We have heard and read a lot about moats around a business/stock. But have you ever wondered about the moats of a true investor. Here are the 8 moats of a real investor complied by MrBuyside from legendary value investor Mark Mobius. Read through it and see how much you score out of 8.
1. It’s an obsession – you don’t enjoy investing you live it. You wake in the morning and you check your portfolio. Before you go to sleep are you thinking about a stock you have been researching?.
2. Buy in a panic & sell during a bubble – Easier said than done, if your portfolio significantly decreased in 1999 or 2008 or March 2020, did you have the balls to double down and put more significant capital to work, even as you watched your portfolio value decline?.
3. Learn from mistakes – What sets average investors apart from great investors is an intense desire to learn from their own mistakes so they can avoid repeating them Average investors much rather to move on and ignore their mistakes of the past
4. Common sense view of risk – The greatest risk control is common sense. When $GME was up 500% in a few days, common sense says to resist and don’t buy into hype. Common sense prevailed
5. Conviction – Great investors have confidence in their own convictions having done the hard and dirty work of their in depth financial analysis Even when faced with criticism, great investors can acknowledge the bear point but their conviction in their analysis does not waver
6. Brain left side – Are you be able to read financial statements, perform calculations and financial analysis, and interpret the story behind the numbers
7. Right side: Are you able to take a step back at the big picture view of certain situations rather than over analysing. Ability to be a good writer, if u can’t write clearly, it is likely u don’t think very clearly. And if you don’t think clearly, you’re in trouble
8. Arguably the most important one – Ability to live through volatility without changing your investment process. Short term volatility does not equate to long term risk. Risk means if u are wrong about a bet, you lose money. If your process leads to strong long term decisions, ignore short term volatility.
So what do you think about your trading and investing psychology and how much you score out of 8?