Due to the interest generated by the
previous article, I will continue to summarise the art of learning and investing.
• Behaviour. Showing conduct and behavior when investing is a fundamental characteristic. It is quite easy to differentiate between a good investor and a not-so-good one, according to their behaviour. An individual that controls his mind and behaviour knows how to deal with losses, when to take profits, acknowledges mistakes and knows how to take advantage of them in order to learn from the experience; knows how to be discreet and how to behave in front of others. Someone with good behaviour has a personality and responsibility that know how to draw good attention to themselves.
• Satisfaction. At the time of investing, it is fundamental to know our objectives, to be satisfied that we achieved them, to be gratified by them and to control our emotions. Satisfaction is the quality that controls greed.
Greed is one of the emotions that can work the worst against the investor at the time of investing. Sometimes, the investor lets himself carried along by greed, isn’t gratified by the profits obtained, wants to earn more and more despite having achieved the objective returns, and as a consequence of this non-satisfaction, he ends up losing everything he earned. Other times, the opportunity-cost investment pain appears, this occurs when one exits an investment with certain returns obtained, then notices that such investment is still profitable and thus invests in it once again at higher costs, for not being satisfied with the situation. As a consequence, many times the situation turns bad for the investor.
Capable of being satisfied, being pleased by the situation we are experiencing and controlling the excessive greed are the fundamentals that make the difference between the good investor and the not-so-good one. Pleasure is the great satisfaction! Someone that cannot control his own mind becomes a victim of it. The mind scratches and permanently seeks more and more. And if the mind controls us, we will be its victims; we will be dominated by desires. Those that can control their minds can be satisfied; they can appreciate what they have, what they earn and what they lose. They are free from tormenting desires. They are satisfied with things the way they are, they do not complain. They enjoy an agile and disciplined mind. They enjoy a peaceful mind.
• Courage. This is the quality that allows men to be braver, overcome barriers and better themselves. Men with courage don’t let themselves be overcome by fear, they are intrepid, they confront dangers, adverse circumstances and problems. Those men’s acts are characterized by enough strength and calm to go through situations no matter what difficulties may arise. Courage is physical and mental.
At the moment of investing, courage is another one of the most important characteristics one should have. With courage, an investor believes in his convictions and acts according to them, without worrying about becoming a contrarian. It is not by chance that one of the market sayings is “buy when everyone is selling and sell when everyone is buying.” To do so in practice, we must have courage and confidence in ourselves.
With courage and confidence, anything could be achieved in this world. Courage is the source of success. Courage allows us to transform the impossible into possible.
• Determination. Along with the previous virtue there is another one closely related: the determination. Determination is resolution, is being able to make decisions. It is closely related to courage. Determination is being firm at the time of deciding. Determination puts an end to doubt and initiates actions. When I started investing, I felt compelled to follow my intuition with courage and determination. In spite of receiving numerous diverse opinions, I had to believe in myself, trust my own decisions and be led by them. The key is to learn from success as well as from failure.
• Duty. Finally, I will consider the duties for the purpose of this letter. Good investors have duties; they have an obligation to carry out certain activities, and they must be faithful to the latter. Men that know their duties and fulfill them are faithful to their own mandate. Those men are responsible, disciplined, organised and capable of achieving their goals. Because they know how to fulfill their duties.
We all must carry out certain duties, if one day the Earth stopped and said “today I won’t carry out my duty of revolving around the sun,” the world would be plunged into chaos. It is important to fulfill our duties in order to achieve excellence in our investments.
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