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
No 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.
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…
About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
And even with decades of experience, Michael believes there has never been a moment in time quite like this.
Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.
To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.
His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.