Unfortunate Investing Traits

Posted by John Posey 

Morgan Housel, author of The Psychology of Money, wrote an article, Unfortunate Investing Traits, that I think is well worth the read (click the link). Below are some of my favorite quotes from the article, but read the whole article for maximum benefit – it’s valuable insight.

“One reason the financial industry mints so many extraordinary egos is because it’s easy to take personal credit for what works and claim to be a victim of what doesn’t. Industrial engineers can’t simply be in the right place at the right time, or blame their failures on the Federal Reserve. But investors can, and do.”

“Unless you’ve enjoyed a period of success that you realize you had nothing to do with, or can admit that a long period of loss was due to your own mistake, you’ll have a hard time grasping reality in a way that lets you do at least the average thing when everyone else is losing their minds.”

“Experience helps if you can appreciate and separate what never changes from what never repeats. If not, it can be an anchor, preventing you from seeing the world as it is versus what you think it should be during the most important moments.”

And here is some insight that can be likened to the mania around GameStop in recent history:

“What you don’t realize is that the traders moving the marginal price are playing a totally different game than you were [as a long-term investor].

It happens all the time: if you start taking cues from people playing a different game than you are, you are bound to be fooled and eventually become lost, since different games have different rules and different goals.”

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