1 Investing Lesson to Last You a Lifetime
Our purpose at the Motley Fool Singapore is to help the world invest, better.
As lifelong students of investing, we never think that we already know everything there is to know about the craft. In fact, much of what we have learnt has been from interacting with a community of fellow investors who selflessly share their experience and own learnings.
As a fellow investor for the long haul, I feel that learning from our peers will be one of the most valuable and enriching experiences in your investment lifetime. Do not miss the chance to learn.
In that spirit, I asked our fellow readers to share their most important investing lesson in 2017, and several brave souls answered the call.
I am excited to pass on the best answer we have received.
An honest reflection
Warren Buffett once said that investing is not a game where the person with highest IQ will win the most.
In other words, smartness can only get you so far. In my years of talking to fellow investors, I have observed that there is one trait that signifies the beginning of a successful investor, and that is being aware of our flaws. Our winning entry from our reader, Cheryl, showed that in abundance.
“You can read and research all you like, but the real learning comes from experience, and making your first investment.
I made my first ever investment in 2017 and kept tracking, panicking at every $0.01 fall but investment is a long term play, it’s just small ripples on the way upwards!”
The trait that caught our eye was Cheryl’s admission that she panicked over every one cent fall in stock price. The reaction is normal. In fact, these emotions are part of what makes us humans. I remember going through the same emotions with my first stock investment.
However, I submit that Cheryl’s admission is not common.
I have found that one of the most important traits of successful investors is the ability to recognise flaws in our behaviour. It is not easy to switch from having the confidence to buy a stock, to recognising that we might have some flaws of our own.
It can be a humbling experience.
However, if we do not recognise our tendencies, it could doom us to repeat the same mistakes in the future. If we can quietly reflect on our flaws, we could have a better chance to design safeguards to counter our tendencies.
That, I believe, will set the stage for us to do better in the future.
Of investing and life
No one is an instant expert when it comes to investing.
We all have to start somewhere. Even Buffett’s first stock investment turned out to be a harrowing experience, but it is not like what Cheryl had experienced.
The biggest difference, in my view, between a great investor and a mediocre investor is the ability to improve our investment approach as we go along.
It comes from the deliberate process of having an honest reflection of our approach, recognising where we can be better, changing or tweaking our approach, testing new ideas, and going back for another reflection. Over time, knowledge compounded over time can make a huge difference.
I also believe that the process can make you a much better investor.