You need to understand the business first, make your judgment then use the checklist. to confirm that you haven’t missed anything crucial.
by Chin Hui Leong
Two key variants:-
1. A “Read-do” checklist, you check off tasks as you carry them out – much like following a recipe.
2. A "Do-confirm” checklist, you perform your work from memory and experience, then pause to verify that everything was done.
Investing isn’t about following steps mechanically. You need to understand the business first, make your judgment then use the checklist, to confirm that you haven’t missed anything crucial.
If you can explain how a company makes money in terms simple enough for a 12-year-old, you’re on the right track.
“Risk is what’s left when you think you’ve thought of everything.”
Write down what you don’t know about your investment. If the list is short, you’re overconfident. If you can’t identify any risks, you haven’t looked hard enough.
Charlie Munger: “It’s remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent".
The market doesn’t require genius. It rewards discipline and punishes carelessness. A good checklist won’t make you Warren Buffett but it will prevent you from being consistently wrong.
Source: Business Times
https://www.businesstimes.com.sg/wealth ... -checklist
