After reading this book, must be well borrowed book at Cheng San NLB as it is full of dirt and stain when Uncle88888 borrowed it!
The Temperament of a True Investor
Well, if you want to be somewhat a little bit like this man who is so loaded with money from stocks, you may have to develop yourself to build up the following characteristics:
1.True Investors are Calm
Buffett is blunt: Unless you can watch your stock holding decline by 50
percent without becoming panic stricken, you should not be in the stock
market. In fact, he adds as long as you feel good about the business you
own, you should welcome lower prices as a way to profitably increase
your holdings.
True investors also remain calm in the face of what we might call the mob influence. When one stock or industry or one mutual fund suddenly lands in the spotlight, the mob rushes in that direction.
The trouble is, when everyone is making the same choices because
"everyone" knows its the thing to do, then no one is in a position to
profit.
True investors don't worry about missing the party; they
worry about coming to the party unprepared.
2.True Investors are Patient
Rather than being swept along in the enthusiasm of the crowd, true investors wait for the right opportunity. They say no more often than yes. Buffett learned that the ability to say no is a tremendous advantage for an investor.
3.True Investors are Rational
They approach the market, and the world, from a base of clear thinking. They are neither unduly pessimistic nor irrationally optimistic; they are, instead, logical & rational.Buffett finds it odd that so many people feel optimistic when market prices are rising, pessimistic when prices are going down. Sell at lower prices & buy at higher prices - not the most profitable strategy.
True investors are pleased when the rest of the world turns pessimistic, because they see it for what it really is: a perfect time to buy good companies at bargain prices.
2.True Investors are Patient
Rather than being swept along in the enthusiasm of the crowd, true investors wait for the right opportunity. They say no more often than yes. Buffett learned that the ability to say no is a tremendous advantage for an investor.
3.True Investors are Rational
They approach the market, and the world, from a base of clear thinking. They are neither unduly pessimistic nor irrationally optimistic; they are, instead, logical & rational.Buffett finds it odd that so many people feel optimistic when market prices are rising, pessimistic when prices are going down. Sell at lower prices & buy at higher prices - not the most profitable strategy.
True investors are pleased when the rest of the world turns pessimistic, because they see it for what it really is: a perfect time to buy good companies at bargain prices.
Buffett says "Pessimism
is the most common cause of low prices. We want to do business in such
an environment, not because we like the pessimism but because we like
the prices it produces. It's optimism that is the enemy of the rational
buyer We simply attempt to be fearful when others are greedy and to be
greedy only when others are fearful."
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Once upon a time, telcos were hot because of the potentials of 3G (remember the crazy 3G bid prices?). Contract manufacturers were hot due to outsourcing trend. S-chips were the darlings when the rise of China was on everyone's lips. And now it's the Myanmar play. All will pass.
ReplyDeleteI now understand what Warren meant.
However, if we have most of our equity FULLY invested, and it drops by half, its no fun...
Unless of course you are like Warren with boatloads of cash to buy even more!
How many have the discipline to take money off the table when the market is on a bull run?