I have been investing professionally for over 25 years. In that time, I have accumulated a number of mental models. However, I found that I wasn’t using them consistently in my investment process.
So, I built an app with AI that lowers the friction and makes me actually use the hard-won investing lessons in my process. In the past this would have taken many months. Instead I was able to do this in under a week of part-time work using Claude Code.
I am really excited to share the Mental Model Scorecard with you. I have been using it consistently in my own investment process over the last few months, and think you will find it quite useful as well.
There is something here for everyone. If you are not a paid member yet, you can still start using the free portion of the app right away. And those of you who are paid members (thank you!) already have full access to the entire app. All you need is a browser, on your phone or on your computer, and you are ready to go.
First, as with all the AI resources that I share with you, I want to frame where this can fit into your investment process. In my 5 Sources of Investing Edge article, I covered the stages of an investment process:
Each AI workflow that I release will be classified into one or more of the 5 investing process stages: Idea Generation, Research, Investment Decision, Portfolio Construction and Information Processing.
This system will let you quickly understand where an AI tool fits in and whether you want to use it in your own work. Without further ado, let’s get to today’s app.
First, why a scorecard rather than a checklist?
A checklist usually has questions that have a binary, yes or no, answer. A scorecard can have the flexibility to add more nuance to each question that properly captures what we are trying to measure.
Also, a checklist is usually structured so that each question gets a ‘yes’, or the checklist fails. Think of a pre-flight checklist that an airplane pilot does before takeoff.
A scorecard isn’t bound by this constraint. It allows you to get an answer that’s analog rather than binary. So instead of answering the question “Is this a good investment, yes or no?” it helps you answer the question “How good of an investment is this?”
Your scorecard will start with the 8 questions that I actually use in my own investing. These are of course not my only questions, but rather ones that experience has taught me I don’t ask consistently enough:
Is this an exceptionally good company?
Is this an extremely cheap security?
Is there an event that is likely to accelerate the timing of when the price/value gap will close?
Is this company becoming a better business, staying the same, or getting worse?
How consistent have recent results been with your thesis?
In which of the following categories do the problems facing the company fall: cyclical, structural, internal, balance sheet?
To what degree does the thesis rely on what has already been happening continuing vs. a change from the past?
What are the degrees of difficulty of getting this investing thesis right?
The default setting for you is that each question gets an equal weight in the total score, and the different responses for each question allocate that question’s points based on my own preferences. So if you are a free user and are not logged in, your screen will look like this:
You will be able to adjust the points assigned to each question, but not change the questions themselves. After the questions are completed, the app asks you to provide a succinct bear case. While any text will technically be allowed as satisfying this requirement, I encourage you to pause for a moment and to take this seriously as this is a great de-biasing opportunity.
Once you fill out the scorecard, the app will calculate the score for you.
Please don’t take this as advice. This is just the app mirroring your own opinion back to you. What is useful is that it forces you to answer these questions and confront what you think about a company.
The default scorecard is also intentionally tough. It is nearly impossible to get a perfect, 100%, score. Many good investments will have scores far lower than that. I have found the most useful features to be a) comparing scores among different investments and b) monitoring how my score for each company changes over time. We will get to this shortly.
In this short video, I show you how to use the free version to complete a scorecard.
If you are a paid member, use the email that you used to subscribe to the Substack to login, and you will receive a one-time login code. Once logged in, you will gain access to additional functionality:
Modify, delete and create questions and save your scorecard for future use
Save your results, with a ticker, to a real, commercial-grade database with daily backup
Export your data
Sort your companies by score or by changes in score if you have more than one entry
Compare any two scores and their components to see how your opinion has changed between those two dates
Chart the score for a given company over time
This video shows you how I use the additional features available to paid members.
I will occasionally add new functionality as warranted, so if you have suggestions, please let me know!
Now, let’s get to the four workflows that you can use this Mental Model Scorecard for in your own investment process:
Workflow #1:
Process Stage: 1b: Idea Triage
Who: Anyone
How:
In the early stages of considering a potential investing idea, fill out the scorecard. True, your answers will be far more approximate than if you fill it out for a company you have already fully researched. However, there should still be a reasonable amount of information in your answers.
You can approach this in one of two ways:
Set an absolute floor for ideas that you will move further into your research funnel. In my own use I found that ideas with a score below 30% tend to be not worth pursuing, but you can of course set your own threshold.
Rank your potential ideas by the score, and prioritize working on the highest-scoring ones
Workflow #2:
Process Stage: 3: Investment Decision
Who: Anyone
How:
Same as workflow #1, except now you are filling out the scorecard after you have done your full research on a promising investment candidate so your answers should be more informative. Set a minimum threshold and seriously consider not allowing ideas below it into your portfolio barring unusual circumstances that you can clearly articulate.
Workflow #3:
Process Stage: 4: Portfolio Construction
Who: Anyone
How:
Same as workflow #2, except now you are using the score as an input into your position sizing. For example, you can set a minimum score threshold for large positions. Or each of your position sizes can map to a score range that you deem appropriate assuming the investment also meets your other criteria. To be clear, I also consider valuation and a number of other factors in conjunction with the score in determining the position size.
Workflow #4:
Process Stage: 5: Information Processing
Who: Paid Subscribers
How:
Complete the scorecard for each of your holdings and/or watchlist companies. Repeat the process any time material new information comes out, such as an earnings report.
At a regular interval (e.g. monthly or quarterly), sort your scorecard journal by the change in the score. For each company with a decreased score:
Understand why the score dropped
Determine any necessary research steps
Decide if your value range estimate needs to be revised
Decide whether this merits eliminating or reducing the position
For each company with an increased score, perform similar steps while asking the opposite question of whether initiating or increasing a position is warranted.
I particularly love Workflow #4 because it embeds behavioral debiasing. By making filling out the scorecard quick and reducing friction, you get yourself to do something you should have been doing all along.
The benefit is that this process can help you catch deteriorating investments earlier than you would have otherwise. You also have a chance of catching good investments earlier. All with very little time spent and no technical know-how required.
THAT is the whole point of the paid side of the Behavioral Value Investor Substack. You don’t need a ton of technical jargon or fancy tools. What you need are useful workflows empowered by AI that you will actually use because they are easy to implement and don’t require you to become an AI expert while allowing you to benefit from the power of the technology.
The best part is if you become an Annual subscriber, you get a 30-day full money-back guarantee. Try 1 workflow from beginning to end. If it falls short, email me within 30 days of your first Annual purchase and tell me which one you tried and where it came up short. I’ll refund your membership in full. Available once per member.1 I don’t want to hold you captive, I want you to be excited to be part of the community because you are deriving substantial benefits from what I am making and sharing with you.
Speaking of that, I have a number of exciting projects in the pipeline that I look forward to sharing with you in the coming months. If you have any suggestions for what I should build next, please leave a comment or send me a message. If you are a Free Subscriber and I end up implementing your suggestion, you will receive a complimentary month of the paid subscription.
Can I ask you for a favor? The Behavioral Value Investor’s relaunch around AI-enhanced workflows is recent, and many people don’t know about it. I would really appreciate it if you could restack this post to let others know and join us.
Until next time,
Gary
Disclaimer: Not financial advice, for educational purposes only. The Scorecard organizes your judgments; it does not recommend investments or determine position sizes.
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.