The Process Is As Important As The Information

Jeannette Showalter, CFA, 11.21.2012

Most recently, I was asked to share the sources I use when formulating my column. The request came from a college professor who saw merit in the column, which understood that the column covers finance, money and investing across many domains, and who felt that her college’s students should consider reading the same sources. As happens so many times, a reader’s e-mail to me has generated a topic for this column.

Square one, which may be different for each reader: The more financially sophisticated might just want to skip this prelude and jump to the specific list of content sources.

Most readers are trying to piece together this seemingly crazy financial world so they can create an investment plan (in any of several asset classes), a plan for retirement (whatever that used to mean and whatever it currently means), a plan for a career after college (or successive adult career), or possibly plan for their children and grandchildren. People often want a coherent view of the world.

And creating that view of the world is a genuine problem for everyone, including central bankers, market pros, 401k investors, etc., as all are trying to “see the forest from the trees.” Sure, they can read topical columns or view cable pundits wt who offer their mountaintop perspective, but the discerning person wants to understandu

Tg what trees are in this forest. They want their view to be a bottom’s up, genuine understanding of the parts and howh it all fits together.

So the process becomes a zigzag approach — mastering some of the money, economic and financial details, followed by trying to put the mosaic together, then reading and viewing more. It’s a never ceasing back and forth. It’s all good but frustrating as a settled and defined understanding of the world just “ain’t gonna happen” in the post 2008, post-crisis era. The old textbooks and rulebooks have been thrown out. Central bankers and governments are trying to rewrite the rules of business cycle contractions and debt deflations as they go along. At best, any picture of the forest will include a lot of shadows and blurry images in between some clearly defined trees.

Secondly, do not presume that a comprehensive knowledge base and coherent view of the world will allow you to make the most profitable decisions. Columnists, authors, professors, economists, etc. write and speak about what they understand but few of them are noted as great investors. If knowledge of finance and money was the critical variable in making money, then we would have a lot of self-made billionaires in the academic and columnist communities, but that’s not so. Many people who are great investors are also poor communicators. They have narrowly defined a market in which they can make money and some don’t care about the information as they look at price as the summation of all information.

Where you get your detailed information is no more important than the process that you go through. Without a disciplined, consistent undertaking of whatever process you choose you will be very lost.

Here are some ideas:

Weekly, preferably at the end of each week, consider looking at a broad array of charts of every major asset class (even those in which you do not invest), across every major country, and across short and long term time dimensions (daily and weekly, or weekly and monthly). Do you need to create the list yourself? You could but there are free online sources that offer a large number of such charts. I use an online free source that posts 200 plus charts (Tony Caldero at caldaro. For customization of charts (e.g., stocks that I follow), I use INO Market Club, a pay service. (As a disclaimer, I do not get compensated and I have no business ties to these sources.)

Initially some of the charts will mean nothing; over time, the pictures tell a story… a leading, lagging, boring, nailbiting story. But start with the reality of market action before you read the words. Words can be persuasive, limiting and create emotions. Charts are hard, cold facts.

Consider reading a major business newspaper every day. I personally do not spend much time listening to info-tainment; for me, much is distorted — the guests are “talking book” and the content is intended to heighten fear or greed.

Spend time watching some of the bestknown worldwide investors on video clips. (Search their names and chances are good that a video will appear.) A lot of major (and expensive) conferences will have segments posted. You will capture a lot more of what is going on in the heads of these legendary investors than through a cable news interview. You will glean some of their process.

Read books, and then read more books. And whatever you do, read content that is contrary to your inclinations, which allows you to see alternative possibilities. Often people buy a newsletter because they liked someone’s opinion in that letter, then they are mired in a single viewpoint of a person who primarily makes money by selling that entrenched viewpoint.

All of this information is of little use unless it is amassed, synthesized and articulated. I find that a local coffee shop group (an open table filled with successful entrepreneurs, former corporate titans, local trades people, policemen, nurses, etc.) forces me to articulate my thinking, measure their thinking and embrace new information and perspectives. There is always an opportunity to learn from everyone. Also consider the anonymous exchange available on Value Forum.

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