According to author Mark Tier, all successful investors have their own investment system that is unique to them. Whether they trade currencies, pick stocks, utilise technical analysis or collect antiques, all of them have a system that enable them to manage risks, navigate the markets and to harvest gains in the assets that they invest in.
Below is a framework to objectively evaluate your system. Take the time to fill it up as objectively as possible – it may be one of the best things to do in your lifetime!
- What to buy?
- When to buy it?
- What price to pay?
- How to buy it?
- How much to buy (as a percentage of portfolio)?
- Monitoring progress of investments:
- When to sell?
- Portfolio structure & leverage (if any)?
- Search strategy:
- Protection against systemic shocks such as market crashes:
- Handling mistakes:
- What to do when the system doesn’t work:
If you can fill up all 12 points comprehensively, you already have your own investment system and are ready to become a successful investor! Hope this is useful!
*image taken from www.pehub.com*