The Traders Journal

How I Use My Personal Pocket Pads to Produce Profits

As many of you know, American composer extraordinaire Richard Rodgers collaborated with Oscar Hammerstein to produce some of the greatest musicals of the 20th century.  Discussing their success, he once explained his thoughts on what it takes to be a superb songwriter.  In his marvelous quote, I took the liberty of substituting his references to a songwriter with the word “investors” instead.   With this substitution, his thoughts are especially insightful for our community:

I don’t believe that investors do something extraordinary spontaneously.  I believe it is the result of years of observational living, of diligent study, reading and dedicated practice.  Finally, after cultivating the proper prerequisites, their experience, their personality and very temperament is just so and at that particular moment, all these come together and the investors are able to profitably express themselves.


At first blush, this may sound overwhelming to a recreational investor.  I assure you it should not be.  If you can subscribe to the concept of “observational living,” you’ll not only become a better investor, but a happier, more well-rounded individual as well.  Investing becomes part of your fiber.  It doesn’t define you as a person, hopefully, but it’s there like a best friend doling out encouragement and support.  Let me describe what I mean. 

I carry what I like to call “pocket pads” with me at all times.  These are small writing pads that I place conveniently in each of my suit jacket pockets, in my sports bags and even in my toiletries bag when I travel.  For years, I have used them to jot down whatever I hear, whatever I see or think of spontaneously.  It’s my main tool for observational living.  I will confess that I am transitioning to using my iPhone as a sort of electronic pocket pad because I can record my commentary while I’m driving and even enhance it with a photo.  But having said that, while I’m often away from my phone, I’m seldom without a pocket pad.  The reason is that I’ve had brilliant little gems present themselves in the most unlikely situations. 

Opportunities abundantly surround us if we are open to them.  I have days when my observational antennae are on high reception mode and I fill pages in my pocket pad.  Then the challenge becomes one of organizing my notes. 

I am not rigid in what I write down, but I do have four categories with which I label most of my perceptions.  These are my labels and definitions – yours will be your own.

  1. LESSON: an enlightening or instructional experience I’ve had.
  2. FACT: an actuality supported by some evidence that most reasonable persons would agree is true.
  3. RULE: a personal standard of behavior that I embrace which hopefully governs my conduct in the majority of situations.
  4. PRINCIPLE: a truth or assumption I embrace which then becomes a personal characteristic and part of my ethical code.

I don’t have any outrageous stories about how I came up with these four labels some twenty years ago, and I would not necessarily lobby you to accept them verbatim.  Just suffice it to say, these are the categories that have worked for me.

Often these observations end up in the pages of my trading journal before migrating into the binders that fill my office. For me, the mere act of transferal is part of my learning protocol.  As far back as I can remember, it’s just been that way. Know they self and don’t fight it!

The binders I speak of are where I have archived these perceptions.  I plan for my son to inherit these eventually as some sort of sacred tablets of wisdom. They certainly encapsulate the journey of my life and the investor person that I’ve become. Modestly, I also believe these binders would be the equivalent of a powerful investment course if one had the time to read a tome of such immensity.  Recently, I’ve discovered them as a fertile source of ideas for these weekly blogs.  No worries about running out of pithy ideas here in the foreseeable future! 

Finally, I should share with you the baskets into which I place my observational family jewels.  These pocket pads – which began as a feeder mechanism for my daily trading journal – actually morphed into something much more powerful.  But you are reading this due to your interest in the stock market, so I won’t go there. Catch me for a beer sometime and I can take you down that other road.  Back to the market baskets….

As I’ve explained, the observations written down in my pocket pads get incorporated into my trading journal or are entered directly into my binders.  The binders have eight baskets into which the observations get placed.  Each observation is labeled either as a Lesson, a Fact, a Rule or a Principle, and it is then put into one of the following baskets:

  • Stock Market History
  • Investor Self
  • Investment Strategies
  • Technical Analysis
  • Buying Equities
  • Selling Equities
  • Trading Methodology
  • Miscellaneous Catch-All

Nothing earth shattering, but back to what Richard Rodgers said:  “I don’t believe that a songwriter (i.e. “investor”) does something extraordinary spontaneously.”  I am a walking testimonial to the fact that observational living does pay significant dividends. If you work at your craft, cultivate the appropriate prerequisites and enjoy what you are doing, then you too may become “an overnight success” in a few years time.  Just try to remember this:  make what you see an observation, turn what you read into comprehension.

Trade well; trade with discipline!
- Gatis Roze, MBA, CMT

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