The Value of Checklists

“Avoidable failures continue to plague us in health care, government, the law, the financial industry – in almost every realm of organised activity. It is the simple checklist that can bring about striking improvements in a variety of fields.”

This quote is taken from The Checklist Manifesto by Atul Gawande, a book that argues we can do better by using the simple method of checklists.

In the increasing complexity of life, it has become increasingly important to use checklists – building a skyscraper, performing surgery, servicing a car, flying a plane, all these things have lower error rates when utilising a well-constructed checklist.

No matter what your situation, your financial success requires careful planning and guidance to help ensure your individual goals and needs are met. Using a checklist is a simple process with tremendous benefits. A checklist can protect you from yourself, ensure nothing is missed, and propel you towards investment success.

I have developed an investment checklist that is in ongoing development, as it never stops changing and adapting to finer details. Depending on the type of investment, I utilize select parts of the checklist that are applicable.

Broken into the main areas below, my checklist also contains many subheadings and checks in each area:

  • The Business – What does it do?
  • The environment the business operates in
  • Financial cash flow and earnings
  • Balance sheet and Equity characteristics
  • Management

The checklist is effective in reducing the effect of behavioural biases, keeps me from overlooking anything, and disciplined.

Investors such as Guy Spier, Charlie Munger, and Warren Buffet all tout the virtues of using investing checklists.

“A checklist is a way of managing your own mind and guarding against your own proclivities, so it needs to be based on this kind of self-awareness.” – Guy Spier, The Education of a Value Investor

“I’m a great believer in solving hard problems by using a checklist. You need to get all the likely and unlikely answers before you; otherwise it’s easy to miss something important.” – Charlie Munger

If you would like to find out more about investment planning, please contact me.


Posted in Investing, Strategies, Value investing.