Trait 2: Obsession in playing the game and wanting to win. These people don’t just enjoy investing; they live it. They wake up in the morning and the first thing they think about, while they are still half asleep, is a stock they have been researching, or one of the stocks they are thinking about selling, or what the greatest risk to their portfolio is and how they are going to neutralize that risk.
They are obsessed in the investing game
Trait 3: The willingness to learn from past mistakes. It is hard to acknowledge your own mistake. But you need to learn from your own mistake. Most people would much rather just move on and gross over the dumb things they have done in the past. I believe the term for this is repression.” But if you ignore mistakes without fully analyzing them, you will undoubtedly make a similar mistake later in your investing decision.
Trait 4: An inherent sense of risk based on common sense. Most people believe analysts’ reports which are invariably ‘a buy’ recommendation. They cannot recommend ‘a sell’ because they would lose the companies’ business. You must always take an analyst report with a pinch of salt.
I believe the greatest risk control is common sense which is not so common.
Trait 5: Confidence: Great investors must have confidence in their own convictions and stick with them, even when facing criticism. Buffett never get into the dot-com mania though he was criticized publicly for ignoring technology stocks. He stuck to his guns when everyone else was abandoning the value investing ship. He was proven right when the dot com bubble burst.
Trait 6: Clear thinking. If you can’t write clearly, it is my opinion that you don’t think very clearly. And if you don’t think clearly, you’re in trouble. There are a lot of people who have genius IQs who can’t think clearly, though they can figure out bond or option pricing in their heads.
Trait 7: And finally the most important and rarest trait of all: The ability to live through volatility without changing your investment thought process. This is almost impossible for most people to do; when the chips are down they find it hard to sell their stocks at a loss. They find it difficult to average down or to put any money into stocks at all when the market is going down. People don’t like short term pain even if it would result in better long-term gain. Very few investors can handle the volatility required for high portfolio returns. They equate short-term volatility with risk. This is irrational. Risk means that if you are wrong about a bet you make, you lose money. A swing up or down over a relatively short time period is not a loss and therefore not risk, unless you are prone to panicking at the bottom and locking in the loss. But most people just can’t see it that way. Their brains won’t let them. Their panic instinct steps in and shuts down the normal brain function.
Trait 4: An inherent sense of risk based on common sense. Most people believe analysts’ reports which are invariably ‘a buy’ recommendation. They cannot recommend ‘a sell’ because they would lose the companies’ business. You must always take an analyst report with a pinch of salt.
I believe the greatest risk control is common sense which is not so common.
Trait 5: Confidence: Great investors must have confidence in their own convictions and stick with them, even when facing criticism. Buffett never get into the dot-com mania though he was criticized publicly for ignoring technology stocks. He stuck to his guns when everyone else was abandoning the value investing ship. He was proven right when the dot com bubble burst.
Trait 6: Clear thinking. If you can’t write clearly, it is my opinion that you don’t think very clearly. And if you don’t think clearly, you’re in trouble. There are a lot of people who have genius IQs who can’t think clearly, though they can figure out bond or option pricing in their heads.
Trait 7: And finally the most important and rarest trait of all: The ability to live through volatility without changing your investment thought process. This is almost impossible for most people to do; when the chips are down they find it hard to sell their stocks at a loss. They find it difficult to average down or to put any money into stocks at all when the market is going down. People don’t like short term pain even if it would result in better long-term gain. Very few investors can handle the volatility required for high portfolio returns. They equate short-term volatility with risk. This is irrational. Risk means that if you are wrong about a bet you make, you lose money. A swing up or down over a relatively short time period is not a loss and therefore not risk, unless you are prone to panicking at the bottom and locking in the loss. But most people just can’t see it that way. Their brains won’t let them. Their panic instinct steps in and shuts down the normal brain function.
To become a super investor, you must have the patience to master the above 7 traits.
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