Rather than a checklist of yes/no answers, the new checklist focuses on sets of core to do tasks.
I’ve also made it visual so that it makes it quicker and easier to follow. Rather than having a checklist of 100 items thrown at you, having a flow chart will make it easier to manage and keep track of what stage of the investing process you are on.
Investment Checklist FlowchartOld School Value Investment Checklist Process
Core Investment ChecklistHere is the text version.
Do the Pre Work
Preliminary Background Reading
- Read previous thesis on Blogs / Investing Sites / Forums / Alerts
- Read news headlines
Financial Statement Analysis
- Go through line by line[list]
- Income statement + competitive advantage analysis
- Balance sheet + competitive advantage analysis
- Cash Flow statement + competitive advantage analysis
- Quality of Earnings (Inventory, tax, EPS)
- 2 annual reports
- 3 quarterly reports[list]
- specific attention to footnotes at the end of the report
- managers discussion – consistency, candidness
- compare words, numbers to annual report numbers
- CEO compensation (% of sales)
- Greed factor (bonuses, reimbursements, planes, boats, family donations)
- Insider ownership
- Write down how you are feeling
- Beware of[list]
- wanting to just buy and study later
- hindsight bias
- obligation to buy due to amount of research
- reluctance to accept differing opinions
- social proof bias
- What can go wrong?
- What are the risks? How likely are the risks?
- How can you lose money?
- How would you categorise this investment?
- How attractive is this idea compared to the other holdings? (There can only be ONE best idea. Not 2 or 3.)
- What is the expected holding time frame?
- What should be the portfolio sizing?
- What price will you sell?
You may also be interested in:
- Graham’s Stock Selection Screen Part 2
- A Test of Graham’s Stock Selection Criteria
- Company Assessment, Checklist and Spider Graphs
Old School Value
About the author:
Mr. Huebscher is the founder and CEO of Advisor Perspectives, a web site and newsletter that provides investment strategy analysis for financial advisors and wealth managers. In 1982, he founded the investment software division of Thomson Financial, where he created the PORTIA product, a portfolio management system for institutional investors. In 1990, he founded Hub Data, a market data redistribution service, which he sold to Advent Software in 1998. He has also worked in the account aggregation field, as a consultant to both vendors and wealth managers. He is a graduate of the Harvard Business School (1982) and Connecticut College (1976).