Stock tips, stock tips, everyone seems to want stock tips. But the best tip I’ve seen recently is that investing is like fishing.
If someone gives me a fish, I’ve got dinner. But if someone teaches me how to fish, I can potentially feed myself many times and for years. Therefore, learning the fishing process has far greater value to me than receiving just one meal.
And learning a process for effective investing has greater value to me than receiving a tip about one stock.
Process-driven investing
I know that to achieve consistently positive results from my stock investing, I need to focus on my investment process. And the process is something most successful investors keep in an active feedback loop. In other words, they monitor outcomes and then think about how they can modify the process for a potentially better result. And they tweak their process based on what they’ve learnt for the next time.
It’s evident from the writings of Warren Buffett, Mark Minervini and others that they focus on their process to the point of obsession. And so do I.
However, many strategies can be successful for investing in stocks. So processes vary. And I reckon everyone’s process is likely to be unique, even though it may have similarities to others.
But it takes time to develop an effective process. In my case, I tried several strategies before settling on my current process. And there’s no substitute for diving in and investing with real money. I found that with money at risk, my focus sharpened and I began to develop a process using that feedback loop mentioned earlier.
However, for me, there was a lot to learn — more than I thought. My initial assumption was I’d be good at investing because of experience in a previous career. But, over several years, the markets humbled me and led me to realise the ongoing evolution of my process is so important.
A system for learning lessons
I’ve heard it said that lessons are what we get when we don’t get what we want! On top of that, I’ve also heard wise people say that lessons keep coming back to us until we learn them. So, by focusing on the process and the feedback loop, I’m aiming to get the best value from each lesson. But even with a strong investment process it’s still possible for me to lose money. Indeed, all shares carry risks.
And because there’s so much to learn when aiming to be an investor, I looked for help. For example, I read many books written by successful investors.
I also subscribed to stock tipping services that provided education alongside recommendations, such as those offered by the Motley Fool and others. To me, it was valuable to understand why stocks had been recommended, rather than just buying them after receiving a tip. In other words, I was learning how to fish as well as being given some fish to eat straight away.
