Standardize Before Optimize

Here is one I took from my corporate life as we went through a big change in operations. It’s also mentioned in the book Atomic Habits. I’m sure there are other derivatives of this concept, but this is the one that sticks with me. Here is a slide I think of when it comes to standards.

Background

We love sexy (and quick) solutions. The idea of hacks/tricks/secrets/tweaks when trying to make progress in something that gets attention. I have to admit that I have clicked on too many videos with the title of “this one trick blew up my bench press” than I want to admit. We particularly gravitate to something that seems sophisticated, and usually technology driven. I have found more often than not, keeping things simple can be just as if not more effective. 

A (Potential) Real Life Example

Let’s say you want to lose some weight. You have decided to tackle this via diet (and exercise of course). This time next year you want to be “in shape”, whatever that means. For the diet portion you are not sure what is best. Carnivore, vegan, keto, paleo, south beach, Atkins, etc. I’m going to use my imagination here and try two different paths.

1 - You start digging and get overwhelmed. What about macros? Should you get most of your energy from carbs or fat? How much protein? Can you have too much protein? Should you carb cycle? This all seems really intimidating. I mean your favorite influencer eats nothing but red meat and looks amazing, but some other influencer is vegan and looks equally as good. Both claim to be natural but aren’t. When you chat with your doctor he/she gives you a puzzled look. Just don’t eat so much junk. (at least that has been my experience here in Canada). Finally after spending 10-20 hours on YouTube, a doctor visit, asking your friends in several different group chats, 3 consults from a nutritionist, getting a lecture from Mom about Magnesium and reading an old article on Ronnie Coleman you decided that you are going to stick to an omnivore diet and shoot for for 2500 calories per day with the majority of energy coming from carbs like fruit, veggies and starches. And you want to hit 250g of protein per day because that’s what some random dude at the gym does. You are going to track your food and water in an app on your phone. You try to have a plan to hit these numbers. No more eating a whole pizza, or drinking with friends. Pretty much every meal you will eat will be boring. You try all of this change at once. Cold Turkey. Because you are different from all the other people who have tried cold turkey and failed. You are going to “try harder”. Of course, like all the other times it lasts about 3 or 4 days, maybe a week or two, and you are back to where you started. You feel like a failure and it further reinforces your personal narrative that you will never be in shape. This was me for much of my early 20s.

2 - What if instead of all this, you just start by tracking the food you are currently eating. No targets, just tracking. Yeah even tracking the cookies you sneak late at night or the half pizza and beer you eat when watching the football game. Maybe you don’t track your food everyday. Start with 3 days per week. Any 3 days. If you manage to do this after two weeks you go to 4 days, then 5 then 6 and eventually (maybe) 7. In 3 months time you have a habit formed and start naturally avoiding certain foods and reduce binge eating. Will you miss days? Of course, but you commit to never missing two days in a row. 

Which one of the examples are you more likely to succeed at? The cold turkey example gets you in shape faster. So you pick the first one right? The second example is easier to meet your goal, although that will take forever. It took me failing at the first option many times before I leaned into the second option and built a solid habit. 

In 6 months you are much more likely to still be tracking your food. All this tracking will force you to look at what goes in your body. What gets measured gets managed is something we used to say in operations. You don’t need to know exactly how much processed sugar or fat is in something to know you shouldn’t eat it. Each time you enter something you get a data point. After you have entered the last meal for the day you will see how much of each macro you have consumed. And after enough time passes you will notice you are likely lacking one of the three (likely protein). Or you are flat out eating too much. So rather than starting the morning with toast and peanut butter, you choose two eggs and an apple. These minor tweaks are so much easier incrementally than trying to boil the ocean and doing this all at once. 

You may not be “in shape” yet, but you have built something sustainable. You will likely have made some sacrifices over the last bit of time. Or you have made some other changes to make it easier on yourself, like eating some of the same meals consistently. Now would be a better time to try and optimize or experiment with your diet. It depends on what your goals are from here. A small tweak is so much easier than a mass overhaul. 

What I Do

I am the person who prioritizes lifting and my personal fitness. I have shifted from focusing on maximizing strength gains to a balance of strength on longevity focus. I make sacrifices like not going out late very often, not going out to eat at certain places during a meet prep, and sometimes eating bland food (gasp). My diet as a wannabe powerlifter requires a larger than typical amount of protein, but really I have found that it isn’t that much larger. My numbers are simple, 2300-2500 calories per day and 150g of protein. I don’t have specific targets per meal or how much before supper. It helps to set up my environment for success. Fresh fruit is always the easiest thing to eat. I have a meal prep service where I eat 1-2 meals each day, and I usually don’t eat breakfast. I track my food most days. I don’t miss two days in a row unless it's a vacation or my birthday or whatever. Do I have days when I eat my bodyweight in sushi or eat an entire pizza? Yes. I’m human. 

How Does This Apply to Investing

This part of the post may not apply to you. There is a good chance that many of my readers are already better investors than me. But if you are just getting started, here is how I would take this concept and apply it to investing at different experience levels. I also provided some examples from my life at different points on my journey. 

If you are young and don’t have a bunch of capital, you are probably better off starting with a budget than reading your 17th Buffett book. Aligning your spending with your values is a starting point. Use an app or a spreadsheet or a piece of paper with a crayon to track your spending. Just track for a while and you will automatically make some changes. Make sure you are allowing your best friend (time) to do the heavy lifting. 

When I was in my early 20s and in trade school, I didn’t realize how much money I was spending on eating out each month until I actually tracked it. (As an apprentice in the trades you spend 10 months on the job and 2 months in the classroom for each year.) The worst part is that when I was at school for each year, I would eat out more than when I was busy working. And that was the worst time because my income was less. After tracking my spending one year while in school, the next year I set some targets around eating out. 

If you have your spending under control and some investing experience, then it may be a better time to really get serious about an investing journal. When you buy/sell and stock, document why and what you think will happen. After collecting enough data you can see what type of investments are successful for you. You are looking for some pattern recognition. I should note that you need to be mindful of timeframes and the broader market background. If it’s a raging bull market in commodities and you do well picking some small Canadian gold explorers you may give yourself more credit than you deserve. But you get my point. 

I still do this today. I have a sheet that tracks my batting average and I use an investment journal to document my thoughts at the time of purchase/sale. Every time I move a minimum amount of money, I track it. It has shown me over the years that I am much more successful in Canada than anywhere else. Also I suck at making macro calls. This batting average style has limitations but building the habit is very important. 

If you have been doing this a long time and want to take your process to the next level, then you likely have some sort of way to track your buys and sells. There may be an opportunity to dig deeper into your decisions. Tracking during major events even if you didn’t “do anything” is also valuable. As well as keeping tabs on the companies you research but don’t buy. What was the source? What was your confidence level? What market cap? Industry? What is the current narrative? What is your position size now and how large would you let it get?

This level of detail is where I have found the most value. I found that all my winners had naysayers. I have not made money when everyone is saying bullish things about the company (go figure). I also found that I needed to take a critical look at what type of investors I get ideas from. Having a network is very valuable, but following investors who don’t invest in my style has led me to sell my winners early and average down too often. 

Closing Thoughts

I hope his post was of value to you. As I was writing it, I wasn’t sure how to tie the two different areas together. In my corporate life I witnessed so much searching for the next “thing” to implement to drive a huge amount of change. I still have friends ask for advice on staying active as a parent. I usually say just go to the gym 3 times a week. They usually say “And do what for how long?” Doesn’t matter. Just get there 3 times a week. Then once you’ve done that for a month, we can talk about exercises. 

When I think about the investing angle, I can really only think about it as a solo investor. I don’t know what it’s like to run a multi person portfolio, so you are on your own there. As well, I can only speak to my experience, so maybe those points applied to you and maybe they didn’t. 

Thanks for reading. 

Dean