Documenting Your Decisions
Always document the context of a decision. You'll be surprised how this one activity can improve your decision making capability in the long term.
One such idea was to document the context of a decision. It came from Mr R. Bandyopadhyay, ex-secretary of Ministry of Corporate Affairs.
When you encounter a situation where you need to decide, you may discuss with your buddies, analyze (mostly mentally), decide and move on. If you have a habit of writing a journal, you may note the decision you made. But you don't write down the details of the situation, choices considered, point of view of these choices, assumptions considered in favor of a decision. These details of the decision are lost.
You may ask, why does it matter?
Well, a decision is meaningful only within the constraints in which it was made. When those constraints change, the decision certainly appear useless, sometimes even foolish. If you have documented the context then it is just an adjustment of the decision; otherwise you have to go through the process of decision making all over again.
Another long-term benefit is your decision making process improves considerably, thus increasing chances of better decisions in the future.
Let me tell you some of the ways in which I have been using this:
I'm a retail and an occasional investor. I do as much through job as I could do to check details of the company before I invest. However, the stock market is such that many-times price of the stock go lower than my purchasing price. Before I started noting down the context of the purchasing decision, I use to get nervous about the loss and would struggle to decide if I should sell and cut my loss. The decision was solely based on the current market price. But after I started practicing this idea, I evaluate the situation based on the assumptions I had made and if any of these assumptions and expectations were wrong I adjust the position accordingly.
Additionally, because I could go back and compare notes, my investing decisions have improved too.
Having seen the benefit of this idea, I am trying to implement this in other areas too. Try it and let me know if you find it helpful.
Choices, Image by: Orin Zebest