Monday, November 5, 2007

On Being ASCCT Readers

This article describes five techniques we should apply whenever we are reading investing-related information. We should seek to be ASCCT readers – that is Avid, Selective, Careful, Critical, and Thoughtful readers. Applying these five techniques will enable us to improve our ability to absorb and utilize the financial information we read so that we can ultimately be more successful as covered calls investors. I ask your forbearance in allowing me to express the following small bit of my personal philosophy on investing success and the associated importance of reading:

Success comes from the application of knowledge.
Knowledge comes from seeking and absorbing truthful information.
Truthful information comes from listening, reading, thinking, and analyzing.”

So to become a more successful covered calls investor, reading is an essential and fundamental tool.
Below is a more detailed presentation of the five keys to success in reading investing-related information:

1. Be an ‘Avid’ Reader – An ‘avid’ reader describes someone who simply loves to read. And if you really enjoy investing, which covered call investors invariably do, then you should probably be spending an average of a minimum of two hours a day reading investing-related information.
2. Be a ‘Selective’ Reader – As you know, there’s an incredible volume of investing information available for reading. So how do we focus on quality investing information and avoid the extraneous ‘noise’? Some specific suggestions in this regard were included in the most recent post nk) on this blog.
3. Be a ‘Careful’ Reader – This is very important! Because of the huge volume of items available to read, there is a natural tendency to speed-read or skim what we are reading so we can cover even more total quantity of material. Don’t do it!! If we have carefully chosen to read only ‘quality’ investing information (see step #2 above), then we must commit ourselves to fully read and concentrate on every sentence we are reading, and to read deliberately enough so that we seriously try to fully understand everything the author is trying to convey to us. You’ll be amazed at how much more in-depth understanding you can achieve by committing yourself to ‘careful’ reading.
4. Be a ‘Critical’ Reader –You already know this, but it’s worth repeating over and over again – “Don’t believe everything you read!” Utilize the analytical ability God gave you to critique the information you’re provided. Some of it will be totally true, some will be partially true, and some will be downright wrong. Analyze, analyze, analyze until your gut feeling provides you increasing confidence that you are getting closer to the truth in whatever the particular subject you are reading about.
5. ‘Think’ About What You Have Read – The final critically important part of analyzing what we’ve read is simply thinking about it. This skill requires us to devote some quiet time to think about what we’ve read to assess its validity and what further analysis you might need to undertake. Find time (go for a walk; or sit in your favorite lounge chair; or whatever else works for you) and cut off the extraneous noise and other competing activities and think about what you’ve read. By the way, Warren Buffett is a great proponent of this quiet time thinking technique.

I hope you agree that to be a successful covered calls investor, we need to read avidly, selectively, carefully, critically, and thoughtfully. “ASCCT” if it helps you to remember it. I invite you to please try this approach during the next month. I’m confident you’ll be pleasantly surprised at how your investing knowledge, savvy, and confidence will begin to grow.