[Investment Philosophy (4)] - Successful Investors

[Investment Philosophy (4)] Successful Investors

To be a successful investor, of course you must understand economics, theory, history and psychology. Among them, only [psychology] is the most difficult and the most critical part to success.

The most critical reason why psychology is the key to investment is that [investment psychology] cannot be completely learned from books. Other knowledge books such as global finance, financial history, value theory, etc. are all available in books.

There are several key steps to building a successful investing mindset:

1. Stay away from the market: What investors should pay most attention to and distinguish are the rise and fall of the economy, the formation and bursting of bubbles, the bottom of market disappointment (darkness before dawn), and the least important thing is the rise and fall of the market. (In a good economic situation, what goes down will go up; when the bubble bursts, what goes up will go down. So the focus is on the economy, not on ups and downs.) So stay away from the market and ignore the short-term ups and downs of the market.

2. Accept losses: When we are confident, no matter how good the economic situation is, index funds will rise with the market, and short-term losses will be worth it. Only when the economic situation is good and you endure short-term losses and market declines can you get big profits from rising markets.

3. Be responsible for yourself: Investors must be responsible for all their investments. The market will never cause losses, only the investors themselves cause losses. Therefore, you must be responsible for all losses. When you lose money, don't blame the market, and don't think that the more you study the market and understand the market better, the more you can increase your investment winning rate. People who do not take responsibility for themselves, do not self-examine their own mistakes when losing money, but work harder to study the market, instead create themselves into "trading machines". Frequent trading is an irresponsible attitude, and it is the shortest way for investors to harm themselves and destroy themselves.

4. Create self-confidence: Investors stay away from the market, accept the market, are willing to bear losses and risks, take responsibility for their own operations, and carefully review the psychological barriers and pathologies of their own operations. There will be no fear and short-term trading caused by the rise and fall of the market.

Date of writing: June 22, 2016