Sometimes low-tech innovations can improve high-tech outcomes. Such is the case with the humble checklist. Checklists have been used for a long time in aviation and project management, helping people organize complex processes and avoid forgetting essential items. Lately they've made their way into hospital operating rooms, where they've helped cut the rate of complications by over 30%.
They help investors as well. When we look at potential investments, there are a host of factors to evaluate, from cash flow to management to liquidity. Investing is a multifaceted process, and checklists help organize it.
But there's a danger in using checklists. Going down the list can degenerate into going through the motions—asking a question just because it's on the sheet, not because we care about the answer. When I was a student-pilot I learned to do a "walk-around" pre-flight exam. It mattered how the aircraft looked; I was putting my life into that airframe. You can bet I made sure there was oil in the engine and no water in the gasoline.
In the same way we need to bring passion into the process of portfolio management. It's a paradox, but we have to care about our investments, even as we're cold and calculating. A stock doesn't know you own it, but you need to know that you own the stock.
Einstein claimed he had no special talent, only passionate curiosity. We need to harness our passions, even as we check off the boxes.