Ten practices of a great investor
A feel for figures, rabid reading and an open mind are some of the traits necessary for success, writes Michel Pireu
Last year Michael Mauboussin at Credit Suisse published a piece entitled Reflections on the Ten Attributes of Great Investors. To summarise, Mauboussin believes great investors: Understand numbers (and accounting). To be a successful investor, you have to be comfortable with numbers. There are rarely complicated calculations but a feel for figures, percentages and probabilities is essential. Accounting is one of the main languages of business [and] great investors are adept at analysing financial statements. The task has become more challenging as companies invest more in intangible and less in tangible assets. [But] this does not abdicate the responsibility to understand a business’s current economics and prospects. Understand value (the present value of free cash flow). The landscape of investing has changed a great deal in the past three decades. The average half-life of a public company is about a decade, which means that the investable universe is in flux. Conditions are always...
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