Moving Beyond The Novice Level

"It is costly to be and remain a novice investor. Everyone should be a novice just once. #Beyondnovice is a movement to eradicate financial illiteracy, uncover hard truths, bust false beliefs and empower you to take charge of your investment journey."

We have all been a novice at one time or another. It depends on what activities you are embarking on. As I am writing this, I am embarking on the path to be a Tai Ji Master. I brag a little about the "Master" part. I have been practising for over three years now, and I am still a novice. I wish I have started earlier because some of the moves that ought to have been effortless now seem impossible. My teacher told me that this exercise could take you a lifetime to figure out. Also, she advises that I shouldn't pick a fight with anyone using Tai Ji, especially MFA fighters. Watch this video, and you will know what I mean.

Learning Tai Ji is quite similar to learning investing in many ways. For one, it is an endeavour that can take you a lifetime to figure out. We are all novice investors one time or another. But some people remain a novice their entire life, never moving beyond the novice phase. Beyond novice doesn't mean that you achieve expert status. That is hard. Not everyone can be a Warren Buffett or a Jim Rogers. Beyond novice means that you are financially literate enough to decipher what is happening in the investment marketplace, it means that you can make your own independent financial decision, it means you can decide on what you should invest in, it means you can defend against unsavoury characters in the investment industry. 

I believe everyone can reach this level of financial literacy. 

Novice Define:

Does any of the following sound familiar?

» Buying high and selling low. You got into equities when the market was exciting and got out when the market was scary. This act of wrong timing hurts your performance terribly.

» Overconfidence. You thought you could discover a "secret formula" that thousands of trading pros weren't already exploiting.

» Individual security selection. You convinced yourself you could use your opinions to pick stocks that would soar.

» Believing well-dressed experts. You paid advisers hefty fees for results that were worse than mediocre.

» Loading up on risk. You sought lottery-like wins and cranked up the riskiness of your holdings, thinking this would somehow capture more gains.

» Ultraconservatism (the reverse of risk-seeking). Once you'd been burned, you pulled your funds out of growth assets and let your money earn little or nothing. Basically, your cash is in a saving account, earning a very low-interest rate.

Welcome to the world of novice investing. The sooner you recognise yourself as one, the easier it is for you to transform yourself and the less costly it will be for your investment portfolio.

The #Beyond.Novice Movement

#BeyondNovice is a stage that every investor can reach. Whether you go by the practice theory of excellence or the talent theory of expertise, it is a stage that you can reach if you put your heart to it. But it is not an expert stage. 

After almost three decades in the business, there are still so much to learn. Malcolm Gladwell introduces us to the 10,000 hours rule whereby if someone puts in an average of 10,000 hours of practice on a particular skill set, they should achieve world-class competence. This rule may not be the case for investing.

It Takes More Than 10,000 hours, and There are no experts.

Investing is a field with rules and an unstable environment. This is unlike games such as chess or tennis, whereby you have a fixed playing area and stable rules. Therefore, reaching an #Beyondnovice level does not mean that you are already an expert. In fact, most people are not trying to be an expert. All that they want to do is to achieve their investment goals. It could be retiring with a certain sum of money, buying a car or some other life goals that they are aiming for. And the thing is that you do not need to be an expert to do that. You can achieve your goals efficiently if you know how the game is played and make choices that suit you.

Build Awareness. Busting belief. Finally empowerment.

Have you ever played a game where you can't win at all? You have no ideas about what the rules are. Everyone says different things and gives you different advice on what to invest in.

Before you invest, you must first understand some sneaky tricks Wall Street might throw at you. Don't play games you can't win. For some reason, brokerages usually emphasise all of their tips and tricks and forget to mention how the game works.

Playing games you can't win, or thinking you're some trading genius, is a big mistake.

You should comprehend the rules, the playing areas and the language used before you play the game.

Many investors try to "figure out" the market. Surely, they think, there must be some secret formula that will predict which assets will go up the most.

This "figure out" mentality drives the popularity of "indicators." An indicator is a ratio of two or more market metrics.

Here's some bad news for the engineering-minded: The market cannot be reduced to a simple equation. It's a lot more complicated than that.

That doesn't stop people from trying. The more things you test, the more likely it is that one indicator or another will seem to work the best, completely by random chance.

As they say on Wall Street, "If you torture the data long enough, it will tell you what you want to hear."

The "Better Awareness - Better Choices - Better Results" Model

The "Awareness precedes choice and choice precedes results." quote I learn from Robin Sharma, my real superhero. I read about it in the book "The 5 am Club". The basic idea is this. When you start to learn anything, you start with the unaware stage. You are an outsider. You have no idea what is happening. Like why the market behaves in a specific manner or why you keep losing money in investing. Then you start to become aware. You become aware of how the market works, about return and risks and the language spoken. As you dive deeper, you start to see how the pieces of the puzzle are fit together and how to make it relevant for your investment goals. You learn about what asset classes are available, what scams are out there, and what megatrends to look out for. These are just some examples of what it might look like for you if you embark on this journey. The more aware you become, the more choices open up to you. You can then make an informed decision, leading to better results.

My mission in creating Equitiespedia is to help novice investors move beyond the novice stage. 

If you stumble on this site, somehow through serendipity, I welcome you. Faith must have it that our path must cross.

This site is all about developing the ability to do your own thinking, make your own independent decision, validate claims and manage your own investment portfolio.