I first mentioned a problem I have been having about how to budget my time in this post at the beginning of August.
I have been doing a lot of thinking and reading lately and I wanted to share my thoughts here to see if anyone has any input.
After my post on Aceto, which is now an article on Seeking Alpha for those who want to follow the discussion in the comments section, I went straight into evaluating another company. It has been my first time in truly trying to evaluate a bank, and about half way through its annual report, I quickly realized that I did not know enough about banks or the banking industry to fully evaluate its prospects properly.
Get FREE access to 17 of our best training videos from the past by clicking here.
I finished up reading its most recent annual and quarterly reports, did a P/B valuation where I found the company to be fairly priced, and was going to do a full valuation and analysis write up like I have been doing. However, my evaluation up to this point is pretty poor, and I realized I need to learn more about banks and the banking industry before I do the write up.
I have been seeing a lot of sites lately talking about deliberate practice and how to constantly get better, and I have been trying to figure out how best to personally accomplish my goals, and here is what I have come up with so far.
My Plan For Deliberate Practice and How to Fix My Time Budgeting Problem
Here are my ideas so far.
- I look at multiple companies as potential investment ideas on a daily basis, but I am fully committing myself to completely evaluating at least one new company every two weeks. By fully evaluating I mean researching the company and its competitors, valuing the companies, evaluating its investment potential at this time, and writing an article about the company. I think this will help me become a better investor on several levels: Thinking about and bettering my investment process, becoming better at putting my ideas into writing, better and more thorough investment write ups, and this will enable me to learn more about new industries and companies. Originally I wanted to fully evaluate a new company every week but that left little time for learning new things, which gets me to my second idea.
- I have known for a while now that I have a lot to learn still but after my foray into the banking industry, I realized I needed to set up some more time where I would specifically be learning, instead of trying to write an article or research another company. The remainder of the two week period after I have finished up my article(s), I will spend learning: New techniques, new industries, reading books, finding better ways to think, etc.
- While I am researching and learning, I will again be posting more links that I think we all could learn from.
- I would also really encourage you the readers to post some ideas on The Readers Investment Ideas and Analysis Page. If you are not comfortable doing an entire write up, I would be fine with your stating which company you have researched and giving a few points on why they are a buy or sell at this time in your opinion. Again, I do not care if you are a beginner or have advanced knowledge, all ideas are welcome. Also the free book giveaway is still in tact so the first person to put an idea on the page will receive a free book from my collection, and I will also continue to give free books away to other investment ideas that are put on the page as well. That page is also for any questions anyone might have. I want us to all learn from each other, and since I am relatively new to investing I hope some of the more experienced viewers give some of their advice.
- I am giving you my email here as well if you would like to contact me for any reason. I would be extremely excited to meet new people and discuss ideas or address any questions you might have in the privacy of email if you are not comfortable posting them on the site. JMRiv1986@gmail.com
So far these are my ideas and I would like to hear your feedback on them. I will be adding to, and tweaking the list periodically when I come across something that I think will help this process. I will stick to the time frame as best as I possibly can, but will allow for some flexibility if some kind of issue, good or bad arises.
I am excited to see what kind of feedback I get as lately I have felt that my investment process has been lacking something that I cannot quite put my finger on. I do feel that I have been getting better with every article I write and I am hopeful that I will find whatever it is that I think I am missing though my version of deliberate practice.
In the meantime I cannot wait to hear from you and to discuss your ideas and thoughts.
Jason,
Great post! I really like your thoughts. Keep up the good work and have fun with it!
Deliberate practice is definitely necessary, but I think the word “practice” often distorts things for us as value investors. Because our practice is a deliberate search in which we are pushing to learn as much as possible at the same time.
Consider these Buffett and Munger quotes:
Buffett at the 2001 annual shareholder meeting:
When I started, I went through the manuals page by page. I went through 20,000 pages in the Moody’s industrial, transportation, banks and finance manuals — twice. I actually looked at every business — although I didn’t look very hard at some.
See how he says “although I didn’t look very hard at some.” Don’t be afraid to toss an investment out.
Buffett to the Columbia business students in 2006:
It was absolutely a question of turning pages
Or as his partner, Munger, explained it to the graduating class at USC law school:
Another thing you have to do, of course, is to have a lot of assiduity. I like that word because it means: sit down on your ass until you do it.
Anyway, just some thoughts.
Thanks for your sharing your thoughts and those quotes.
That is the main problem I have had so far is being able to throw out research or stop researching a company once I start. I have always been the type of person who if I start anything I always finish it, so that is something I will have to work on to more efficiently maximize my time.
Luckily I have become an extremely patient person over the last several years and have no problem with sitting on my hands and not buying. I have only bought two companies in the last year, while I have lost count of how many I have researched or at least looked into. I am hopeful that my patience will become my competitive advantage over other investors.
I have been struggling with how I best can deliberately practice and hopefully writing out some guidelines will help me, and help me figure out whatever it is that I think I am missing in my analysis or investment process.
Jason,
I think it’s a good idea to keep track of your time, especially the time spent reading articles, news, blog posts on the internet. Hypertext is tricky business – at one point you are reading a value investing blog, next thing you know you are in that strange part of YouTube. Happened to me many times.
Also, with all the content out there and all the new one being constantly created, you have to have very good filters to avoid the drinking-straight-from-the-firehose problem.
As for researching companies, I like Quan’s post, probably because I followed a similar path. Overall, you have to go through different stages until you find the most fitting way to do it.
Dimitar,
I completely agree with your points. When I first started getting serious learning about investing I dealt with massive information overload. I spent all my time reading books, websites, blogs, pretty much anything I could find.
I got so bogged down at one point, that even without realizing it, was spending absolutely no time reading about companies or honing my valuation techniques. I was completely overwhelmed, and it is no wonder looking back why I was struggling to get any better. I still sometimes find it difficult to balance the time spent between learning and practicing and I hope the guidelines I set up help me find a better balance.
Also thanks for sharing that link, it has some fantastic points in it. Making a checklist is something I know I need to do to more efficiently budget my time and it is something I have started working on recently.
Great Blog! Thanks for sharing this kind of thoughts. Deliberate practice requires time and hard work, but anyone can reap the benefits, regardless of whether you think you have any special innate talent for the activities you care about most. Focus on the areas where you want to improve and be patient. Over the long term, diligent repetition and targeted feedback will pay off.
Thanks for the compliments.
Deliberate practice has been tough so far but very worth it. I recently have been going back and reading all my articles and it is amazing how much better I have gotten in a few months. Excited to see the progress over several years.