Know the difference between a great investor and a majority of mediocre investors

One important skill that separates the great investors from the majority of mediocre investors are that great investors can control their emotions. Great investors like Warren Buffett are not discouraged when the stock price of one of their investments drop. When Warren Buffett has determined that he is indeed paying $5.00 for something that’s worth $10.00, it is great news if the price drops to $4.00. At $4.00, he can buy even more shares than he could earlier.

 For most people, this idea is counterintuitive. If they buy something, they hope that item will increase in price shortly after their purchase. The problem for these types of investors are their minds are bound by time. In order for value investing to work, you must remove the time element that often dictates impulsive decisions. The best way to remove this impulse is to increase your level of knowledge. As your knowledge increases, your confidence improves, and your understanding of truth and facts becomes clear. Financial education removes the time and impulse element found in novice investors.




Thoughts on Value Investing: The Fallacies of Perception

" In 2007, a man started to play the violin at a metro station in Washington DC on a cold January morning. He played six Bach pieces for about 45 minutes. During that time, since it was rush hour, thousands of people went through the station.
Three minutes went by until somebody noticed there was a musician playing. A middle - aged man slowed his pace and stopped for a few seconds — and then hurried up to meet his schedule. A minute later, the violinist received his first dollar tip: a woman threw money in to the player’s violin case and continued to
walk. A few minutes later, a man leaned against the wall to listen to him, but then looked at his watch and started to walk again. Clearly, he was late for work.
The one who paid the most attention was a 3 - year - old boy. His mother hurried him along, but the kid stopped to look at the violinist. Finally, the mother pushed hard and the child continued to walk , turning his head all the time. This action was repeated by several other children. All the parents, without exception, forced them to move on.
In the 45 minutes the musician played, only 6 people stopped and stayed for a while. About 20 gave him money but continued to walk their normal pace. He collected $32. When he finished playing and silence took over, no one noticed. No one applaude, nor did anyone recognize him.

The violinist was Joshua Bell, one of the best musicians in the world. He played one of the most intricate pieces ever written, with a violin worth $3.5 million. Two days before his playing in the subway, Joshua Bell sold out at a theater in Boston and the seats averaged $100. His performance in the metro was a social experiment by the Washington Post about the perception, taste and priorities of people."

Source : ilote Partners




" Investing is where you find a few great companies and then sit on your ass"

Charlie Munger



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Warren Buffett



" Watch the downside, and the upside will take care of itself "

Ducan Ross




" Never invest in an idea you can't illustrate with a crayon "

Peter Lynch




" La simplicité est la sophistication suprême "

Léonard de Vinci