Why I also write...

There was a nice post on Wexboy’s blog called Why I Write. I would like to share some of my own ideas for writing.

I tend to blog less nowadays, although that does not mean that I do not write. I have noticed that my sense of humour really looks off-key when I look back at it. “What idiot wrote this nonsense?”, I sometimes wonder. When I blog now, I rather talk about interesting observations, or interesting shares. If I mention a share as a buy candidate, I really really want it go up for the reader. So I am inclined to mention less buy candidates.

I first became more committed to writing down my thoughts when I read an article by Geoff Gannon that recommended writing for 10 minutes a day. This often led me to do lots of writing – way too much writing. I am now trying to go to the other extreme – I want to capture the very essence of an idea as simply as possible. Having read Peter Lynch’s Beating The Street (I think that this is a much-underrated book), I now try to keep to a minimalistic pattern. For a stock that I hold, I have a loose-leaf sheet of paper for each company, on which I note the day, share price, and 2- or 3- lines of relevant information. Here’s one I wrote for RGS last month, for example:

15.1.13 160p IMS H1 Double-digit organic sales growth. Interesting M&A opportunities. New very significant Emerging Market contract win

I am really, really trying to reduce things to their bare bones. (it’s nice to see that the share price has made good progress since then).

Additionally, I have a big 2011 diary from the office, which I use as a notebook diary. I will jot down anything that is of interest. It could be about specific shares, or anything that I think is of value. Here’s an example entry:

 Special Offer: Invest like Buffett, Slater and Greenblatt. Click here for details »

6.2.13 F958B noted on 17.1.13 regarding AZN’s potential overpriced bid for SHP: “I can’t recall many takeovers where the bidder saw their shares rise. In most instances the bidder’s shares dropped significantly, but often made for a good purchase from bombed-out levels, immediately after the deal was agreed”. is.gd/FA1c8t

This helps me as a learning exercise. To be a good investor, you need to need to be a good pattern-recogniser, and I am trying to improve the patterns which signify either good opportunities, or terrible traps. It is important to me that I am able to review my writing and refresh my memory – that’s why I want to keep my writing short. I want to see what my key insights were, and how they stacked up against reality.

I tend to oscillate in my views regarding the usefulness of bulletin boards. Currently, I am in favour of them. It is often easy to get a nice overview of the central issues on an investment just by reading ADVFN. I am also constantly on the lookout for people whose investing is much better than mine (some might say that that shouldn’t be too difficult a task), so I will sometimes write down who wrote what. You can learn a lot from some of the really skilled investors. You’ll be amazed – sometimes, even when you do have a good investment idea, you’ll notice a better investor concentrate on something different – and you discover that their idea is a few notches above what you have as your own idea.

So, I have a dual-system: a notebook which contains chronological entries, and a loose-leaf folder organised alphabetically in EPIC symbols. The loose-leaf pages contain information on current/past holdings that I pare down to the minimum. I will cross-reference to the notebook if I have copious notes that I want to remember. So my loose-leaf notes might say “Potentially significant discovery DB03/209″, and in my notebook I’ll flesh out the details. But I don’t want to flesh out the details unnecessarily. In this way, I attempt to capture the essence of why I think a share is a buy, hold, or sell.

And oh, BTW, I think LAM (Lamprell) could still double from here. 142p