Credit: Shutterstock photoI am not really sure how I got to a very old post at Fortune (it is from October 2006), but in the post, Geoffrey Colvin, the senior editor at the time, discussed how to become great at our fields. He cited Warren Buffett ( Trades , Portfolio ) and Tiger Woods, among others, as examples and provided a great road map that we can also apply as investors. His publication is backed by research made by Florida State University and three professors, who believe greatness can be narrowed down to four key elements:
- Hard work. While people with a natural talent certainly exist, most of us need to work hard to achieve our goals. It is commonly said that, to reach a good degree of mastery, 10,000 hours should be devoted to a certain activity. This research mentions that this number is a rough approximation and merely an average, not a rule. So the general rule is that we must be willing to devote our most precious resource, time, to develop our skillset in the best way we can.
- Practice . Research shows that not only practice is required but also what is called "deliberate practice," which is focused on achieving a better performance. With this, we will achieve something that distinguishes the elite from the amateurs - consistency.
- Be open to feedback . Feedback is critical to achieving a better performance, but it also must be accompanied by a long-term view so that frustration moves out of the way. With this, we will see every little improvement and setback as part of our way toward better performance and mastery.
- Use mental models. The authors suggest applying different mental models that explain our environment but most importantly the environment in which we want to improve our performance. If we start putting together all the factors that influence our performance, we will start achieving better results and become more aware on every step of the process.
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This research has touched upon several factors that are important for us as investors. We all know that investing is not easy, and anybody who finds it easy is stupid, according to Charlie Munger (Trades, Portfolio). Taking these steps into account, we must be sure that, in order for us to improve and achieve better results, we need to be willing to put in hours of deliberate work in an intelligent way. Gathering and knowing the most important mental models from several disciplines is a time investment that is likely to alleviate the freight when analyzing and reading through companies. Most importantly, having a decision journal, or some record of our decisions and how we arrive at them, is also critical as, with time, they provide the necessary feedback to improve our calls. Munger, Buffett and other investors have followed fairly similar road maps to achieve better investing results.
What do you think?
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
