A Little Time Off
I readily admit, and most of us should admit, that one's career has been blessed by having a number of outstanding mentors. On of the great influences in my life was the chairman and ultimately, my partner in an investment counselling business who reminded me of the importance of having some time on my hands. Never burden yourself with the daily administrative tasks of life when one thinks about investment. You need time to think.
Most investors, at least in my opinion, fail to take sufficient time to really think about their investments chosing to look for brokerage advice, investment newsletters, Yahoo message boards, bartenders, or even blogs (I shudder) as a substitute for thinking on their own. Ignore the experts...conventional wisdom will often fail. Fear, ignorance, and status quo tend to predominate much conventional thinking. Extrapolating current trends into the hereafter fails to recognize competitive threats to once successful businesses.
The importance of reading, the importance of thinking about competitive landscapes, the importance of looking at the downside first and the potential reward later; all of these should be part of the mental models that one builds as one considers an investment.
As Shai points out in his review of his Greenblatt interview, independent thinking, in-depth research, and the ability to persevere near term underperformance are critical attributes to successful investing.
Do your own work! If reading something on my blog, or anyone elses for that matter triggers an idea, think it through. Don't accept it as some sort of gospel. My methodologies and risk tolerance levels may be entirely inappropriate for you. Perhaps there is some key factor that I am missing or my biases blank out obvious keys to understanding.
Time on your hands is an important aspect of thinking. Rapid ready-fire-aim trading will enrich your broker but rarely will do much for your wealth. Take some time to cogitate. Much like a stew that sits on a backburner developing a flavor over many hours of blending and heating and stirring, great stock ideas take time.
I am on vacation this week, and as I sit on the Barbados shore, gin and tonic in hand, I do have a lot of investment ideas stewing, on the backburner if not at the front of my mind.