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Every investor has been there.
You sell because you are scared, you buy because everyone else is making money.
By the time you realize your mistake, your portfolio drops 20% again!
Today, I will teach you 7 habits that will help you improve as an investor.
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1. They Stay Inside Their Circle
Ted Williams, the last baseball player to hit over .400 in a season, divided the strike zone into 77 cells.
He only swung at pitches in his best cells.
You should do the same with stocks.
There are over 10,000 publicly traded companies. You don’t need to understand all of them.
You only need a few stocks that fit inside your circle of competence.
If you can’t explain a business in a few sentences to a friend, don’t buy it.
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2. They Think Independently
Here’s an uncomfortable truth: Experts can be very wrong.
Economists have failed to predict any of the last four recessions.
Analysts’ two‑year earnings forecasts are wrong by 94% on average.
In 2008, they predicted a 24% price gain.
Of course 2008 turned out to be one of the largest stock market crashes in history.
Following random tips without proper research is one of the fastest ways to lose money.
Spend less time guessing what the business will do next year, and more time deciding if this is a business you want to own for the next 10 years.
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3. They Play The Long Game
Stock prices are very volatile. They can be up +20% tomorrow or -30% the next day.
Nobody knows what’s going to happen.
But in the long-term stock prices tend to follow the intrinsic value of the company.
That’s why you should think in terms of decades and not days.
When one of your holdings drops 10% or more, ask yourself:
Has the business changed, or is the market just being moody?
Most of the time, it’s just being moody.
That’s not a reason to sell.
In fact, it might be a reason to buy more.
Trading activity is the enemy of performance.
Paul Samauelson says it best:
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4. They Master Their Emotions
The financial world has good characters and bad characters.
The bad ones promise market‑crushing returns, brag about recent performance, and push risky stocks with little research.
Ignore them.
The stock market is not a get‑rich‑quick machine.
You need to be patient to let the magic of compounding work.
Even the best fund managers are wrong 40% of the time. You will be wrong too.