In light of the recent nonsystemic risks that have developed, particularly in the banking, brokerage and real estate industries, it's important to review your investing philosophy and research strategies. The following bullet points list my very thorough and focused ideology for reducing nonsystemic risk (business risk) in determining whether to buy/sell common stocks:

* Check the short interest and kinds and volume of option writing/buying/selling. Does it indicate that investors on the other side of the trade have a widely dissenting opinion from yours?

* Who holds the stocks? Individual, institutions, insiders, mutual funds? And at what percentages of shareholders do each represent.

* If buying or selling has been the most recent trend, who has been active in the trading (refer to the above holders)

* Financial statements must be reformulated to reflect not current and long term assets and liabilities, but operations and finances (going back at least 5 yrs). Intangible assets, or uncertain assets should be amortized or depreciated heavily

* Profitability analysis, ratio analysis, Discounted PV analysis (earnings or cash flows) should all be calculated to determine intrinsic value

* Earnings should be matched with cash flows to determine the quality of the earnings. Are depleting cash flows suggesting transitory or fraudulent earnings?

* For when to buy and sell, have technical analyses revealed any developing trends that might indicate an opportune buy/sell at a specific point in time?

* Read the 10k's for the past 5 yrs and match items and MD&A. Are management's policies and accounting consistent? Are they fraudulent? Conservative or aggressive?

* Read the most recent 10q's since the last 10k (same analysis applies as above)

* How does the firm stack up to their competition in terms of competitive advantage and profitability? Valuation? This will be more generalized and less intense analysis

* Industries and sectors, what are the outlook/economics?

* Finally summarize and organize all of the above findings into an easily readable report

The research workload is no doubt very heavy, but considering the consequences of laziness (or in the case of many stockbrokers or portfolio managers, greediness), taking a note from greats like Graham & Dodd, Buffett and as I'm so bold to say Einhorn, and intensively researching these inherent nonsystemic risks can greatly reduce your losses and provide more safety of principal with satisfactory returns despite the lack of diversification (deownersification?)

Any thoughts?