Tutorial 51-55 Recap
1) INVESTOR PSYCHOLOGY - the Investment Masters understand that human psychology is as important to markets as hard numbers and at times can be more important. It's important to understand the dynamics of human psychology to better understand yourself and your biases and also to help identify where investors may be making mistakes to which you can take advantage and or manage risk. Understanding human psychology can give you an edge.
2) EMOTIONS - the human emotions of fear and greed have developed over hundreds of thousands of years to help humans survive. Unfortunately these emotions are likely to be detrimental to successful investing. Humans feel fear greater than any other emotion. Being scared out of the market at the lows or chasing markets at their highs will be detrimental to your portfolio. It's important to be aware of and learn to control your emotions when investing.
3) HUBRIS AND HUMILITY - no one is above the market. It's important to recognise that all investors make mistakes. Being humble will allow you to remain open minded when investing. If you go into a stock acknowledging you don't know all the information and that you could be wrong will place you in a better position to recognise and address investing mistakes. Successful investing is getting the right balance between confidence and humility.
4) PATIENCE - The Investment Masters understand that making money doesn't happen over night. The Investment Masters understand the power of compounding over a long period of time. The Investment Masters also understand that opportunities may present themselves sporadically. Investors need the patience to do nothing until such attractive investment opportunities are available.
5) FEELINGS - Investment Masters understand that the stocks they own don't know they own them. Stocks offer no reciprocal feelings. It's important to recognise stocks are just 'three letters' and not to fall in love with a position. Falling in love with a stock can blind an investor to new information that suggests a stock should be sold.