This would require the investor to have in place an "investment system" with all its checks and balances. This would include investment strategy and tactics with all their accompanying rules. Fundamental and technical analysis and their relevance to the financial instrument targeted for investment. This investment system may be called an "investment management system" or a "portfolio management system". Others may also call it an "asset management system".
In conclusion, from the 'why' we get the aim. From the 'what', we are able to think, analyze and act. From the 'where' we see the financial instruments available for investment. From the 'when' we have an understanding when to invest or divest. And from the 'how' we get our investment system.
I must caution you at this stage. That whichever the financial instrument chosen for investment, there will be ups and there will be downs. Good and bad decisions will be made.
Investment and its management are not gambling; it is an art, which is as interesting or as boring as you make it to be. It is an ongoing process and would require adjustments from time to time to optimize and maintain the expected rate of return on our investments. The main aim being to be ahead and above of inflation.
Although, the above description of how to invest may sound to be a bit simplistic; it would be fair to say that to achieve a certain amount of expertise in matters of investment it would take many years of study, analysis and action. In addition to the financial papers or the annual reports of corporate entities, the investor would also be required to have a certain amount of theoretical knowledge and the wisdom to apply such knowledge in real time investment decision successfully.
The investment system or the investment management system or the portfolio management system or asset management system would have many parts. For simplicity, I would prefer to first segregate these parts as operational, support and core. Further, that there would need to be synergy and easy flow of information between the various parts of this system.
The operational part of the investment system would comprise of confirmation and reconfirmation of transaction order(s) to be placed on the stock market/exchange. The stock broker or the electronic trading platform provided to you by your bank or its subsidiary. The actual transaction order placement and execution. And the trade order confirmation. Funds allocated for such investments would also be considered to be operational.
The support part or function would further have two sub-parts; namely, the operational support and support parts. The operational support part would have relevant data collection on the one hand, and tools and measures to study, analyze and decide upon both the fundamental and technical parameters related to the stocks under consideration for onward investment on the other. The support part would be mostly related to accounting and an analysis of risk, return and performance appraisal of the portfolio(s) under management.
It is at the core of the investment system that you would find the finer points of strategy and tactics and their various sub-parts. It is here that you would also find the dynamism of shifts and tilts in positioning to keep the investment system running in step with the stock market. After all, it would be unfair to be caught in the midst of a fall of the cliff with regard to stocks held in the portfolio or the stock market in general. Further, you would also find aspects of governance and compliance and their review here.