What do Warren Buffett, Kelly Clarkson, and Skinny-Dipping Have in Common?
How to come up with a plan when you have no idea where to start.
That one time, I went skinny-dipping.
When I started investing in individual stocks, I thought I had it all figured out.
Then my portfolio stopped going up every day. It turns out March 2020 was a good time to start, but not ideal for judging your ability.
It happened slowly and then really fast. I don't recall a specific moment, but I remember realizing I had a lot of work to do if I was going to be successful at investing.
It's humbling. We don't want to admit what we don't know, so it's easier to keep posting Buffett quotes with our heads stuck in the clouds.
But as Buffett says, "Only when the tide goes out do we discover who's been swimming naked."
Let me tell you, I started investing without a swimsuit, and boy, did the tide go out.
That's ok, though, because I also enjoy quoting Kelly Clarkson, and she says, "Whatever doesn't kill you, makes you stronger."
Preach Kelly!
Kelly has a point. We must take the lessons from the past and grow from them, and that's what I plan on doing.
My biggest investing mistake was not having a plan. It was part laziness and part overwhelm. How do you come up with a plan when you're brand new?
Luckily, investing is full of past and present heroes who have revealed their plans for all to see. So should I pick my favorite investor and clone his style? Maybe. I've heard that works for some people, but I can attest that it's not for me.
Mohnish Pabrai claims he is a Buffett clone, but I call BS. I've seen Pabrai's checklist, and while it's Buffet inspired, it has a Pabrai twist.
That's precisely what I plan to do and why I'm building The Framework Challenge. I am studying several investors and testing their frameworks by running businesses through them one at a time.
Through this process, I can clone and adapt multiple frameworks into a unique style that works for me because that's the most important thing. Adopting the framework of a man with $100 billion in the bank isn't the best idea for a guy with less than half that (rough estimate). To put it modestly, we have different goals.
Why am I telling you this? I've run two test Challenges so far, and they've gone great. I honestly think I'm on to something. I know this because I've participated in both challenges and grown a ton from them.
It forces you to look in places you've never looked and ask hard questions. Sometimes it unravels your thesis, and you have to make a hard decision.
But the most important thing it does is get you one step closer to building a plan.
One of my investing mentors says, "You won't get it until you study 100 businesses."
He's right. Reading an investor presentation and calling it due diligence isn't going to get the job done and is the equivalent of skinny dipping.
Every successful investor I've studied has two things.
A plan
Multiple mentors who helped shape that plan
Most of them start by cloning, and as time passes, they tweak and change the plan to fit their mindset, situation, and style. This is what I plan to do. I will continue to put frameworks, checklists, etc., from the world's best investors to the test. As I do, my own unique plan will begin to take shape. I'll take what works for me and politely leave the rest.
If that sounds like a good plan, then the Framework Challenge is for you.
Give it a try. This link will take you to the landing page, where you can learn more about it. It's free, and you can go at your own pace, so there's no pressure.
That's it for this week.
If you missed it, I released another edition of The Investors' Library as I continue working through "The Investment Checklist" by Michael Shearn.
Happy Investing!
-Jason