Equity Investing Checklist

[ finance ]

This page represents a work-in-progress checklist for equity investing. It is continuously being refined based on my reading, as well as my actual experience in researching and investing. The hope is that this provides transparency and accountability (for myself), to better understand my cognitive biases and weak spots.

An important idea underlying this checklist is that time is finite, and there are thousands of public companies that we could analyse. Hence it’s ok to be trigger-happy with your vetos, and to stop researching a company if there’s a minor red flag. In the checklist below, I write “veto” whenever the point is a sufficient reason to stop researching the company.

Investment universe

The first step is to narrow down the investment universe. This is a very vague process, and can be done in many different ways. The quality of these companies really doesn’t matter at this point; we are just trying to reduce our universe from ~5000 companies to ~100 companies. Some methods:

Preliminary research

In this section, we aim to understand whether a company is worth doing more research on. Throughout the process, we take brief notes of any questions we have about the company or any preliminary pros/cons, which will be revisited later if we continue researching the company.

Understanding the business

Quick look at financials

Meta issues

In-depth research

Once I have decided that it is worth investing the time to deeply research a company, it’s time to pull up the recent financial statements to try and properly understand the company.


Key questions

Some of the key questions to answer are as follows (based on Aswath Damodaran’s framework):

Regarding strategy and competition:


Having answered the questions above, it is time to summarise all of the information thus far into a story, that links the facts together. It is advisable to amass all the facts then try to come up with a consistent story, rather than building a story on the go (prone to confirmation bias).

veto if I can’t come up with a simple story that explains the facts, or if the story is not attractive.

Modelling and valuation

Valuation is quite a deep area, so the depth you go depends on how much time you are willing to dedicate to it. The bare minimum is do a relative valuation.

Relative valuation

DCF valuation

We should already have most of the inputs ready to go, based on the prior section. The key job here is to tie the numbers to the story and to come up with some idea of the intrinsic value of the company.

If we are having trouble with the inputs, we may need to do some work regarding market-implied variables, or inferring DCF inputs from comparable companies. Useful questions to consider:

Margin of safety and catalysts

Pull the trigger

At this point, if we decide that a company is worth investing in, we prepare a dated memo according to the following template:

This is really for accountability and self-improvement, so that 6 months from now I can understand whether I was:

After the trade