I have been investing in individual stocks for more than thirty years now. Having an analytical bent, I very much enjoy learning about different companies, industries, economics and trends. There is nothing like cracking open my Barron’s Magazine on Sunday morning and learning something new.
Having an insatiable interest in constantly learning new things is a characteristic that successful investors share. This is why Warren Buffett, the most successful investor of our time, incessantly reads. His two portfolio managers closely follow in Buffett’s footsteps and spend most of their time reading.
Keeping track of investment performance is critical skill. Investments are comparable to developing a workout program. Just like working out, you must constantly assess your current position based upon how you approached your workouts and what you achieved. The feedback loop is as essential with succeeding in investments as it is in pursuing an effective workout program.
More than twenty years ago, I developed an extensive database to track all my investment returns using internal rates of return mathematics. This database is indispensable to adjusting and tweaking my approach to investment practices.
I learned to develop databases and program early in my career. Very sophisticated databases and models can be developed with MS Access and Excel. Most people have these tools already at their disposal, but don’t know how to program them a refined way. Usually, the functionality found in many “high end” products can be programmed with tools already in hand. Furthermore by programming the functionality, the user knows exactly what is happening in the “black box” – a significant advantage.
Whenever you are trying something new, there will be a learning curve. There is no free lunch. Whether you are talking sports, auto repair, house remodeling, investments or anything, you must learn, try, adjust and repeat. With each repetition, your skill will improve. There are no shortcuts.
With each bit of knowledge you acquire, you will fortify your ability to triangulate in on the correct decisions. Some knowledge many not benefit you in a direct sense, but it will provide a structure to grasp other subject matter as well.
Like a great athlete, the joy of a successful competitive victory is as much about the win as it is about the road taken to get there. Stocks are no different.
