[2025–2026] Week 18: The Investment Checklist by Michael Shearn
Reading assignment and questions for week 18 of the Value Investing Seminar
(Note: If you are just joining the seminar, please start by reading the Introduction)
I had the privilege to work with and learn from Joel from 2021 to 2024 when I was a young Equity Research associate at Fidelity. He has remained someone that I stay in touch with and think of as a mentor over the years.
One thing that I learned from Joel that became fundamental to my investing philosophy is a focus on long-term predictability of a business. Joel always looked for companies that didn’t change a lot, at least not for the worse, over the long-term. As he used to say in an industry obsessed with the short-term, “some businesses are better than others, and that remains true beyond just the next quarter.”
Another aspect of Joel’s approach that had a lasting impact is his focus on honest and competent management. His fund usually owned 10% of the small companies that he invested in, and I was always impressed how the CEO of each of his holdings made a pilgrimage to Boston once a year to see Joel.
Joel is both one of the smartest people that I know, and also one of the most hard working. When I was working with him 20+ years ago, a few of us junior associates would come in on the weekends. Few PMs did, except for Joel. He was often found in his office, catching up on a pile of 10-Ks and analyst notes.
Note: For those who want to read ahead, our next reading will be Superforecasting: The Art and Science of Prediction by Philip Tetlock.
Week 18 assignment is to read The Investment Checklist by Michael Shearn and answer the following questions:
Question 1: Which aspect of the research process outlined by the author do you think will be the most challenging for you to perform? Why?
Question 2: How would each of the investors that we have studied customize the approach described in this book to their own investment process?
Question 3: How would you like to customize what you learned from this book to your own investment process? Why?
Question 4: How much time do you think it would take for you to learn to be proficient at the author's research process? To learn to master it?
Question 5: Come up with an AI prompt based on Michael’s checklist.
Now it’s your turn:
Submit your answers in the comments below this article with all your answers in a single comment. I will engage with some of the answers each week and highlight some of the ones I find most insightful in next week’s seminar assignment article.
Engage with the answers of some of your fellow seminar members in the comments below. Remember – the goal is to learn together. Be kind, be respectful and try to add to our learning as a community.
Feel free to ask any questions about the reading in your comment.
Until next week,
Gary
About the author
Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.
Question 1: One of the most challenging aspects is the depth of qualitative research such as interviewing management, suppliers, and competitors. This requires good amount of persistence, access, and judgment .
Question 2: Warren Buffett – He would emphasize the sections on management integrity and long-term competitive advantage, aligning with his focus on “moats.”
Peter Lynch – He would lean on the checklist’s industry and product-level questions, since he favored investing in businesses he personally understood.
Benjamin Graham – He would prioritize the financial strength and valuation parts of the checklist, consistent with his margin-of-safety principle.
Philip Fisher – He would use the checklist’s qualitative questions about innovation and management vision, echoing his scuttlebutt approach.
Question 3: Shearn encourages everyone to customize “The checklist is not meant to be rigid; it is a framework to be adapted to your own style of investing.” I would add more competitive aspects like 5 forces . I would also add macroeconomic filters (tariffs, trade policy, cost structures) to align with long term outlook. After WB had to sell TSMC.
Question 4: Shearn himself says “mastery comes from repetition and reflection.”
How much time depends on how focused the person is. For an unfocused unserious ,it would take a lifetime :-(
General proficiency in 2 years for focused hard working, Mastery would take Several years (7+), since it requires building judgment, pattern recognition, and the ability to adapt the checklist across industries and cycles . Mastering the market cycle is a long term aspect
Q5:
Act as an investment analyst using Michael Shearn’s checklist.
Evaluate [Company Name] by answering the following:
1. What is the company’s business model and how does it make money?
2. What are the key risks in its industry and competitive landscape?
3. How strong is management’s track record and integrity?
4. What is the company’s financial strength and valuation?
5. Does the company have a durable competitive advantage (moat)?
6. What external factors (regulation, supply chain, macro trends) could impact it?
Provide a structured analysis with both qualitative and quantitative insights.
Q1:
Some aspects of the checklist that would be challenging:
- Evaluate as a CEO would require a big picture understanding of how all the pieces work together--that sounds like something that takes time to develop.
- Determining sustainable competitive advantage because this is a hypothesis about the future and requires understanding of multiple companies in the industry.
- Relationship with supplier would require more in person style research that I'm not in the position to do.
- Deciphering the character of the accounting standards used.
- Management analysis will take time because people are complex.
- Determining future growth
Q2:
https://docs.google.com/document/d/e/2PACX-1vQxxGQWWpdQ2ySDJ90nOEZ7j1iI-ZlSQBxfnKxrxfazI5gux0000v3WdxWHvW4mb3Dx_n4J4K9BbXdR/pub
Q3:
I would tweak the management process. For one, I may be willing to buy before I have all these questions answered if the other boxes were ticked because some of these questions may need time to play out. Second, I also have mixed feelings on docking management for having strategic plans to conduct business and don't see a problem with them issuing guidance.
Q4:
I appreciate the question, because I wasn't taking that into consideration. Research, if a skill, would need practice. Financial research process will probably come quicker, but I think the more complex items like really understanding how a company works, competitive durability and future growth and developing discernment for good management will take time, experience, practice, and failure, to really 'master'. I think it's good to realize that if I sat down today with all 40 items, 1) there are still a lot of skills I need to grow before I could actually 'accomplish' them and 2) I would still need to go through the process many times. AI will continue to be helpful in gathering the information, but I'm still going to need to develop the skills of what to do with it.
Q5:
Prompt for Management research. (This could be way more extensive as he spent 3 chapters on analyzing management.)
Step 1: Build a chronological career history of TIKR's CEO. Use historical proxy statements and articles from the past 10 years.
Step 2: Analyze and report back:
1. Do they have a history of making deals, financial engineering, marketing or creating new products?
2. Do they have a background in operations, marketing or finance?
3. Do they jump from job to job or do they have a long tenure in the industry?
4. Are there any red flags in their career history?
There is a lot of good material in this book to build prompts for AI to help research. Which brings up the question about how long it will become necessary to do this research ourselves? Now, services built on these types of AI prompt/frameworks could provide exponentially better qualitative profiles for companies. Does that lead to a more automated, level playing field?