In the last post, I wrote about three stages of an investor – The Beginner, Novice and Expert.
In the initial years as you learn, you will find books and courses to guide you through this evolution. After 8-10 years of this journey, if you are still investing actively and more importantly learning, you won’t find a nicely packaged curriculum to progress further
In college our learning is structured and guided by others. As an early expert – someone who knows a lot, you are now on your own and that is disorienting.
It is tempting to read more books, hoping to learn but you realize that you have reached the point of diminishing returns. You look for gurus, but soon realize that they are no different, though some sound confident online. Often these gurus are performing no better than you and make similar mistakes
Finally, the handful of super-investors who can teach you something are not accessible.
You have to develop your own learning process. There are no pre-defined guidebooks to do that, but some approaches which I will share with you
Mistakes as your guide
One of the most powerful ways to learn at this stage is reflecting on your process and mistakes. Let me explain
Once you have learnt the basics and become proficient, it’s time to start documenting your process and decision making. Write down the thesis, valuation estimate, your entry criteria, position sizing and so on. Finally, when you exit the position, review what happened versus what you expected
Reflect on what went wrong, what you got right and what you missed. Go back to your process and refine it. You have to keep doing this to keep learning
Teach others
The other well known way to learn is to teach others. Write about it, make online videos or take classes for other investors
When you make your knowledge explicit, you teach others as much as you teach yourself. You find gaps in your knowledge and can fill those gaps
I accidentally stumbled into this through my blog and have been learning/teaching others for 20 years. My plan is to expand this further
Jump boundaries
I realized this aspect of learning in 2019 when I found gaps in my understanding of the market and was unable to explain some of my failures. As I reflected on these mistakes , I started studying other types of investing. This led me down a rabbit hole of swing and position trading, Momentum investing, Quantitative and Technical analysis and more
I am still a value investor at heart, but have incorporated the core principles of these approaches into my process
Keep an open mind
This is the key to your learning process. Do not think of yourself as an expert who knows it all. Always consider yourself as a beginner – in other words, keep your ego out. Be open to learning from other investors including ones who are much younger than you
I follow all types of investors as they bring fresh ideas and new approaches which sometimes don’t make sense to me. Whenever I am confused or find something is working but doesn’t make sense to me, my instinct is not to dismiss it but to dive deeper into it
That’s the reason I am obsessed with AI and other new technologies these days. I get energized when I find something new to learn and that gets me to the final point
To develop as an investor, you must love the process of learning and getting better at your craft each day.
