Pick the perfect stock in 15 minutes

Let’s go back to 2001, when Warren Buffett was researching Larson-Jhul, that custom picture frame company he was trying to decide whether to purchase.

You would have expected Buffett to spend hours re searching the company. He’d never even heard of Larson-Jhul before, so it would have required more time to do it. His calendar was empty,

so he had all the time in the world to research the company.

And it’s important to conduct thorough due diligence, right?

Important to conduct thorough due diligence?

It took Buffett 15 minutes from first hearing about the company to decide he was going to purchase it. “What prompted him to buy the company so quickly?” you may ask.

Well, the truth is that it doesn’t take long to figure out if a company is a good company. As Buffett says, “If we can't make a decision in five minutes, we can't make it in five months.”

Take a look at these companies: Starbucks, Amazon, and Apple.

Their huge competitive advantages are almost immediately apparent.

It doesn’t take an hour to figure out that Starbucks has a strong brand. It doesn’t take a day to figure out that Amazon has excellent customer experience. It doesn’t take a week to figure out that Apple has a world-class product and an ecosystem that’s hard for users to ever leave.

Only a few minutes.

Here’s the other side of the time equation: if it’s taking anything longer than a few minutes for you to figure out whether a company has a competitive advantage, well, it probably doesn’t.

I was once researching Nomad Foods, a British frozen foods company. I needed to figure out if the company was so good that no one could compete against it.

I spent hours and hours researching. I read all of its most recent annual reports. I spent a lot of time searching different opinions of different investors. I even gave myself a whole week

to think about the investment decision.

But then it hit me.

I didn’t have an answer yet, which meant I had my answer. I passed, which was the right choice . . . and one I could have made in 15 minutes.

Stop researching a company once you spend 15 minutes thinking about it. Anything more than 15 minutes is a waste of time.