Tuesday, November 17, 2009

The Importance of Having a System | Timing is Everything

My guiding light in the market is Marc Faber's perspicacious observation: Economic reality and the market's perception of economic reality are two different things. Think of it as two parallel universes and when those universes collide....well, we've seen those examples, and they are not pretty.

We know that things don't matter in the market until they matter. I want to encourage you to not be discouraged about the things that should matter but don't seem to. They'll matter. I also want introduce a tool for you that you may not have considered for organizing your own ideas: a blog.

Do not shudder. You, too, can have a blog--your own personal blog. Did you know that? You can create a private blog, and use the blog as your automated idea retrieval system. You can write your trading notes, your stock ideas, load your charts, create a tickler system, all in an instantly retrievable system. You'll then be able to watch your nascent ideas evolve and capitalize on the opportunity to act on those ideas. Being early or late to a move means we take on more risk. If you organize your ideas, to include your expected timing and assessed risks, you'll be in better control of information and time. That control will lead to better results. You can also do a post-mortem as well.

It is one of those obvious things that isn't so obvious. We know that writing is a discipline to concretize our jumble of thoughts. (Maybe your thoughts are orderly, but mine are jumbled and as readers know, sometimes I undergo a tortuous process for both of us to get it out of my head). But get the stuff out of your head and onto SOMETHING--and something that you can index/organize and retrieve.

We often see stuff that is 'fixin' to get ready' to do something. We note it. Then the move is made; we slap our head; we mumble our coulda, woulda's; we vow to do better.

I'm encouraging you TODAY to make good on that vow. Create your own digitized space. For your eyes only. Use it to upload your charts. Write your ideas. Link to interesting articles.

Having written this, I realize that I've let my own indexing system collapse. One of those housekeeping projects. Only 45 days or so until New Years. I've at least one resolution.


Glenn_in_MA said...

You have no idea, but you already inspired me to create my own blog when you used to provide a link to your personal fitness blog (sweat360 or something like that). I started my own fitness & cycling blog around this time last year to help me track and attain goals. Before your post today, I had already been contemplating a personal investing/trading blog. Now you have politely insisted on it! Great advice!

"Tickler system"??

Leisa said...

Glenn! Congrats on your fitness blog...a tickler system: something handy to your fingertips. You leaf through (tickle) to find things. http://tinyurl.com/yky6dzh

Anonymous said...

I absolutely agree with Leisa that writing forces focus and clarity.

FWIW, I take a different approach vs. a blog: I write a position paper (not verbose; just enough outline to communicate the ideas). Or I'll write a "consolidated book report", if I'm reading one or more books on the same topic).

IMO, this especially works when you're noodling on strategic / long term trend stuff. The advantage of a Word (or similar) doc is that you can constantly refine it (I tend to incubate on ideas & realize new insights). The BIG disadvantage is that it does not get the constructive scrutiny of TPI cognoscenti. And you don't meet any of them!

This approach is at the core of my investment approach: incubate-> write-> refine-> estab position-> harvest-> rinse and repeat. I've reduced my trading activity the longer I do this, but am comfortable with bigger positions now(still never "all-in"), with the same really-good results


Leisa said...

Sleepless--One could absolutely use Word. I consider the blog format with its indexing capabilities to be easier to use for reviewing those ideas.

And the fact that it can be a private, non-published blog allows one to enjoy the privacy of developing and incubating thoughts. It occurred to me that anyone who has not blogged, would not realize the conduciveness of a blog infrastructure to organizing and retrieving thoughts.

Anonymous said...

Hey L. I wanted to weigh in on a thought experiment I ran on Marty Chenard's service. The question I asked myself was whether I could duplicate my "black box" using his data and measurements. Not only could I do it I found a couple of places where mine could be improved. (If any of this makes sense.)


Leisa said...

MarkM---yest, that makes perfect sense. I still have a follow up post, but my diseased brain is not cooperating. When I feel better, things will become a bit clear.

Congrats on the black box and the thought experiment. They surely help when trying to improve a process or drive a more refined results.