Investors should follow a systematic approach to make informed decisions about where to allocate capital. To achieve this, they need to build an investment system that provides a structured and disciplined framework. One of the biggest issues investors face is the lack of a system. Therefore, if you want to be a serious active investor, you need to start by building an investment system.

The investment system creates consistency in an information overload world.

I view the investment system in two parts during my investment process. The first part is the system through which I put ideas. This is the foundation of the entire investment process component of the blog. It starts from the point where I find an idea that warrants further due diligence. The second system involves consolidating information, research, and keeping records of what I have gone through. I generate investment ideas in a variety of ways, and to keep all of this organized, I need a structured system.

If you can’t describe what you are doing as a process, you don’t know what you’re doing.

W. Edwards Deming

In my earlier investing journey, I had no system. I researched widely, looked at hundreds of companies, but had no process or disciplined system. It became overwhelming, and I wondered how I could actively keep up with so much information. Therefore, I began systemizing everything, which allowed me to cover more ground as an individual investor. I may not be running a billion-dollar fund, but I treat my capital like a fund with accountability and, therefore, need a way to consolidate all of this.

The investment system needs to be methodical, replicable, and rigorously committed to. How do you go back over information? Sometimes, ideas may be something you researched a year ago, but the thesis has changed, and the business is further along. You need to go back over earlier notes to see if these companies are now investable according to your framework.

When I find an investment idea I put it through this Investment System flow chart.

This may seem complex and has too many layers, however, it is not hard to run ideas through this type of system in an efficient manner. It quickly removes all the weeds and allows me to say NO fast.

Each of the stages expands into further areas which I will cover individually in other blogs. For example, Kill the Idea Fast. I’m looking at the factors in a business that would cause me not to own it. Often by inversion, why wouldn’t I own this business? Then look for all the reasons why.

Why do I think in systems?

I have been scaling and building companies since I was 20 years old. One of the ideas that I grasped very early on and what I would easily say was the biggest contributor to early success was the importance of building systems. If something was done more than once or was replicable, I would systemize it. This helped scale up some of my earlier companies to million-dollar organizations with less than 90% of the manpower than my competitors.

I don’t prioritize making things look pretty but rather focus on being effective in everything I do. Having systems in place allows me to allocate more time to other important areas. A systematic approach creates consistent outcomes, which is crucial for long-term success.

A brief outline of how I approach Investing…

To consolidate information, I use several tools. If I come across information that is of no relevance, such as a newsletter or an article, I read it and then delete it. However, if the information is related to one of my holdings and could be useful in the future, I archive it either on a bookmark bar or in Google Drive.

For companies that I am researching, I use Excel to create a database of every company, linking it to relevant information. I also include notes on why I passed on certain companies, which is important as over a lifetime of active investing, one will scan thousands of companies.

For companies that I actively want to buy, I have a full system that I duplicate for every new idea. It is in a file with all the key tabs, spreadsheets, thesis, and checklists, all blank and ready to start. This includes blank DCF modelling and all types of valuation spreadsheets, depending on how I intend to value a business. I also have a database component allocated to the information I have scanned, such as articles, write-ups, and other funds’ views on the business.

I archive the last three annual reports and quarterly reports in a PDF so I can add notes and track my thought process. It’s also helpful to know when ideas turn south. I want to know what I missed so I can go back over my notes, research, and system and find gaps in my decision-making process.

I need those feedback loops to be able to gauge how I picked the winners…and the losers.

There is too much information in the investment universe that needs to be ignored, and what is not ignored needs to be archived. Think about your investing system, if you have one. It can be overwhelming to generate ideas from blogs, forums, and investment newsletters. How do you sift through this vast amount of information and discard the rubbish to consolidate the important information needed? How do you filter out ideas that are not yet ripe to invest in, but maybe later on?

Develop a systematic approach just like professionals have a system, you should have one too. Your capital is not of lesser importance than theirs. Don’t “wing it”; develop your philosophy, strategy, and system to give the process strength. You cannot keep so much information in your head. I know because I’ve tried it. After a while, it gets fuzzy, and judgments get clouded because you scan so much every day. The investment process should be as systematic as possible.

The more disciplined the approach with a reproducible system, the better outcomes it will produce. Methodical stock picking does produce results. I’ve yet to see a disciplined investor who follows a systematic approach with a sound strategy not beat the markets.

The system is a safeguard, it protects me against my emotions, when FOMO surfaces, when that “Buy now, research later” lazy part of me creeps in. I fall back to my investment system that drives the process. It protects me.

Start building your System…

There is no right or wrong way, just what makes sense to you and allows you to stay disciplined over the long term. The systematic approach need not be overly complicated, I’ve seen some that were excessive. It shouldn’t be so excessive that it stops you from wanting to invest in anything because the process is 10 years long!

The more you do it the faster it will become. You can start turning over ideas, tracking everything and creating those crucial feedback loops. It should be easily accessible and a place to reflect over, perhaps finding a gem that you missed.

Here are a few ideas to get you started.

System Area	Tools
Idea generation: Ideas not yet ready to research but keeping an eye on.	Either create a watchlist in your brokerage account or an excel/google sheet with the idea, notes and relevant info.
Further Research on ideas: Companies you are starting to see whether you want to invest in.	Create an excel/google sheet or notion, a place to add notes and build out any information.
Companies that are in due diligence phases.	Create a bookmark bar, with all your systems, articles, checklists, thesis on it. Easily accessible. Maybe Google Drive, OneDrive, dropbox…
Watchlists for Hunting grounds, idea generation, companies you own, want to own…	Use your brokerage account or perhaps your analytical platform like Tikr. Create notes for every company, any ideas that come to mind.
PDS’s, Annual reports, quarterly updates, investor presentations.	Create a file for the company name and archive these documents, track your notes, write on the PDF’s, use highlighters, so you can go back over information.
Even ideas you say no to or are not investable.	Track all the companies in a spreadsheet with a simple note on Why you said no, what was unattractive, the date you did this. Also add a note What would make it attractive?
Companies that failed the Checklist.	Add a clear section of companies that failed your checklist and what would make them pass it in the future?
For companies you are researching, look at all the information and archive what is relevant ONLY.	To keep track of positive and negative information about a company, I copy and paste it into a Google Sheets tab. This way, I can quickly scan the information without having to read the articles again.

These are just ideas to help steer you in the right direction. Start thinking systems, it also brings a level of seriousness to your investment game.

In Summary…

Investing is my full-time profession and I dedicate my life to it. To manage the overwhelming task of analysing over 60,000 companies, I rely on a system that keeps me accountable. This system allows me to make the most of my time, analysis, and research, without the need for a large analytical team.

Investing requires patience, and there are long periods of inactivity. However, with a system in place, I can easily pick up where I left off. I continually refine my system and review all information, even archived data, to ensure it’s relevant. If it’s not, I delete it and move on, freeing up my mind.

The investment system that drives the process is crucial and requires time to develop. I recommend starting today by unsubscribing from irrelevant information, building files and folders, and archiving everything you’re already doing. By taking the process seriously, you’ll be better positioned to maximize opportunities and track your progress.