Research Framework

A systematic research framework ensures you cover all bases before investing. It transforms ad-hoc research into a repeatable process.

Great investors have consistent processes. They don't miss important factors because they follow a structured approach.

Why You Need a Framework

Without Framework	With Framework
Emotional decisions	Rational decisions

The Complete Research Framework

Stage 1: Quick Disqualification (5-10 minutes)

Before deep research, check deal-breakers:

Check	Disqualify If
Recent news	Major red flags

If passes, proceed to Stage 2.

Stage 2: Business Analysis (1-2 hours)

Understand what the company does:

Area	Questions
Moat	What protects them?

If you can't explain the business in 2-3 sentences, you don't understand it well enough to invest.

Stage 3: Financial Analysis (2-3 hours)

Dig into the numbers:

Analysis	What to Check
Balance sheet	Debt levels, assets
Ratios	ROE, ROCE, D/E

Stage 4: Management Analysis (1 hour)

Evaluate the people:

Aspect	Check
Communication	Transparent?

Stage 5: Industry Analysis (1-2 hours)

Understand the playing field:

Factor	Evaluate
Regulatory environment	Risks?

A great company in a dying industry is still a poor investment. Industry context matters.

Stage 6: Valuation (1-2 hours)

Determine fair price:

Method	Application
DCF (for stable cos)	Absolute value
Margin of safety	Buy price calculation

Stage 7: Risk Assessment (30 minutes)

Identify what could go wrong:

Risk Type	Examples
Industry risks	Regulatory changes

Stage 8: Investment Decision (30 minutes)

Synthesize everything:

Decision	Based On
Conviction level	High/Medium/Low
Position size	Based on conviction

Documentation Template

For each stock researched, document:

Company: [Name]
Date: [Research date]

1. Business Summary
   - What they do
   - How they make money
   - Competitive position

2. Key Financials
   - 5-year trends
   - Key ratios
   - Cash flow quality

3. Management Assessment
   - Track record
   - Ownership
   - Concerns

4. Valuation
   - Current price
   - Fair value estimate
   - Margin of safety

5. Key Risks
   - Top 3 risks
   - Mitigation

6. Investment Thesis
   - Why invest
   - Investment horizon
   - Exit criteria

7. Decision
   - Buy/Hold/Avoid
   - Position size

Writing your thesis forces clarity. If you can't articulate why you're buying, you shouldn't buy.

Time Investment

Stock Type	Research Time
New sector, first stock	8-10 hours
Same sector, additional stock	4-6 hours
Familiar company, update	2-3 hours

Key Takeaways

Follow a consistent research framework
Cover business, financials, management, industry, valuation
Document your research and thesis
Identify risks before investing
Make decisions based on complete analysis

Module complete! Next, let's learn about making actual investment decisions.

Sources & Disclaimer

CFA Institute - Equity Asset Valuation
NCFM Fundamental Analysis Module

Note: Any benchmarks (e.g., "Good ROE is > 20%", or specific P/E ranges) are simplified industry heuristics for educational purposes. True evaluation depends on specific industry context, market cycles, and individual company circumstances.