{"id":3568,"date":"2022-05-04T23:56:00","date_gmt":"2022-05-04T15:56:00","guid":{"rendered":"https:\/\/www.granitefirm.com\/blog\/us\/?p=3568"},"modified":"2025-11-24T10:36:17","modified_gmt":"2025-11-24T02:36:17","slug":"investor-temperament","status":"publish","type":"post","link":"https:\/\/www.granitefirm.com\/blog\/us\/2022\/05\/04\/investor-temperament\/","title":{"rendered":"The most important quality for an investor is temperament, not intellect"},"content":{"rendered":"\n<p>I must admit that when I was young, I had doubts about the view of &#8220;The most important quality for an investor is temperament, not intellect&#8221;. However, after many years of practical investment experience, I found that I have become more and more in the same view that the key to long-term success of investors is the key to long-term success of many investment gurus, and this point is almost familiar to you and me.<\/p>\n\n\n\n<p>One of the rare consensuses of all investment gurus. The viewpoint that can become the consensus of almost all investment masters is certainly worthy of our in-depth discussion and research.<\/p>\n\n\n\n<p>This post is very special. I almost always quote the speeches of these investment masters directly. You can ponder the meaning of his original words.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #ffffff;color:#ffffff\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #ffffff;color:#ffffff\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/05\/04\/investor-temperament\/#Temperament_is_more_important_than_other_knowledge\" >Temperament is more important than other knowledge<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/05\/04\/investor-temperament\/#Buffetts_view\" >Buffett&#8217;s view<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/05\/04\/investor-temperament\/#Keyness_View\" >Keynes&#8217;s View<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/05\/04\/investor-temperament\/#Investors_must_know_themselves_first\" >Investors must know themselves first<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/05\/04\/investor-temperament\/#Related_articles\" >Related articles<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Temperament_is_more_important_than_other_knowledge\"><\/span><strong>Temperament is more important than other knowledge<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Graham once said, &#8220;We have seen much more money made and kept by \u201cordinary people\u201d who were temperamentally well suited for the investment<br>process than by those who lacked this quality, even though they had an extensive knowledge of finance, accounting, and stock market.&#8221; in his famous book &#8220;The Intelligent Investor &#8220;<\/p>\n\n\n\n<p>Peter Lynch said, &#8220;This is the most important question of all. It seems to me the list of qualities ought to include patience, self-reliance, common sense, a tolerance for pain, open-mindedness, detachment, persistence, humility, flexibility, a willingness to do independent research, an equal willingness to admit to mistakes, and the ability to ignore general panic. &#8221; in his famous book &#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/06\/05\/one-up-on-wall-street\/\">&#8220;One Up on Wall Street&#8221;, Peter Lynch&#8217;s great book for investing newbie<\/a>&#8220;.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Buffetts_view\"><\/span><strong>Buffett&#8217;s view<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Warren&nbsp;Buffett&nbsp;appears on Adam Smith&#8217;s Money World in 1985. In <a href=\"https:\/\/www.youtube.com\/watch?v=nuUKDvnBSGc&amp;ab_channel=InvestorArchive\" target=\"_blank\" rel=\"noreferrer noopener\">his first ever TV&nbsp;interview<\/a>.&nbsp;Buffett&nbsp;shares his rules when on&nbsp;investing. &#8220;It\u2019s an intellectual trait, not an intellectual trait. When you do things, you don\u2019t need to have a high IQ, and you don\u2019t need to be able to play 3D chess.&#8221; But you need a stable character. You need intelligence that is not driven by the emotions of the crowd. It\u2019s not about the opinions of others, it&#8217;s about your thoughts.&#8221;<\/p>\n\n\n\n<p>In 2006 letter to shareholder, Buffett wrote: &#8220;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&#8217;ve seen a lot of very smart people who have lacked these virtues.&#8221;<\/p>\n\n\n\n<p>Just like Buffett on October 16, 2008, when the financial tsunami swept across the world, the global stock market collapsed; when everyone fled the stock market. <a href=\"https:\/\/www.nytimes.com\/2008\/10\/17\/opinion\/17buffett.html\" target=\"_blank\" rel=\"noreferrer noopener\">He submitted an article &#8220;Buy American. I Am.&#8221; to the &#8220;New York Times&#8221; <\/a>. He revealed at the beginning of the article &#8220;I\u2019ve been buying American stocks. This is my personal account I\u2019m talking about.&#8221;, and &#8220;Why? A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. <\/p>\n\n\n\n<p>To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation\u2019s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.&#8221;<\/p>\n\n\n\n<p>In Buffett Partners Company Letter 1967, Buffett ever wrote: &#8220;We will not follow the frequently prevalent approach of investing in securities where an attempt to anticipate market action overrides business valuations. Such so-called &#8220;fashion&#8221; investing has frequently produced very substantial and quick profits in recent years (and currently as I write this in January). It represents<br>an investment technique whose soundness I can neither affirm nor deny. It does not completely satisfy my intellect (or perhaps my prejudices), and most definitely does not fit my temperament. I will not invest my own money based upon such an approach hence, I will most certainly not do so with your money.&#8221;<\/p>\n\n\n\n<p>Like Buffett said: \u201cSuccess in investing doesn\u2019t correlate with I. Q. once you\u2019re above the level of 25. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.\u201d As quoted in &#8220;<em><a href=\"https:\/\/quotepark.com\/quotes\/1850874\/history\/\" target=\"_blank\" rel=\"noreferrer noopener\">Wisdom from the Oracle of Omaha<\/a>&#8220;<\/em> by Amy Stone in BusinessWeek (5 June 1999)<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Keyness_View\"><\/span><strong>Keynes&#8217;s View<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Keynes once said, \u201cInvestment is to be successful, in fact, personality is more important than logical thinking.\u201d Keynes mentioned in a speech to the King\u2019s College Industrial Management Committee, \u201cIn the modern organization of the capital market, holding publicly issued shares of investment People must be calmer, more patient, and more persevering than those who hold other forms of assets.&#8221;<\/p>\n\n\n\n<p>Keynes told a colleague that in order to succeed in investing, &#8220;more temperament than logic.&#8221; What is needed is the ability to remain calm when everyone loses their minds. As long as a smart investor has the concepts of intrinsic value and safety first, and understands that the market is not only a voting machine, but also a measuring machine, it is easy to cultivate the correct character required for investment success.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Investors_must_know_themselves_first\"><\/span><strong>Investors must know themselves first<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Charles Ellis, a celebrity in the investment industry described some of the nature of human beings when investing: &#8220;Whether investors can control their temperament determines your ultimate investment performance.&#8221; &#8220;If you want to use investment as your lifelong career, the only thing that must be done is to &#8220;know yourself&#8221;!&#8221;<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"112\" height=\"91\" src=\"https:\/\/www.granitefirm.com\/blog\/us\/wp-content\/uploads\/sites\/2\/2022\/09\/Flickr.jpg\" alt=\"temperament\" class=\"wp-image-13804\"\/><figcaption class=\"wp-element-caption\">creidt: flickr<\/figcaption><\/figure>\n\n\n\n<p>George Goldman (with Pen name of Adam Smith) said, &#8220;The&nbsp;stock doesn\u2019t know you own&nbsp;it. If you don\u2019t 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\u2019s going to behave when. What is more important is how you\u2019ll react when markets don\u2019t react in your favor.&#8221;<\/p>\n\n\n\n<p>For how to know yourself, I suggest you to refer to my other blog post &#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/05\/17\/investors-disc-test\/\" target=\"_blank\" rel=\"noreferrer noopener\">Investors&#8217; DISC test to assess your traits<\/a>&#8220;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Related_articles\"><\/span>Related articles<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/05\/04\/investor-temperament\/\">The most important quality for an investor is temperament, not intellect&#8221;<\/a><\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/05\/11\/memory\/\">Memory is an edge to investment success<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/11\/18\/doom-to-fail-if-not-good-at\/\">Doom to fail if you&#8217;re not good at investing<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/02\/26\/personality-impact\/\" target=\"_blank\" rel=\"noreferrer noopener\">Personality has a decisive impact on investment success or failure<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/05\/17\/investors-disc-test\/\">Investors&#8217; DISC test to assess your traits<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/06\/05\/one-up-on-wall-street\/\">&#8220;One Up on Wall Street&#8221;, Peter Lynch&#8217;s great book for investing newbie<\/a>&#8220;<\/li>\n<\/ul>\n\n\n\n<p><em><strong>Disclaimer<\/strong><\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>The content of this site is the author\u2019s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.<\/em><\/li>\n\n\n\n<li><em>I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers&#8217; direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.<\/em><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>The most important qualifty for an investor is temperament, not intellect. I must admit that when I was young, I had doubts about the view of &#8220;The most important qualifty for an investor is temperament, not intellect&#8221;.<\/p>\n","protected":false},"author":1,"featured_media":13804,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[574,50,737,17,42,71,43,11],"tags":[],"class_list":["post-3568","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-temperament","category-benjamin-graham","category-charles-ellis","category-investing-psychology","category-john-maynard-keynes","category-out-of-the-ordinary","category-peter-lynch","category-buffett"],"_links":{"self":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/3568","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/comments?post=3568"}],"version-history":[{"count":37,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/3568\/revisions"}],"predecessor-version":[{"id":40179,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/3568\/revisions\/40179"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media\/13804"}],"wp:attachment":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media?parent=3568"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/categories?post=3568"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/tags?post=3568"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}