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Greg - Speicher Ways To Improve Your Investment Process PDF
Greg - Speicher Ways To Improve Your Investment Process PDF
COM
I
10
Introduction
Ways to
Improve Your
You would not be reading this if you did not want to improve
your investing results. Provided that you already have a
Investment
rational investing philosophy, the key to improving your
results lies in improving your investment process.
Process
I have been investing for over twenty years. Like you, I want
results. If over time I can’t beat the market averages, what’s
the point? I’d rather buy an index fund and forget about it.
… and make more money.
The good news is there’s plenty of evidence thatSpeicher
Greg this goal is
achievable – not easy, but achievable.
I have been investing for over twenty years. Like you, I want
results. If over time I can’t beat the market averages, what’s
the point? I’d rather buy an index fund and forget about it.
Saban talks about how you can’t skip steps. You can’t get
from point A to point Z without passing through point B and
that if you skip a step, you won’t achieve your desired
outcome. Saban talks about finishing.
In this short book, I’d like to share ten ideas to improve your
investment process. I’ve learned these ideas from my own
experience and from studying the great investors.
Unless you love what you’re doing and can derive pleasure
from the process of learning and mastering your craft, it’s
unlikely that you will persevere. This requires passion.
Analytical Edge
Institutional Edge
Outcome Bias
Here’s Buffett:
The results were dramatic. The typical I.C.U. cut its quarterly
infection rate to zero. Fifteen hundred lives were saved and
costs were reduced by a hundred and seventy-five million
dollars.
They are not a substitute for judgment, but they do aid our
memory and help us to manage complexity. They help us to
manage our emotions and misjudgments. They also help
reduce the effects of complacency. Instead of thinking –
“Why bother reading the proxy and footnotes? Most of the
time there’s not much in them.” – you go through them
because it’s on your list and part of your discipline.
So why aren’t they used more often? I think the answer lies
in human nature. We all know that diet and exercise are
good for us. The problem is often not with knowing what to
do, but actually doing it.
It’s easy to get away from this discipline because most days
there’s nothing there. This is a common error with checklists.
You get complacent and skip steps even when you
remember them. For example, think of an airline pilot who
always finds that a given gauge gives the correct reading.
He may be tempted to skip the step of checking it. With
investments, that might be the day an elephant decides to
tiptoe by.
You can also improve if you focus your time on ideas that
are obvious. If it’s too close to call, the investment may not
be worth it. You’ll get better returns over time if you do this.
You’ll also save yourself a lot of time.
The forty who lost a finger said they knew just before an
accident that they were at high risk, but failed to yield to a
primal scream inside that was yelling STOP. The other ten,
in contrast, always listened to this inner voice. They never
operated equipment when tired, rushed or after drinking.
Cognitive Biases
You could also collect the best books and articles on the
subject and make their study a serious part of your
professional development.
Time Management
Work Ethic
The great investor Peter Cundill, who died earlier this year
and whose fund achieved 15% returns for over thirty years,
stated that the most important attribute for success as an
investor is being patient and that most investors don’t have
it. The importance of patience is frequently cited by other
great investors.
The best coaches, the best CEOs, the best investors all
religiously do this.