Book Review: The Investment Checklist

Author: Michael Shearn

Genre: Equity Investment


Before you read this book, consider these questions about you and your approach to investing and be honest with yourself.

  • Do you check stock prices frequently?
  • Do falling stock prices make your stomach churn?
  • Do you react quickly to positive or negative news announcements about the companies whose stock you own?
  • Do you ever feel you’re under time pressure to make buy or sell decisions?
  • Do you have high portfolio turnover? Are you buying and selling shares often?
  • Do you feel you need to defend your investments when others challenge you?

If you answered “yes” to any of the above questions, this book can help you make better investment decisions

On his quest to discover a checklist-based value investing book, Michael discovered that most of the books covered only the broad concepts of investing. Since he couldn’t find a book that can help him in his investment decisions he decided to create one himself. ‘The investment checklist- The art of in-depth research’ is a brainchild of Michael Shearn.

This book is for people who are just starting out and thinking about an investment or if you already have a portfolio (of any size) that you want to manage better and watch your money grow.  It will help you learn what you need to know about specific companies you’re considering investing in, and to help you evaluate whether those companies are worth investing in.

This will help you increase your knowledge for businesses and the checklist can help you discover the underlying economics as well. It will tell you what information you need and where can you find it. The questions in the checklist should help you understand the business as if you’re the business owner and help move you away from thinking of stocks as pieces of paper. The reader, however, must note that the checklist requires you to answer questions using a long time span, which helps protect you from overvaluing more recent pieces of information.

The various topics that are covered in this book are but not limited to:

  • Investment search strategies
  • How a business earns money and how it evolves over time
  • How are the customers and employees are important to a business
  • The various competitive advantages a business can have
  • The operational and financial health of the business
  • Cash flows of a business
  • Quality and competence of management,
  • How acquisitions can be bad

Here is a quoted text from the author of the book “It is important to understand that good investment ideas are rare, and consistent success in the stock market is elusive. Those investors who believe that they can make money year after year in the stock market are setting themselves up for disappointment. Most investors are far too optimistic: They often think they’ve found great ideas when they haven’t. The result of all my research is this book, which describes the checklists I’ve used in my own investing over the past 10 years.”

Pre-requisites before reading the book: None

Is the content relevant even today? Yes

Vocabulary and Understandability: Easy

Level of investment expertise required: Any

How can it benefit you?

If you are a person who loves to keep checklists for everything then this book would help you in your investment journey. With a comprehensive list of 59 items divided across various sections in the checklist, this book can turn out to be your only reference point to new investment decisions. This book will help you analyze a business using an encyclopedic checklist type system. The book highlights only the things that are required and eliminates any checklist item that is not necessary. Add it to your reading list now and learn the art of core stock analysis. Although the book may be a little costlier to an average investor, the juice you would extract from it would be worth the squeeze.

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