Warren Buffett, known as the Oracle of Omaha, distilled the essence of investment triumph as follows: “Once you possess average intelligence, what you truly need is the temperament to rein in the impulses that ensnare others in investment pitfalls.”
Let’s assume both you and I possess average intelligence and aspire to refine our investment acumen. What qualities distinguish exceptional investors?
Empathy
The realm of finance often glorifies the mantra “Greed is good,” epitomized by characters like Gordon Gekko, ingrained in our cultural psyche. From cinematic depictions like The Boiler Room to The Wolf of Wall Street, we’re inundated with portrayals of financial predators.
Interestingly, adopting a shark-like mentality may actually hinder success in finance.
A study published by the Society for Personality and Social Psychology analyzed the behaviors of hedge fund managers over a decade. Those exhibiting psychopathic, narcissistic, or Machiavellian traits lagged behind their peers by 1 percent annually. Over time, their cutthroat decision-making approach translated into significant losses.
By eschewing aggressive instincts and unethical tactics, we can concentrate on cultivating positive, empathetic traits akin to those that propelled billionaire investors like Warren Buffett and George Soros to remarkable heights. This entails leaving the duplicitous, cunning archetype of investor to Hollywood.
Positivity
Some individuals shun investing altogether, convinced they lack the aptitude for it. This mindset can become a self-fulfilling prophecy. Understand this: refraining from entering the investment arena ensures zero returns.
Maintaining faith in your ability to excel in investing and wealth accumulation is the mindset to adopt. Whether you opt to hone your skills and manage investments independently or enlist the aid of a seasoned financial advisor, confidence in your capacity to make prudent financial choices will propel you forward.
Sustaining optimism can prove challenging, but immersing yourself in a wealth of constructive investment information has never been easier. Engage with communities on platforms like Facebook, peruse personal finance websites, and heed the counsel of investors boasting a track record of sustained success. Viewing your glass as half-full bodes well for your financial standing.
Resilience
Successful tycoons like Warren Buffett espouse a patient, long-term investment strategy. “Our preferred holding period is forever,” Buffett famously quipped. Cultivating patience helps you sidestep knee-jerk reactions to market hysteria or sensationalist headlines foretelling economic doom. Armed with research revealing the stock market’s average annual return of 7 percent over any ten-year span, your optimism fuels your patience, enabling you to maintain a long-range outlook.
Purposefulness
Given the necessity of a long-term perspective for investment success, individuals driven by goals typically fare better in this arena. Remaining fixated on the ultimate objective helps ward off distractions. Whether you’re investing for retirement, a home purchase, or a child’s education fund, delineating your objectives dictates your optimal course of action. Establishing interim milestones, such as completing an introductory investment course or consulting with three financial advisors, steers goal-oriented individuals toward desired outcomes.
Equanimity
Do you retain composure while others succumb to panic? Are you adept at mapping out the requisite next steps amidst crisis? Your composed demeanor may well be the paramount predictor of investment success, eclipsing even your intellectual prowess. So asserts Warren Buffett.
Market tumult can incite widespread panic, particularly when our hard-earned funds are at stake. Your capacity to maintain composure in the face of short-term fluctuations fosters sound decision-making and unveils opportunities overlooked by investors swept up in the tide of hysteria.
