Investing checklists
Check a business against the questions long-term investors ask.
For learning only, not investment advice.
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VISA · NYSE
Munger's Psychology of Human Misjudgment. Flag every bias colouring your thesis. A 'Yes' means your brain is being influenced. Aim for all 'No's before trading.
1. Emotion, ego & self-regard
Liking/Loving: Are you more likely to buy a stock because you have positive feelings toward the company/CEO?
Disliking/Hating: Are you avoiding a stock solely because you dislike the company personally?
Excessive Self-Regard: Are you overestimating your ability to pick stocks, believing your intuition is better than it is?
Inconsistency Avoidance: Are you sticking to a bad stock just because you don't want to admit you made a mistake?
Envy & Jealousy: Are you buying a stock because you're envious of others who have made money on it?
2. Social & authority influences
Social Proof (FOMO): Are you buying a stock because everyone else is buying it, without doing your own work?
Authority Misinfluence: Are you blindly following an expert's recommendation without conducting your own research?
Influence from Association: Are you influenced by superficial associations, like a well-known brand or celebrity?
Reciprocation: Are you investing because you feel obligated due to a personal relationship or favor?
Kantian Fairness: Are you choosing a stock because you believe it's 'fair' or 'just,' rather than financially rational?
3. Information & logic traps
Availability Misweighing: Are you basing your decision on recent news or events simply because they are easily available?
Contrast Misreaction: Are you buying a stock just because it looks cheap in comparison to a severely overvalued peer?
Reason Respecting: Are you accepting plausible-sounding reasons for a stock's potential, even if they lack hard evidence?
Twaddle Tendency: Are you getting distracted by irrelevant information, opinions, or unnecessary debates?
Curiosity: Are you buying a stock based on novelty or curiosity, rather than solid fundamental research?
4. Stress & psychological defenses
Doubt Avoidance: Are you rushing a decision to ignore or dismiss doubts and avoid the feeling of uncertainty?
Psychological Denial: Are you actively ignoring red flags about a stock because acknowledging them is too painful?
Overoptimism: Are you overly optimistic about potential returns, heavily dismissing realistic risks of failure?
Deprival Superreaction: Are you deeply willing to overpay due to a desperate fear of missing out on a perceived opportunity?
Stress Influence: Are you making this investment decision under heavy stress or emotional pressure?
5. Physical & compounding factors
Reward/Punishment (Incentives): Is your decision being overly driven by an aggressive incentive structure or fear of punishment?
Use It or Lose It: Are you holding onto a stock merely because you have already invested time/money into it (Sunk Cost)?
Drug Misinfluence: Are you under the influence of substances (including deep fatigue) which could impair judgment?
Senescence (Old Habit): Are you relying entirely on outdated information or old mental habits to make this decision?
Lollapalooza Effect: Are multiple biases listed above converging at once to push you into this specific decision?