How To Set Up A Process Flow For Investing Your Money

One of my favorite books is Emyth by Michael Gerber. The book does an amazing job of providing business owners and entrepreneurs with a template on how to create a turn key business operation, so you can work on your business and not in it. The key principle behind the Emyth is to systematize all your business functions so that they are performed without thought by owners and employees.

Gerber, correctly states that managing people and ourselves is very difficult because humans are inconsistent, unpredictable and unchangeable. As a result, its better to set up process flows for all the activities within a company that can be followed step-by-step without thought or ego getting involved. For Mr. Gerber, the best business owner and manager is ultimately the one that has been taught and operates a system for managing process flows rather than people.

I believe this process mentality is applicable to investing our own money. Each investor should have an investment process flow that is standardized and systematized. My process flow is all set up around turnaround stocks. I have a process flow for finding, researching and managing a portfolio of turnaround stocks. I systematically search for stocks that are technically bottoming and fundamentally appear to be successfully starting a corporate turnaround. I want the fundamentals to be confirmed by the technicals.

By having a standardized process flow for how you find, buy and manage a portfolio of stocks your investment life will have less stress and lead to better returns. This was evident over the past three weeks. If you have a standard procedure for managing your stock portfolio, there is no need to panic when stocks are declining. You go into each day having pre-planned your stops, reentries and when to buy stocks on your watch list. As a result, you can invest according to a plan and process and not from fear or ego.

If you own your own business or are an executive or manager and want to learn how to systematize your business and investing process, I highly suggest that you read the E myth revisited by Michael Gerber.

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