MICHEL PIREU: Understanding yourself is vital step in becoming a successful investor
Self-discipline and hard work are some of the qualities needed to get the most from the market
Know yourself. Work very hard to better understand how you, as an investor, react to both prosperity and adversity, and particularly to the market’s manic swings, both euphoric and traumatic. If you don’t know who you are, the market is an expensive place to find out. While there’s no psychological profile that guarantees investment success, there are a few that seem to presage failure. Impatience, stubbornness and an inability to control your emotions are a problem. The key lies in recognising your weaknesses. Assume you are average. A good check on any investment decision is to ask: should this work on average? Are the odds in my favour? Allow for a margin of safety. Consider the extent to which you are relying on your own skill for a good outcome. The less so, the better. Be sceptical. Plenty of high-profile people are more than happy to share their views on the state of the market and give advice on the best course of action. But much of the time what they say in public has litt...
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