Warren Buffett. Peter Lynch. Ben Graham.
If you are reading this email, chances are, you have your own investing hero.
But there’s a problem.
Most of the great achievements by the best investors in the world happened in the distant past.
Finding the next great investor, that you can sit next to and learn from, is not as easy as it looks.
The obvious people may not be the right ones to listen to.
Even when they have all the necessary skills.
Besieged by numbers
Financial statements are the lingua franca of the business world.
An obvious group of people who were trained in interpreting and analysing these statements are accountants.
This group of professionals are naturally comfortable dealing with massive amounts of numbers — it’s their bread and butter after all.
They were also adept at calculations of ratios and variances and understood subtle nuances related to financial statement preparation.
In short, they were the “ideal” bunch of people armed with the skills needed to be good investors.
Except that most of them, in my experience, are not even investors.
A straw poll of a group of friends who work as accountants found that less than half invest actively.
The disappointing news was that of the half that did invest, most either did pretty badly or did not bother to do much analysis for the companies they purchased.
As it turns out, after spending their working day looking at numbers, analysing financial statements is the last hobby they want.
Furthermore, being good with numbers is not the only factor that can make you a good investor.
If numbers were all there is to investing, then the mathematicians of the world would be the best investors.
But they are not.
A savvy investor also needs a keen understanding of businesses, how it interacts with its customers and suppliers, and how it reacts to competition and innovation.
Held hostage by history
Perhaps, a study of the stock market history will give you clues on how to invest in the future.
But alas, there’s another problem.
Those who knew their stock market history in intricate detail were also too scared off by the stories of lost fortunes and economies crises..
The knowledge of history also cannot accurately predict what comes next.
In the last hundred years, the human race has witnessed a Great Depression (1929), a World War (1939), hyperinflation (the 1970s), the Asian Financial Crisis (1997), a dot.com bust (2002), the Global Financial Crisis (2008) and now a vexatious pandemic (2020).
Every single one of these events was unique when it occurred.
So was last year’s pandemic.
There was no reliable way of predicting what would hit markets next even if you are familiar with stock market lore.
A willingness to learn and grow
But if numbers and history are not the answer, what else do we do?
One way is to suss out great investors and then tease out their common attributes.
And what I found astounded me.
Those who did well in investing came from a wide variety of professions — from engineers and IT professionals to journalists and even teachers.
The common attribute among them was a voracious appetite for learning and a willingness to grow as investors by learning from mistakes.
And these attributes, I would argue, are what define the best investors out there.
Get Smart: The right mindset and temperament
Here at The Smart Investor, we are committed to learning for life.
And there are always new things to learn.
Being a successful investor requires not just a knowledge of businesses and an understanding of the stock market.
It also has to be paired with the right temperament and discipline.
And these attributes will go a long way to help you grow your wealth and build up a retirement fund.
A secure, worry-free retirement may not be as far-fetched as you may believe. In our latest special FREE report, we cover eight stocks, consisting of a mix of blue-chips and mid-cap companies, that we believe can ride the recovery and offer investors a great mix of both growth and income. Click HERE to download the report, 8 Singapore Stocks for Your Retirement Portfolio, for FREE now!
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.
