If you want expert-level stock selection without a finance degree, you need a repeatable set of questions. This post gives you a 12-question framework used by seasoned investors, explained in simple language, plus a one-page template you can reuse for any stock.
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The 12-question framework
The 12 questions
- What problem does the company solve, and for whom?
- How does it make money (the simple revenue engine)?
- What could kill this business in the next 5 years?
- Is the industry growing, stable, or shrinking?
- Is revenue growth consistent and explainable?
- Do profits convert into cash?
- Is debt manageable in bad years?
- Are margins stable, and why?
- Does the company have a moat, or just a good year?
- Does management communicate clearly and consistently?
- Is valuation reasonable versus growth and quality?
- What would make you sell (clear invalidation rules)?
Business understanding: what the company really sells
Most investors lose money because they don’t understand what they own. Your first job is to write the company story in 5 lines. If you can’t, don’t buy.
Financial reality: cash, debt, and margin quality
A great business can be a bad stock if cash is weak, debt is high, or margins are fragile. Focus on cash flow, leverage, and the quality of profits.
Moat and management: signals retail investors miss
Retail investors often ignore management quality because it is ‘hard’. But it shows up in disclosures, capital allocation, and consistency.
Valuation and entry: how to avoid overpaying
Valuation is not a single number; it is a judgment. Avoid buying at extreme optimism. Use staggered buying and a margin of safety mindset.
A one-page stock review template
One-page stock review template (copy/paste)
| Section | Your notes |
|---|---|
| Business in 5 lines | ________ |
| Key customers / demand drivers | ________ |
| Moat (why it wins) | ________ |
| Revenue + profit trend | ________ |
| Cash flow reality | ________ |
| Debt & risks | ________ |
| Valuation & entry plan | ________ |
| Sell rules | ________ |
Keyword cluster
- how to analyze a stock india
- stock analysis checklist
- fundamental analysis for beginners
- how to read annual report
- stock picking framework
Reader exercise (10 minutes)
- Open the latest quarterly presentation of one company in this theme.
- Write 5 bullet points: demand, pricing, margin, risks, and management confidence.
- Compare that with the market’s recent price action. Are they aligned?
- Write one sentence: “I will buy only if ____ happens.”
- Save this note. Review after the next quarter.
Deep dive: avoid analysis paralysis
The purpose of analysis is decision-making. If your research doesn’t produce an entry plan and sell rules, it is entertainment. Use the 12 questions to reach clarity, then act with position sizing.
Beginner path (4 weeks)
- Week 1: pick one sector you understand.
- Week 2: analyse one market leader using the template.
- Week 3: analyse a challenger and compare.
- Week 4: build a watchlist and define valuation bands.
Glossary
- Moat: durable advantage that protects profits.
- Capital allocation: how management uses cash (capex, buybacks, debt).
Myth vs reality
- Myth: More ratios mean better analysis.
Reality: A few core questions about cash, debt, and moat beat ratio overload. - Myth: News is analysis.
Reality: News is input. Analysis is linking facts to a decision and a risk limit. - Myth: If you’re uncertain, buy small.
Reality: If you’re uncertain about the business, don’t buy. If you’re uncertain about entry timing, stagger.
Worked example (with numbers you can copy)
Assume you invest ₹1,00,000 in a stock with a 3-year view. You decide you will not lose more than 8% on this idea at the portfolio level. That means your maximum acceptable loss is ₹8,000. If the stock’s normal drawdown is 20%, you must size the position so that a 20% fall equals ₹8,000. Position size = ₹8,000 / 0.20 = ₹40,000. The remaining ₹60,000 stays diversified. This single calculation prevents most retail blow-ups.
Printable one-page checklist
- Can I explain the business in 5 lines?
- Do profits convert to cash?
- Is debt safe in a bad year?
- What is my sell rule if thesis breaks?
- Is my position size aligned to risk?
Extra FAQs
Do I need to forecast exact earnings?
No. Focus on direction, quality, and risk. Conservative assumptions are enough.
Where do I find information?
Annual report, quarterly results, investor presentations, and exchange filings are the best starting points.
How do I avoid being fooled by narratives?
Write your thesis in one paragraph and update only when facts change.
Keep your thesis short: one paragraph. If it takes a page to justify, it’s likely overfitting. Simple theses are easier to monitor and easier to act upon.
Focus on the ‘three Cs’: customers, cash, and culture (management). Customers drive revenue, cash validates profits, and culture drives execution over years.
Use comparison to learn faster. Analyse one market leader and one challenger in the same industry. Differences in margins, cash flow, and capital allocation teach you more than analysing five random companies.
A professional stock review always ends with a decision, a position size, and a sell rule. If you finish analysis with “maybe”, it usually means you need either more facts or a smaller opportunity set.
Focus on the ‘three Cs’: customers, cash, and culture (management). Customers drive revenue, cash validates profits, and culture drives execution over years.
Over time, your edge comes from avoiding mistakes: overpaying, overleveraging, and overconcentrating. The 12-question framework is designed to prevent those mistakes.
A professional stock review always ends with a decision, a position size, and a sell rule. If you finish analysis with “maybe”, it usually means you need either more facts or a smaller opportunity set.
A professional stock review always ends with a decision, a position size, and a sell rule. If you finish analysis with “maybe”, it usually means you need either more facts or a smaller opportunity set.
Over time, your edge comes from avoiding mistakes: overpaying, overleveraging, and overconcentrating. The 12-question framework is designed to prevent those mistakes.
A professional stock review always ends with a decision, a position size, and a sell rule. If you finish analysis with “maybe”, it usually means you need either more facts or a smaller opportunity set.
A professional stock review always ends with a decision, a position size, and a sell rule. If you finish analysis with “maybe”, it usually means you need either more facts or a smaller opportunity set.
Use comparison to learn faster. Analyse one market leader and one challenger in the same industry. Differences in margins, cash flow, and capital allocation teach you more than analysing five random companies.
Use comparison to learn faster. Analyse one market leader and one challenger in the same industry. Differences in margins, cash flow, and capital allocation teach you more than analysing five random companies.
Focus on the ‘three Cs’: customers, cash, and culture (management). Customers drive revenue, cash validates profits, and culture drives execution over years.
Focus on the ‘three Cs’: customers, cash, and culture (management). Customers drive revenue, cash validates profits, and culture drives execution over years.
Focus on the ‘three Cs’: customers, cash, and culture (management). Customers drive revenue, cash validates profits, and culture drives execution over years.
Use comparison to learn faster. Analyse one market leader and one challenger in the same industry. Differences in margins, cash flow, and capital allocation teach you more than analysing five random companies.
Focus on the ‘three Cs’: customers, cash, and culture (management). Customers drive revenue, cash validates profits, and culture drives execution over years.
A professional stock review always ends with a decision, a position size, and a sell rule. If you finish analysis with “maybe”, it usually means you need either more facts or a smaller opportunity set.
Use comparison to learn faster. Analyse one market leader and one challenger in the same industry. Differences in margins, cash flow, and capital allocation teach you more than analysing five random companies.
Focus on the ‘three Cs’: customers, cash, and culture (management). Customers drive revenue, cash validates profits, and culture drives execution over years.
A professional stock review always ends with a decision, a position size, and a sell rule. If you finish analysis with “maybe”, it usually means you need either more facts or a smaller opportunity set.
Focus on the ‘three Cs’: customers, cash, and culture (management). Customers drive revenue, cash validates profits, and culture drives execution over years.
Keep your thesis short: one paragraph. If it takes a page to justify, it’s likely overfitting. Simple theses are easier to monitor and easier to act upon.
Focus on the ‘three Cs’: customers, cash, and culture (management). Customers drive revenue, cash validates profits, and culture drives execution over years.
Keep your thesis short: one paragraph. If it takes a page to justify, it’s likely overfitting. Simple theses are easier to monitor and easier to act upon.
Focus on the ‘three Cs’: customers, cash, and culture (management). Customers drive revenue, cash validates profits, and culture drives execution over years.
Over time, your edge comes from avoiding mistakes: overpaying, overleveraging, and overconcentrating. The 12-question framework is designed to prevent those mistakes.
Focus on the ‘three Cs’: customers, cash, and culture (management). Customers drive revenue, cash validates profits, and culture drives execution over years.
Use comparison to learn faster. Analyse one market leader and one challenger in the same industry. Differences in margins, cash flow, and capital allocation teach you more than analysing five random companies.
Use comparison to learn faster. Analyse one market leader and one challenger in the same industry. Differences in margins, cash flow, and capital allocation teach you more than analysing five random companies.
Keep your thesis short: one paragraph. If it takes a page to justify, it’s likely overfitting. Simple theses are easier to monitor and easier to act upon.
Use comparison to learn faster. Analyse one market leader and one challenger in the same industry. Differences in margins, cash flow, and capital allocation teach you more than analysing five random companies.
A professional stock review always ends with a decision, a position size, and a sell rule. If you finish analysis with “maybe”, it usually means you need either more facts or a smaller opportunity set.
Over time, your edge comes from avoiding mistakes: overpaying, overleveraging, and overconcentrating. The 12-question framework is designed to prevent those mistakes.
Over time, your edge comes from avoiding mistakes: overpaying, overleveraging, and overconcentrating. The 12-question framework is designed to prevent those mistakes.
A professional stock review always ends with a decision, a position size, and a sell rule. If you finish analysis with “maybe”, it usually means you need either more facts or a smaller opportunity set.
Keep your thesis short: one paragraph. If it takes a page to justify, it’s likely overfitting. Simple theses are easier to monitor and easier to act upon.
A professional stock review always ends with a decision, a position size, and a sell rule. If you finish analysis with “maybe”, it usually means you need either more facts or a smaller opportunity set.
A professional stock review always ends with a decision, a position size, and a sell rule. If you finish analysis with “maybe”, it usually means you need either more facts or a smaller opportunity set.
Over time, your edge comes from avoiding mistakes: overpaying, overleveraging, and overconcentrating. The 12-question framework is designed to prevent those mistakes.
Focus on the ‘three Cs’: customers, cash, and culture (management). Customers drive revenue, cash validates profits, and culture drives execution over years.
Over time, your edge comes from avoiding mistakes: overpaying, overleveraging, and overconcentrating. The 12-question framework is designed to prevent those mistakes.
Over time, your edge comes from avoiding mistakes: overpaying, overleveraging, and overconcentrating. The 12-question framework is designed to prevent those mistakes.
Use comparison to learn faster. Analyse one market leader and one challenger in the same industry. Differences in margins, cash flow, and capital allocation teach you more than analysing five random companies.
A professional stock review always ends with a decision, a position size, and a sell rule. If you finish analysis with “maybe”, it usually means you need either more facts or a smaller opportunity set.
