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Mastering Self-Control in Investing

The document emphasizes that the biggest obstacle to successful investing is not the market, but rather the investor's own mindset and self-deception. It highlights how many investors fall into traps of self-delusion, leading to poor decision-making and financial losses. To be an intelligent investor, one must overcome these internal challenges rather than simply trying to outsmart the market.

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lovebook888
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8 views1 page

Mastering Self-Control in Investing

The document emphasizes that the biggest obstacle to successful investing is not the market, but rather the investor's own mindset and self-deception. It highlights how many investors fall into traps of self-delusion, leading to poor decision-making and financial losses. To be an intelligent investor, one must overcome these internal challenges rather than simply trying to outsmart the market.

Uploaded by

lovebook888
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

If they can’t win their game, why would you even want to play?

The good news is that you don’t have to.


With Graham as your guide, you can forget all that nonsense about
being in a fight to the death against the markets—and forgo all the stress,
fees, and failure that go with it.
However, you will have to wage another, even more challenging
struggle.
To be an intelligent investor, there is a dark and mysterious force you
must conquer. But it isn’t the market.
It’s yourself.
You—not the market—are your own worst investing enemy.
That’s because the human mind is a brilliant mechanism for solving
difficult problems—but it is even more adept at the simple task of self-
deception.
Millions of investors spend their entire lives fooling themselves: taking
risks they don’t understand, chasing the phantoms of past performance,
selling their winning assets too soon, holding their losers too long, paying
outlandish fees in pursuit of the unobtainable, bragging about beating the
market without even measuring their returns.
They are willfully blind to the fact that they are their own worst enemy.
They preserve their self-esteem with self-delusion. They look in the mirror
and see Warren Buffett.
As an investor, if you know what you’re doing, you can make more
money than you ever dreamed possible. If you only think you know what
you’re doing, you will lose more money than you ever envisioned in your
worst nightmares. Fooling yourself can be even more costly than being
fooled by someone else.

What Is an Intelligent Investor?


Conventional measures of intelligence have little to do with whether you
can be what Graham calls an intelligent investor. In 1720, Sir Isaac Newton,
one of the smartest people who ever lived, lost a fortune trading shares in
the South Sea Co.2 In 1998, Long-Term Capital Management L.P., a hedge
fund run by mathematicians, computer scientists, and two Nobel Laureates
in economics, lost roughly 80% of its capital in a few weeks and had to be
rescued in a $3.6 billion bailout.3

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