Finally I have found some time to start on this Blog. I have had this in my mind for many months but not really had a ‘window’ of time where I can really free myself up from the hustle and bustle of life and enable an atmosphere that is peaceful and conducive to the Deep Thinking I suspect this Blog will demand. You could say I have “Cut out the Noise“……
Humans are nutty creatures. I distinctly remember doing a ‘Stock Buy Rationale’ Blog recently where I said something like “I’ve done loads of the Educational type Blogs recently and I want to scribble something about a Stock and do some in-depth research” - well now I am fed up with doing stuff on Stocks and I want to do an Educational tome !! (there is of course an implicit assumption in this paragraph that WheelieDealer actually is human - it is debatable. He is certainly part R2D2.…..)
This could be a huge oversight on my part but I am undertaking this Blog totally free of alcoholic assistance. As much as I fancy a Pint or two, I really feel a need to knuckle down and get on with this and I know that booze will make me unfocused and nudge me towards procrastination - so I did the next best thing which was a few lines of Coke (Diet Coke).
I knew there would be quite a bit to this Blog and it will most probably evolve into a full on Blog Series - once I sat down with a Blank Piece of A4 to start on the Outline Plan, it started to hit me just what a huge subject area this could easily become - but I think this is an extremely important subject and the thoughts that this could inspire in Readers will hopefully make the lack of brevity worthwhile. The thoughts you will be exposed to here from me are very much the result of my Day to Day Investing activities and are thus totally entwined with reality (well, sort of).
This is a huge thing for me. I am sure I have mentioned this before but you will have to suffer it again - it is very much my intention that the Educational Stuff you read here on the WD Website etc. is 100% based in Reality “Keep it Real” and as a direct result of this is of far more value to Readers than the Theoretical, Academic, BS which permeates 99% of Financial writing. In line with this, I have recently been really lucky to have some wonderful mates produce ‘Guest Blogs’ which are very much in line with this ethos and based on The Real World. The bottom line is what is the point of myself and Guest Bloggers writing the same old stuff that you can read anywhere else on the web - I want my stuff to be very unique. Of course it is no good being Contrarian just for the sake of it and I hope that on the whole I avoid wheeling down this particular worm hole.
I will be writing this Blog from my own perspective of a ‘Long Term Investor’ not a Short Term or Day Trader - although I would imagine that many of the Principles, Thoughts and Ideas contained herein are relevant in some way to anyone who mucks around with the Markets - although obviously you will need to think about how these concepts relate to your own Approach.
Part of the inspiration for this Blog has come about by accident. OK, we all know that “Cutting out the Noise” is a common phrase that we all bandy around and I suspect that almost on any one given day someone who we interact with on Twitter (it could easily be me, cos I know I say it a lot) will use these apparently magical 4 words - but what do they actually mean? I have written about this a lot and in particular I think it was in ‘Wheelie’s Xmas Message’ for 2016 where I sort of said I needed to ease back on my Twitter use because as much as I think Readers/Followers may find some of my Tweetering useful, it was simply getting to the case where I was just not getting anything else done - I could easily spend 10 hours a day on Tweets I reckon !!
The obvious snag with being on Twitter so much is that I was simply not getting anything else done - I felt I was not researching in the way I should be doing and I decided I would rather put my focus on improving the Website and producing Content for that as a preference - and of course there are other things I want to do in life apart from feeding the demands of the WheelieDealer Online Experience (bit like Jimi but without the guitar, heroin, or the naked ladies) and my paramount Day to Day Investing tasks (especially because I am an “Administrative Trader” according to some online questionnaire thing I did the other day - I feel a bit insulted LOL).
The side effect of me easing back from Twitterland was that I soon started to realise that I was ‘Cutting out Noise’ - it occurred to me that a huge amount of what I was being exposed to on Tweets was really just Noise (and distractions) which was not actually helping my Investing - it could easily have been hindering it I suspect, and not just by sucking up all my time like some sort of Tomorrow People’s Dyson (if you remember them you are an old geet !!) Hence the seed of my ideas to write this Blog.
Too much Opinion/Confusion
As I have drifted away from Tweets, I have become less and less exposed to the views and opinions of others - and on the whole I think this is beneficial although there are some caveats I will outline. It is easy for me to say this as I am reasonably experienced after about 16 or so years in the Markets, but I am starting to move to a way of working where I put more store in my own judgement and conviction than that I hear from other sources.
That sounds awfully arrogant, egotistical and bigoted and maybe it is - but the point I want to make here is that as time goes on I find that I am focusing on just a handful or so of Sources for views on Stocks etc. and cutting out all the countless random writings and views that are out in the Marketplace. I have just a few people, many of them Mates from Twitter etc., who’s view I massively respect and take notice of and then there are views from other people that I just mentally screen out. This is a wider context than just a view on a particular Stock - there is also the critical factor that I think it is important to seek/obtain views from Great Investors/Traders who have a similar Approach to yourself.
What I mean by this is that if like me you are a Long Term Investor who tends to buy after gallons of Research (often in a PUB !!) and hold often for many years, then there is no point having a Day Trader as your best buddy who is working on an entirely different Approach and in particular a different timeframe. Simply put, a Stock that is a ‘Buy’ on a 2 year view is perhaps not a buy if you are only going to be holding it for a few Days. I remember my mate @A1Mhigh saying something incredibly insightful and astute on exactly this issue probably about 2 years ago - his Tweet went along the lines of “most of the disagreements/arguments on Tweets about a Stock are as a result of people having different timeframes” (A1M, if you’re reading this, I bet you are well surprised I remembered after all this time !! But it shows the profundity and value in this simple Tweet.)
The root of my thoughts around this is that in the past (and I suspect many newer Investors/Traders fall into this trap) I probably tended to read everything I could about a particular Stock - no matter who had written it. This is particularly dangerous if you go on Bulletin Boards a lot - just the other day I remember going on the BB for a Stock I hold and reading something like “This is a piece of cr*p and has too much debt and will do a Profit Warning” or stuff along these lines. Well, having researched the Stock in depth and with the benefit of a lot of experience, I find it highly unlikely that this particular Stock is a duffer (in fact, it has risen which means the Market probably agrees with me) but the problem here is that those words could easily affect my Objective, Rational, Judgement and lead me to do something dumb like sell the Stock. This is particularly a problem if you are tired, inebriated, stressed, distracted, unfocused, etc. etc. - it is a simple Psychological reality that just a simple statement like this can influence our thinking even if we think it isn’t - just by exposing ourselves to the possibility of accidentally reading nonsense like this we are probably making a huge error which will cost us Money. Unless and until you are able to effectively screen-out stuff like this, you may be well advised to keep away from Bulletin Boards (I bet as you are reading this you are thinking of times when exactly this sort of thing has influenced your thinking and Buy, Sell or Hold decisions).
The problem here is very much one of ‘Cognitive Dissonance’ where you have a particular view on a Stock or an aspect of a Stock but then you read something from someone who you have perhaps never met or read before or know anything about and all of a sudden they cause you to do a 180 degree turn on the Stock and you totally revise your thinking. Then you read another view on the same Stock and you do another 180 and go back to your original view - and then you read something else and you panic and do a 126 degree turn and now you are really befuddled. So you Sell your superb Stock and of course just after this it jumps up 40% and you are feeling like a total wally. So often we read something scribbled by someone we know nothing about and more importantly than anything, we have no idea of their Track Record or experience - you need to realise that many Financial Writers out there have very little Real World Experience - and this is certainly the case on Bulletin Boards.
Right, fair enough, but what is One supposed to do about this? (I wrote it like that because The Queen often reads my Blogs, being a Windsor Local and all that and she is a regular Trader. When the flag is flying over Windsor Castle, that means Her Madge has just had a Big Day on the Markets). If you are pretty experienced, then probably recognising the ‘problem’ I am talking about here is a great starting point and then you can think about your Information Sources and the Blogs and stuff you read and you can narrow it down to a manageable number but with a focus on People who’s views you respect hugely and where they have a similar Investing/Trading Approach to yourself and you have a good idea of their Track Record and they tend to talk sense.
If you are new to Trading then this is a particularly dangerous problem and it needs constant attention and discipline to enable you to chop out the Noise. Perhaps it might even be worth writing down some ‘Rules’ which dictate which Websites you are allowing yourself to read and which People you follow on twitter etc. You could then revisit your Rules every week or something and just see how well you stuck to your ‘Information Plan’ and avoided being distracted.
It won’t be easy when you first start because there is such a torrent of Opinion and ‘News’ with a gazillion ‘Gurus’ purveying it, but it makes sense to find some Investors/Traders who appear to have an Approach that is similar to how you wish to do things (an important factor here is time - there is no point following every move of a DayTrader if you are stuck at work in a demanding Full Time job all day), and in particular take note of the People who don’t just tell you what Stocks to buy and sell but also provide a lot more about the Methods they use and the Ins and Outs of how they do things on a Day to Day basis - there are few of these around but they are out there. In many ways it is not about Copying the Trades that other people do (this is quite a dangerous thing to do especially because very few Investors/Traders are fully transparent on every trade they do and their Risk Level/tolerance and Risk Management techniques could be very different to your own) but you should focus on trying to learn how they do things and what tricks they have. After all, you could be copying this amazing Guru who then gets pecked to death by a Flock of Black Swans (“nasty bug*ers - break your arm just by……”..)
For New Investors who wish to do things in a similar way to myself, then good people to follow/read are for example: Robbie Burns (the Naked Trader), Paul Scott on Stockopedia, Jamie at Compound Income, John Rosier who has his own Website and writes in the Investors Chronicle, Simon Thompson of the IC who has a superb column every week with some great Stock Ideas and a lot on how to value Companies and stuff, Daniel Coatsworth @SharesMagDan who edits ‘Shares’ magazine, Aston Girl @Reb40 who is an outstanding Investor, @Conkers3 who writes and records ‘Conkers Corner’ on ShareTalk, Dave Sullivan who does quality YouTube videos on Stocks, Maynard Payton who has his own Website and specialises in small Stocks, Richard Beddard who I have followed for a million years and really is a Legend in the Investing World - he writes on iii.co.uk, Bill, The Stock Whittler, does a really good Blog and that is worth a look; and Steve Markus @smarkus is a really capable Long Term Investor who does highly useful Tweets first thing on various Stocks. There are loads more really great people - I won’t name them all here but I intend to revise the list on the ‘Beginners’ page in the near future and make sure they are all on there.
That’s a short list and there are many many more (oh, don’t forget @BenSharman, @MGinvestor, @sholdsworth1963, @marben100, @sloan_phil, @rhomboid1MF, @BrilliantLeader, @andrewjones88, and @groupstageexit) - if you need inspiration for people you want to follow who are appropriate to your Approach then feel free to contact me and I might be able to give you some steers. In addition, make use of the People you do follow and if there is something you are unsure about or whatever, then it might be worth contacting them - most People on Tweets and stuff are really helpful and they can only say ‘No’ !!
As I think I mentioned above, this ability I am talking about in myself to be single-minded and dismissive is not something that you get over night - in fact, it perhaps takes years and years and years - and of course we cannot be totally dismissive but we must learn how to focus and drill-down quickly to the elements of a Stock or whatever that really matter. Like with anything in life, the first step to addressing a Problem is recognising that you have one in the first place and hopefully my Blog is awakening you to this possibility and ways in which you might be able to improve how you deal with Information Overload.
That’s it for Part 1 - no doubt Part 2 will follow in coming weeks,
Regards, WD (right arrogant git)
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