Tom Scollon
Tom Scollon
Chief Editor

And many - if not most – traders and would be traders are guilty.

As the saying goes ‘fail to plan ….plan to fail’

I would go so far as to say that the majority of people will not succeed without a plan. I am not saying a plan will make you successful but it is a sound start to this very important venture. In my earlier sentence I was careful in my choice of words in that there are the rare few that will succeed by virtue of special qualities they possess – regardless of a plan. But these are a rare few and most of us have to work in a methodical manner.

So what constitutes a plan? Well anything about your ‘investment’ self is relevant. This will include your:

  • Life goals and time span
  • Investment goals
  • Risk profile
  • Skill level as appropriate to type of investing
  • Funds available
  • Fund allocation – shares/managed property
  • Investment horizon
  • Return expectations
  • Commitment per week – how/when
  • Investment tools and methodologies – by asset class
  • Method of entry
  • Exit triggers

It should also outline:

  • What your overall risk management approach will be – in good and bad times
  • What skill do you need to improve on?
  • How and when you will review your positions?

Yes I am stating the obvious. And most investors know all of this sort of stuff – yet are too lazy or ambivalent to actually put pen to paper.

It is a crucial starting point. As a plan is not just a road map but it also helps us clarify our thinking and makes us think hard about what we really believe…. ‘How do I know what I think until I see what I write’ – or words to that effect - a power statement from P J Wodehouse.

Get cracking – pen to paper and you are half way there to removing yet another deadly sin that brings investors to grief!

Enjoy the ride

Tom Scollon
Chief Analyst