The Reds boss said that the club learned a tough lesson during his first spell in charge, when they were challenging for automatic promotion in January 2010 - but failed to add to their ranks and subsequently faded in the second half of the campaign.
Davies revealed that he has told owner Fawaz Al Hasawi that new additions are crucial this time around as Forest head into 2014 in good form, with a 2-1 success over Leeds leaving them only five points off second place.
"There was a clear objective at the start of the season. The objective was to be in the top six in January - that was objective number one," said Davies.
"Having been here before - having found ourselves, in the middle of January, five points clear of third place and then not doing the business we should have done in January - we then found ourselves in the play-offs at the end of the season.
"From experience, I have had a good chat with the chairman, to tell him that the January window is very important.
"Having achieved our first objective, our second objective is to do some good business in the window, to give us a little lift and a push that will help us to towards the end of the season.
"Then hopefully we can achieve objective number three, which is to be in the mix come the end of the season."
Forest have already spent more than £6million this summer and Davies will have a striker at the top of his shopping list after seeing Matt Derbyshire's spectacular strike earn them three points.
Ross McCormack looked to have sealed a point for Leeds after cancelling out Greg Halford's opener - but Derbyshire struck just a minute later, to lift the City Ground fans.
Brian McDermott wants Leeds to splash the cash like Forest in the January transfer window.
The United manager admitted he envied the spending power the Reds have had over recent seasons, after seeing his side edged out 2-1.
"It is evident where we are, we need to add to the squad, to add to the players we have got. We have a bunch of players who are giving us everything. But we know we need to add to the squad," said McDermott.
"I have given four names to the owners, we will see if we can do a deal when it comes to the money.
"I expect Forest to be up there, with the spending power they have. They have spent a lot of money over the years. Good luck to them.
"There is no quick fix for us, it is going to take time. I think the fans appreciate that. We will keep that improvement going and see where we are.
"But we need a little help. I am sure the owners will see that. They want to do the best they can for Leeds United.
"They know the history and they want Leeds to do well."