Friday, April 14, 2006

Staying the Course

Having some faith in your positions is crucial to long-term portfolio outperformance.

This implies that you have enough confidence and knowledge of why your investment choices are sound, to stick with your strategy during the softer markets. Much potential portfolio outperformance has been undone due to a lack of knowledge and faith in choices, by selling out during a weak patch.

That's one reason I favor an investment diary - writing down what I picked and why, and then reviewing those writings before I buy or sell. Although I've been practicing this for less than a year, I find it's already helping me reduce my portfolio turnover, increase the clarity in my investments, and provide me with better confidence to continue to "stay the course" over the past while. I think that this has been at least partially responsible for helping me to produce a return rate in my own portfolio over the past year in excess of 30%.

I highly suggest that you start an investment diary, together with an investment scrapbook. Both are "capital ideas" likely to improve your investment performance.


The Confused Capitalist

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