Deliberate Practice & Reading

I'm a big believer in the idea that you could find any answer to life's ills in what has already been written.  I couldn't tell you any economic thinker that has done much in the past 50 years.  Everyone else is just adding layers of complexity to quasi-defunct ideas to justify their tenure.  Does Cialdini's Influence really tell us anything How To Win Friends and Influence People hasn't already explained with common sense and folksy anecdotes.  Rereading articles or books can be more useful than finding new material that conveys the same message.  

I find the marginal returns from reading an additional biography about an investor or a "how to" investing book to be negative.  They dilute the original ideas and just rearrange the ideas a bit.  You wouldn't really be selling yourself short if you read Margin of Safety and Stock Market Genius then moved on.  Some supplemental accounting books like Quality of Earnings can be nice, but you don't need to read 10 additional, slightly differing rehashings of a sound value investing philosophy.

This article titled Deliberate Practice - How To Become An Expert  appeared on gurufocus a few months back, but it's worth revisiting in a similar vein.  He doesn't waste time rehashing ideas, he just quotes/summarizes others, but then adds value by tying it together with specifics about how they apply to investing.  Similar to Tim McElvaine's brief ABBA analysis process, which I highlighted way back, this table from his article is worth keeping nearby:

Deliberate Practice	Not Deliberate Practice
Detailing how specific news items may impact your investments understanding if you should still hold those investments quantifying the impact on your valuation	Reading the newspaper
Valuing & evaluating Businesses Use annual reports to value companies Read annual reports for different companies in the same industry Evaluate the differences between companies in terms of their accounting, strategy, competitive advantages Summarize the results of the research	Reading Annual Reports
Engage the ideas in books Summarize books using mind mapping or similar tools. Apply the ideas presented Compare the ideas to your current ideas Test the ideas presented	Reading Investing Books
Engage the ideas and authors Summarize and file articles Comment on articles, engage the author in a discussion Compare the ideas to your current ideas Test the ideas presented	Reading Articles
Manage a portfolio Create and maintain a list of businesses and the prices that you would like to purchase them at (and if they hit your price then buy) Review the stocks in your portfolio and look for better opportunities (and if there are then sell / buy) Constantly evaluate if the situations has changed (and if it has then buy/ sell) If the price drops substantially where the situation is unchanged then purchase more Deliberately setting appropriate position sizes and evaluating performance in light of the chosen position size Constantly evaluate the overall portfolio and ensure that you have not accidentally made just 1 or 2 big bets (and adjust your portfolio if you have) Keep a log of why you bought and sold	Buying and selling shares
Writing your own research Write down your ideas along with the reasoning and encourage critical review Look back over your previous writings to see where you went wrong	Posting on message boards
Be a contrarian Buy stocks on the 52 week low list Sell when your stocks hit your estimate of fair value Develop systems that work for you to ensure that this happens (like Good-Till-Cancel limit orders) Keep a diary of trades and identify the market context at the time	Buying when the market is doing well or selling when it's doing poorly

You should read and reread his entire article, keep the table nearby, but ideally you should be keenly aware of the fact that just doing that isn't enough.  Especially when the markets are going crazy like now, it's all the more important to ground your actions in logical and thoughtful reasons.  There's no better way to do that than with deliberate practice and there's no better way to figure out what that entails than by reading Neil's article.