I’ve been reading Malcolm Gladwell’s Outliers . One of the key themes of the book is that experts in a field became experts through 10,000 hours of deliberate practice. There are numerous academic papers that support this view including The Role of Deliberate Practice in the Acquisition of Expert Performance .









[this article] explains expert performance as the end result of individuals' prolonged efforts to improve performance while negotiating motivational and external



constraints. ... Individual differences, even among elite performers, are closely related to assessed amounts of deliberate practice. Many



characteristics once believed to reflect innate talent are actually the result of intense practice extended for a minimum of 10 years…







Reading books and magazines – the law of diminishing returns applies once you have the core knowledge and at best this allows you to keep up





MBA, CFA or CPA – these teach you how to exactly match the market





Experience – if this were true then the best investors would be in their 70’s







Ability to buy stocks when others are panicking





Obsessive about playing the game and wanting to win – this often means a hard time maintaining personal relationships





Willingness to learn from past mistakes





Inherent sense of risk based on common sense





Confidence in their own convictions and stick with them even when faced with criticism – this also means no 2% positions, what’s the point





Ability to use both sides of your brain. It’s not enough to be able to do the math you need to be able to write and think of inventive ways to solve problems. You do need to be able to do the math!





The ability to live through volatility without changing your investment process





Pursue what you love



Do the hardest work first



Practice intensely



Seek expert feedback, in intermittent doses



Take regular renewal breaks



Ritualize practice

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

About the author:

Neil Golding Neil Golding manages international value investments for himself, family and friends. He is currently based in Australia and writes about his investments at longterm.blogspot.com Neil Golding manages international value investments for himself, family and friends. He is currently based in Australia and writes about his investments at longterm.blogspot.com