First, I’m an equity guy and a fundamentalist. While I wouldn’t recommend starting as equity investor at the market’s current level, my tilt has been toward equities for more than 20 years. Bonds to me is like “kissing my sister”, but to invest mostly equities requires a certain resilience toward volatility. There are great advantages in equities. There are also times when the pain is severe and emotional control is essential.
For the entire time I’ve invested I’ve kept all my investment information first on Excel sheets and, then, a database. I quickly discovered that Excel was woefully inadequate to perform daily IRR calculations for a variety of slices and dices of the portfolio.
Given my fundamentalist slant, I evaluate companies by their SEC numbers and only use the market to buy or sell given my view of the fundaments relative to the market.
Nonetheless, investing is a constant learning process. All successful investors have to go through the learning process – Buffett, Lynch, Marks, Munger, etc. While we all hope to learn vicariously, vicarious learning is much more often the exception rather than the rule.
Keeping extensive records electronically enables evaluation of past activities. Critical to learning in any endeavor is using a feedback loop. In other words, find out what you’ve done wrong in the past and make appropriate corrections/adjustments.
The biggest error that most investors make, myself included, is selling too early. Good companies with solid fundamentals and excellent management can take several years to turn the corner and achieve expectations. Unlike ordering from Amazon, returns don’t come this afternoon. I would equate returns coming to fruition as similar to turning a big ship. It takes time to perform and a good crew to execute the plan.
Unlike many things these days, feedback is not immediate in stocks. Patience is a virtue.
Be smart, be well-read, be aware and be successful.
