To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework. ~ Warren Buffett
My fundamental philosophy of life: Preparation. Discipline. Patience. Decisiveness. ~ Charlie Munger
Combining whatever I have learned from these and other legends of investing, and also my little investment experience spanning the last 14+ years, here is my “framework” for selecting stocks that have mostly worked well for me over time (sorry for a bit darkish image, but it just shows how cloudy it is here where I live).
Click here to download a larger image
A few pointers from this framework –
- Screeners I use – Screener.in, Google Finance
- My screening criteria is what has worked for me over time. You can modify it to suit what you are looking for
- What this framework shows is the science part of investing. The art part involves changing the flow of filters in the funnel to suit your style. So, some people may have the “moat filter” prior to the “financial stability filter,” etc.
- Warning – This framework has also handed me to a few mistakes, so beware. But overall, it has helped me build a portfolio of stocks that have done extremely well over a period of time. How well? I won’t put a number to it. Just that it’s been a number that has helped me build enough to pay off my financial liabilities, quit my job, and work on things and with people I love (don’t want to prove this to anyone). 😉
Anyways, the proof of the pudding is in the eating. So I would suggest you try this process, in case you don’t have one of your own, and let me know your thoughts/results five years from now. 🙂
And by the way, this framework will only help you prepare. You must get discipline, patience and decisiveness on the table yourself.
Send me your thoughts/questions on this framework, in the Comments section of this post.
Hi Vishal , I attended u r workshop on 24 Feb 2017 at YMCA, Delhi .
I am aspiring to become full time investor by 2022, I started my serious journey from 2016. Need to valuable and constructive advice , you can post me personal msg(if u can) . What do think the minimum PF size to become a full time investor, may i know u rs please.
Hi, please see this post – Want to Become a Full-Time Investor? Here’s Your Checklist.
Hi Vishal,
Thanks. This is a very usable model.
Do you have pointers or articles on the price filter part. I think that’s the toughest part for me – to arrive at a value.
Hi Aashish. Please see here and here.
Thanks Vishal
Hi Vishal,
This is the really nice article. The model you have drawn here is unbeatable really. I’ll share this article with my father for sure. Thank you so much for the useful article. Best wishes & Regards.
Thank you Suresh!
Hi Vishal
When you say “Better than competitors”, do you mean that you look only for companies which are industry/niche leaders?
Superb …. How to do valaution and DCF methods…. do u provide any class for learning….regards
Hi Roshan. Pls see here.
Hi Vishal,
You are talking! I was always thinking how to compile things to filter most out. What a useful analysis. Very precious for me!
Thanks for sharing your hard work with the world!
Glad to know that, Manoj. Thanks!
I lived the way you have summarised your approach to investing- simple and concise. I also appreciate the ‘open- heartedness’ & your spirit of sharing your knowledge; few share with such honesty and sincerity.
Wish you lots of success!
Thanks Rajeev. All the best!
Hi Vishal,
First of all, I’m a big fan of you. I was always fascinated by your write ups.
Thank you for showering your knowledge on us.
Needless to say, this is one of the best posts I have read in recent times.
Glad to know that, Vinay. Thanks for your kind words. Regards.
Thanks for this post. Any framework for understanding the business? You can almost never say that you know a business and an industry 100%. What level of understanding and detail is good enough? Would love if you can explain in future with a post on how you go about understanding a business.
Hi Amit. Thanks! Will write something on this. But this post may be of some help to you. Regards.
Deeply appreciate your hard work Keep it up God Bless You
Thanks Dr. Gandhi! Regards.
Thank you Vishal. This would be very good reference guide for new investors.
Best of luck on amazing job you and team are doing for investor community.
Thanks Sachin! Regards.
Hi Vishal,
Thanks a lot for sharing this. This is a very Illustrative and extremely useful.
Really appreciate your hard work
Thanks Mehul!
Hi Vishal
I started reading your blogs some time back only and really liked your way of writing.
I am facing bit challenge in findig a topic on your post. Like there is no search option to immediately search a required topic of interest or in case i want to find an article. Only way is to go through complete list again.
Please let me know if there is another way to search article on your post
Thanks
Shashank
sir, please please make video on this screening system. finology, sagar rv they are charging 15000 rs for this investing technique. can we get this from you for free?
Hello vishal
Very very informative with free of cost .God bless you.
Just one clarification
At the top you mentioned stock screening criteria (7 to 10 years)
Does it mean that stock should fulfill all the criteria under this screening criteria at least from 7 to 10 years timespan?
hello Sir
you didn’t mention the selection criteria?
I checked image as well.
am I missing anything?
Thanks