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What Would Sherlock Holmes Do in a Bad Economy?

Sherlock Holmes on Investing in a Bad Economy by David Acord author of "Success Secrets of Sherlock Holmes: Life Lessons from the Master Detective."

I’ll admit it. The idea of taking advice from a fictional character like Sherlock Holmes – especially when it comes to money – sounds a little absurd. It’s okay to be skeptical; the great detective himself would certainly approve.

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What you have to remember is that Holmes was, in many ways, a reflection of his creator.

Sir Arthur Conan Doyle was a genius in every sense of the word: medical doctor, prolific author, adventurer, historian, intellectual – he did it all. Conan Doyle was also fortunate enough to encounter many brilliant teachers. In fact, Holmes’ most extraordinary qualities – his ability to deduce a person’s entire life history from the tiniest detail, for instance – weren’t fiction at all. They were based on the skills of real-life men whom Conan Doyle was fortunate enough to study under in medical school. Although he never existed, Sherlock Holmes is still more real – and more relevant – than most people think.

The London detective dealt with many difficult cases throughout his career, but they pale in comparison to our current economic problems. Call this one “The Case of the Perplexed Investor.”

How can you use the wisdom of Conan Doyle – as expressed in the Sherlock Holmes stories – and find success during these days of distress and financial uncertainty?

Here are some tips straight from 221B Baker Street.

Approach financial decisions with a clear mind. In “The Adventure of the Cardboard Box,” Holmes outlined his method for solving a tricky mystery. “We approached the case, you remember, with an absolutely blank mind, which is always an advantage,” he said. “We had formed no theories. We were simply there to observe and to draw inferences from our observations.” Conan Doyle was obviously relying upon his own experience as a doctor. In order to give his patients an accurate diagnosis, he couldn’t allow his personal bias to interfere.

Likewise, when making an important investment decision, you must first empty your mind of all negative preconceptions. Replace the conventional wisdom we are bombarded with on a daily basis with real wisdom – the kind that comes from concentrating with keen eyes and a clear mind on the hard data staring you right in the face. Even though it’s your money at stake, you must take the Holmesian approach and look at the investment opportunity in a thoroughly objective and removed manner.

Get your hands dirty. Holmes was known to crawl around the dirty floor of a crime scene and poke into every nook and cranny he could find. It was all very improper behavior for Victorian England. The detectives from Scotland Yard wouldn’t be caught dead doing what Holmes did for fear of being laughed at by their peers. That’s why Holmes always solved the cases first: he didn’t care what anyone else thought. He was after the truth, period.

"Replace the conventional wisdom we are bombarded with on a daily basis with real wisdom – the kind that comes from concentrating with keen eyes and a clear mind on the hard data staring you right in the face." -Author, "Success Secrets of Sherlock Holmes", David Acord

When deciding whether or not to make an investment, don’t let propriety hold you back. Stick your nose in the nooks and crannies of a company’s prospectus. Get your hands dirty. Ask the tough questions – and a few “dumb” ones, too – and don’t give up until you get answers, even if it means enduring a few sighs and eye-rolls. Learn to be comfortable with being annoying.

Genius almost never looks like genius when viewed from a distance. I recall the story about two military officers standing on a hill watching a soldier make his way across the valley below. Instead of walking in a straight line from Point A to Point B, he zig-zagged back and forth erratically. Convinced he was drunk, they ordered him thrown into the stockade. Only later did they learn that he was walking through a minefield, and he wasn’t drunk – he was following a map to avoid the mines. What looked like aimless wandering was actually a well-thought out plan.

Like Holmes, your ceaseless quest for the truth will earn you more than a few weird looks from your “proper” colleagues. But like that soldier, I’d much rather let someone think I’m drunk if it means escaping from the minefield in one piece.

Fall in love with the details. Conan Doyle described Holmes as having “a passion for definite and exact knowledge” and “an extraordinary genius for minutiae.” To Holmes, there was nothing so lovely as a tiny detail, because he knew they held all of the answers. “I am glad of all details, whether they seem to you to be relevant or not,” he once remarked. He may have sold a lot of books, but the author of Don’t Sweat the Small Stuff obviously never read The Hound of the Baskervilles! Sweating the small stuff is what made Conan Doyle a success in all of his endeavors, and he made sure that Holmes carried on the tradition.

The same is true today. Desperate times make for desperate investors. Eager to make up for past losses in the market, we may be tempted to pounce on a hot stock without first doing our homework and diving into the minutiae of the company and its products and services. Holmes would have rather died than prematurely accuse someone of a crime. “They say that genius is an infinite capacity for taking pains,” he quipped in A Study in Scarlet. “It’s a very bad definition, but it does apply to detective work.”

And, Watson might have added, to investing, as well.

David Acord is the author of "Success Secrets of Sherlock Holmes: Life Lessons from the Master Detective."

Email me at bullishonbooks@cnbc.comAnd follow me on Twitter @BullishonBooks