All About The Site Redesign

I've been wanting to do this for a while!

As you may notice, GreenDot Stocks has been redesigned and "re-launched" as of today. I wanted to take some time and write a post explaining why the service was changed, how the new process works, and what to expect going forward.

Importantly, there are NO CHANGES to the membership structure. It is still just $8 a month.

My goal with the redesign is to give you a lot more actionable value for your time and money. Let's get into it...

Why It Was Changed

The biggest reason was that the old format wasn't providing much actionable value.

What do I mean by that?

We had over 200 brief stock reviews, and there was some investing value to the "dot" ratings. In short, consider green or yellow stocks but not red ones.

But that took a lot of wading through. Nobody wants to comb through 100+ stocks looking for something to buy TODAY, or at least soon. I wanted a service that you could come to, find either stocks to buy today, or at least ideas to consider for a watch list, without being inundated by hundreds of stock reviews.

Again, "actionable" is the key word here.

Also, I came to realize that the previous format's focus on business quality with no attention to valuation was not serving members well. Both are important. So both are equally featured in the new format. GreenDot Stocks now gives you an idea not only of WHAT to buy, but also WHEN to buy or sell it.

Lastly, I never liked the "x stocks per month" format. A lot of investing newsletters use it, but it isn't the best. It forced me to recommend stocks to you through late 2020 and 2021 when it was very obvious that these companies were likely overvalued (the write-ups even said so).

With the new format, I can always highlight great companies for you, but not necessarily "buy" them right away until the valuation is appropriate. And when the market is overvalued, we won't be adding a lot of stocks to the portfolio. That's just good sense!

How The New Format Works

The new format is based on the classic principles of investing greats like Buffett, Lynch, Fisher, and Graham.

The short description is: "buy great companies at a margin of safety to fair value".

You can think of the process as a funnel now:

1. Screen: We start with the Green Screens as a filter to the entire stock universe. Out of this we get a collection of companies with quantitatively good growth rates and cash flows. This becomes our population of stocks to do research on.
2. Research: I'll produce research on stocks from these screens on a regular basis. The goal will be the same as before: find companies with strong organic revenue growth, recurring revenues, durable competitive advantages, trustworthy management teams, and sustainably high returns on capital. There will be one of two outcomes. If the stock passes as a "green dot" stock, a detailed research report will be posted and it will be added to the Watch List, with a target fair value price. If it does not pass, there will be a short description as part of a "rejected article", and it will be crossed out in the Green Screens.
3. Watch: Added stocks will be tracked against their Fair Value estimate, which will be updated quarterly. If a stock drops to 25% or below its Fair Value, we will consider "buying" it, in which case it becomes an official recommendation in the portfolio!

4. Buy / Hold: A stock in the portfolio will either show up in the Buy List (if it remains 25% below fair value), or Hold List. This way you can immediately see what we think can be bought now, vs. stocks you might want to wait on to buy.
5. Sell: Sell decisions will be made in one of two ways. If a stock reaches 50% OVER fair value, we will sell the position and return the stock to the Watch List, pocketing the gain. The second way is if the business deteriorates to the point where we would no longer consider it a "green dot" company. In that case we would sell the position and NOT return it to the Watch List.

What To Expect

With this structure, you can expect the following kinds of updates:

New Stock Addition: These updates will provide a detailed review of a particular stock from the Green Screens that passed muster and was added to the Watch List.

Rejected Stocks: These posts will usually contain brief reasons why I passed on 3 or more stocks from the Green Screens.

Buying A Stock: When a watch list stock reaches an attractive valuation, you'll be notified with a "Buy" post, and it will be added into the portfolio.

Quarterly Updates: Generally any stock in the portfolio and some stocks in the watch list will be reviewed every quarter, and the fair value adjusted accordingly. These updates will usually contain brief thoughts on several stocks.

Selling A Stock: I'll give you my reasoning for removing a stock from the buy or hold list.

The site was re-launched with an example of all of these, except for the selling article. So you can get a good idea of what to expect going forward.

Conclusion

I think you'll find the new service a lot more useful in your investing endeavors. The point is to spend MORE time on great stocks and less time on mediocre ones. The fair value estimate in particular makes this a lot more structured offering. I hope you like it.

If you are not yet a member, sign up here!

All the best in your investing efforts!