Traits of a Successful Investor
During my stay within Yellowstone National Park, I was reflecting and pending down my thoughts on what makes a successful investor. I know that I have written a post similar to this in the past, however, I felt that it was time to write a new one – partly because there are new traits that I feel that are important, shaped through my experiences and interactions.
Traits of a Successful Investor Insatiable Curiosity
I find that the route to becoming a successful value investor is not just solely being curious about researching on companies or investing strategies. That will make us a better investor compared to those who do not put in the effort to learn more about the different strategies and all, however, I do not believe that is sufficient. Many a times I find that the materials that make me a better investor are materials solely unrelated to value investing. Take for instance, I was reading an article titled, “Doing Business in Japan“. It was a really interesting article from the point of view of a foreigner who migrated to Japan and his experiences of working and starting a business in Japan. However, from such an article it gave me insights and understanding of the business culture and corporate governance within Japan. Hence, don't just narrow down your curiosity to one aspect but broaden your interests. While value investing may be an investment strategy, it too is a way of thinking about various issues.
Michael Mauboussin: Here’s what active managers can do
The debate over active versus passive management continues as trends show the ongoing shift from active into passive funds. Q2 2020 hedge fund letters, conferences and more At the Morningstar Investment Conference, Michael Mauboussin of Counterpoint Global argued that the rise of index funds has made it more difficult to be an active manager. Drawing Read More
Traits of a Successful Investor Networking
Built up a great network of investors to talk to, be it seasoned or new investors. I have always found myself fortunate to have my friend/partner to start my value investing with and over the years it is this mutual help that has deepened our understanding towards value investing. Furthermore, over the years, we have constantly been meeting other like-minded individuals and this has definitely been rewarding. I once believed that the road of a value investor is often lonely due to our contrarian nature, however, this belief has changed over the years. It is all a matter of whether one is willing to look and put in the effort to make that connection. Hence, to all value investors out there be it seasoned investors or those starting their journey out, we are always willing to meet up for a chat to share our insights and hear about yours.
Traits of a Successful Investor Humility
I have once said that as value investors, we require that necessary arrogance to allow us to have the conviction in our investments when we are going against the herd. To achieve greatness, I believe a balance of the two is required. One needs to know what you can do and what you can't, and be grounded in reality. The greatest dangers some face are when they have been through a period of successful investments, such as since post Global Financial Crisis. A rising tide lifts all boats, during this period every stock has benefitted from an extremely long period of cheap interest rates. To immediately attribute one's success over this period to successful stock picking resulting in a conviction that one can never be wrong again is very dangerous. We have to constantly keep our self belief in check and know when to listen to others.
Traits of a Successful Investor Attention to detail
I have seen many formulas being taught out there and many investors have started applying it. While the formulas are not wrong, however, value investing is not just some mathematical problem where formulas are sufficient in solving it. Hence, this is why it is both a form of science and art. It is not as simple as just 1 + 1 = 2, but there are many details within an Annual Report that we have to be attentive to. For all the patience that is required in value investing, without the attention to details and fine prints, all that patience is just plain endurance.
Traits of a Successful Investor Reading LOADS
I cannot stress the importance of reading. It need not be reading huge volumes of materials everyday, but just ensure that some reading is done everyday. Reading articles pertaining to investing, history, biographies, blogs etc. are all valuable sources of knowledge. While I find all this reading goes hand in hand with keeping a dairy of my thoughts and musing, the latter is solely up to individuals. How one keeps track of their thoughts and experiences are up to each individual but I have found it useful doing so via the form of this site.