What makes the difference between a Mozart and somebody who can play quite well? What makes the difference between a Michael Jordan and a good overall basketball player?
Of course, raw talent plays a part. You have to be capable of accomplishing such exercises as such outstanding masters. There is also the role played by parents and mentors from an early age, which is usually significant. But there are plenty of people with a lot of talent and ability who never come close to their actual potential.
We all know that we have to practice something to get good at it. But there are plenty of people who spend years and years at their instrument or profession or sport but reach only a level of basic competence and go no further.
The most important element for developing and maintaining an exceptional level of performance is deliberate, conscious and concentrated practice.
Deliberate practice involves purposefully focusing on each precise skill of our endeavour, paying attention to the details, and consciously adjusting and modifying what we do so that we achieve the very best outcome possible. This is hard work, and it can be emotionally challenging to consistently open ourselves to the kind of feedback and criticism that it sometimes takes to keep our skills growing. It usually takes no more than about 50 hours to get to the point where mistakes become rare and the performance is relatively smooth and competent.
Once these things become automatic, we become used to performing them without reflecting on or re-evaluating what we’re doing. And when we stop bringing that level of consciousness to the development of our skills, we continue to drive in the habits we’ve already built. Once our habits are dug in deeply, it’s much harder to change, grow or fine-tune our skills.
Many people stop consciously improving their skills and settle into a level of competence. They stop growing and spend their time practicing what they already know.
Remember the intensity of focus, conscious awareness and the level of fatigue that you experienced when you were learning to drive a car. Today, you don’t think about it much because you just get in the car and start driving. Even though you may have decades of experience at it, you probably have not much improved your skills from when you had been driving for only a couple of years. But to really master something and to continue to improve our level of expertise, we need to maintain the initial level of conscious, deliberate practice that we brought to first learning to drive.
So now, how can you hone your own investing skills so that you become better a year from now?
Here are a few things to keep in mind:
1. Study business, the markets and continue as long as these skills have relevance for you.
2. Stay curious about everything that might impact your money and investments.
3. Look for your own limitations, assumptions and blind spots. These include thinking errors and emotional traps.
4. Pay attention to the effects of your actions and be open to changing your thinking and strategy, even when your usual way points in a different direction.
If you want to become excellent in investing, the key is to purposefully, consciously and deliberately practice everything that goes into doing it well. Use this principle of deliberate practice and find the level of expertise that suits you.
Sven Franssen