My stock investing checklist
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The last newsletter was about my stock investing principles. This newsletter builds on that and goes a bit deeper — it provides the checklist I go through before making a stock investment.
As with my stock investing principles, this list is ever-changing. Items are added, removed, and changed frequently
The checklist below is not complete. I’m not sure this list will ever be complete. It is possible, and likely, that I will learn something new tomorrow from a bad investment, a successful investor, or a podcast guest, at which point this list will change.
As of today, my stock investing checklist is as follows:
Is the company and industry within my circle of competence?
Is it too hard?
Do you have an edge in understanding this opportunity?
Is there significant competition (i.e. other investors)?
Does the stock trade at a significant discount to its intrinsic value?
Does the analysis require an elaborate spreadsheet to appear undervalued?
Is this a good business, not merely a cheap stock?
Are the financial statements clear and simple?
Is this your best idea currently?
Is it better than everything else you currently own?
Is this for the sake of diversification or a truly great opportunity?
Are you acting rationally or participating in market hype and/or falling victim to FOMO?
Are you falling victim to any biases?
Does the company have overwhelming amounts of debt or liabilities?
Does the company have positive future prospects, outside of just strong financial statements?
Does the industry have positive future prospects?
Does this company have a competitive advantage?
Does this company have a strong management team?
Could this business be run by idiots and still be successful?
What is part of your stock investing due diligence process? What would you add to this list?
All the best,
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Nothing in this email is intended to serve as financial advice. Do your own research.