Thursday, June 18, 2009

An Investment Journal

Dr Van Tharp advises that every investor should keep a personal investment journal. In the journal, you should record down all the related information about your investment, including why you buy into this counter, how much is the risk, how much is the reward, and then finally when you exit that counter, did you exit with profit or loss.

Such a journal sounds very trivial, but in fact it is very useful. When you do your periodic reviews of your investment, in particular, when you want to detect and correct mistakes you made in the past, and not to repeat the same mistake in the future.

There are things you will never realise if you don't keep such a journal. For example, when I look at, I found that I bought into the same counter, at about exactly this year of the year one year ago. And I lost money in both cases. This means I might be repeating the same mistakes time and again, without realising it.

Keeping a journal hence will help me break this cycle, prevents myself from going in a circle of mistakes.

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