The 4-Step Stock Picking Framework I Use to Invest

I guarantee you've probably tried picking stocks before — or at least thought about it. And let me tell you, the method I'm about to share with you is the exact same one I use to invest in my own community. So if you're watching this on video, make sure you check it out, because this framework will help you analyze any new company you come across.

The Four Questions You Must Ask

Whenever you find a new company to analyze, run through these four questions:

What do they make?
How do they make it?
What do they earn while making it?
Activity, value, evaluation.

Let's break each one down.

Question One: What Do They Make?

This sounds obvious, but you'd be surprised how many people skip this step. Let's look at some examples.

Panadol

What is Panadol? It's a pain killer. Simple, right? But knowing this is the foundation of everything else.

Centrum

Centrum is the only multivitamin brand that comes to mind for most people. Again, very clear product positioning.

Sharbat B or Calcium B

These are standard health supplements — everyone knows what they are.

The Competitor's Angle

Now, here's where it gets interesting. Who is the competitor? You're looking for import substitution with high margins — we're talking around a 40% margin per box. That's a solid business. So essentially, when you ask "what do they make," you want to build a 360-degree picture of the company's product.

Question Two: How Do They Make It?

This is where you dig into the cost structure and operations. I want you to really internalize this concept because it matters.

Let's take another example.

Pakistan Tobacco

Pakistan Tobacco sells cigarettes — or as they might frame it, "less harmful products." But let's be honest here, that's a marketing technique. The real question is how they manufacture and distribute at scale, and how much of their cost structure gives them an edge.

Cash Deposit Ratio: Remember the CD 70

There's another concept I want you to keep in mind — the CD 70, or cash deposit ratio. It matters more than most investors realize, so keep that in your back pocket.

Question Three: Competition

This is where things get nuanced. Competition isn't always what it seems.

The Chinese Factor

Yes, Chinese competition exists — but it isn't as big a threat as people assume. Competition isn't really the competition in the traditional sense. In the short term, it's about technology. In the long term, it's about staying power.

The Pakistan Example

In Pakistan, petrol is a great case study for this. We discussed this in detail already, so I won't rehash it — but the point stands: understanding the competitive landscape is essential.

What About Pakistani Companies and Imports?

On the import side, in the teens we have a total of... well, that's a topic for another day.

Coming Soon: Stock Picking MBA

Part one ends today — but this is just the beginning. I'm launching a brand new course called Stock Picking MBA, and it's coming soon to all of you. If you thought this video was useful, trust me, you don't want to miss what's next. This knowledge isn't something you'll find subscribed anywhere else — your link is safe here.

I'll tell you this: by the time you finish this course, you will become the best stock picker you know.

So hit that subscribe button, and thank you for watching.