The Temperament of a True Investor!

Just For Thinking ....

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.

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."