What should be on an investment checklist?

Questions about the business, the balance sheet, the catalyst, the valuation and the risks, each with a source document and a pass or fail rule. For special situations, add items on the event itself: its date, who controls it and what happens if it does not occur. Leave out anything you would not act on.

How long should an investment checklist be?

Most working checklists have 15 to 25 items. Fewer than 10 tends to miss whole categories of risk, and more than 30 gets skimmed. If a list grows past that, merge items that ask the same thing in different words.

Do professional investors use checklists?

Many do, often in the form of an internal review template or a pre-trade memo. The idea comes from fields such as aviation and surgery, where a short list of checks reduces avoidable errors. In investing, the value comes from making the same checks on every idea, not from any single item.

Should a checklist decide whether I invest?

No. A checklist catches errors and gaps; it does not replace judgment about price and probability. Use it to block ideas that fail a hard rule and to make sure the open questions are written down before you act.

How often should I update my investment checklist?

Review it after every position you close and at least once a year. Add an item when a mistake would have been caught by a specific question, and remove items that never change a decision. Date every revision so you can see how the list evolved.

Where do I find the answers to checklist questions?

Mostly in SEC filings: the 10-K and 10-Q for financials and risk factors, the proxy statement for pay and ownership, 8-Ks for events, and Forms 3, 4 and 5 for insider trades. All are free on EDGAR. Company presentations help, but the filed documents carry legal liability and should be the reference.

How to Build an Investment Checklist: A Step-by-Step Guide

What you need

Your past ideas, including the losers, with notes on what went wrong. If you keep a dated investment thesis for each position, start there.
Free access to SEC EDGAR for 10-Ks, 10-Qs, proxy statements and 8-Ks.
A spreadsheet or a plain document. The format matters less than using the same one every time.
About three hours for the first version, then 20 to 40 minutes to run it on each new idea.

Step 1: Collect your past mistakes

Start with evidence, not with a list copied from a book. Go through every position you have closed in the last few years and write one line on each loss or near miss: what happened, and what question would have caught it before you bought.

Group the lines. Most people find their mistakes cluster in three to five patterns. Common ones in special situations are underestimating cash burn, trusting a catalyst date from a news story, ignoring the share count, and paying too much for a good outcome. These clusters become the sections of your checklist.

If you have few closed positions, borrow from the documented ways cheap stocks fail. The warning signs in what a value trap looks like are a useful starting set.

Step 2: Set the sections

Five sections cover most special situations:

Business: what the company sells, who pays, and whether revenue is shrinking.
Balance sheet: cash, debt, maturities, off-balance-sheet obligations and dilution.
Catalyst: the event, its date, who controls it and how firm the date is.
Valuation: what the stock is worth in a base case and a worst case, and what the price implies.
Risk and exit: what would prove the thesis wrong and what you will do then.

Keep the sections fixed once set. The point is that every idea passes through the same gates in the same order.

Step 3: Write each item as a question with a source

Each item should be a question with a factual answer, followed by the document where you find it. "Is management good?" is not a checklist item. "Have the CEO and CFO bought shares in the open market in the last 12 months?" is, and the source is Form 4 on EDGAR.

Name the primary source for every item. Filings carry legal liability and press releases do not, a distinction covered in primary vs secondary sources in equity research. Data platforms are useful for speed, and our comparison of the best stock research tools for individual investors shows which ones pull filing data cleanly, but the filing is the reference when the numbers disagree.

Step 4: Give every item a pass, fail or flag rule

A checklist without rules turns into a notes page. For each item, write what counts as a pass, what counts as a fail, and what counts as a flag that needs more work. Use three result types:

Hard fail: the idea stops here. Example: debt maturing within 12 months with no committed refinancing and cash that does not cover it.
Flag: the idea continues, but the open question goes into the thesis and gets a date to resolve.
Pass: no further action.

Limit hard fails to five or six items. If too many items can kill an idea, you will start bending the answers to keep ideas alive.

Step 5: Build the checklist table

Put the items in a table so each idea can be run in one sitting. A starting version for special situations:

Step	What to check	Where to find it
Business	Revenue trend over the last eight quarters	10-Q and 10-K income statements
Business	Customer concentration above 10% of revenue	10-K, business section and notes
Balance sheet	Net cash per share after all debt and leases	10-Q balance sheet and debt note
Balance sheet	Debt maturities in the next 24 months	10-K or 10-Q debt footnote
Balance sheet	Quarterly cash burn and months of runway	10-Q cash flow statement
Balance sheet	Share count change over two years, including warrants	10-Q cover page and equity note
Catalyst	Event, date and whether the date is fixed or estimated	8-K, proxy statement, tender offer documents
Catalyst	Conditions that must be met for the event to occur	Merger agreement, Form 10, offer documents
Valuation	Base case and worst case value per share	Your model, built from the filings
Valuation	Price implied odds of the good outcome	Your model and the current price
Risk	Insider buying or selling in the last 12 months	Form 4 on EDGAR
Risk	Pending litigation or going concern language	10-K risk factors, legal proceedings, auditor report
Exit	The fact that would prove the thesis wrong	Your written thesis

For the balance sheet rows, how to read a 10-Q for special situations shows where each figure sits. A 10-Q is due 40 days after quarter end for large accelerated and accelerated filers and 45 days for other filers, which sets how fresh your answers can be.

Step 6: Tie the catalyst items to a calendar

Catalyst questions decay. A date that was right last month may have moved. For every idea that passes, copy the catalyst date, its source and its certainty grade onto your catalyst calendar, and set a check date for each flagged item.

This step links the one-time checklist to ongoing monitoring. Without it, the checklist tells you the idea was sound on the day you bought it and says nothing after.

Step 7: Require a base case and a worst case

The valuation section should never accept a single target. Require a value per share in a base case and a worst case, each with the two or three assumptions that drive it, built as described in how to build a base and worst case.

That last line is the useful one. It turns a vague sense that the stock is cheap into a probability you can argue with.

Step 8: Test the checklist on old ideas

Before using the list on live money, run it on 10 past ideas, five that worked and five that did not. Answer each item using only the filings available at the time you made the decision.

Look for two failures. If a losing idea passes every item, the list is missing a question. If a winning idea fails a hard rule for a reason that did not matter, the rule is too strict or poorly worded. Adjust and rerun until the list separates the two groups better than your memory did.

Step 9: Keep a dated revision log

Change the checklist only through a log: the date, the item added, removed or reworded, and the closed position that prompted it. Review the log once a year.

The log keeps the checklist honest. Without it, items drift in after a single bad week and never leave, and the list slowly grows to 50 questions that nobody reads.

Where this goes wrong

A checklist catches known errors. It does nothing for a risk you have never seen, such as a new regulation or an industry shift that no filing describes yet.

It can also give false comfort. An idea that passes 20 items can still lose money if the price already reflects a good outcome. The valuation section exists for that reason, and it is the section people most often fill in loosely.

Finally, a checklist cannot fix bad inputs. If you take the catalyst date from a headline instead of the 8-K, the item passes and the answer is still wrong.

Common mistakes

Copying someone else's list. A famous investor's checklist reflects their mistakes and their style. Use it for ideas, then rebuild from your own record.
Writing opinions instead of questions. Items such as "strong moat" invite you to answer yes. Ask for a fact and a source.
Too many hard fails. When a dozen items can stop an idea, people start shading answers. Keep the hard fails few and absolute.
Running it after buying. A checklist completed after the order is a justification, not a check. Run it before, every time.
Never removing items. Items that have not changed a decision in two years cost time and dilute attention. Cut them and log the cut.

Dombey's published research runs a similar set of balance sheet and catalyst checks before each report; see the research archive.

The bottom line

An investment checklist is a short list of factual questions, each tied to a filing and a pass, fail or flag rule, that you answer before every new position. Build it from your own mistakes, test it on past ideas, and connect its catalyst items to a calendar so the checks continue after you buy. Keep the hard fails few and the valuation section strict. Revise it only through a dated log, and it will improve with every position you close.