OldSchool.com - Jae Jun

Investment Checklist for Stock Selection

Tan KW
Publish date: Fri, 25 Jul 2014, 06:56 PM

 

Following on from the discussion of my first investing checklist, it’s time to reveal my new investment checklist.

Rather than a checklist of yes/no answers, the new checklist focuses on sets of core to do tasks with the real checklist being only a handful of questions in the “Final Evaluation” section.

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 Flowchart

Old School Value Investment Checklist Process

Core Investment Checklist

Here is the text version.

Do the Pre Work

Preliminary Background Reading

  • Read previous thesis on Blogs / Investing Sites / Forums / Alerts
  • Read news headlines

Valuation

Financial Statement Analysis

Dirty Work

  • 2 annual reports
  • 3 quarterly reports
    • specific attention to footnotes at the end of the report
    • managers discussion – consistency, candidness
  • 2 letter to shareholders
    • compare words, numbers to annual report numbers
  • Latest proxy
    • CEO compensation (% of sales)
    • Greed factor (bonuses, reimbursements, planes, boats, family donations)
    • Insider ownership
  • Search CEO history, track record, personality

Emotional Check

  • Write down how you are feeling
  • Beware of
    • wanting to just buy and study later
    • hindsight bias
    • overconfidence
    • obligation to buy due to amount of research
    • reluctance to accept differing opinions
    • social proof bias
  • If required, take a break and clear your mind. Get away from the excitement and  noise.

Final Evaluation (the only checklist you need at this point)

  • 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?

Read more: http://www.oldschoolvalue.com/blog/investing-strategy/investment-checklist-stock-selection/#ixzz38Tc7gCcr
Discussions
2 people like this. Showing 9 of 9 comments

stockoperator

TQ

2014-07-25 19:30

johnny cash

Post removed.Why?

2014-07-25 20:48

AyamTua

applicable only to newbies not hardcore old timers like KUKUMANIS.. kikiiiii

2014-07-25 23:01

lmenwe

since you look down on a seasonal and successful investor like jae jun's check list. why don't u share urs with us. btw pls dun tell me base on charts and volumes!

2014-07-26 12:25

johnny cash

Ayam Tua,, when you will be turning to Ayam Muda ??

2014-07-26 12:39

johnny cash

Post removed.Why?

2014-07-26 12:41

DickyMe

LOL..in Malaysia they hate reading..how can you expect them to pore through hundreds of pages of the annual report. They do what they like best. They outsource the analysis part to be spoon fed. Besides, majority base on hearsay, rumour and inside information. Besides I doubt counters in KLSE adhere to rules or regulation, there is just too much intervention politically and shark activities. This analysis method is only applicable to companies with integrity.

2014-07-26 14:29

leno

Everywhere the same. Some tok kok about malaysian investors like to be spoonfed lar, base on hearsay lar ... why ? U think US investor, singapore investor, india investor, china, indon, filipine, UK, europe not the same meh ? KLSE poor regulation ? Why ? U just come out from which jamban hole ? U no hear in Singapore also got conman counter meh ? How about Enron ? World.com ? As usual ... if u fail in your investment, if u lose money in share market .. always blame klse lah .. blame malaysia lar ... blame your wife lar .. blame your grandfather lar ... KAKAKAKAKAKAKAk ... look at Insas KING LENO the most panlai investor ... got blame anyone boh ? Boh right ? Because Leno veri veri successful mah .... HAHAHAHAHAHAHAH ... got correct boh wat leno said ? Sure correct one.

2014-07-26 14:37

DickyMe

LOL..leno..siapa makan cili dia rasa pedas!!! Your outburst confirms what is said is true...huhuhuhuhu..don't be too emotional..not good mah...Next time toss coin before you invest if you think analyzing is not your thing!..Relax ..Happy punting in KLSE Leno!

2014-07-26 14:44

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