Investing Checklist
April 21, 2009

Have you ever thought to yourself:  "I think right now is a good time to invest, but which stock do I choose?"  Believe me, we've all been there.  Today, I'm going to introduce you to a methodology that whittles down the investing world into the best candidates.  It is not an academic formula by any means.  It is a structured, disciplined method of thinking that should help you develop informed opinions before you invest. 

The Two Approaches
The Top 10 List is modeled after the "Top Down" approach to investing.  In a nutshell, this approach first looks at global economic conditions, then through deductive investigation, gets increasingly more specific.  After the global picture is determined, then your opinion on Broad Sectors, Industries, then individual Companies comes into play.

The opposing process is known as, no surprise here, the "Bottom Up" approach.  This method starts with individual companies, and determines if they are strong businesses, being sold at a low valuation, or some other such metric.  It then determines if the current economic environment is conducive to the operations of the business.  I prefer the Top down approach because it acts as a natural filter.  See the figure below to get an idea.

Top-Down Investing Model


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