In an interview with Warren Buffett in 1993, Adam Smith, author of Supermoney, asked how the small investor can find good investment ideas.
Warren Buffett: I’d tell him to do exactly what I did 40-odd years ago, which is to learn about every company in the United States that has publicly traded securities, and that bank of knowledge will do him or her terrific good over time.
Adam Smith: But there are 27,000 public companies.
Warren Buffett: Well, start with the A’s.
Everybody knows that Warren Buffett gets his investment ideas largely from annual reports.
Of course, now he has become so influential that companies call him to share their own ideas. But, fifty years ago, Buffett was not the go-to guy if you wanted to sell your company or raise capital for your failing bank.
He was a small investor who was clawing his way up the investing street by reading whatever annual report came his way, and then finding his investment ideas that worked wonders in the subsequent years.
You are probably at the same stage Buffett was fifty years ago. But there’s a big advantage you have over the early day Buffett.