How to Become a Smarter Investor?
Last week I had a very interesting conversation with Max Rothery from Finmize about what makes a good investor. We have agreed that continuous learning is needed and that a strong network of people with the same interest in investing helps a lot (hint 1: have a look at the Finmize community). Also, Max emphasized that learning should not be only theoretical, but practical as well. In investing, as in any other area, people need experience in order to become better.
Additionally, Max shared with me the following 5 foundational pillars that I would like to share here as well: Awareness, Literacy, Practical, Strategy, Emotional. Let’s take each of them individually and see what it means.
1 Awareness: Am I aware of the global events? What about events with lower reach? Am I connected to the ecosystem?
2 Literacy: Do I understand the terminology and concepts involved? What says my vocabulary about me? (There are a lot of conclusions that can be drawn about different investors by listening carefully to the words that they use).
3 Practical: Do I understand how to invest? Am I aware of the options available to me? What about options not currently available to me right now, that I can possibly access in the future?
4 Strategy: Do I have a cohesive strategy? Do I understand risk? Do I have a plan or am I gambling?
5 Emotional: Am I aware of the irrational biases I have as a human? (hint 2: you might find interesting “Thinking, Fast and Slow” by Daniel Kahneman, who got the Nobel Prize in Economic Sciences for his work. The book talks about different biases humans have such as overconfidence bias or loss aversion bias- we’ll get more about these in tomorrow’s post).