Can you become a great investor, by choice?

Friday, Nov 16 2012 by
6

Like any activity where the results are affected by talent, some people are born to be great investors; but most are not.  Most private investors fail to match the returns of professional investors, and most professional investors fail to match the returns of a simple index tracking strategy.

However, great investors do exist and, although you cannot change your innate talent, there are many things you can do if greatness is what you aspire to.

Greatness is largely a matter of conscious choice, and discipline  

I’m a big fan of Jim Collins, the author of several outstanding business books including Great by Choice: How to Manage Through Chaos, and Good to Great: Why Some Companies Make the Leap and Others Don’t.  What I like most of all is the way he breaks down complex questions into a small number of critical behaviours, and then structures and frames them in a memorable way.

His books have been massively successful, far beyond their original business sphere because many of the ideas are applicable to life in general as well as business, and I think many of them apply to the world of investing too.

Here are some of the key ideas from Great by Choice which are paralleled by the actions of many great investors, and which can be learned and applied by those who aspire to be great investors themselves.

Clear Eyed and Stoic

“great [investors] accept, without complaint, that they face forces beyond their control, that they cannot accurately predict events, and that nothing is certain; yet they utterly reject the idea that luck, chaos, or any other external factor will determine whether they succeed or fail.”

The first lesson from Great by Choice is that the world is a harsh and uncertain place, and yet to be successful you must believe that you are responsible for your success or failure.

This is an especially difficult idea to apply in the world of investing, where in the short-term luck is as big a factor as skill.  Although luck may dominate the results of any individual investment (for example my investment in UTV Media returned over 40% in just 7 months which was as much luck as anything else), in the longer-term your ability to make the right decisions will be the most important factor.

Because of that, your long-term results are down to you,…

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Disclaimer:  

This article is for information and discussion purposes only and nothing in it should be construed as a recommendation to invest or otherwise. The value of an investment may fall and an investor may lose all their money. Any investments referred to in this article may not be suitable for all investors.  Investors should always seek advice from a qualified investment adviser.


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Wireless Group plc, formerly UTV Media plc, is a media company comprising radio and media operations. The Company operates through three segments: Radio GB, Radio Ireland and Digital Services. Radio GB operates talkSPORT, a sports radio station; Sport, a sports magazine; approximately 10 independent local radio stations in England and Wales, as well as digital radio multiplexes throughout Great Britain. Radio Ireland is a local radio operator in Ireland with over seven stations broadcasting from Belfast, Cork, Limerick, Dublin and Drogheda, and an advertising sales house based in Dublin. Digital Services offers Tibus and Simply Zesty, which provide digital support to the radio divisions alongside services to external customers. Tibus provides Internet services for businesses and public organizations. Simply Zesty is a digital advertising agency offering customers a range of creative digital marketing and technology services. more »

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1 Comment on this Article show/hide all

Diggerriggers 18th Nov '12 1 of 1

This is the best written article on this subject I have read to date.

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About UK Value Investor

UK Value Investor

My name is John Kingham and I'm the editor of UK Value Investor, an investment newsletter for defensive and income-focused value investors. That means I write about buying large, successful companies with long track records of profitable dividend growth, and buying their shares at low valuations and with high yields. My website includes a unique stock screen and a model portfolio which is managed using a checklist-based investment strategy.  The goal of the strategy is to produce a portfolio which combines a high yield and good capital growth with low risk, and which is easy to maintain in just a few hours each month. more »

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