Investors are humans, and therefore tend to make mistakes frequently.
Feelings such as fear and desire for wealth can make us behave in ways that are likely to harm our financial goals.
However, good investors have the ability to resist emotional influence in their investing decisions, and work hard to avoid general mistakes altogether.
The definition of success is dependent on an investor’s goals and portfolio.
Whether your objective is to succeed as a small town millionaire or an international real estate baron, there are several traits that great investors have in common.
They include but not limited to:
Good investors study a wide range of materials including online articles, periodicals, forums and blogs to keep up with emerging trends.
There is also the tendency to remind oneself of the proven successful investment strategies that have worked in the past.
This would be more helpful in the event when a new article is trying to refute a proven strategy on the grounds that it no longer works.
A good investor will have the ability to search for data and information to refute or support the claim.
Strong Emotional Control
It is to the knowledge of a true investor that markets are normally driven by sentiment.
Market declines and surges are normally caused by the emotional factors of greed and fear.
Average investors are usually affected by these emotions, but good investors develop a control over the emotions.
The talks of financial advisers and investment pundits do not affect their method or choice of investing.
Good investors are usually patient.
The moment they make calculations on a given investment, they are ready to wait, to ensure their plan materializes.
Patient investors review their investment results periodically.
They tend to focus on cost and diversity as much as performance.
Emotions have the ability to drive the market and corrections can happen fast, but the market can reverse the direction just as quickly.
Patient investors are also well educated about taxes and hence place more aggression on long-term holdings with the ability of realizing higher returns in order to avoid excessive tax consequences.
Good investors usually do their homework.
They look at the company’s numbers to determine whether it is a favorable company.
There is an examination of whether the profits and sales have shown consistent growth over a certain period.
The net worth of the company is also questioned by examining the balance sheet.
When an investor is “measuring twice” he/she sees several angles to the company and the opinion of other individuals.
A decision is made based on the pros and cons involved.
Good investors put more focus on what they can control since they are aware that they will have very little control over the elements of their investment.
They cannot control inflation or the markets and neither can they directly influence currency rates and monetary policy.
For these reasons, they have to focus on what they can control. This includes discipline to save for the future, choice in tax consequences, diversification of their portfolios and expenses from investments.