Strong emotional control
If we give in to our emotions constantly, I think it's more likely that we buy high and sell low. People can be irrational at times and having strong emotional control is good if you want to be able to make rational decisions before investing in a share that is likely to provide sub-par returns and you will regret in the end.
Self-confidence
It takes a good amount of self-confidence to go against the crowd, something which happens regularly in investing. Buying companies at their lowest does not really sound intuitive as this situation usually occurs when the prices are likely to drop further. Good investors need self-confidence to stick to their decisions and at times, go against the crowd.
Take risks for reward
Leaving your money in a savings account or government bonds is not going to get you rich, you may even be losing the real value of your money to inflation. Investors invest in more risky assets such as corporate bonds and shares to increase their returns. Of course, this has to be done with some caution and too much risk may result in you getting your fingers burnt.
Admit they made a mistake
It's important for investors to be able to admit that they had made a mistake and quickly sell the share before it plunges further. Some times, we may make mistakes when reading the growth prospects of the company or they company loses an important economic moat, in these cases, the investor should just quickly admit the mistake, sell the share and move on. Just don't think the share is a mistake simply because the share price is dropping.
Summary
These are some of the traits that I can think of, I may add on more at a later date. Most of these traits can be learned, or at least developed over time. I really need to develop some self-confidence in particular, especially with the decisions I've made that are currently in the red.
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Take risks for reward
Leaving your money in a savings account or government bonds is not going to get you rich, you may even be losing the real value of your money to inflation. Investors invest in more risky assets such as corporate bonds and shares to increase their returns. Of course, this has to be done with some caution and too much risk may result in you getting your fingers burnt.
Admit they made a mistake
It's important for investors to be able to admit that they had made a mistake and quickly sell the share before it plunges further. Some times, we may make mistakes when reading the growth prospects of the company or they company loses an important economic moat, in these cases, the investor should just quickly admit the mistake, sell the share and move on. Just don't think the share is a mistake simply because the share price is dropping.
Summary
These are some of the traits that I can think of, I may add on more at a later date. Most of these traits can be learned, or at least developed over time. I really need to develop some self-confidence in particular, especially with the decisions I've made that are currently in the red.
If you have enjoyed this post and would like to receive notifications on new posts, you can subscribe to my blog via email or like our Facebook page
Some folks say it is most difficult to control one's emotions. I beg to differ as even managing my emotions can be trained.
ReplyDeleteThe first step is to learn about what triggers emotions and how our trusted brain is naturally biased and often playing tricks on us. The resulting thinking errors can be avoided with conscious awareness and 'pre-prepared' counter measures.
The more I know about those biases the better I am in managing my own stupidity.
Hi Tacomob,
DeleteI think it's easy for us to control our emotions too, but we have to be aware of our own personal biases. I usually try to avoid them though, for example, not researching on companies that I have a positive or negative bias towards so I won't invest while looking through tinted lenses.
How about patience and consistency? Consider traits?
ReplyDeleteHi Rolf,
DeleteI think patience and consistency are under strong emotional control. We have to control our emotions to be patient and not sell low and buy high and to stick to our plan instead of constantly deviating due to unrelated factors.