3 Must Have Qualities of Great Investors

September 10, 2022

For as long as I can remember,  I’ve been in love with the game of football. My love began from watching my father and mother obsess over their favorite team, the San Francisco Forty Niners. They’d allocate Sunday mornings to watching the games, preparing meals and making sure that all of their major duties were completed before gametime. I knew nothing about the sport, other than how the men on the gridiron presented themselves as superheroes and how I, too, wanted to be a superhero – a Power Ranger to be exact – myself. At this point in my life, the game was a fantasy. 

As I matured, the game became my outlet and security blanket. It was a way for me to channel my confusion of losing my dad due to illness. It brought focus, camaraderie and brotherhood. Yet, it also served as a way for me to remain safe in the neighborhood that I grew up in and protected me from its many sinister entrapments. It kept me out of harms way, out of trouble and amongst like-minded young men who also had dreams of being like the superheroes that they saw on the television. Only this time, with every snap of the football taken, the dream felt closer and closer. 

In truth, I consider myself one of the lucky ones. When I arrived at the college level, the game once again transformed its persona. This time it was a teacher, and one of the biggest lessons taught was that there are four full quarters to be played. I can remember it like it was yesterday. In my time at the University of California, Berkeley we were a middle of the pack football program. We weren’t the best, but we weren't the worst team in the conference either. We lost games that, on paper, we probably should’ve won and we won games that we were the underdogs by a large margin. 

The difference between those teams that won or lost was their ability to play all four quarters. This meant exercising a mental fortitude and focus free of distractions that allowed the players on the field to optimize their strengths, neutralize their own weaknesses and execute on their game strategy. 

In times of market volatility, the principles that great teams harnessed to win tough games are the same core values that the best investors exercise in every cycle of the market. These principles are strategy, calculated adjustments and discipline. 

Strategy

The problem that many investors face is simple: they invest first, and strategize later. When this happens, there is no way to forecast the implications of your decisions, the risks involved and how it can lead you further away from your desired outcome. 

The best players often study their opponent tirelessly weeks before the game, race or session. This allowed them to pick up on techniques, style and opportunities that might present themselves on game day. As you navigate the markets it’s important to know what your strategy and goals are before you invest at all. Ask yourself: 

Why am I investing?

What is my time horizon? 

How will I invest? 

How involved do I want to be with my investments?

By asking yourself these questions, you’ll be able to attach goals to your strategy (which should encourage more discipline), understand that short-term volatility is to be expected and will have a compass on what investments make sense for your portfolio, but more importantly, what investments do not. Your plan – and your dedication to it – will be the biggest driver for your success. 

Discernment

Inevitably, there will be times in the game when you have to make adjustments. Perhaps, your strategy is not working, timing may be off or the risk calculated has become a reality. Whatever the circumstance, this presents an opportunity for the disciplined investor to make adjustments to their strategy. 

Let me acknowledge this: adjustments can be tricky. There should be a compelling reason to adjust your entire financial plan and investment strategy. If it is not an overwhelming “yes” to a potential switch then consider it a definite “no.” Be weary of trends that disguise themselves as opportunities because they rarely stand the test of time. There are no short-cuts around compound interest, time, patience and discipline in investing.  

Discipline

A wise advisor once said that anything will work as long as you work it long enough. I disagree with him. Anything will not work. Yet, the right mix of things – asset allocation, investment selection, and rebalancing – will work if you commit to it over a long period of time. 

Human emotion is a notorious manipulator. It tricks us into going into fight or flight mode when often danger is not on the horizon. It can haunt us, and twist our arms into making decisions that do not align with our true desires. The best investors win the small battles against their own emotion so that they won’t have to fight the big ones. This is my challenge to you. Choose every day to win the small battles. If you can be disciplined enough to do this, like the best sports teams we’ve had the pleasure to marvel at in recent years, you will be victorious.

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