Finally all these elements need to be written down in a plan that is clear and easy to understand with rules that we can follow consistently. The real time performance of the portfolio, along with the process of running it, need to be recorded and analyzed in detail. Through ongoing research and by analyzing live data, the plan will constantly evolve, while staying consistently true to its core principles. The golden middle would be to meddle as little as possible, but to be open to real improvements.
For my own investments I use a spreadsheet divided into three parts.
Here I list all open positions and closed trades divided by strategy. It includes current NAV (the value of all positions plus cash, if they were closed right then) and all the data points I need to run the statistical analysis on each strategy. There is a comments section that serves as my investment diary, to record the circumstances, thoughts and reasons for the actions taken with each position.
The investment plan
Below I list each strategy´s exact rules: entry and exit, stop loss, position sizes and limits, adaptive allocation rules and comments. I also write down the expected returns, volatility and drawdowns for each strategy.
I add general points to focus on and a list of relevant new ideas to research and adjustments I want to make when the market environment changes.
I use Evernote to keep track of interesting new ideas I come across, excerpts of books I read and the raw outlines of new strategies I intend to develop and backtest. I also keep a current To Do list for each strategy there. It is very practical for monitoring open positions and keeping a copy of strategy rules at hand for consultation when making decisions.
Step by step I will write about interesting aspects of investing and publish detailed rules for the strategies I use in my portfolio on this blog. I will also update my thoughts on the current allocation to different strategies and asset classes regularly, as well as describe some interesting, unforeseen events and mistakes that happen in practice.