What should a great investment philosophy include?

investment philosophy

Investment philosophy is what I found that investment books and media in Taiwan like to use the four words “investment method of mentality” . Mainland China, Hong Kong, or the United States are not like Taiwan. The media like to explore the “investment method of mentality” of successful investors. However, I personally always think that Taiwan’s translation or use of proper nouns is more appropriate than mainland China and Hong Kong.

For example, American films are shown in China, Hong Kong and Taiwan. Taiwan always translates film titles better. People often know the content of the movie or the main message the director wants to convey when they look at the title translation in Chinese; instead of translating the English into the title directly, or translating it so unintelligible.

Investment is not science, but there are ways to succeed

I think the four words “investment method of mentality” contain too much meaning, which is the purpose of this article. Just like everyone wants to know the “mind” of a successful investor, the “mind” (for the time being I can’t find the appropriate English words for “investment method of mentality”, it can be temporarily translated as Philosophy) is mostly psychological, basically very boring (see my blog article “Full-time investor“) .

And many of them are clichés. If there are such books, and they are usually sold very poorly. Most people are reluctant to spend time thinking about these topics on investing, but hope that they can get a touted stocks from the celebrities, or leave no stone unturned to go through all books to find formulas for calculating stock prices, guess the market or timing, or study various line graphs, hoping to guess the high and low points of stock prices for band trade.

Judging from objective facts such as the history of the stock market over the past 100 years and the experience of successful investment masters, these methods are useless and do not help investors’ remuneration. why? Because investment is not a science, but an art. Most of the investors who can be classified as successful investment masters in history agree with the view that “investment is not a science” (including Buffett, Keynes, and Peter Lynch). There is no formula for investment, but there are methods. Most of the successful investment methods of these successful investment masters are psychological, very basic, but easily overlooked. These elements are what we call “investment method of mentality.”

What exactly does the investment mentality include?

General direction

  • Investment Strategy
  • Investment principles
  • Investment skills
  • Portfolio management
    • Money management
    • Risk Management
    • Trading skills
    • Concentrate investment or diversify investment
    • Do you take a balance of regular combinations?

Investor’s characteristics

  • Discipline
  • Patience
  • Will
  • Insights
  • Independent thinking

Investment psychology

  • Investment behavior
  • Investment concept
  • The courage to be different
investment philosophy
credit: Adobe

Investment research

  • Reading
  • Financial report analysis
  • News and information collection

When we want to understand a certain investment method that we admire, or want to get familiar with the successful people in investment, we need to figure out these things listed above. Rather than how much money he has, which stock he currently invests in. The most important thing is to figure out how to succeed, the way he or she invest success. This is also the purpose of my other blog post “How to research successful investment masters?


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