You are on page 1of 4

7/3/2015

Investment Process: Arrogance Will Always Get the Best of You in Finance | The Talkative Man

The Talkative Man


Investment Process: Arrogance Will Always Get the Best of You in Finance
Home
Sample Page
Home Investing and Finance Investment Process: Arrogance Will Always Get the Best of You in Finance

Investment Process: Arrogance Will Always Get


the Best of You in Finance
Posted on June 22, 2014 by James Moore No Comments

It is necessary for the investors to think logically while investing and researching a stock. Investing isnt about
beating others at their game. Its about controlling yourself at your own game. Overcoming dysfunctional
psychological heuristics is a trained response. That trained response requires work and disciplineif you want to
avoid that, buy an index fund. In a speech before the Foundation Financial Officers Group in Santa Monica,
California, 14-Oct-1998, Warren Buffetts partner Charlie Munger said:
Human nature being what it is, most people assume away worries like those I raise. After all, five
centuries before Christ, Demosthenes noted that: What a man wishes, he will believe. And in selfappraisals of prospects and talents it is the norm, as Demosthenes predicted, for people to be
ridiculously over-optimistic. For instance, a careful survey in Sweden showed that 90% of
automobile drivers considered themselves above average. And people who are successfully selling
something, as investment counselors do, make Swedish drivers sound like depressives. Virtually
every investment experts public assessment is that he is above average, no matter what is the
evidence to the contrary.
http://www.talkativeman.com/arrogance-will-always-get-the-best-of-you/

1/4

7/3/2015

Investment Process: Arrogance Will Always Get the Best of You in Finance | The Talkative Man

Smart, hard-working people arent exempted from professional disasters from overconfidence.
Often, they just go aground in the more difficult voyages they choose, relying on their self-appraisals
that they have superior talents and methods.
It is, of course, irritating that extra care in thinking is not all good but also introduces extra error.
But most good things have undesired side effects, and thinking is no exception. The best defense
is that of the best physicists, who systematically criticize themselves to an extreme degree, using a
mindset described by Nobel laureate Richard Feynman as follows: The first principle is that you
must not fool yourself and youre the easiest person to fool.
Warren Buffetts success as an investor demanded not only deep analysis of financial documents but also a large
measure of self-discipline and willpower to avoid getting caught in market bubbles and panics. Buffetts decree
buy when everyone else is selling, sell when everyone else is buying requires enormous self-confidence to
implement. Investors dont need to concern themselves with market psychology, price charts, or anything else
not related to the intrinsic value of the company theyd like to invest in. In an interview with CNBCs Becky
Quick on 04-Mar-2013, Warren Buffett said,
But [a lot of Main Street investors] should hold a diversified group of really high-class companies,
which you can do by buying an index fund. And then they should forget it. They should just pretend
the stock market closes for five years and they shouldnt look at prices every day

Recommended Reading on Warren Buffett & Value Investing


The Essays of Warren Buffett: Lessons for Corporate America by
Warren Buffett, Lawrence A. Cunningham
The New Buffettology: The Proven Techniques for Investing
Successfully in Changing Markets That Have Made Warren Buffett the
Worlds Most Famous Investor by Mary Buffett, David Clark
The Warren Buffett Stock Portfolio: Warren Buffett Stock Picks: Why
and When He Is Investing in Them by Mary Buffett, David Clark
The Warren Buffett CEO: Secrets from the Berkshire Hathaway
Managers by Robert P. Miles

Related Posts
1.
2.
3.
4.
5.

Investment Process: Common Sense and Knowledge of Business is Important


Charlie Munger on Three Considerations that Average Investors can Use for Better Returns
Investment Process: Do your Homework Thoroughly
Investment Process: Market Fluctuations are Often Meaningless to the Bigger Picture
Value Investment Process: Dont Overanalyze

CAMBODIA: The Best Sights, Destinations, and Experiences (ASEAN Travel)


La Justice by French Painter Bernard dAgesci
Tagged Charlie Munger Value Investing Warren Buffett
Posted in Investing and Finance
http://www.talkativeman.com/arrogance-will-always-get-the-best-of-you/

2/4

7/3/2015

Investment Process: Arrogance Will Always Get the Best of You in Finance | The Talkative Man

Leave a Reply
Your email address will not be published. Required fields are marked *
Name *
E-mail *
Website

Comment
You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym
title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q
cite=""> <strike> <strong>

Post Comment
search here

Go

Recent Posts
Koch Industriess Three Key Criteria When Evaluating A Deal
The Six Essential Skills of Successful Innovators
Istanbuls Prominent Cagaloglu Hammam can Soothed Your Nerves
How Peak Performers Move Ahead and Pursue their Dreams
How to Recapture Trust and Have People Follow You
Categories
Airlines and Airliners
Business and Strategy
Education and Career
Faith and Religion
Global Business
Health and Fitness
Hobbies and Pursuits
Investing and Finance
Leaders and Innovators
Life Hacks and Productivity
Management and Leadership
Mental Models and Psychology
http://www.talkativeman.com/arrogance-will-always-get-the-best-of-you/

3/4

7/3/2015

Investment Process: Arrogance Will Always Get the Best of You in Finance | The Talkative Man

Music, Arts, and Culture


Philosophy and Wisdom
Software and Programming
Travels and Journeys
Authors
Aileen Chang
Andr Bouquet
Ellen Kaufman
James Moore
Archives
July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015
December 2014
November 2014
October 2014
September 2014
August 2014
July 2014
June 2014
May 2014
April 2014
March 2014
February 2014
January 2014
December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
2015 The Talkative Man

Responsive Theme powered by WordPress

http://www.talkativeman.com/arrogance-will-always-get-the-best-of-you/

4/4