Your weekly dose of wisdom
Let me start with a really good article by Ben Carlson.
There are different kinds of investor intelligence. I used to work for a guy who had an Ivy League education. He created some of the most beautiful discounted cash flow models you’ve ever seen.
It took me weeks to figure out how every cell was connected or impacted by the different inputs.
This guy had textbook financial intelligence, which is important for investment success.
Yet spreadsheets and math alone are not enough to succeed as an investor.
You also have to understand how the markets work, with a firm grasp on financial market history, from booms to busts and everything in-between.
But even if you’re the smartest person in the room and read every book about market history, it doesn’t matter if you don’t have the requisite emotional intelligence to stick with your strategy without fail.
Temperament is more important than IQ but it’s really hard to learn.
This is a very important thought. Book knowledge does not help beyond a point. Investing is at the crossroads of multiple disciplines - accounting, math, statistics, psychology, economics, history etc.
All investors know market returns are not linear. Yet, when you live through it, it becomes a very painful journey. When every day you see your portfolio bleed out slowly, it becomes emotionally traumatic.
One of the reasons, I like processes and quantitative decision-making is because it helps you navigate through your emotions and gives you a framework to continuously evaluate your performance and update your process.
Thought of the Week:
Surround yourself with winners. Sit with people who are smarter than you and you can learn from them.
~ Robert Kiyosaki, Rich Dad, Poor Dad
Video of the Week:
Rajashekhar Iyer is not a very famous investor. And that is a pity. He has one of the most practical and sensible investing approaches I have encountered. Putting two of his very recent interviews in which you can learn his approach and thought process.
Definitely worth a watch.