Industry standards: a repeatable investing workflow
Professionals win by process. Here’s a workflow you can run consistently—and map directly to tools like screeners, watchlists, backtests, and portfolio tracking.
Step 1: Idea generation
- Macro themes (rates, inflation, policy, cycles)
- Bottom-up (earnings surprises, quality compounders, special situations)
- Quant signals (momentum, value, quality, mean reversion)
Step 2: Screening (reduce the universe)
Good screens combine liquidity + quality + valuation + risk constraints.
If a screen produces 500 names, it isn’t a screen.
If a screen produces 500 names, it isn’t a screen.
Step 3: Research & thesis
- What is the business model and competitive advantage?
- What must be true for the thesis to work?
- What would invalidate the thesis?
- What is the range of outcomes?
Step 4: Risk controls and sizing
- Define max loss tolerance and position size accordingly.
- Use exposure caps: single name, sector, country.
- Plan exits: thesis invalidation, time stop, or risk stop.
Step 5: Execution
- Prefer limit orders where liquidity is thin.
- Split orders to reduce impact when needed.
- Write down execution rationale for later review.
Step 6: Monitoring and review
- Schedule review windows (e.g., weekly / monthly) to avoid noise.
- Track allocation drift, concentration, and drawdown.
- Maintain an investment memo / decision log.
Step 7: Backtest and learn (for systematic strategies)
If you run rules-based strategies: backtest to validate assumptions and measure risk. Then re-test with conservative costs and stress scenarios.