HEALTH WARNING.  This section is complex. Just invest time and effort to understand this if you genuinely want to be ‘an independent woman around town’. Your savings security may well depend on your understanding this section.  Otherwise, you will be vulnerable to people in the finance sector.

Girls I know you are already playing on the stock market. This is a good and a dangerous thing. Investing in stocks without understanding what is going on is betting in a casino which I don’t think you are into.

Warren Buffet, called by many as the ‘Greatest investor alive today’ has always been open about the way he invests.  Pouring over his speeches, I have developed this checklist to help you gain an insight into Warren Buffet’s approach.

There are over twenty points to note.  If you can only handle five questions then this is my take:

  1. Do you know how the company’s money is made?
  2. Is there a high threshold for new entrants meaning that the company is sparred from fierce price wars?
  3. Has the management demonstrated a high degree of integrity, intelligence, and energy?
  4. Is the company conservatively financed with a below industry average debt to equity ratio?
  5. Is the CEO home grown? Outstanding organisations grow their own CEOs.


Using the CAMELS rating system

For years, bank supervisory authorities around the world, have used six factors to rate financial institution’s ability to weather a financial storm. The CAMELS acronym is so appropriate for measuring ‘survivability’ as that is exactly what camels have mastered in the desert. The acronym, for the purpose of this book, stand for:

  • Capital and clarity – the company needs enough shareholder funds to facilitate operations without an over reliance on borrowings
  • Assets – saleability, remaining life span
  • Management – experience, time with organisation
  • Earnings – historic post tax earnings
  • Liquidity – cash reserves, the management of debtors and inventory, level of creditors
  • Sensitivity – the extent of any barriers to new competition, impact of international price drivers

The Warren Buffet advice has been set out in the checklist using these important six categories.

Investment checklist incorporating Warren Buffet’s advice Each ‘No’ should be a concern
Checking the market timing for investment  
1.    Is the investment company, Berkshire Hathaway (Warren Buffet’s investment vehicle) buying stocks at the moment? This is a good sign that the market is under-priced. □ Yes □ No
2.    Is the ‘Shiller price earnings ratio for the S&P top 500’ below 20?  The number of years’ earnings it will take, at the existing level, to recoup the investment. □ Yes □ No
3.    Has the stock market / company been temporarily punished for a specific risk that is not a long-term risk? □ Yes □ No


When evaluating a prospect investment

Capital and clarity of business  
4.    Is the company conservatively financed with a below industry average debt to equity ratio? □ Yes □ No
5.    Do you know how the company’s money is made? (Never invest in a company you do not understand how they make their money) □ Yes □ No
6.    Is there a high threshold for new entrants meaning that the company is sparred from fierce price wars? (e.g., it is difficult for a new drink company to compete with Coca Cola) □ Yes □ No
7.    Does the company have favorable long-term prospects? □ Yes □ No
8.    Can current operations be maintained without a large reinvestment in plant and equipment? (This will require looking at the annual accounts, a task investors should be doing.) □ Yes □ No
Full template available from


Doing your own homework

A guideline would be somewhere between 10-20 hours of research in each organisation you are investing in. Your search should include reading:

  • Investor material of the target company’s website (presentations, press releases, the annual and quarterly reports)
  • Stockbroker research reports
  • Share analysis websites such as and to help you analyse the target company
  • Internet searches on: “company name” + “problems”, “company name” + “key director’s name”, “company name” + “CEO’s name”, “company name” + “concerns”

Buying blue chip shares

Register yourself on a share trading platform.

After doing your homework take a view about what you consider a good price is to buy at from looking at price movements in the last few years.

Put a buy order in at that price rather than buy at market price.  Remember, in any one day there can be a swing.  The computer can monitor the share price better than you can.

Buying high risk start-ups

If buying shares in starts ups it is even more important to do your own homework.  In addition to the Warren Buffet checklist follow these rules.


Small stocks investment rules Stock#1




Do your own homework.  A guideline would be somewhere between 10-20 hours of research in each organisation using the Buffet checklist. □ Yes □ No □ Yes □ No
Avoid taking investment advice from social media and the internet. Investment decisions must be based on your own research. □ Yes □ No □ Yes □ No
Ensure all those who you listen to are operating under some Governmental Financial Services Licensing arrangement making them accountable. □ Yes □ No □ Yes □ No
Full template available from


Selling shares

Always sell by putting a sell order in at a price you think can be met rather than sell at market price.

Avoid getting emotionally attached to an investment

If one of your stocks is the darling of the stock market, you can expect great gains and you can become emotionally attached to it; leading to irrational decision making.

Your Grandad and Grandma had amassed a small fortune in a banking stock having held it for over 40 years.  The sound Scottish management were taken over by a the ‘pin-striped suits brigade’ who sought growth at all costs.  The management were buying other banks at exorbitant prices.  They became the darling of the stock market. Investors like lemmings, jumped in without looking at the real worth of the company.

Your Grandpa was in a predicament. To sell at these over inflated prices would be the right idea but a capital gain tax bill in the hundreds of thousands would result.  Instead, he decided to hold on and wait until the shares went into his estate.  Unfortunately, a stock market crash occurred, and the holding was largely all lost and your Grandpa was mortified and was pained by this mistake until the day he died.

Holding onto a failing stock in the hope that it will recover on day is typical of an investor who has invested more than just money in a stock, but also time and energy. They just do not want to face up to a poor purchase decision.  With a poor performing stock work out the current proceeds from a sale and ask yourself, “Would I invest this sum into this company now?”  If the answer is “No” just get out of the stock.

To avoid these problems, follow these rules:

  1. Never let a stock become more than 20% of your portfolio.
  2. Consider pulling out your original sum invested when your stock has tripled in value. If $3,000 invested and stock now $9,000, sell $3,000 to fund another investment. Leaving the gain to hopefully grow.
  3. Do not let tax considerations get in the way of the right decision.
  4. Set a stop loss share price that you will exit if it gets near this level.

Avoid investing dumb money

Investors have a tendency to believe that what occurred in the recent past is likely to reoccur again in the near future. The fear of missing out leads them to buy a rapidly rising stock without any attempt to assess whether it makes a smart decision. This is called ‘dumb money’.


Some other pearls of wisdom from Warren Buffett

“The critical investment factor is determining the intrinsic value of a business and paying a fair, or bargain price. “

“Risk can be greatly reduced by concentrating on only a few holdings.”

“Be fearful when others are greedy and greedy only when others are fearful.”

“Unless you can watch your stockholding decline by 50% without becoming panic-stricken, you should not be in the stock market.”

“It is optimism that is the enemy of the rational buyer.”

“It is more important to say “no” to an opportunity, than to say “yes”.”

“Much success can be attributed to inactivity.”

“Wild swings in share prices have more to do with the “lemming- like” behaviour of institutional investors than with the aggregate returns of the company they own.”

“Turnarounds” seldom turn.”

“Do not take yearly results too seriously. Instead, focus on four or five-year averages.”

“Always invest for the long term.”

‘Remember that the stock market is a manic-depressive.”

“Buy a business, don’t rent stocks. Wide diversification is only required when investors do not understand what they are doing.”


This is an extract from a book called ‘Don’t say I never told you’.

The past has great lessons to offer. Whilst technology and the evolving pace of change may lead millennials to thinking that what is ahead of them is unique. In fact, it has all happened before. I am a father in my 60s who has gathered many lessons from the past, and I set them out here for my daughters in the vain hope that they will be a guiding light long after I am physically gone. Some of the suggestions may seem ridiculous at first, but I ask you to chew the crud and make an informed decision later. For a list of topics covered see here.