1. Believing that you have to predict the market’s next move to make big returns
2. The “Guru” belief: If you can’t predict the market, there’s someone somewhere who can and all I need to do is to find him
3. Believing that “Insider Information” is the way to make big money
4. Diversifying
5. Believing that you have to take big risks to make big profits
6.The “System” belief: Somebody, somewhere has developed a system - some arcane refinement of technical analysis, fundamental analysis, computerized trading, - that will guarantee investment profits
7. Believing that you know what the future will bring - and being certain that the market must “inevitably” prove you right
Winning Habit #1
Preservation of capital is always priority #1 (Never lose money)
The Master Investor
Believes his priority is always preservation of capital, which is the cornerstone of his investment strategy.
The Losing Investor
Only investment aim is “to make a lot of money” As a result, often fails to keep it up.
High Probability Events!
Only invest in “high probability event” and nothing else. Risk of loss is tiny or non-existent.
Winning Habit #2
Passionately Avoid Risk
The Master Investor
Is risk-adverse
The Losing Investor
Thinks that big profits can only be made by taking big risks
Risk is contextual
Risk is related to knowledge, understanding and competence
Risk declines with experience
4 Stages of Learning
Unconscious incompetence
Conscious incompetence
Conscious competence
Unconscious competence
No comments:
Post a Comment