Sunday, April 20, 2014

Constant progress

Reading is the most important part of becoming a better investor over time. It might even sound as a cliche expression, but let's look into the matter closely and try to understand what makes reading an important element in becoming a batter investor.

Types of reading.

In my view there are several types of reading. The important distinction is that there are a passive rerading and active reading. Passive form is more applicable when one reads for leisurly reasons, just to entertain or relax. Comic books, or materials that adds nothing material but just entertain a person. This type of reading is the easiest one, and the one that becomes a bad habit we don't take active measures to place a limit between these two types of reading.

The second type is active reading, which means reading to learn something and add tools that have practical use for us.Take for instance reading of company filings. Company filings in of itself are not the most entertaining materials to read to relax. They often contains a lot of factual and statistical data that has a limited use for an average person. But they are of utmost importance to an investor. Because the company filings are sort of report cards of companies. They give us a factual informayion about the status of progress at the company, or give us information to us to make a better judgement about the viability of company business plan foing forwards. These mataerials should be read with extra focus and attention, as they give us a picture to make a judgement.

Any time, we read an important document, be it an article that falls into our circle of interest, or company filing, that we care about, we have to make a habit of taking notes to to be able to think deeper about the issues. This way, we make ourselves more focused and might understand things a little better.

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