Qualities of a good investor

Having given an introduction about valuation, and before I discuss more on the topic , I would like to talk about the qualities you may have to develop before embarking on a mission to value stocks.

I know, most of you would be of the opinion that this is a very silly post.  I’d put it this way – what’s easy and silly is easy to miss ! What many beginners miss  are those very simple basics.Since i’m primarily writing this for beginners, I think I have to say these points.

so here’s a list of traits you got to have :

  • First and foremost – Patience. Valuation is not an easy process. It may take a day or it may take months to analyse a stock.
  • Academic interest in the subject- You must do real research. You have to study a lot before investing.

  • Memory – If you can remember a time when the business conditions were similar to this one, then you can go back and determine what happened to stock prices. For instance – When recessions hit, what happened to IT companies?
  • Faith- Have faith in your decisions. When you buy or sell or hold a stock, you must be confident that you’ve done your homework and must be lest affected by the rumors that are going around.
  • Courage – The stock markets may sometimes seem illogical. After all the research, the stock you invested in may defy all your analysis and crash in a way that may result in wiping off half of your portfolio. An investor should have the courage to survive such market gyrations.
  • Business-mindedness – value of a business should be decided according to how it is performing and not from what someone else is willing to pay them for it. Some investors justify high prices of shares and argue that there will be a bigger fool to whom they can be sold. Investing with such expectations is akin to gambling.
  • Positive mind- Mistakes are inevitable in every investor’s life. But, all that hard work will pay off at the end. To earn a return, they need to think positively and must take calculated risks.
  • Perseverance – Understanding the basics of company valuation may take several months. Mastering valuation takes decades. It depends from person to person. You’ll will make many mistakes in your early attempts but persistence will lead to fewer and fewer errors.
  • Independent thought– investors who are influenced by short-term price movements, or what others are doing, usually find it difficult to value shares independently.

That’s it for today , Bye for now !!

have a nice time !

You may like these posts:

  1. 5 steps to become a smart investor
  2. Investor protection – Message from the Bombay Stock Exchange
  3. How to choose a Stock broker?

8 Responses to “Qualities of a good investor”

Mansoor

January 5, 2012 at 11:30 pm

Nice post Victor, it’s not silly at all, rather insightful.

P.S. I do have few of the qualities, if not all :-)

J Victor

January 6, 2012 at 9:46 am

nice to hear that :)

Vikas

January 6, 2012 at 4:43 pm

Hi Victor,

I’m a college going student. Please write an article discussing what type of courses do I have to do if I want to make my career as ‘Investment Adviser’?

J Victor

January 6, 2012 at 9:10 pm

Hi check this link : http://www.iifpindia.com/

Rohit

January 7, 2012 at 12:39 pm

Sir,

I read online Sensex and Nifty are open today (Saturday, Jan 7) for upgrading Futures & Options system. It is a Special Trading Session.

But what does upgrading Futures & Options system meant? Why are the markets still open today?

Thanks.

Anonymous

January 15, 2012 at 4:00 am

Hi, I enjoy your web

bharat

January 21, 2012 at 2:01 am

which are the best pick of the month ? whats your advice.
bharat

Theo Conner

January 24, 2012 at 1:18 pm

Thanks for taking time to write down this post. It’s been extremely useful. It couldn’t have come at a superior time for me! http://www.ctctradshows.com

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