This Blog, the first of a Series, has had a pretty slow development from a simple observation about how many people I see/know go about their Investing to something far larger and much more involved - yet, at this stage of starting to type, I am not really convinced that it will coalesce into a coherent whole - I can see this one being abandoned at some point and me just publishing it anyway in whatever state it is in and Readers can make of it what they will !!
Thankfully since typing the above I have made a lot more progress on the full draft and there is a reasonable chance that it might turn out not too dire. In fact, it might actually be quite helpful for many Readers.
I have noticed with regularity how even very highly experienced and successful and wealthy Investors I know seem to lack a final conviction / belief in their own ideas and often it just needs someone like me to say “yes, I like the look of that Stock and it is probably well worth buying” or to actually buy it myself, to get them to finally take the plunge and ‘Pull the Trigger’ to bring it into their Portfolio. In simple terms, some people need reassurance despite knowing what to do.
I started off with a working title of ‘Pulling the Trigger - Evolution of an Investor’ but after revisiting the whole thing I felt that the shorter version made a bit more sense because my observation of People’s behaviour was merely the starting point for this Blog Series but it is a very noticeable ‘thing’; and I suspect it costs People money and they would do better to try to get to a position where they can trust themselves (after all, if you can’t trust yourself, then who can you trust?)
Presumably this is a ‘Confirmation Bias’ thing and with a large dose of ‘Halo Effect’ where my comments (and those from the usual ’Gurus’) are involved. Weird though isn’t it?
So I got thinking about this and trying to work out how I don’t seem to need such Confirmation myself and I am far more likely to find my own Investments and to make the Decision to act to buy them. This Confirmation thing actually seems to go a bit wider - rather than just myself or whoever making a strong positive statement on the Stock, sometimes these People need a Tip from a Magazine or Newspaper or something to nudge them into the Action to Buy.
It then dawned on me that I myself used to act in this way (and for many years) - perhaps not so much on the Personal Recommendation thing because I didn’t really know many people involved in Stocks (and probably knew only one great mate at the time who I would take the judgement of), but I used to use Tips from someone like Robbie Burns (The Naked Trader) or Tom Winnifrith when I used to subscribe to his T1PS Website which was excellent back in the day (ShareProphets is a very sad [and profane !!] departure by Tom from what he was good at in my view).
So then I made the next jump in understanding to appreciate that in my ‘Investing Career’ I have gone through various ‘Steps’ or ‘Stages’ of how I interact with the Markets and I decided that this was some sort of Continuum or Evolution of myself as an Investor. So then I figured out that if I could sort of encapsulate what each of these Stages was and the attributes and features of each of them, then this might be very useful for Readers - both in terms of where they sit on my own Evolutionary Path but also to get some idea of the Steps ahead of them when compared to my own Evolution. A possible ‘Roadmap for Learning’ if you like.
Of course my Route was not the only possible one and there are many twists and turns you can make on your trip - but at least by understanding my travels you can get a good idea of a route through the Forrest that might get you out the other side in one piece (you gotta watch out for those Bears as we know from this week - they are not cuddly in any way.)
If you have got to a certain degree of competence and sort of ‘Hit a Wall’ in your progression (I see Investing as very much a never ending Learning Experience but I have definitely had several periods in my ‘Career’ where I have in effect dried up and been treading water for quite some time with no obvious route to how I can progress), then hopefully this might give you some ideas on where you can go next and what you might be able to do to get your Learning moving forwards again. You might find the ‘M3 Manifesto’ page on my Website useful for this also.
Obviously the Stages that I will go through in a bit are merely how my own Investing progressed and of course not only will they be unique to me but I might easily have made errors of Memory and also errors in how I have described them - but it will be my best effort I promise and this is not a Blog that I have rushed into with no thought (unlike many of them, hey, Wheelie !!).
Because this is in essence a History of my own Investing Journey, I am hoping Readers will be able to view it as what would be my own Chapter if I was successful enough to be included in a book like the excellent ‘Free Capital’ by Guy Thomas (if you have not read this, I strongly recommend it and you can grab a copy in Wheelie’s Bookshop).
Before I get stuck into the Stages I will just outline below how I have divided my Investing Career up because this might help Readers with some scene-setting:
Stage 1 - 1999 to 2003 - Dotcom Bubble Peak and the Bust
Innocent Ignorance and massive Overconfidence. Big Losses.
Having a Job and a degree of Human Capital no doubt helps with the whole Investor Psychology thing - now I do not work and I feel that with my Health my own Human Capital is quite low, I am definitely more cautious and more focused on lowering Risk. I simply cannot let my Account ‘Blow-up’ and of course at the age of 53 Summers (actually, despite my official age being 53 I might only have done 52 Summers !!!), I do not have as much time to recover if I do screw up. At 35 you have a lot more time to make up for the idiotic trades you have made - although I would recommend that the Cautious Low Risk approach is probably far more successful for most ‘ordinary’ Investors and those who take High Risk rarely succeed.
This of course got me reading lots of books around Value Investing and at some point Robbie Burns produced his first ‘Naked Trader’ book and this had a profound impact on how I do things and I know this influence is still helping me today and this is one of the few books which I have read over and over and I have bought every new edition he has produced. Pure Gold. I also read Robbie’s Website all the time and he used to update it Monday, Wednesday and Friday and it was outstanding. Funnily enough, when he stopped doing so much to his Website this was part of my inspiration for starting my own Website because I realised that new Investors starting out today would not have something like this they could go to - and it also dawned on me that I could create something really helpful by putting my knowledge built up over many painful years into something based very much in reality - although of course I realise I will never be even a fraction of the amazing Trading Talent that Robbie is. I will provide a lot more detail on the birth of WheelieDealer later in the Blog Series.
That’s it for Part 1 - I hope Readers found this a decent start and I will try to get the next parts out in stages over the coming Weeks.
PS. Sorry about the dodgy formatting towards the end - the limitations of the Website Builder unfortunately.
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