The Investors' Library: Understanding the Business - The Basics (Michael Shearn)
"The Investment Checklist" by Michael Shearn is the best resource I've come across since I began building a framework.
The book contains 59 questions to ask when researching a business. I’m going through every question to see which ones I want to add to my framework.
It’s worth noting that Shearn doesn’t recommend his book because so many things have changed since it was published. But while some of the references are dated, there is still a ton of value for those willing to wade through.
Today we’ll cover the 1st six questions in the book aimed at helping investors understand the business.
“If you have a solid understanding of what a company does and can explain it simply, you are less likely to waste time on tangential issues as you go into more depth.” - Michael Shearn
*Below you will find a tweet summarizing each question. For easier readability, you can click on the question, and it will take you to the blog post on Typeshare.
#1 Do I want to spend a lot of time learning about the business?
#2 How would you evaluate the business if you were to become its CEO?
#3 Can you describe how the business operates in your own words?
#4 How does the business make money?
#5 How has the business evolved over time?
#6 In what foreign markets does the business operate & what are the risks of operating in those countries?
That’s all for this week. Next, I will cover questions 7-14 on understanding the business from the customers perspective. You can follow along on Twitter.
Have a great week!
What I think is so interesting about the checklists and content you share is how directly it can transfer to your own life. The quote from the beginning: “If you have a solid understanding of what a company does and can explain it simply, you are less likely to waste time on tangential issues as you go into more depth.” - Michael Shearn" could be used to look at your own life. Do I really know what I believe? Can I explain it simply? If so, I don't need to get lost in some of the tangential details.
Great post!!