On Experimenting and Keeping Score

This week I wanted to write about something a little different: about Experimenting and Keeping Score while Investing.

KEEPING SCORE

It’s amazing how little scoring is done when it comes to the world of investing. 

Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway. -Warren Buffet

Reading this quote is always amusing. Wall Street doesn’t keep score. We know very little about the investment track records of most investors. Yet, people get their financial advice from Wall Street.

The media doesn’t keep score either. Several individuals make stock predictions on CNBC, and other financial media outlets, all the time. However, their predictions seem to be forgotten as soon as the interview or show ends.

However, if you really want to get good at something, you need to be keeping score. This allows you to create a learning system where you can experiment and observe whether you did well. Then as a next step you can ask yourself, “what can I do to do better?”. Lastly, you can make changes, conduct new experiments, and re-evaluate your progress, and so on. 

As a result, I want to start tracking my investing experiments. This will allow me to see what I’m doing well, and how I can improve. 

HOW WILL I KEEP SCORE

I will be running several different investing experiments.

For each of these, I will use this Scorecard to keep score. 

Over time, I will probably modify what metrics to track via this scorecard. For now, I have simply listed the stock price performance, the performance vs the SP500, and the annualized return.

I would encourage you to do the same, to create your own scorecard and see how you improve as an investor over time.

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