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samudra
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Joined: December 23rd, 2002, 2:48 pm

Psychology of legendary investors

September 1st, 2015, 4:41 pm

This topic has been beaten to death. But still great investors are so rare.So lets analyse the psychology of great investors.Broadly we have 2 component 1. The gift as we say which probably cant be learned2. The second component which we can learn. 2a. The math, the science etc. 2b. The mind/psychology part which is more difficult to learn.So for those lucky ones who came in contact with legendary investors is it possible to develop the thinking of the legendary investors?How do I systematically make my mind to think like them. Or one can argueeveryone is trying to imitate them so maintain original thought. Here I have decided to take the path of value investing. I am developing my strategy mostly following Lynch, I am getting success with Lynch ( has managed to get about 4-5% multibagger in my portfolio as of now). I blow up now and then but thats inadequate research on my part mainly because I get the debtwrong.Debt is really deadly.Anyone who has the privilege to work with Lynch, Buffet, Munger, Prem Watsa etc can you please share your thoughts.
 
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platinum
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Joined: May 6th, 2009, 11:08 am

Psychology of legendary investors

September 1st, 2015, 4:53 pm

To round out your studies, I would recommend the book Red-Blooded Risk: A Secret History of Wall Street by Aaron Brown.The book has very good insights on investing/gambling/risk management and personality traits that may lead you to be better or worse at any and all of them. For gamblers, in particular, cash management is key. The same is also true for solo investors working only with their own money. Blowups, as you say, can be a learning experience, but how often will you be able to bounce back, especially if a minor blow up evolves into a major one?Risk management is the critical issue that is often neglected in the typical texts (however engaging) on the successful investors and it is addressed at length in this book.
 
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DavidJN
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Joined: July 14th, 2002, 3:00 am

Psychology of legendary investors

September 8th, 2015, 12:55 pm

I don't read business books because they bore me to sleep but I will convey from personal experience that, before the advent of HFT, by far the most successful trader I ever met was a minimally educated chap who literally came from the farm. He understood that he was playing a repeated game, used simple intuitive rules and while he learned from his mistakes when time permitted, he didn't dwell on them but instead looked forward to the next trade.What with an technological micro-structure that encourages scale, deviousness and lack of transparency, trading is of course now a completely different thing. The environment seems to me to be ripe for abuse and even organized criminality. But it is sure fun to watch!