You read that right, the quality of memory is also a type of investor’s circle of competence.
Temperament, history and information
History and data are important
In my post “Seeking Facts is the First Step in Investment” I emphasized that investors must work hard to find the truth and be diligent in recording their own investment-related information (for details, see my post: “What information should investors document?“), these two have something in common: they involve a large amount of data records, and it takes time to read, study the data, and analyze and compare.
Memory determines the number of samples
The number of listed companies in the world is just that. Limited by the natural structure of the human body, the average person’s ability is limited and it is impossible to remember too many things at the same time (this is one of the main reasons in my post “Why concentrated Investment?” ).
At this time, if you have a good memory, you will have an unparalleled edge over others. Because the capability of your memory determines the number of samples of listed companies that you can invest in and screen.
If you have a poor memory, you can only get investable tips from the media, or let others help you think about it, or even pay for it. Ask someone to screen for you (that’s what you’re doing when you buy stock funds and ETFs). No matter which one of these three, it is impossible to have satisfactory returns, and you are bound to miss out on companies that are truly worth investing in.
The reason is simple. You can only fish from your fish tank in your living room, which has a very limited capacity, not from the ocean. Whales are live in ocean, not your fish tank.
Temperament and circle of competence
Both Buffett and Munger have repeatedly emphasized that discovering “The importance of circle of competence” is the first step necessary for successful investors. In their many speeches, these two men have repeatedly emphasized the key influence of investors’ temperament on the investor’s final success or failure. Please refer to my previous posts for this part: “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“, and “Non-quantitative factors determine success or failure of an investment“.
Long-term investment
History will repeat
In my post “Will the social network and fintech change stock investment?” mentioned in: I quoted Jesse Livermore famously said: Livermore said: “There is nothing new in Wall Street. Whatever happens in the stock market today has happened before and will happen again.”
“History Doesn’t Repeat Itself, but It Often Rhymes” – Mark Twain
Like my previous posts “Investing has no formulas, but there are ways to invest successfully” and “The main investment principles of successful investors are similar“.
Pay attention to your holdings
Successful investors are almost without exception long-term investors. There is a very key criterion for long-term investment. They will spend time and long-term care about the investment companies they are interested in, spend time comparing the long-term performance of the companies, hold them for a long time and make them at any time. Pay attention to the dynamics of the companies you hold and compare whether the long-term performance of the company is sustainable.
Memory reveals lies
The key to this is that if the investor can have a good memory and make constant comparisons to recall his or her own memory, the performance of the company, past bad records, fraud techniques, and fraudulent accounting techniques will all be revealed. It is difficult to fool these serious investors who have good memories.
Why various fraud cases of listed companies emerge in endlessly is the same as the various Internet, phone, and financial fraud cases that occur every day in our society. Because the mastermind seizes on the weaknesses of human nature, betting that ordinary people have poor memories and poor thinking—even if the same fraud technique is used over and over again, people will still be fooled.
How to verify sustainability ?
Sustainability is important
In my book “The Rules of 10 Baggers” and on this blog, I have discussed a lot about whether “sustainability” can influence investment success, and whether it is used to judge whether a company is worthy of long-term investment and whether it has sustainable performance. is the key.
But how to judge “sustainability” in practice?
Investors
First of all, my previous posts “What information should investors document?” and “A investor can be sustained or not? how to verify?“, discussed how investors can verify investment performance and how to judge whether investors’ performance can be sustained.
In my two recent books, I discussed how to examine whether an investor’s success is sustainable. include:
In the book “The Rules of Super Growth Stocks Investing“:
- Section 1-5, pages 64-67, discussion on “Using three conditions to screen out trustworthy investors”
In the book “The Rules of 10 Baggers“:
- Section 1-2, pages 33-35, discussion on “Using three criteria to determine whether successful investors are worth learning from”
Corporate
In my book “The Rules of 10 Baggers“:
- 1-2 sections
- In sections 2-2, 2-3, the good performance of 10-fold stocks is mostly “sustainable”
Media
Media framing
I mentioned in the post “Investors should choose media Wisely” that readers can easily be led to follow the trend because the media has the power to monopolize public opinion. Almost all people are passively fed news, and are implanted with messages that have a position and have been manipulated. Most people only read the headlines of the news and do not read the content carefully. The result is that they become mediocre sheep, being taken advantage of, being tied up and paid for, without realizing it.
Ability to think independently
The crux is──not having the ability to think independently! But unfortunately, independent thinking, and even the courage to be different, are necessary conditions for successful investors.
The media usually only has three minutes of popularity, and few reporters follow the people, things, and things they have reported on. This is also the main reason why the media is criticized by many people for being superficial. Journalists or editors who truly follow the people, events, places, and things they cover and study them carefully will, almost without exception, win a Pulitzer Prize or gain the respect of the world.
Let me give you two examples: Walter Seff Isaacson, who served as chairman and CEO of the Aspen Institute, chairman and CEO of CNN, and editor of Time magazine, and has written many best-selling celebrity biographies, such as Jobs, Edison, Musk, Franklin, and Leonardo da Vinci. Or Jason Zweig, the Co-editor of the latest edition of Graham’s classic “The Intelligent Stock Investor” , these two are great examples of great reporters and great editors.
Commonality of excellent media people
What I want to say is that these few outstanding media people are of course very serious, but they all have one characteristic in common – they have amazing memories, which can trigger their writing inspiration and keen observation ability. During their many years of journalism and media careers, they have accumulated a lot of experience in interviewing people, events, places and objects. This is the main reason why few young reporters can become excellent media people.
Peter Lynch
As I mentioned in the book “The Rules of Super Growth Stocks Investing“, most people think that people with a financial background have a great advantage in investment. I have always disagreed that und size, education, occupation, and status are decisive factors in the success or failure of investment at all.
Peter Lynch is a good example. He graduated from the Department of History. According to the established view of most people, the history department has nothing to do with investment and is not helpful to investment. But what is the reality? Everyone has seen the final result, Peter Lynch’s personal efforts and amazing data analysis capabilities have created the best compensation for any large-scale fund manager in history.
People on Wall Street often laugh at Peter Lynch. In the forest area, the joke is that there is almost no Peter Lynch has never invested in stocks because he has invested in thousands of stocks in his more than ten years of career as a fund manager. These are all facts, but have you thought about it carefully? If you are a serious investor, if Peter Lynch doesn’t have an amazing memory, how can he invest in the stocks of thousands of listed companies? From the thousands of Chinese and English financial investment books I have read, or countless articles, or online articles, no one has discovered this important point so far.
For details on Peter Lynch’s investment career and investment principles, please see my previous post: ““One Up on Wall Street”, Peter Lynch’s great book for investing newbie“.
Conclusion
If you live long enough and have a good memory, it will be easy for you to tell what a lie is, your chances of being scammed are much less. If you are willing to work hard, work hard to wake up what is remembered in your mind, and analyze the information readily available everywhere, the investment
Related articles
- “Memory is an edge to investment success“
- “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“
- “Non-quantitative factors determine success or failure of an investment“
- “The importance of circle of competence“
- “Why long-term investment is better?“
- “Investors should choose media Wisely“
- “What information should investors document?“
- “A investor can be sustained or not? how to verify?“
- “Will the social network and fintech change stock investment?“
- “Investing has no formulas, but there are ways to invest successfully“
- “The main investment principles of successful investors are similar“.
- ““One Up on Wall Street”, Peter Lynch’s great book for investing newbie“
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