The difference between a good investor and a great one isn't IQ or information — it's temperament. The great investor behaves as if the market is there to serve him, not to instruct him. Most people get this exactly backwards, which is why most people shouldn't be managing their own money.
The biggest constraint on the returns of a large investor is the investor himself. Most people think they need more information, better models, faster data. But the actual binding constraint is almost always temperament — the ability to hold a variant view, in size, for a long time, while being wrong in ways that are publicly visible.
The investing world is full of 'smart' people. But intelligence is not the limiting factor. The limiting factor is temperament. You need the temperament to be able to think and act independently.
The big money is not in the buying and selling, but in the waiting. If you have the temperament, you can make a lot of money by sitting on your ass.
The great investors buy when others are fearful, and sell when others are greedy. But the converse is also true—they tend to avoid buying when others are greedy, even if the business is good. Temperament matters more than IQ.
The big money is not in the buying and selling, but in the waiting. Lethargy bordering on sloth should remain the cornerstone of an investment style.
Underscored — save the words that stop you in your tracks.
Start saving quotes →