May

16

The book The One Minute Manager by Kenneth Blanchard and Spencer Johnson has sold more than seven million copies and has influenced many for the good. As far as I can see its message is to have those you manage set goals (on which you agree), then praise them for a minute when they behave in a way that will help them achieve there goals, and reprimand them for a minute when they don't. ("The One-Minute Manager" recommends to touch the person you are managing when giving your one-minute compliment or reprimand. I would suggest that you be careful with this as it can lead to unintended consequences, especially with the opposite sex.)

I wonder if there is a one-minute way to manage an investor's stock investments. I would suggest to read Dimson, et. al., and the threads on Daily Speculations on how incentives, respect for property, rule of law, and encouragement of innovation work to create returns for investors.

On the other side of the ledger, read the posts on chronic pessimism and note that all those who populate same tend to be visited with -97% or worse returns of people like the weekly bearish financial columnist.

Read mine and Tom Downings' work on the fed model, and note what its yearly forecast is and if this has changed over the past quarter.

Decide what percentage of your net worth you wish to have in the market at all times, and how much you wish to borrow when you want your exposure to increase — choose between adding when the chronics have a winning day, week, or month, or just constantly adding or subtracting, depending on your liquidity and lifestyle needs as they vary over time.

Figure out how to maximize the after-service amount you get to keep, through compounding and cap gains, with your accountant, and see if there is a field where you have an edge that can augment buy and hold with individual stocks, or that you can buy when everyone else wishes to throw in the towel, or is not suitably optimistic about them.

Finally, be sure your frictional costs and grind are at a minimum. Pay attention to ever-changing cycles and never believe a guru. Keep records in a logbook of your good and bad moves.

That's how I would teach someone in one minute to be a good stock market investor.

Tim Hewson writes: 

I would suggest to be prepared for those inevitable down days. They will happen at times, so come up with a plan to handle them so it doesn't unduly impact your morale. Personally I have found reading interviews with other traders like some of those in the market wizard series have a useful motivational component. Anything really, which reminds one you have to take a few knocks trying to climb up the stairs. 

Steve Leslie adds: 

In my faith, we are encouraged to spend a quiet time at the beginning of each day, to pray, to read the Bible for 15 minutes and reflect upon the wonder of the universe and the many blessings that have been bestowed upon us.

Other faiths and secular teachings recommend an "altar" or special place that one visits at the beginning of each day to offer their prayers and positive affirmations to strengthen one for the upcoming day.

I recommend along with this a handheld recording device or writing pad, to immediately record any relevant thoughts. And to always have the recorder available to add additional thoughts that might be inspiring. Once recorded, this releases the mind to pursue other things.

If you think this is unnecessary let me remind you that once a day and for his entire life Thomas Edison practiced this ritual and allowed no interruptions during this time. No further comment necessary.

Finally, I recommend a timeless classic by Napoleon Hill, Think and Grow Rich. It is a short but incredibly powerful book that should be read time and time again.

Scott Brooks adds: 

Another book to that I consider a must read every few years is Dale Carnegies's, "How to Win Friends and Influence People". Every time I read this book, I pick up another tip to apply to my life and interaction with others. I keep a copy of it in my lobby as it has short, concise and to the point chapters. 

David Lamb suggests: 

Perhaps one could change the term "one minute" into the term "one mistake". And by keeping records in a logbook of all of these one mistakes one could go back and read of what not to do and how not to trade. I have hundreds of recordings of one mistakes in my recordings. I know hundreds of ways how not to trade. In fact, I'm a genius in the ways of trader error.

It has been said that Thomas Edison failed in thousands of attempts at producing a better light bulb. He recorded these failures and never repeated them. But oh! How many cousins do types of failures have! I hope I don't have to record too many more one mistakes in my record book. I'm running out of room. 


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