Although I invest in only a handful of companies, I spend a lot of time covering at least 100 other companies. These are companies that may be close to fulfilling my investment criteria but I may have concerns with some aspects of their operations. I monitor these companies in the hope that some of these companies may have sorted out the issues that I am concerned with.
Also, I monitor the stock prices of these companies as there may come a time when the market capitalisation of these companies are at such a discount that it offers me a ridiculous margin of safety such that I can overlook some of the minor issues of the company that I was concerned with.
However, there are a few things that I do not compromise such as a high level of net cash and management integrity (ie, even though a company may have a lot of net cash but management has been more generous to themselves rather than to the shareholders, I will certainly strike off such companies from my list).
This ground work is important as I do not know when the opportunity will arise. Mr Market is a strange creature as sometimes, a big seller may appear and the share price will be depressed. Once a big seller appears, a lot of small sellers will also appear and there will be an avalanche of sell orders which will drive the share price down. If one has not done this background work, it will not be easy to buy these shares when they keep falling. One needs a lot of confidence to buy when everyone else is selling.
My confidence as an investor is because of the many hours of hard work that I put in before the opportunity arose. Without this amount of hardwork, I do not think I will have the courage to buy in a falling market. This is why when the market is quiet, I will spend my time doing all the necessary research and when the market is moving up or down, I will be ready to take advantage of what Mr Market offers.
Investing is certainly not a stroll in the park. One has to put in a lot of hardwork in preparation for the opportunities that Mr Market throws at you.