Normally I am not a huge fan of investment books since many are poor substitutes for the classics.
The Investment Checklist The_Investment_Checklist by Michael Shearn (2012) gives new and intermediate investors a more programmed approach to analyzing investments including competitive advantages. I have no affiliation with the author, but I recommend. Is the book perfect? No. Figuring out if management is motivated is harder than the checklist approach would make it seem. However, you will benefit by being relentlessly thorough BEFORE you invest.
Two reviews below.
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
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.