Why you should maintain an investment dairy

Whether it is living on a budget or eating to a diet plan, or having a running program the most important (and often neglected) portion is RECORDING your thoughts and actions. Let us assume you 'think' you know what is happening to your eating, running or saving, that is enough, right?

Wrong. Completely wrong. You need to write down the actual proceedings as it happens. Corporate World has a Budget, and a Budget Compliance committee. This committee makes a continuous comparison of the actual with the budgeted numbers. This gives us a basis for

a) Corrective action or b) Revising the Budget.

If you 'thought' that equities will give you ATLEAST 18% p.a. you were proved wrong from say 2007 to 2012. So maybe you need corrective action.

Let us say you DECIDE to maintain an Investment Diary similarly for all your investing…

Assuming a diary is a place where you will write down your darkest, best, an investment diary is a must.

These 5 things MUST, MUST, MUST go into a diary if you really want to improve as a stock picker:

a) Log all ideas - history tells you which were good and which bad. A diary will be cruel enough to tell you that your best pick was a fluke, or whether it was a product of some effort. A diary is much more honest than your brain. A brain lets you remember events as you wish it had happened, rather than how it actually happened.

b) Learn your lessons! losing money in the market is fine, losing the lesson is NOT. Losses get registered in the mind better than the profits...so it is important to know WHY you lost money. Was it a decision taken over 3 pegs of whiskey? was it a decision taken to please a broker? Or was it on the basis of information from a poorly informed member of the Board of Directors? Et el Rajat Gupta?

c) List advice from people YOU think are good advisers or people who can or are mentors. also if you find an expert from the media and to keep it a little light even whom the media thinks as experts...and see what really works. Write down all the ideas that people give and see what works. Also see the logic. See the hype - and separate it from the reality. All these things help you MATURE as an investor.

d) Give vent to whomsoever but be careful if it is in a public forum / electronic media - do not maintain it in an electronic form. You may want to edit the language if you know about 100,000 people are going to see it.

e) Collect compliments

f) Write down what do YOU think will happen in the immediate future...and why. Then see whether you were right, and if you are right whether it was luck or skill.

Doing all this helps you be a better investor. Just the process alone is worthwhile!

Keeping all this in an electronic form...and updating makes NO SENSE...because you cannot know how u modidifed it...so a hard copy makes more sense....