The stock market has a long history of humbling investors. The Investment Masters understand the need for humility. Ordinarily, when investors have had a good run they risk getting over-confident and letting down their guard, only to have the stock market deliver them losses.
Many of the Investment Masters maintain a psychology of fear..
“It is better if you invest scared, if you worry about losing money, if you worry about being wrong, if you worry about being overconfident because these are the things you want to avoid. They should be foremost in your mind.” Howard Marks
“We are big fans of fear, and in investing it is clearly better to be scared than sorry.” Seth Klarman
"I always start from a position of fear. And then when I see something that looks attractive, I start getting greedy.... But I'm always looking at the downside on something first. I mean, if you can't lose money, you're going to make money.." Warren Buffett
“I know that to be successful, I have to be frightened. My biggest hits have always come after I have had a great period and I started to think that I knew something.” Paul Tudor Jones
“Our goal is to maintain that sceptical attitude about how the world is run, that concern bordering on fear for what might happen, but also to remain functional and able to make decisions while maintaining a portfolio.” Paul Singer
"We have a fear all the time. But that's what keeps us going, that's what keeps us focused. People who say 'I have no fear. I'm not afraid of ever failing,' are kidding themselves. It's the fear of failure, of not wanting to fail, that makes people as great as they are. I know that's what pushes me." Henry Kravis
It's impossible for an investor to know everything there is to know about a company, industry or situation. Investors are dealing with incomplete information and changing circumstances.
“I am always searching for the underlying truth, based on insufficient information.. it’s simply not possible to have a complete understanding of anything. We’re never truly going to get to the bottom of what’s going on inside a company, so we have to make probabilistic inferences.” Guy Spier
“One of the things I do very well investing is, I gather a lot of information but I never know the whole picture. I have a lot of inputs but never everything and I have to make a decision on incomplete information." James Dinan
As an investor it's important to recognise what you know and don't know. Stick within your circle of competence and buy with a margin of safety. Investing scared makes you worry about loss, fear the things you don't know, and prepare for the unexpected.