To succeed as an investor, it requires a combination of technical expertise, emotional intelligence, and intentional habits. This trifecta demands precision, perspective, and discipline. While technology has provided numerous tools for investors, one of the most valuable skills has been around for centuries: writing.
The act of writing and clear thinking are closely intertwined. When we articulate our ideas through writing, rather than keeping them in our heads, we gain new insights. Writing forces us to slow down, evaluate our thoughts, and test the validity of our ideas.
Writing is often overlooked as an essential investment skill. However, it should play an active role in the investment process for several reasons.
1. Writing helps us differentiate between knowledge and understanding.
It is easy to consume information and believe that we have a complete understanding of a particular investment topic. However, often we know many things but understand very few. Writing helps bridge this gap and identify our blind spots.
Geopolitics is a classic example. Topics such as war, public health, natural disasters, trade policy, and elections attract significant attention. It is essential to be well-informed, but we should be cautious about equating knowledge with investment conviction.
Writing allows us to critically evaluate our level of understanding and uncover any gaps in our knowledge.
2. Writing promotes self-awareness.
Investing is as much about emotions as it is about numbers. Self-awareness is crucial for recognizing biases and managing emotions. Writing serves as a mirror that reflects our mindset and provides additional perspective.
By distancing ourselves from our thoughts and emotions, we can gain objectivity and confirm our investment convictions.
3. Writing improves our ability to separate insight from noise.
Writing helps develop disciplined research habits. It allows us to filter out noise and identify valuable insights.
For example, headlines celebrating a strong start to the stock market may distort the underlying mechanics. By writing and describing the health of the market, we can gain a clearer understanding of the situation.
4. Writing acts as a guide for our investment process.
Just like keeping our eyes on the road prevents us from veering off course while driving, writing helps us stay on track with our investment process. It is easy to get distracted by hot topics or market noise. Writing provides a checklist and allows us to proofread our ideas.
5. Writing provides clarity on our decision-making quality.
Performance results alone do not reflect the quality of our investment decisions. Writing helps us analyze our thought process, assess the validity of our analysis, and learn from our experiences.
By documenting our thoughts and emotions, we create a time capsule of feedback that enhances our learning curve.
How to Get Started?
Writing is an investment in itself, and building writing skills requires practice and effort. Here are a few suggestions to get started:
- Start with small writing exercises.
- Consider the timing and frequency of your writing practice.
- Adjust the length of your writing based on the purpose.
- Pay attention to the emotions reflected in your writing.
- Periodically review and reflect on your writings.
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The views expressed in this article are the author’s opinion and should not be considered as investment advice. The opinions expressed do not necessarily reflect those of CFA Institute or the author’s employer.
John W. Moore, CFA, CAIA, operates as Stratview Wealth Management, a marketing name for representing Northwestern Mutual. Stratview Wealth Management and Northwestern Mutual Private Client Group are not registered investment advisors, broker-dealers, insurance agencies, federal savings banks, or other legal entities. Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company and its subsidiaries. Moore is an insurance agent of The Northwestern Mutual Life Insurance Company (NM) (life and disability insurance, annuities, and life insurance with long-term care benefits). He also offers investment brokerage services as a registered representative of Northwestern Mutual Investment Services, LLC (NMIS) (investment brokerage services), a registered investment advisor, broker-dealer, and member of FINRA and SIPC. Additionally, he provides investment advisory services as an advisor of Northwestern Mutual Wealth Management Company® (NMWMC) (investment advisory and trust services), a federal savings bank. NM and its subsidiaries are located in Milwaukee, WI. CA License: 0787835; NPN: 1164592.
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