Wednesday, April 9, 2014

Planning versus Doing

"All things are created twice: first, a mental creation; second, a physical creation." 
- Stephen Covey

This past year has been a time of deep introspection for me.  Sometimes I thought the insights I needed would never come.  But eventually they arrived, and usually when I least expected them.  I would like to gradually share some of these insights, especially those that relate to finances in some way.

Planning vs Doing

Some people almost instinctively want to plan.  Others are wired to act.  Yet we all know that the best results are obtained when there is some balance to these forces.

I'm a natural planner, but acting on those plans is much harder for me.  If unchecked, this can lead to a form of procrastination where plans are continually revised and gold plated, yet never acted upon.

The Insight

One key insight to realize is that successful investing requires almost all planning and very little doing.  The most successful investors in the world spend endless hours planning - researching, analyzing, theorizing, tracking.  Yet they may only act a few times a year to change investments.  And this paradigm is not restricted to buy-and-hold investors.  Even the best short-term traders sing the same tune.  They plan, and wait...and wait.  Then when a truly attractive opportunity arises, there may be a burst of activity.  And then they go back to planning and waiting.

The Corollaries

That one insight helped to explain three different things to me.

First, it's very possible that much of the relative success I've had in the area of saving and investing can be attributed to my predispositions regarding planning and doing.  Second, I can see how other areas of my life have been negatively affected by this lack of balance between planning and doing.  Third, and least obvious, the lopsided strategy I employed was being reinforced by my financial successes.  In other words, because my natural approach was successful in the financial realm, I subconsciously (and incorrectly) assumed it would be successful in other areas.  However, as we all know, there are many areas of life that require far less planning and much more doing.

The Correction

It seems to me that if you have a natural bent to significantly favor planning over doing (or vice versa), then you will want to identify which tasks might require just the opposite approach.  You will have to appreciably change your normal efforts for these tasks.  Additionally, you may want to examine why planning (or doing) comes so naturally to you.  For me, the answer to that question yielded a much deeper understanding than I expected.  But that's a topic for another post.