Here's a great question from Greg: 'How do you know if you know?'
As I wrote not long ago, if you are stockpiling, you have to know you know. You try to only stockpile a business you know well enough to know you really are happy that the price went down and you got put another 1000 shares. (You try ... but you won't know for sure until it happens. That's when the rubber meets the road on your confidence in your research.)
So your question is how do you get there? You roll up your sleeves and dig in. Start by reading everything about the company: The SEC documents, the annual reports, seekingalpha.com articles, transcripts of quarterly calls, magazine articles, as much analysis as you can get from the pros.
If this is a fast food place, eat there a lot. Talk to others who eat there. If its CMG, go to Moe's and ask someone why they like Moe's better. Talk the workers behind the counter. Are they good hires or boneheads? Do they like working there or hate it. Ask a lot of questions. Think about it like a guy who is interested in buying a franchise. What would you want to know? Are they honest? Can you trust them? Is the company going to be there for you for the next 40 years? Will people still love this thing all that time? Get it down to this: Are they the best at what they do? What would it take to knock them off? If you had the market cap in cash to spend on building a competitive company, could you destroy them?
Think about that for Chipotle. The answer is no. Take a billion and you can't compete. They defined the space. Good luck knocking them off. Or McDonalds. No way. They've got all the corners. They have a brand to thank God for. (Ask me about Apple and I'm not so positive even though I love their stuff ... I've lived through their decline and I left them. It can happen again.) Goldman. Best in the world. Smartest in the world. No way can you build a Goldman. WalMart. Enough said. See? Not hard once you know what you want to know.
Rule One investors try to be intensely rational. We try to get emotion out of it. We love it when someone on this site blows up our thesis because that person just saved us from losing our butts because of something we didn't see. We are like scientists: We put forward a theory, spell out the support for it and then try to blow up our own theory. And if we can't and no one else can either, then cool. Add one to the watch list. If our friends here blow us up, we thank God when they do. We're weird like that.
You'll find most investors run from the facts and from pressure on their pet ideas. Rule One investors embrace reason, logic and homework.
Do as much as you know how to do and then post it up here. Ask questions but do the homework so you can take the questions deeper over time. You'll get some push back and some support and you'll decide what's worth listening to and ignoring. But most of all you'll learn how to avoid emotion, how to be patient, how to do homework, how to think like this business is the only one you'll ever get to own and you will, if you stick with it, evolve into a good investor.
And then you'll have other people asking for your advice on their projects.