Yesterday I had a post, “Investing Books That Go Above and Beyond” up at the new Amazon Money & Markets talking about some investment-related books that I find worth a further look. I view investment books as simply another resource for investors. If books are one end of an educational spectrum then one could argue that direct experience lies at the other end of the spectrum.

Direct experience is crucial for any investor but in practical terms is limited in its efficacy.* There are two reasons for this. Experience is not a useful learning tool unless investors actively embrace the lessons inherent in trading activity. This requires a purposeful approach to gathering and analyzing the data generated from one’s own investment activity. I would guess that most investors and traders really couldn’t tell you in any systematic fashion about their results. In short, they are trading out of their back pocket.

The benefits of experience is limited in another way. Any individual trader can only experience so much. We are limited by the particular markets in which are dealing and the time period it occurs. The fact is that other investors have collectively experienced so much more and in some cases written eloquently about those results. Tim Richards, the author of the newly published The Zeitgeist Investor, has a post up at The Psy-Fi Blog talking about the limits of experience. Richards writes:

For some people investing is as much about what other people think of them as what their returns are.  Which is fine, if that’s your bag, but otherwise the best way of learning in investment markets is from other peoples’ research and experience.  You’ll never learn enough from your own to really make a difference.

That is why I always find it puzzling that so many investors, often professional investors, are so scornful of new and emerging ways for investors to communicate with each other.  Blogs were the first method that was scorned by the media and professionals. Now blogging is a dominant form of communicating information and opinion.

More recently, whether it be a StockTwits, SumZero or Estimize (among others) why wouldn’t you want to try and capture information and insights from other investors? If there is only so much we can do as investors on our own, doesn’t it make sense to try and leverage your knowledge in new ways?  There are of course good ways and bad ways to use these services and used improperly they could be detrimental to one’s own investment efforts, but the same can be said for any other resource. However to ignore them seems an effort in willful denial.

*It should also be said that I am a skeptic of paper trading as well.

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Please see disclosures here.

Please see the Terms & Conditions page for a full disclaimer.