Ten remarkable traits of great Investors!See if you have any on you?

2022-08-02 0 By

I had never heard of Mark Sellers until I overheard him speaking at Harvard.I think this speech is well worth reading.Sellers talks about how hard it is to be a great investor, with less than a 2 per cent chance for Harvard MBA graduates and a one-in-50 per cent chance for other investors.While I don’t entirely agree that a Harvard MBA graduate is 200 times more likely to be a great investor than someone else, I agree with the traits Sellers mention that are common among great investors.In his talk, Sellers lists seven attributes.I don’t think you have to go to an Ivy League school to get these qualities, and I don’t think these seven qualities are enough.The following article quotes directly from the seven qualities mentioned in the speech: “The first is the ability to buy stocks when others are panicking and sell when others are ecstatic.Everyone thought they could do it, but few had the guts to buy stocks when the market crashed on Oct. 19, 1987.In 1999, when the market was going up almost every day, you didn’t sell because you would fall behind your peers.The vast majority of money managers have Mbas, high IQs and have read a lot of books.By the end of 1999, all these people were also convinced that stocks were overvalued, but they could not allow themselves to pull money out of the market for what Mr Buffett calls the “Institutional Imperative”.”The second characteristic of great investors is that they are totally obsessed with investing and have a strong desire to win.These people don’t just enjoy investing, they make a living.When they wake up in the morning and are half asleep, the first thing they think about is the stock they are currently studying, or the stock they are considering selling, or the biggest risk they are currently facing in their portfolio and how they can avoid it.They may have difficulties with interpersonal relationships because although they enjoy spending time with other people, they often have little time to communicate with others.All they think about is stocks.Unfortunately, being obsessed with something is not something you learn to do, it’s something you’re born with.”The third trait is a willingness to learn from past mistakes.That’s hard for people to do, and what makes investors stand out is their willingness to learn from past mistakes and avoid the same ones.Most people will ignore the stupid decisions they made in the past and move on.I think the noun explanation for this behavior is #39;Depressed & # 39;.If you ignore your mistakes and don’t fully analyze them, you’ll no doubt make similar mistakes later in your investing career.But even if you do analyze them, it’s hard to avoid repeating them.””The fourth trait is a common sense instinct to detect risk.Many people know the story of Long Term Capital Management, where a team of 60-70 PHDS and a sophisticated risk-analysis model failed to spot what seems obvious in hindsight: they took too much risk.It never occurred to them to step back and ask, “Even if the computer says this is a viable investment, does it really work in real life?”This ability is not as common among people as you might think.”I believe that common sense is the most effective way to manage risk, but people have become so used to listening to computers that ignoring common sense is a mistake I see repeated in the investment world.””The fifth trait is that great investors firmly believe in their choices, even under fire.Even though Buffett has been publicly criticized for neglecting tech stocks, he didn’t get caught up in the dotcom frenzy.When others have given up on value investing, Buffett has remained steadfast.Barron'S) even put buffett’s picture on the cover for the occasion, with the headline “Warren, what’s wrong with you?”.It turned out to be buffett’s wisdom, making Barron’s look like a perfect countermarker.Personally, I’m surprised that most investors have little faith in the stocks they buy.According to the Kelly Formula, a person can have 20% of their portfolio in one stock, but in reality they only have 2%.Using the Kelly formula to do the math, placing 2% on a stock is equivalent to betting that it has only a 51% chance of going up and a 49% chance of going down.Why waste your time on this bet?These people are paid $1 million a year just to find which stocks have a 51 percent chance of going up?It’s just sick.”Sixth, it’s important to have both sides of your brain working at the same time, not just the left side (which is good at math and organization).I met a lot of really smart people at business school.But those majoring in finance don’t have good writing skills and can’t look at things in a different way.I was a bit shocked by this.I found out later that these very smart people only use half their brains, and while that’s enough to set them apart in the world, it’s not enough to make a difference as a corporate investor.On the other hand, if you’re right-brained and you probably hate math, you’d have a hard time meeting these financial people in the first place.Because finance professionals are likely to be left-brain oriented.I believe that a great investor needs two brains working together.As an investor, you need to use the left side of your brain to do your calculations and have a logical investment philosophy.But you also need to be able to judge a management team in detail.You need to be able to step back and look at the big picture instead of dwelling on the small details.You have to be humble and humorous and have common sense.And most importantly, I think you have to be a good writer, too.It’s no accident that warren Buffett, one of the most prominent writers in the business world, is also one of the best investors of all time.I think if you can’t write coherently, it means you can’t think clearly either.If you can’t think clearly, you have a problem.There are many people with genius IQs who can calculate the price of a bond or an option in their head, but cannot think clearly.”And finally, the most important and rarest quality of all: the process of not changing your investment thinking even in the face of market turmoil.This is almost impossible for most people.When the stock market falls, it is hard not to sell while taking a loss, to buy more shares to spread the cost, or even to simply decide not to put money back into the stock market.They don’t like losing money in the short term, even if it leads to long-term gains.Few investors can accept the short-term volatility that high returns require.Many people irrationally equate short-term volatility with risk.Risk means that if you invest in the wrong stock, you will lose money.However, short-term volatility does not cause losses, so it is not a risk.Unless you panic at the bottom of the market and decide to lose.But most people don’t see that. Their panic instinct blocks normal brain function.”In addition to the seven traits listed on the list, I added a few personal observations: Trait Number eight: the ability to process data and information efficiently, the analytical gap.Everyone can take the time to read a book or an annual report, but what you do with the information you read is what matters most.Trait Number nine: Willingness and ability to adapt to changing circumstances.Munger once said that neither he nor Buffett learned enough in this decade to be successful in the next.For example, Benjamin Graham’s approach to investing worked when financial information was hard to come by. But now that information is readily available online and the number of institutional investors is growing rapidly, it’s hard to make it work.This also applies to the analysis of individual companies.Great investors are aware of threats as technology advances, the competitive environment changes, and new companies disrupt existing business models.Ability to balance arrogance and humility.Humility means knowing what you’re capable of, whereas arrogance means that you need to have the confidence that you know more than the person selling.Humility helps you accept that you may fail within your means, and you’ll be able to face the reality of failure when it comes.These are the 10 traits of every exceptional investor.The good news is we don’t have to be above average.Hard work, intelligence and persistence have paid off well enough.The bad news is that becoming the next Seth Klaman may be a lot harder than you think.Source /GuruFocus Author /Grahamites Translator/Yolanda