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Three "Open Source" Investing Strategies to Start Using Today

More and more tech companies are building their success by going "open source."

By that, I mean they're using open-source tech platforms like Linux and Hadoop – which are free and open to the public to use – to write code, create cloud storage, and develop Big Data applications. With these platforms, they're saving money, running their business more efficiently… and raking in the profits.

I thought of open-source platforms recently – on New Year's Eve.

For more than a decade now, my wife and I close each year with a powerful ritual that has helped us live a life most people only dream about. We sit down in front of the fire and go over the annual report we've written – celebrating our accomplishments and planning for the year ahead.

This year, I realized that our annual report is built on open-source platforms. In fact, there are three open-source investing strategies that I use every day to improve my skill set, find winning stocks, know when to cut my losses – and enjoy peace of mind.

The Dow Jones Industrial Average dropped 400 points intraday Friday, making 2016 look more like a "stock-picker's" market than ever.

With these three free platforms, you can build your picker's "muscles" – improving your odds of crushing the market not just this year, but for many years to come.

Take a look…

Open-Source Investing Strategy No. 1: The Action Plan

tech-social-mediaNo matter which life "guru" you might follow, you'll find that each and every one of them hammers away at the importance of a written blueprint for success.

I couldn't agree more.

You've heard me say this many times – "the road to wealth is paved with tech." The thing is, you'll get to your destination a lot faster if you have a good road map.

An action plan, in essence, is that road map. Here are three elements your plan ought to have.

  • Overall Goals and Objectives: This is where you write down what you ultimately hope to accomplish over several years. It might read something like: "I intend to have a net worth of at least $2 million in 20 years by investing in the stock market with a focus on high tech and the biosciences."
  • Specific Action Steps: Here, put down what you really want to do for 2016. It might read something like "invest in quality technology and beat the market by 20%." Or it may include a complete review of all the stocks you own. This also may mean improving your portfolio-management tools, such as making better use of trailing stops and/or staggered entries.
  • Investment Focus: Specify the areas where you are already invested – and where you want to go. Your investment focus will give you a bird's-eye view of how you intend to blend investments like real estate, bonds, precious metals, retirement accounts and, of course, tech stocks.

You can find open source action plans all over the web. I like the one from Google Docs – which you can customize for an investment focus.

Open-Source Investing Strategy No. 2: The Trading Journal

I'm honestly surprised so many investors fail to keep a journal – maybe the single-most valuable tool for making money. In fact, I often say that if you're too busy (or lazy) to keep a journal of your trades, then you are too busy (or lazy) to be a serious investor.

Yes, it's that important. I don't care if you're Warren Buffett or Warren Smith – every investor leaves a trail that shows you where you did great… and where you need to improve.

You can put this journal into a simple word-processing document or a spreadsheet. Or you can use one of the many open source trade journals available online. It really doesn't matter – as long as you have a "notes" section to explain the actions you took.

I rarely make an investment without opening my trading journal and jotting down the thinking behind that trade. Otherwise, I would end the year with a list of "Buys" and "Sells" and of gains and losses – but with no clue as to what factored into my decisions.

For me, I reference the company's financials, the stock's chart, and any catalysts I see. And once I exit the trade, I enter not just how much I made or lost, but also write down why I closed out the position.

If all this sounds a bit too much to do on your own, there is a cloud-based open-source platform I've been checking out lately. It's at Tradervue.com, and it includes all the elements I've just discussed. You can sign up for a free version and make use of its online journal, notes, trades, and reports.

If you are more technically inclined and trade based on charts, I'd recommend TC2000. This one isn't open source. But for a fair price, this advanced program allows you to take screenshots of the chart for the stock in question and then add notes.

No matter which route you choose, be sure to review your journal regularly to keep honing your skills.

Open-Source Investing Strategy No. 3: Your Investor Profile

Understanding who you are as an investor is critical for your ongoing success.

This is where you take account of your time, talent, tools, and personality. All of these have a huge bearing on how much money you make – especially over the long haul.

The reason is simple. To succeed in the long run in the markets, you have to develop a system that works for you in good times and bad.

The first thing to understand is your time horizon. Day traders have very different objectives and risk tolerances than someone "dollar-cost averaging" in their retirement account.

You should understand what angers and frustrates you about the markets and proceed on a course that minimizes those factors. If you don't, you may end making the oldest mistake in the book – basing decisions on your emotions and not a disciplined system tailored to your needs and objectives.

To get started, take my own "Tech Investor Personality Test." Like all of these open-source platforms, it's free.

Remember, this choppy market will continue to throw curveballs our way this year – as it always does.

However, these three open-source investing strategies give you a whole a new set of tools that will help build your "stock-picker's muscles"…

And guide you to success no matter what the markets throw our way.

Follow us on Twitter @moneymorning or like us on Facebook.

The Tech Investing Survival Guide: With markets – and tech stocks specifically – in a turbulent stretch, a disciplined strategy will help keep you from making mistakes. With these tools, you can protect your portfolio while positioning for tech's inevitable rally back up…

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About the Author

Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.

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  1. Daniel Scott | January 18, 2016

    Well, if you ask me, the most critical part of structuring your finances and optimizing savings is just having a plan. Whether you use a spreadsheet or a tool like OnTrajectory or some other website — you have to get everything out if front of you so you can make smarter decisions. Once you do that, then implementing your disciplined savings strategy becomes critical.

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