I recently read a Whopper Investments blog post on deliberate practice. Whopper issued a deliberate practice challenge to analyze various companies that have been investments of well known value investors in the past. The first challenge was Warren Buffett’s purchase of Dairy Queen in 1997 and the second challenge was Buffett’s purchase of Coca-Cola (NYSE: KO) stock in 1988.
I have been interested in digging into the investments of some of the best value investors to better understand their approach and process. I have not gotten around to that work and now is a good time to begin. Additionally, this project is coupled with the idea of deliberate practice. I’m at a point in my investment education where I have reached a plateau and adding deliberate practice will help me move forward.
I first encountered the idea of deliberate practice in Malcolm Gladwell’s book Outliers. While Gladwell focused on 10,000 hours as a benchmark for expertise, it is clear to me that it takes more than time. Is the 10,000 hours time well spent? It is best to work smart. Focusing on the right areas will accelerate the process.
Many other bloggers signing up for Whopper’s challenge appear to be looking for similar improvement that I am looking for. For me, just reading is not enough for me to move forward. I need to write and ideally receive feedback on the writing.
The next time I encountered the idea of deliberate practice was while reading Geoff Colvin’s book Talent is Overrated. Colvin explains,
Deliberate practice is characterized by several elements, each worth examining. It is activity designed specifically to improve performance, often with a teacher’s help; it can be repeated a lot; feedback on results is continuously available; it’s highly demanding mentally, whether the activity is purely intellectual, such as chess or business-related activities, or heavily physical, such as sports; and it isn’t much fun.
Taking on Whooper’s deliberate practice challenge fits many of these elements. The activity is specifically for improving investment performance but unfortunately there is not a teacher. Hopefully, the wisdom of the crowd of bloggers involved in Whopper’s project will act as a proxy for a teacher. It can be repeated a lot and so far it has been a weekly challenge. The feedback is continuously available through comments from other bloggers. Of course, trying to determine if a company is a good investment is highly demanding mentally.
Luckily, I have fun researching companies. On the other hand, tight deadlines are not fun. Doing a weekly analysis with limited time and information is not fun. However, in this case, I see it as an important part of the deliberate practice process. These limitations should help me focus on the most important drivers for the investment thesis. Like most analysts, it is easy to want to collect more and more data before making a decision. It will be better to deliberately focus on the most important things.