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The Investment Checklist: The Art of In-Depth Research Hardcover – November 8, 2011


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The Investment Checklist: The Art of In-Depth Research + The Manual of Ideas: The Proven Framework for Finding the Best Value Investments + The Art of Value Investing: How the World's Best Investors Beat the Market
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Product Details

  • Hardcover: 384 pages
  • Publisher: Wiley; 1 edition (November 8, 2011)
  • Language: English
  • ISBN-10: 0470891858
  • ISBN-13: 978-0470891858
  • Product Dimensions: 9.6 x 6.5 x 1.2 inches
  • Shipping Weight: 1.3 pounds (View shipping rates and policies)
  • Average Customer Review: 4.5 out of 5 stars  See all reviews (20 customer reviews)
  • Amazon Best Sellers Rank: #116,090 in Books (See Top 100 in Books)

Editorial Reviews

From the Inside Flap

All too often, investors buy stocks based on either recommendations from other investors, hunches, or isolated facts about a business they've heard or read about. In doing this, your decision-making process becomes dangerous because you haven't taken the time to thoroughly understand the businesses you are buying and you're relying on the information, or misinformation, being provided to you about a particular stock. Instead, your investment purchases should be based on understanding the value of a business through in-depth research. If you truly understand the value of a business, then you will be in a position to recognize investment opportunities and can more easily make the right buy or sell decisions.

The Investment Checklist has been designed to help you develop an in-depth research process, through a series of checklists, that will allow you to effectively generate and research investment ideas, assess the quality of a business and its management team, and ultimately improve the performance of your portfolio. In it, author Michael Shearn—founder of Time Value of Money, LP, and the Compound Money Fund, LP—outlines the systematic process he has used over the past decade to carefully think through potential investments and avoid common investment mistakes. Along the way, he puts this approach in perspective by addressing:

  • A search strategy that will improve your odds of finding investment ideas worth researching further

  • The importance of evaluating a business's strengths and weaknesses, measuring its operational and financial health, and understanding a business from the customers' perspective rather than your own

  • Why assessing the quality of management— from how they handle daily operations and long-term strategy to the type of managers they are and how they rose to lead the business—are essential to achieving better investment results

  • How to gauge the potential future growth opportunities of a business by looking at whether it's growing organically or through merger and acquisitions, and whether historical growth has been profitable

  • And much more

Each chapter of The Investment Checklist also offers countless examples of companies the author has researched, considered investing in, and actually invested in or decided not to invest in. These examples show you exactly how his checklist helped him make investment decisions, and they'll show you how to do the same. In addition, each chapter ends with "Key Points to Keep in Mind," so you can zero in on the critical factors in each set of questions.

If you want to lower your investment risk you need to increase your knowledge of the businesses you buy stock in. The Investment Checklist will show you how to do this, and much more, by helping you follow a concise and easy-to-use framework that will guide your investment decisions.

From the Back Cover

Praise forTHE INVESTMENT CHECKLIST

"Every wise investor will keep The Investment Checklist next to their financial instrument panel and consult it whenever they make a decision to buy or sell a stock."—Robert P. Miles, author, The Warren Buffett CEO

"Michael Shearn has written an indispensable book. It will raise the game of every investor who reads it. Fortunately, not all of them will." —Judd Kahn, co-author, Competition Demystified and Value Investing: From Graham to Buffett and Beyond

When you base your stock purchase decisions on isolated facts and don't take the time to thoroughly understand the businesses you're buying, costly investment mistakes are usually made. Instead, your investment purchases should be based on understanding the value of a business through in-depth research.

That's why Michael Shearn—founder of Time Value of Money, LP and the Compound Money Fund, LP—has created The Investment Checklist. In it, he shares the successful approach he's used over the past decade to generate and research investment ideas, assess the quality of a business and its management team, and ultimately improve his overall investment performance.

Along the way, you'll be introduced to specific "checklists" that will enhance your ability to understand the dynamics of the business you're interested in and the people operating it, value the potential investment, and make the most informed buy or sell decision possible. Each chapter also contains countless examples that show you exactly how the author's checklist has helped him make the right investment moves over the course of his successful professional career.

Whether you're just starting out and thinking about what you want to invest in, or already have a portfolio that you want to manage more effectively, The Investment Checklist has the tools and insights you need to improve your investment endeavors.


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Customer Reviews

4.5 out of 5 stars
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Overall, I thought the book was very interesting and well written.
Andrew Wesley McDill
This is critical to successful investment, as the gap between intrinsic value and market value helps determine an investor's margin of safety.
John Mihaljevic
I highly recommend this book for Beginner investors as well as serious investor.
Indra

Most Helpful Customer Reviews

29 of 31 people found the following review helpful By R. Michael Knipp on December 28, 2011
Format: Hardcover Verified Purchase
Anyone wishing to utilize a disciplined method for investing should read this book by Shearn.
Good investing mean avoiding mistakes and taking calculated risks. Identification of risk involves
deep thinking about "what can go wrong?". This is where this book shines, since it forces you
to adopt a structured approach of working through a checklist of the possible unknowns.
Too many unanswered items? - Take a pass until you can complete the checklist.

What I really liked about the book are the tons of real life examples of exactly what he means.
You look at investor conference calls in a different way, as it has an exhaustive section
on evaluating management and their responses. Are they honest? Are the overly promotional?
What are they trying to hide? You see real life examples of both sides - the good and the bad ones.

The book made me think of many situations in the past that were strong clues about excessive risk.

Another useful aspect of the book is that it provides many outside sources (websites, etc) to
check your facts. Investing in teen retailers? Shearn provides a number of free sources
to verify and understand trends.

I've no doubt that this book will make me better at researching a company.
For anyone not employing a checklist - the Shearn checklist provides a great template to success.

R. Michael Knipp
Private Investor
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28 of 30 people found the following review helpful By Ant Gara on March 9, 2014
Format: Hardcover Verified Purchase
To be honest, I really don’t understand these 5* reviews for this book. In fact, this was one of the more severe letdowns for me. I was expecting a check list full of both quantitative and qualitative measures regarding a business, but instead, the quantitative part is kept to a minimum, with the subjectivity of qualitative measures dominating the book. Now, just because qualitative descriptions are what the majority of the book is about doesn’t necessarily mean it’s a poor book; it’s the type of qualitative measures the author presents that really hampers it. Due to this, it’s unclear whether the book is written for the individual investor who wants to simply put more time into his investment evaluation, or for the professional analyst working at a bulge bracket firm.

As an example of the author not knowing his audience, he mentions in order to gain a better insight into 99 Cent Stores, he visited over *100* of their stores! Yes, you read that right, over one hundred stores. Unless the author’s firm was contemplating buying the entire business, there is ZERO insight a person would gain after visiting the 20th store versus the 110th store. Now, if you’re a professional analyst and your boss is paying you to visit all these stores, hey, why not? But as an individual investor, the notion that you’d need to even visit a fraction of this amount is absurd. Visiting as many locations as you REASONABLY can is a great method right out of the Peter Lynch school of investing, which I wholeheartedly endorse, but really, over a hundred locations? Come on.

Another instance of this lack of audience awareness is Appendix B, titled “How to Interview the Management Team.
Read more ›
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22 of 23 people found the following review helpful By David Tsai on September 26, 2013
Format: Hardcover Verified Purchase
I have to say this is a book that pushes my investing skill to a new level. If you are a short term trader that want to make some "quick money" in days or weeks this book probably won't help a lot. If you are a serious investor that cares about the fundamentals of the company you invest, then this book will teach you a lot.

I am an O'Neil style investor. Originally fundamentals to me are just some numbers: ROE, Profit margin, EPS, sales growth etc. Although this did not prevent me from catching some big fish like LULU or ALXN, I did miss several opportunities due to a lack of deep understanding of the business. Every time there is a sharp decline on heavy volume with no news, I have no idea what to do and the only conclusion is some institutional investors are dumping shares which is usually not a good thing. As a result I was shaken out of positions that turn out to be bigger winners for several times, such as VRX and QIHU this year.

After I read this book, I started to spend time reading 10-K and 10-Q which can give me a lot of insights of the financial health beyond those numbers. Based on the points in the checklists I produced my own checklist and feel more ease amid market fluctuation, because now I know the business beyond numbers.

Some book reviewers say the book is too much for them and I partially agree with that considering we are busy and have full time job. Some points in the checklist are too "advanced" for me, meaning the data can not be acquired easily by individual investors. But most of information are contained in SEC filings. If you don't want to spend time understanding the business, why do you throw your hard earned money into it? There is no free lunch.
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15 of 16 people found the following review helpful By Andrew Wesley McDill on January 4, 2012
Format: Hardcover Verified Purchase
Overall, I thought the book was very interesting and well written. It did a nice job of helping people learn how to think about businesses from a strategic and competitive point of view. The one thing that would have made the book better would have been some discussion to tie the strategic analysis of the company to some valuation frameworks. There was some mention of what the author and his firm were paying for certain companies when they purchased the stock, but it was not a complete discussion of valuation and the related value investing concept of a margin of safety. With that said, I do think that the anecdotes included in the book were helpful and added good context.
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