that, you know, they're trying to attract subscribers and I guess stand out from their competitors, et cetera. So, you know, I started looking around to see if there was any tools or research portals that might cover specifically in this particular part of the investment market. So not managed funds, not ETFs, but, you know, I'm a individual stock investor and I need some help where, where do I go? Which newsletter's the best for me? So we started building this research portal, which is called the Investment Newsletter Group, TING for Short. And what we then did was went out and built some virtual portfolios basically. So we, you know, we pretended we had $120,000 to invest in.

Phil (2m 49s):

Oh, I was gonna ask for that. It's all paper trading, isn't it?

Simon Shepherd (2m 52s):

All paper trading. I do have money invested myself, but in terms of, you know, the cleanliness and the, and the data management, et cetera, we just thought, you know, let's start with what would would possibly a typical portfolio size be for, you know, the average man or woman in the street getting started, et cetera. So seven portfolios across the seven newsletters that we selected to track and see how they're doing. A variety of different styles, which we can jump into further down the chat. Yeah, and we've been doing that in, in one form another since 1st of July, 2021. So coming up on two years, this is obviously a long-term all been, well, a long-term tool and analysis, but we thought, you know, now's a good time to launch and start talking about what we're doing and how we think we might be able to help the individual investor.

Phil (3m 37s):

So tell us about being 16 years old and starting investing. I mean, are you unusual?

Simon Shepherd (3m 44s):

Hard to say

Phil (3m 44s):

I don't know a lot of people exactly start investing at that age.

Simon Shepherd (3m 47s):

If you ask my parents about the, the BHP share price chart that I hand charted every single day on the back of my, my wardrobe, they'd have a good odd chuckle.

Phil (3m 55s):

Did you have graph paper and all of that?

Simon Shepherd (3m 59s):

The works. It works.

Phil (3m 60s):

How did you work out the actual scale of it? Because, did you get it wrong to start with?

Simon Shepherd (4m 5s):

I definitely, the, the rubber got plenty of use as well, so it was all part of the process, I think, but yeah,

Phil (4m 10s):

But it's, it's actually really good to go through that kind of process, I think because you actually see that the, the charts we get on screens now, which are all automatically generated, they're all based on graph paper. You know, you go back, you know, many years ago, I mean some of the, the, the earlier works on technical analysis were all done like that hand drawn with pencil, paper, rubber on graph paper.

Simon Shepherd (4m 33s):

So true. Yeah, so true.

Phil (4m 35s):

What was that about that, that attracted you?

Simon Shepherd (4m 37s):

Well, I, I think getting the feel for how much a share price could move within a day and BHP was an obvious candidate being Yeah. You know, one of the largest stocks in the Aussie market. Very high profile still is of course. But yeah, I get some funny looks from my mates when they come around and you know, most of 'em have got whatever, stranger Things, posters on the, whatever it was back then, you know, I had a few ski skiing posters up there, but then I had this stocking big great BHP chart on the wall, but that's how I got my interest going and it went from there. So obviously as, as you say now with technology, nobody draws charts anymore. Likewise, any kind of analysis of companies, it's all electronic, it's all computed, it's so efficient.

Simon Shepherd (5m 18s):

Yeah, it doesn't make it any easier as an investor, but at least that works done for us, which is what's great about what, we've got an offer in Australia with some of these newsletters.

Phil (5m 26s):

So I guess it was obvious that you were going to end up in the financial services industry

Simon Shepherd (5m 31s):

One way or another. That was, that was my path, absolutely. Yeah.

Phil (5m 34s):

So did you go to uni to do statewide economics?

Simon Shepherd (5m 37s):

Finance? Yeah, finance and accounting. So again, back when, when everything was done on paper and, and very limited spreadsheets, but I actually started life as in the accounting field, one of the big four accounting firms as a cadet, straight outta high school. They, if you want to be an accountant and that's your career thing, great. It didn't for me wasn't, you know, after year or two wasn't the right fit. But what was great about it was it got me in the workforce, they helped me out with my degree and I, I did a finance and accounting degree about halfway through my degree. I, yeah, you know, with that, that urge to somehow get into the investment banking financial market side of of life. Actually a mate at uni, who was working at Bankers Trust, just got accepted into Ansett Flight School as a pilot.

Simon Shepherd (6m 17s):

And so he put his hand up on my behalf, said I've got this great guy that is really keen to come and have a go. So ended up at Banker's Trust, which at the time in the sort of early to mid nineties was the, you know, sort of one of the top

Phil (6m 29s):

Yeah, I've had, I've had a couple of guests on who talk about the nineties at Banker's Trust.

Simon Shepherd (6m 32s):

Yeah, a beautiful, yeah, the good, the good days, good old days. And so that was my sort of foothold into, you know, the finance financial market world. And from there I ended up finishing my degree and the day after I finished my degree, I flew to Tokyo, ironically, ostensibly to just have a year off a gap year and teach English and, you know, backpack around then end up in London. But after about two months, I got very itchy feet and got in touch with one of my clients from my BT days and landed me a job on the desk at Lehman Brothers, which no longer exists.

Phil (7m 6s):

The notorious Lehman brothers,

Simon Shepherd (7m 8s):

One of the ones that blew up in the financial crisis, wasn't around when that happened, thank goodness. Ended up in, yeah, in Tokyo for four years in the sales trading role, mainly for Deutsche Bank. And then they moved me to New York for two years, same thing over there. And then off to London for another sort of three years with a bit of time off in between and landed at a French bank and then ended up back in Australia in the mid two thousands and had another sort of three, four years and working on trading desks and then joined the family business in mid 2008.

Phil (7m 38s):

So you're a planner and advisor now since then?

Simon Shepherd (7m 40s):

Yep, you bet. So got my, got my license early 2009. So what are my 14 years now? So roughly I guess half my working life, I, I've been on sales, trading desks, working in the markets, seeing how things, you know, really, I, I think that's probably a blessing for me as an advisor now, which a lot of advisors don't have. Not, you know, everybody, everybody has their strengths and weaknesses of course, but to be able to understand what makes markets tick, how hard it is to, to make money, you know, how hard it is to beat the market. Yeah. Is, is was a brilliant experience. That's what I've tried to do as apply that to building TING with my background and the analysis and, and the way of thinking about, you know, what is it that I'd be looking for if I was an investor trying to get started in, you know, in a newsletter, et cetera.

Phil (8m 26s):

It seems interesting that you're looking at newsletters. I mean, you do have a lot of experience in markets already. Why did you start looking at newsletters? I, I believe it's because many of your clients need this kind of assistance. Is that the case?

Simon Shepherd (8m 38s):

Look, it's a bit of, it's a bit of everything. It's, it's partly personal interest. It's partly for those clients that, you know, like to do it together. So they might have a share portfolio, but they need us to help them with other parts of their financial world or lives. And it's also, cuz I'm always looking for that edge, right? So I think that one of the most important things if you are doing your own investing is you've gotta have a robust system and there's no one size fits all, but you've gotta have something that's repeatable, ideally successful over a market cycle. In other words, you know, beating the market otherwise what's the point? You know, there can withstand the rigors of a bad patch, a downturn, a draw down, a paper loss, whatever you want to call it.

Simon Shepherd (9m 21s):

So let's see if these newsletters are, you know, cut the mustard are are, because in a lot of cases they display their returns, but there's very little clarity around exactly what method they use. There's no consistent approach. There's no industry rules or standards, so you have to take it with the grain of salt. So, you know, it's where I think an independent unbiased analysis of the returns is, is really useful. It's not the be all and end all, but it's a starting point and an important one.

Phil (9m 47s):

Yeah. And when and when you started researching this, you discovered Wall Street Survivor in the United States. That's right. and they've been a bit of an inspiration for you.

Simon Shepherd (9m 54s):

They have, absolutely. Yeah. So, you know, pretty very been, been around a long time. Very deep data set seem to be, you know, very well resourced. You know, for me this is more just a, it's a, it's a research arm of my, of my mainline financial planner business. So we have limited resources at the moment, but the principle of what we are trying to do is, is very similar to Wall Street survivor. It's really helping self-directed investors to, you know, make better decisions and, and a, a selection tool for, for the, for newsletters.

Phil (10m 25s):

So when you started looking at newsletters, you're basically looking at the ones that provide fundamental research or technical analysis or combination of both. So there's any criteria that you used in choosing, which

Simon Shepherd (10m 35s):

Look, good question, I think not implicitly. What we've ended up with through our research is the seven newsletters that we track, there's a real variety. We, you could probably bucket them into a couple of main categories. So there's some that are what we call sort of the value investing approach. So, you know, we've all almost all heard of Warren Buffet, I'm sure, or Benjamin Graham, who is the father of

Phil (10m 60s):

The Messiah. The

Simon Shepherd (11m 1s):

Messiah indeed, indeed. Value investing. Exactly. So there's, you know, some, some of the newsletters apply that approach. Others would be what I call sort of a blend. So, you know, they, they do a, a value investing sort of overlay, but they might look for, you know, quality at a reasonable price without getting through technical. That generally means maybe something that's a bit more expensive by traditional value measures, but it's still a good quality company to own. And that's again, sort of straying the way that buffet or his disciples have moved towards, you know, not a strictly the cigar butt approach, for example, which you might have heard about, you know, the buying those cheapest dirtiest stocks you can find in the hope that they turn around. So some fit in that category.

Simon Shepherd (11m 40s):

Some use technical indicators as well to compliment their, their, their, their recommendations. So what I mean by that is a classic one is just charting the share price. Like, you know, the BHP that, that we talked about before in the hope that that that gives you an additional edge or allows you to maybe better time your entry and exit into an investment and, and for risk management as well. So here's a point where if the stock gets here, for example, we recommend you sell it or lighten up. So without even looking at the fundamentals of the company at that point, it's just, this is where the price is and this is where we should take action. So there's that bucket. And then the other bucket we noticed was what we call a sort of quantitative or data based or evidence, but not evidence based, but, but a data heavy or data intensive approach.

Simon Shepherd (12m 26s):

So newsletters like stockopedia, for example, simply Wall Street where they crunch a lot of data and come up with screenings and, and you know, different filters. So you can pretty much cherry pick any theme that you wanted or build your own filters. These styles all work in different seasons, if you will, of the market. There's not really any right or wrong, you know, and that's why I think there's value in looking at as many as we can within the scope of what our resources are. So yeah, there's, there's a whole bunch of different styles and it's kind of worked out well that we've ended up with different styles in the, in the reporting so far.

Phil (13m 0s):

What does it mean to have the best fit newsletter?

Simon Shepherd (13m 3s):

Well, I think the way we look at it, it's really about, as we've just discussed, right? There's, there's a bunch of different investing styles and you know, as humans, we're not robots. We're all very unique. We all have a lot of subconscious biases and drivers and influencers. And I think the key to successful investing or successful use of one of these newsletters, i e making money is finding the one that, that fits with your type of personality or more specifically your, the way you think, the way your mind works. So what I mean by that is some people love storytelling, some people love number crunching and analysis and deep thinking.

Simon Shepherd (13m 45s):

Some people love pictures and graphs and they, and they're a visual type thinker. So the great thing about the newsletter market in Australia is it's pretty much something for everyone. So as opposed to one size fits all, it's really about figuring out the way you think, the kind of investment style that resonates with you and then giving it a try. And so what we've done in the newsletter, the report is we've broadly categorized each of the ones we follow into, into certain styles. And where that's also useful is if we're in a certain season of the market where maybe values doing better than other approaches. It'd be interesting to see if the newsletters actually are consistent with, you know, what's happening in the broader market. Only time will tell, cause obviously we're still fairly young in terms of the, the data history.

Simon Shepherd (14m 27s):

And I think the reason why the, the best fit concept is so important is I can guarantee you that it will be tested. So what I mean by that is any strategy, any personal individual investor, any fund manager, any professional investor for that matter is, is always gonna have a tough, a tough period, hopefully not too long.

Phil (14m 48s):

And then they get lucky sometimes.

Simon Shepherd (14m 49s):

That's right as well. Yeah, exactly. And you, you know, reminds me of my old boss in the trading desk in Tokyo used to say it's, it's, you know, it's better to be lucky than smart because if you're smart, if you're lucky, but you think you're smart, you can actually get yourself in a lot of trouble. Which is a, you know, it's a, it's a great thing to keep in mind and again, that it gets back to why, you know, process is so important because we're, we're the enemies of our own emotions, not just with investing but everything in life. And it's a tough job, you know, the investing piece, it really is, you are competing against some of the smartest people in the world with, you know, instantaneous access to, to, to, to exchanges. I can't remember what that movie was, but a few years ago, you know, all these hedge funds were competing to build their office as close to the exchange as possible.

Simon Shepherd (15m 36s):

Yes. With the fastest i fiber optic cables and, you know, paying exorbitant rents to do it so that they could get a just

Phil (15m 42s):

To save a few nanoseconds.

Simon Shepherd (15m 43s):

That's right. Exactly. There's amazing movie. So, you know, you've, you obviously we can't compete with that as, as individual investors, but it doesn't mean there's not an opportunity, right. And that's why it gets back to really finding the approach that works for you because when it's tested, in other words, when you hit a rough patch with your portfolio, you need to be able to stick it out. Cuz the worst thing you can do is abandon the strategy. And human nature is you're abandoned at the worst point possible guarantee the next day the market will turn. If you, if you sell out, go into cash.

Phil (16m 15s):

Yeah. Those people in the middle of the GFC just said, I can't take it anymore.

Simon Shepherd (16m 18s):

That's right. And it happens, you know, and that's where, you know, it's, it can be a really lonely existence and that's where you've gotta be able to lean back on one of two things. One is that the process does work over time. So rely and trust in that newsletter that they're gonna do the right thing by you once you've done your initial homework right, and you've figured out which one works for you or you've, you know, get, get our quarterly newsletter and track how things are going, whatever it is, whatever you do or get advice. So that's one of two. And two of two is in many cases it's great to have a coach or you know, someone you can talk to because it can be a really lonely existence even if you're doing well. It's like, well when do I take profits? You know, I've made all this money, I've quintuple or you know, a 10 bagger fire bagger, who's gonna help you risk manage that?

Simon Shepherd (17m 1s):

Who's gonna help you rebalance? So, but putting that aside, because the whole point of a newsletter is doing it yourself as a starting point is, is really, you've gotta make sure that you're comfortable with it because you are going to be pushed and challenged when you're losing money.

Chloe (17m 15s):

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Phil (17m 34s):

Is it important as well that newsletters, be upfront about their failures as well as their successes? And do they do that?

Simon Shepherd (17m 42s):

It's fairly transparent from what we've seen with our research, but again, it depends on the style, right? So the more traditional kind of, you know, when I say say traditional, I mean like a, if you've ever read a stockbrokers report, so, you know, let's just, I don't know, pick on CBA, you know, here's the recent story and I guess CBAs very relevant cuz they just reported a a record profit yesterday

Phil (18m 2s):

And dropped in price very quickly Indeed. Not, not that we're interested in those daily movements.

Simon Shepherd (18m 7s):

Indeed. That's exactly right. Don't talk to us if that's what you're looking for in terms of, you know, your question about do they own up to their failures? Yeah. I think it's easier to figure that out with the more traditional newsletters. And you know, most of them, when I, so for example, intelligent investor, the traditional style is what I mean. So, you know, like a stockbroking report, they'll write a report, they'll have a valuation on the stock, I'll have an action to take, so on and so forth. If that doesn't work out, it's pretty clear to see and they generally do disclose it, you know, they're upfront about that. So I think that's good. There's, you know, there's nothing in our research universe that concerns us. There's none on our list that, you know, yes, we have to rank them, but it's only one measure of quality, if you will, or performance.

Simon Shepherd (18m 48s):

It's only one thing in the data set that you should be looking at as I, as I keep saying equally important is the, the style has to, has to suit you because if you pick, you know, you pick the best performing newsletter for example, but it's not really the way you think and the way your mind works. The second it has a downturn, the risk is that you walk away from it and you've gotta start again. And most likely you've destroyed some capital along the way. So we hope that the tool he helps people get, get it right the first time and avoid those kind of mistakes.

Phil (19m 17s):

One of the things I've found in my own investing that I've learned so much about is the importance of journaling and writing down why you took a particular position and to look back on it when it goes wrong. And I think with the newsletter you can actually refer back to the newsletter, all of that information is there for you, just copy and paste it into your journal. And so you can look back at that journaling's very hard and it's also very hard when you're making your own decisions as well. Do you find that can be a big part of the guidance that you need as an individual retail Investor?

Simon Shepherd (19m 48s):

Look, it's, it's a really great and and unique question because I haven't seen anything, and it may exist, but I haven't seen it out there that sort of encourages that some of the services have great educational tabs and there's probably stuff in the, in buried in there about, you know, holding yourself accountable, benchmarking yourself. That's sort of an extension of what you are saying. So I think it's beneficial. However, in my experience as an advisor and observing, you know, trading desks and stockbroking, we, you know, our business was at, at Morgan's Financial for about five years. So I, I'd sit next to stockbrokers on the phone all day long to, you know, those self-directed investors or self-managed Superfund clients that want to do their own investing.

Simon Shepherd (20m 28s):

I didn't see a lot of introspection. I didn't see a lot of reflection. It's like, if you lose money, move on, go to the next thing. So I think there's value in that, whether or not many people do it, I'm not sure. The only area I'm aware of that it's really an enforced discipline is if you are day trading or you're trading some kind of system and you know, you, you're doing it for a full-time job. It's, it's a, it's a dedication, it's a discipline. It's this is, this is it, this is what I'm doing for my, for my living in, in that case I'm, I know it's pretty common, but you know, for, for the mom and dad investors and if you've got a day job and kids to raise and all that stuff, I, I can't imagine happens too often, but I think it's a great idea. But a softer version of that would be benchmarking. And when clients come to see me and you know, they're talking up their investment pros or down, in which case they want to come and outsource, you know, the first thing I say is, what are you benchmarking yourselves to?

Simon Shepherd (21m 16s):

Or the opposite, you know, sometimes when clients say, look, I think I can do a better job myself or my kids want to take it over or I'm getting too old. You know, there's, it's a free world, right? We, we, we try to help as many people as we can in a way that works for them. But the number one thing I say is be honest with yourself and at least benchmark yourself. And that's where something like share site is great, which we use in our data analysis because it allows you to do that. And that's the, the rawest form of truth possible. Because if you're not gonna beat the market, why bother? Alright, if it's a hobby and it's fun, go play golf, you know, it's a lot cheaper into

Phil (21m 50s):

An index

Simon Shepherd (21m 51s):

Hugging et whatever it is, right? Some index fund, yeah. Some passive approach indexing or you know, or pick a manager you like, whatever. But it's, I think if we did more of that, probably if we did more of that, there'd be less, people are trying to do their own thing, actually. So maybe that's counterintuitive for the newsletter industry. Who knows.

Phil (22m 6s):

So I'm, I'm slightly scared having you here because many of the newsletters you cover, I've had some of the people at work for them on this podcast as well. Yeah. And we love them all.

Simon Shepherd (22m 15s):

Indeed. They all provide a service. Yeah.

Phil (22m 18s):

Just give us some general overview of the observations that you've come up with out of this process.

Simon Shepherd (22m 24s):

Look, yeah, I think it's, it's really exciting, Phil. It's really exciting and I, I am such an investment nerd, as I said, interviewing my schoolmates and they'll tell you that or my family, but it's, you know, there's no, and look another way, if you look at it from a commercial point of view, all the newsletters we are looking at have been going concerns for a long time. I think in some cases, like 30 years, I think the eureka report, intelligent investor, they've had various corporate restructures over time and change brands, whatever. So as a starting point, you know, by definition, if these guys are in business and selling newsletters, they must be doing something right. The purpose in what we are doing is just helping people filter out the noise to screen to find something that suits them best.

Simon Shepherd (23m 6s):

Nothing on our list is of any concern, or we wouldn't, we wouldn't bother having it on the list. But they're all different. But our role is to help people try and understand that it's a bit like, you know, our, our sort of full service financial planning clients, we spend a lot of time getting to know them so that we can try and customize the advice and the strategy so that it, it most resonates with them. Cause we want happy clients, we want success. So in the same way, hopefully TING over time will do that as well, or be one of those tools that people can use. But in, in summary, we're blessed, right? We're so blessed. We, there's so many and we we're only scratching the surface, there's probably another five or six I could roll off that I'd love to be tracking as well. It's just at this point, resources and costs and everything else, else.

Simon Shepherd (23m 45s):

So we, you know, we try to sort of work our way through that. But again, let's jump back in that time machine to the eighties, you know, you just didn't have the power and the data that you have now at your fingertips. So all that work is done for you. How exciting and how good is that? That means you're just ready to go. It doesn't mean it makes investing easier, but it just, there's all that energy you've saved because of technology basically. And because, you know, there's, there's a lot of great services out there. Just the trick is, the first step is which one's the right one for me?

Phil (24m 17s):

Presumably this is a useful tool to find that.

Simon Shepherd (24m 18s):

Well,I, I'd like to think so. Yeah. But, you know, welcome the feedback from your listeners and you know, anyone who wants to jump on and it's a free report, download it. We've got fresh data from a couple of days ago, you know, have a look and we welcome feedback, subscribe to our quarterly updates and yeah, you know, we, we want to be encouraged by the crowd to, to, to do things. And the more support we get, the more we can put into the, the service. So yeah,

Phil (24m 41s):

That's great. Yeah, A newsletter is often simply a guide. The individual investor still needs to drive the car with skill, knowing when to buy and sell, knowing when to cut losses and let winners run. How do newsletters compare in this department?

Simon Shepherd (24m 54s):

For the most part, they cover it well, and I call that again, risk management or rebalancing, you know, money management to different terms. But they all mean the same thing, which is really, you know, like you say, when you get out, if something's not working or when you take, you know, some, some nice profits off the table, good problem to have

Phil (25m 11s):

Because, because the thing is, if it's not working, that's where you've gotta cut your losses, don't you? That's, you've gotta really cut your losses. That's the the most important thing, Isn't it?

Simon Shepherd (25m 19s):

It is. And again, another quote from another trading desk boss was, you know, the, the first cut is the cheapest. So, you know, you're right. It longer and longer, it goes lower and lower and eventually, well

Phil (25m 29s):

That's going on my list of sayings.

Simon Shepherd (25m 32s):

Yeah. And it's, again, it's so true. And you know, we're looking, we're talking about trading desks here, but the, but many of the analogies apply for the individual as well. Not that, you know, we're in the business of, of turning over our entire portfolio in the course of a week. But you're gonna be challenged with those decisions at some point. So again, most of the newsletters, they have valuation ranges or they have, in some cases they have sort of hard, what they call a stop loss, which is a point at which the stock gets to, and you're losing money at that point. No, no questions ask, you sell it, you don't try and second guess the mark. You don't try and look for some glimmer of hope in the latest, you know, AFR article about the dog that's gonna recover.

Simon Shepherd (26m 12s):

You just exit. So again, it comes down to style, right? Some people might be very comfortable with that, just rip the bandaid off and some people won't. So they approach it differently. But in all styles of the newsletters we cover, there is some form of what I would call risk management. You know, when to take profits, when to cut your losses. The exception would be the quantitative style of newsletter. So the two in our universe are Stockopedia and Simply Wall Street. And really then it's not so much a hard get out or, or you know, get out, you lose your money or get out, you're taking profits. It's at the discretion of the individual investor as to when they should do it. So again, it depends on your personality, right?

Simon Shepherd (26m 53s):

Whether you've got the discipline. And my advice would be if you go into something, one of those services and you set up a position, have your exit strategy in mind already in both directions and there's plenty of trading books around that and investing books, you know, it's not, not for today's chat, but that way you've had the conversation with yourself before the event and before the emotions take over either greed or fear, right? It goes both ways really for those kind of services. And again, there's others, others out there that we don't cover, but they still have very powerful signals, messaging, whatever you wanna call it, that will, you know, you can, you can set that up and go, okay, it's, for example, Stockopedia have a, you know, they have a ranking, a scoring system, so hundreds, the stocks you really want to own.

Simon Shepherd (27m 35s):

Zero is don't go near it, it's nuclear waste and so on and so forth. So you might set a score of 95 if, if the score drops below 95, I'm gonna sell it, no questions asked. And in fact, that's what we use as an example for our, our virtual portfolio, the Stockopedia ones, we, we, our universe is the top 5%. So that's what we are always owning and holding when we do our rebalances of our Stockopedia portfolio. So that's one example. You might say, yep, 95 is my get out, you know, if, if the score drops below there, I'll sell it and I'll buy the the newest thing that's on their list that's ranked a hundred. So that's actually the process that we do with our Stockopedia virtual portfolio. So it's a rules-based mechanical process.

Simon Shepherd (28m 15s):

So as long as you're okay, again, that type of personality that you can build rules and stick with them, then that's, in our opinion now we, you would use something like a, a Simply Wall Street or a Stockopedia for that risk management aspect.

Phil (28m 28s):

So then is that framework that you just described, does that change from newsletter to newsletter depending on staff? Absolutely. It would have to, wouldn't it? Because yeah, they're gonna have different rankings.

Simon Shepherd (28m 37s):

Exactly Right. Yeah is it's so true. So they also,

Phil (28m 39s):

So it'd be very difficult feel to compare

Simon Shepherd (28m 41s):

Them. It is. And that's where we've had to do some work and some thinking and it's been, it's been great and challenging at the same time. And again, I think I've been fortunate cause I've, I've worked on trading desks and you know, sat in front of Bloomberg screens for 15 years and I'm not, you know, I don't, I don't rank myself a mathematician by any stretch, but good enough to hopefully produce something that's of value for our subscribers. And what we've tried to do is just, you know, replicate what a typical journey might be for someone starting out and investing or starting out with this newsletter. That's why we don't cover every single stock that's a buyer, right? Because in reality you wouldn't own every single stock in most cases. So, you know, we have to sort of finesse that in a certain way with each portfolio.

Simon Shepherd (29m 21s):

And again, you know, we're happy to publish the rules in due course, you know, we can get all that stuff on the website. So absolutely, they all speak sort of a different language, if you will. They all have a different style and you know, I can strongly recommend they all offer, you know, try before you buy free trials, right? So absolutely. If any of them of them sound interesting, even, you know, not necessarily the ones that are ranked one on two on our list, go ahead and look at them and, and, and, you know, play around with them. But before you do, I'd strongly urge you to think about, you know, what is it you want to achieve? Is it short-term, is it long-term? Is it, you know, you're only looking at exchange trade of funds, is it single stocks? Predominantly these guys are, you know, a sing a single stock focus.

Simon Shepherd (30m 1s):

In other words, an individual company, you know. So what we've tried to do is standardize, like I said at the start of our chat, the challenge with the ones that do report their returns is you've got no idea what their methodology is. There's, there's no unified approach, therefore

Phil (30m 16s):

It's not, it's not level playing field

Simon Shepherd (30m 18s):

Exactly. And maybe not a negative. There may be good reason for that, right? Yeah. Because how do you define a return? Is it stocks they still own? Is the stocks they own before they all do their best to report some degree, again, apart from the quant style ones, cuz there's just too many, right? So, and, and the quant style, so the Stockopedias and the Simply Wall Street, they make it very clear that it's not necessarily a buyer sell recommendation, it's, it's, it's a screening tool, it's a, you know, it's a data set. So I think again, it comes down to awareness. What works for you, you know, what you're trying to achieve and the way you think, the way you look at the world, like I said before, do you, like, do you like stories in which case, you know, things like storytelling and, and ideas and you know, things like Intelligent Investor, Fat Profits, Motley fool, you know, they're more your traditional kind of stockbroker type approach.

Simon Shepherd (31m 6s):

And you know, if you're a visual person then you've got the snowflakes with, with Simply Wall Street. So there is something for everyone really, and it's just about, as I said, you know, jump on and, and do the free trials. They all, they all do good things, it's just they don't all hum at the same time, which is what's what our numbers are demonstrating so far. So what we've tried to do is take a unified approach, there's slightly different portfolio construction for each portfolio because of those things you point out they all have, you know, one man's buyers, another man's hold or you know, diff different definitions. So we're trying to unify as best we can, but we have, you know, a very clear set of data portfolio construction rules for every single portfolio.

Simon Shepherd (31m 46s):

So, you know, and it's all open. If anyone, everyone's look at it, we can say this is how we did and I'll give you an example for Stockopedia and we use Share site, which is a fantastic, you know, tracking service

Phil (31m 57s):

And benchmark. Benchmark Benchmark,

Simon Shepherd (31m 59s):

Exactly right. That's what it's all about. Otherwise why are we here? Right? You know, I don't wanna lose money for, for fun. I'd rather play golf and get frustrated that way. So

Phil (32m 9s):

Yeah. So where can listeners find out more?

Simon Shepherd (32m 12s):

Pretty straightforward. We've got a website, tinglive.com.au. So the TING stands for The Investment Newsletter group. Got a free report you can download, as I said, fresh Off the press is the latest performance data. Go ahead and subscribe for our quarterly updates. And you know, as I said, over time, if the demand is there and we get support, we're gonna expand. We've got a bunch of ideas of different products and you know, tools, et cetera. But we're just really, you know, see, see, see what people think of what we're doing so far and go from there. Any socials? No, a bit old school that way, but thank you for asking. No worries. Just making sure that covers everything. Yes, it's phase two.

Phil (32m 52s):

Simon Shepherd, thank you very much.

Simon Shepherd (32m 53s):

Great, thanks Phil. Good to talk to you.

Phil (32m 56s):

Thanks for being here.

Chloe (32m 57s):

Thanks for listening to Shares for Beginners. You can find more at sharesforbeginners.com. If you enjoy listening, please take a moment to rate a review in your podcast player or tell a friend who might want to learn more about investing for their future.

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