Personality determines the success or failure of investment
George Goldman (with Pen name of Adam Smith) said, “The stock doesn’t know you own it. If you don’t know who you are, the stock market is an expensive place to find out. We human beings are a bunch of emotions, prejudices, and twitches and that makes it hard for us to understand the market. You will never know how it’s going to behave when. What is more important is how you’ll react when markets don’t react in your favor.”
The importance of personality cannot be overemphasized
Although I have emphasized the importance of “temperament” to investment in the blog before, after publishing the two articles “Questions must be clearly answered before entering the stock market” and “”The most important qualifty for an investor is temperament, not intellect”, It has also been a while, and I think “personality” is too important, and it is necessary to discuss this topic again.
How to assess my personality?
I suggest that you can take a DISC test by yourself, so that you can know your own personality. For details, please refer to my previous article “”Investors’ DISC test to assess your traits“.
No perfect match word in English
Personality is mostly translated into personality, character in English; perhaps identity and individual must be added. But I always feel that there is not a single word that matches exactly in English.
Humans are extremely complex animals
I agree that “personality” may be the most difficult part. Everyone has their own unique characteristics. Personality is difficult to “describe” in words, and there is no certain “expression” method; but the impact is comprehensive. My own experience, the books I have read, and what I have learned from the few investment masters worthy of emulation in the world make me think more and more that this is one of the final determining factors.
Most investors believe that personality is innate, and I do not deny that innateness does affect it, but I think that people are extremely complex animals. The acquired life course, age, learning, and lessons (but I think it has nothing to do with rank, IQ, or It doesn’t matter if you have academic qualifications, which most people value; all of them will describe the unique personality of each person. This is an important point, and I will talk about it some time.
Related contents in my book
In the preface of my book “The Rules of Super Growth Stocks Investing“, I mentioned several things in my investment career, which I didn’t discover at the time, but in retrospect, they are very helpful for investment. These findings will be shared with you in the next paragraph.
Personalities are helpful
The following list is my own personal experience. After induction, I think that these characteristics will be of great help to investing in stocks.
Willing to make long-term investment
If you want to accumulate satisfactory wealth in the stock market, long-term investment is a prerequisite. But it is difficult for most people to accept this fact, especially investors in Taiwan stocks. For long-term investing, see my article “Why long-term investment is better?“
I have devoted considerable space to this subject in two of my books:
- The advantages of long-term investing are discussed on pages 49-50 in Sections 1-4 of the book”The Rules of Super Growth Stocks Investing“.
- In “The Rules of 10 Baggers“, section 4-1, pages 184-192, there is a discussion about “buy right” and “long hold” to own 10 times shares.
Put in the time and tireless basic research. Sometimes, need to endure tedious and routine daily jobs on your investment homework. The most important thing is willing to be long-waiting for the buying opportunity of margin of safefy, willing to give the company enough time to let the stock price rise slowly.
Willing to change
Change is never easy, and the difficulty scales inversely with your age. Be willing to find out why you make mistakes, be honest with yourself, and don’t report good news or bad news. The point is to make a change, and even a little noticeable change can go a long way.
Invest only in you are most familiar with
Don’t touch things you don’t understand. It is the best way to only invest in companies within your circle of competence. Regarding the circle of competence, you can refer to the discussion in my previous article “The importance of circle of competence“.
Personality of seeking truth from facts, patience, discipline, stressing facts and evidence in everything, comparison and analysis of basic figures and materials
Continue to read books related to investment and financial management, the more the better, the more extensive the better. Especially the annual reports of listed companies in your investment portfolio. If you have never read them, my suggestion is that you sell them immediately.
Stay away from crowds and media
The crowds, the media, colleagues, relatives and friends, authorities, experts, social consensus, and social networks; in most cases, they are anti-indicators for stock market investment. I admit that it is difficult for modern people to resist these things, but it is necessary.
Before everyone wakes up, have the courage to walk alone in a thousand mountains and endure loneliness.
Others can’t help you on personality; you have to be willing to change yourself, even a small change is a huge improvement.
In his 2006 shareholder letter, Buffett wrote: “Temperament is also important. Independent thinking, emotional stability, and a keen understanding of both human and institutional behavior is vital to long-term investment success. I’ve seen a lot of very smart people who have lacked these virtues.”
- “Questions must be clearly answered before entering the stock market“
- “The most important qualifty for an investor is temperament, not intellect”
- “Personality has a decisive impact on investment success or failure“
- “Investors’ DISC test to assess your traits“
- “The importance of circle of competence“
- “Why long-term investment is better?“
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