https://twitter.com/themotleyfool/status/638786466085249024 There are good traits to learn for investing and then, there are things to avoid. If there are enemies to good investing, they can take the form of undesirable behaviours like overconfidence and impatience. Like a muddy swamp, traits like these may hold us back and hamper our progress toward being better investors. Taking note of their existence may help us avoid them. 1. Overconfidence – click here 2. Impatience – click here 3. Pessimism It may easy to feel pessimistic…
Biggest investing enemies: Impatience, pessimism, gullibility, self-interest of middlemen, ignorance of exponential function, overconfidence
— The Motley Fool (@themotleyfool) September 1, 2015
There are good traits to learn for investing and then, there are things to avoid.
If there are enemies to good investing, they can take the form of undesirable behaviours like overconfidence and impatience. Like a muddy swamp, traits like these may hold us back and hamper our progress toward being better investors.
Taking note of their existence may help us avoid them.
1. Overconfidence – click here
2. Impatience – click here
It may easy to feel pessimistic now. The Straits Times Index (SGX: ^STI) is down around 16% for the year. Furthermore, there are a litany of things to be worried, such as t he U.S. interest rate hike that occurred last night and the slowdown in Chinese economic growth . Even low oil prices are touted to be a sign of a slowing global economy.
In short, uncertainty appears to be the order of the day.
Now, some of the concerns may be valid. But if we allow the clouds of pessimism to dictate how we invest, we may never get around to investing.
After all, concerns around the global economy seem to be around every single year. My U.S. colleague Morgan Housel had written an article back in April on this:
“At every step during the last six years [from March 2009 to April 2015,] there has been a persuasive argument that stocks had gone too far, were getting ahead of themselves, and bound to fall.
2009: Economy teetering on a second Great Depression.
2010: Europe debt crisis, flash crash, corporate earnings too high, hyperinflation pounding at the door, CAPE valuation ratios make stocks look wildly overvalued.
2011: Arab Spring, oil prices surge 25%, double-dip recession looms, end of quantitative easing, Obamacare generates some of the most doom-laden headlines ever printed, America’s credit downgraded.
2012: Greece falling apart and taking Europe with it, corporate profits stretched, Bernanke ruining the [U.S.] dollar, taxes going up, weak jobs growth [in the States] meant an entire generation would be left behind, [U.S.] election headlines destroyed your faith in humanity.
2013: Cyprus’s banking system collapsed, American banks sued for all they were worth, [U.S.] federal government shuts down, debt-ceiling showdown risks U.S. debt default.
2014: End of quantitative easing [in the U.S.], China’s economy slows, Ebola, stock hit all-time highs.
Through this seemingly pessimistic period – that is from March 2009 up till yesterday – the Straits Times Index has gone up by 85%. We may be better off spending time studying businesses and limiting our time reading and worrying about events which we have no control over.
There can be things or traits that trip us up as investors. Overconfidence, impatience, and pessimism are just three investing enemies we may want to take note of.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.