I wrote in my previous post about time management issues, we face as non-professional investors. We barely have enough time for our jobs and family. How the hell can I one pursue an outside interest such as investing ?
I am not referring to investing one’s capital via other vehicles such as mutual funds, FD etc. These options require much lesser time and can give a decent level of returns. I am referring to pursuing investing as an interest or hobby. In such a case, one is not looking for only returns, but also at learning and becoming a better investor.
My own journey started more than a decade ago. I had started managing the finances for my family and had started reading up on the basic such as what is an FD, what is a stock etc. Those were pre-internet days, so access to information was limited. I remember searching for books and finding very limited numbers on investing. My main sources of learning initially were finance textbooks and economic times.
By 1998, I had access to internet and that was like opening a huge door for me. For professionals like us, the internet is god send opportunity. I cannot imagine being able to learn and develop as an investor while still working at my day job without the internet. Even this blog would not have existed without it !
Well, with access to internet and all this information, I started reading and learning the basics of investing. The period 1999-2002 was time spent on learning the basics. During the period 2002-2006, I started reading more annual reports compared to general articles and books. However the reading was random and all over the place.
Reading too random
I realised by 2006, that my reading was quite random and not directed. As a result I was reading the entertaining stuff, but not necessarily the dry and important materail such as accounting, AS standards , annual reports etc.
In order to avoid that, i now have a list of topics I want to learn and improve upon. For example, my current year plan includes learning more on behavioral finance, GAAP accounting and arbitrage.
With these topics in mind, I start by looking for books and will list 3-4 books on the topic. Once I have the books I need, I will generally spend 2-3 months or more on that topic. This ensures that I maintain focus on a topic, explore it fully and at the end of it have more depth in it.
As an example, I am current focussing on behavioral finance. I have read 3 books on it already and plan to read 1-2 more books on it. Based on my learnings, I plan to review my current holdings to check my biases and will also be updating my investment templates (see here for the templates).
In addition to the focus topics, I continue reading annual reports and tracking the performance of my current holdings. I am currently not searching for new ideas as my current list of holdings have reached my maximum limit (in terms of number of holdings). As a result I am reviewing my current holdings and will require a new holding to replace an existing one.
The above is a reading/ learning plan. All my blog entries and updates are usually centred around the topics and companies I am reading about. So you can see, the blog is an extension of my learnings and current thoughts.
So in summary I can break down my approach into the following points
- key objective is to learn and be a better investor
- all reading and learning is focussed on the key objective
- The objective would be achieved by identifying areas of learning and then focussing on them one at a time
No shortcuts and magic bullets here !