Book of Wise Investors

“There is nothing like writing to force you to think and get your thoughts straight.”

This is by far my favorite quote of Warren Buffett and by far the greatest insight from him.

Buffett has a habit of filling up at least one A4 page of paper with reasons why he wants to invest billions in this company. Thomas Edison has a habit of documenting his thoughts to help him to think, to increase his persistence.

The fact is that if you cannot articulate clearly in own words about something, that means you did not really think about it and just follow other people’s conclusion about the same thing. How can you say you understand about a business when you cannot describe in words how the business operates?

Few people ever know that writing and thinking are intrinsically linked.

Because of the fact that a normal human mind can only hold one conscious thought, when people says that they can make good decisions regarding major issue like dumping more than a few thousands in a single investment in a matter of seconds, the same person usually regret those decisions. This is simply because he usually decides it based on one variable when there are many variables that one needs to consider.

How many thoughts can you hold in your mind right now?

Writing about something literally forces you to think about it rather than blinding accepting opinions of others. It lets you see clearly what concepts, knowledge and data you draw on when analyzing an issue and reaching a conclusion, you can also see clearly if the same mental models are not really applicable in a particular context, you can see the flaws in own logic, you can see unwarranted assumptions, you can also see the flaws in the arguments of others.

As you can see, writing about train of thoughts can very much fine tune own thoughts and leads to better thinking in future.

It has been said that a fool and his money is soon parted.

Let’s fact it, you are going to hear a lot of advices from other people, friends, family and agents. Either well meaning or not really so most of the times, or rather, words by others are more in their best interests but not in yours.

As a result, you need to think for yourself. And to think better, pen down your thoughts on paper.

The world’s greatest investor uses writing to make better investment decisions, perhaps you should too, be it in managing own finances or other issues in life.

“I never buy anything unless I can fill out on a piece of paper my reasons. I may be wrong, but I would know the answer to that. “I’m paying $32 billion today for the Coca Cola Company because…” If you can’t answer that question, you shouldn’t buy it. If you can answer that question, and you do it a few times, you’ll make a lot of money.”

Related posts:

1. Accepting responsibility or rationalize away the mistakes
2. Deciding between actively managed mutual funds and passive index funds
3. Why the stock markets are not efficient 100% of the time
4. On hiring talent based on IQ and academic qualifications only