Author Topic: Investing, behaviour not intellect or knowledge  (Read 397 times)

galumay

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Investing, behaviour not intellect or knowledge
« on: February 10, 2018, 01:14:25 PM »
Thoughts taken from an amazing speech, https://microcapclub.com/2018/01/morgan-housel-industries-teach-us-investing/

Investing is the only skill where someone with no education, experience or background can massively outperform the highest ranked pro, with all the qualifications, experience and background. This is because the most important element in becoming a great investor is behavioural. So a little old lady who had an ordinary job but earned more than she spent and invested the savings in the share market can die a multi millionaire while some of the best business poeple with MBA's, massive expereience in corporate banks etc can end up bankrupt.

The same would never happen with a skilled trade or other profession. That little old lady was never going to become a brain surgeon, a concert violinist or #1 tennis player.
« Last Edit: February 10, 2018, 02:05:32 PM by galumay »

galumay

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Re: Investing, behaviour not intellect or knowledge
« Reply #1 on: February 10, 2018, 01:55:16 PM »
Ben Graham, the investment formula,

Dividend yield + Earnings growth +/- Change in valuations

First two are easy, last one is unknown, basically its investor sentiment, which cant be predicted,

But the solution,...

"The purpose of the margin of safety is to render the forecast (change in valuation) unnecessary"