Finding the right Investing framework for yourself.....

A few minutes after I sent out the last week's blog --- I had an email back from someone on my list -- the esteemed Professor Narayan Naik of London Business School's finance department who had just read my post. Oh dear. Busted. And he was correcting me on one if the terms I used (dollar cost averaging, not averaging down). Oops. I had failed to check my output thoroughly making sure it made sense ---  failed checklist. I don’t yet have the right framework in place.

So thank you Prof. Naik -- it's an absolute privilege that you took the time to read my post. And yes… now you know I can’t make things up on these missives!

Yesterday was the Easter service for my daughter’s school. It’s in a beautiful chapel held in the lovely leafy area of London called Dulwich home to the famous Dulwich Picture Gallery - the first public art museum in the world.

I have about an hour and a half to kill between dropping the girls off and the concert starting which isn’t enough time to get anything done in the office…

On these occasions I take advantage of my annual museum pass to pop over to the Dulwich Picture Gallery. A great way to spend a morning….

Now Dulwich likes to be a bit quirky, trying to view things through a different angle.

They have interesting rotating exhibitions such as MC Escher, but also a permanent standing collection of the masters (sorry no mistresses) including Rembrandts and Titians...

They have an interesting Titian (Venus & Adonis) where they concentrate on the artistry and the origin of the frame around the painting, not just the artwork. Until modern times and machinery, frames were ornate and required a great deal  of artistry to create. You could claim that the frame took as much skill to create as the artwork itself.

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The other interesting things about these gilded frames is that they were often extensions of the art work themselves. For example the fruits and leaves carved into the frame might take inspiration from vegetation depicted in the painting.

Next time you’re in a museum with art older than 1850, take a look at the frames… some skilled joinery went into them.

Most of the time we investors spend so much time looking at a particular investment we forget to look at the context the investment is being made in. This gives us unnecessary anxiety as we try to evaluate investments that might not fit our framework anyway.

o what are the advantages of concentrating on the frame around a piece of art:

  • It actually holds the artwork in place.

  • It displays and accentuates the artwork.

  • If the artwork doe nt fit the frame, you can tell right away.

What are the advantages of focusing on the frameworks in which you invest:

  • They give you a structure to hang your investments on

  • ou have somewhere to start in evaluating any investment opportunity thrown at yo

  • If it doesn’t fit you realize immediately…

I think the easiest way to have a framework for your investments is to have a checklist of things to tick off as you consider them. It doesn’t have to be a formula, just a simple list of things to consider. I’m constantly surprised that even professional investors rarely stop to think of the “bigger picture”.

I personally have a basic checklist for any investment I make. I shared the 8 things on the list at my first investing workshop last weekend and the attendees thought that it was the most useful part.