A Wealth of Common Sense sheds a refreshing light on investing, and shows you how a simplicity-based framework can lead to Print Friendly, PDF & Email. Print Friendly, PDF & Email. Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to download or sell. A simple guide to a smarter strategy for the individual investor. A Wealth of Common Sense sheds a refreshing light on investing, and shows.
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Hence, if you want to be the next Warren Buffett, what you need is not some complex strategy, but A Wealth of Common Sense Summary. (c) >>> page 1 of 8 PDF File: f A Wealth Of Common Sense: Why Simplicity Trumps Complexity In. [PDF] DOWNLOAD A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan (Bloomberg) by Ben Carlson [PDF].
So, how can it be so simple? Who says that it has to be complex? The same applies to investing too. You may have heard of many complex strategies on how to get rich usually, in fairly short period of time , but the simple fact is that most of them are either for already rich people or work from time to time because of luck. Because, every investor is different and, consequently, every investing strategy should be different as well.
However, expect him to give you few common-sense advices which will be applicable in any case. And the most important among them: never — ever — enter the world of investing with an expectation to get rich in a relatively short time. The simple fact is — that almost never happens.
The intelligent investor knows this and tries to find a safe strategy which will make him as independent from market fluctuations as possible. First of all — be emotionally intelligent. What is your biggest shortcoming as an investor? What do you wish you were better at? What do you think is the fairest fee structure for active managers? What do you think fees will look like in 10 years? Will it still be based on AUM?
Can performance fees be justified? You could look at every fee structure out there today and make a case that it creates a misalignment of interests. I think it all comes down how comfortable investors are with the firms they choose to work with and whether or not they will likely use poor judgement with the inherent incentives involved.
It takes a long time to see changes in these things.
In your day job, you speak to many active managers. Two questions: what are you most sick of hearing? Another common mistake is overconfidence. Overconfident investors tend to forget this, and call the shots as if they know exactly how the future will pan out. For example, they might invest a lot of money into a stock that did well for a few months, and end up suffering considerable losses not long after that.
Finally, resist the temptation to follow the herd. Unfortunately, they can.
We saw this in the real estate bubble in the mids. But the bubble burst and lives were ruined.
So, do your investing career a favor and always think for yourself! Success as an investor also relies on a few key characteristics. Find out if you have what it takes in the next book summary! You might consider yourself fairly intelligent. But is this enough to achieve success?
Emotional intelligence is the ability to recognize and manage our own feelings and those that exist between people, says psychologist Daniel Goleman. In other words, we need to know how our emotions influence our actions and the people around us. But what does this have to do with investing? A great deal. Recognizing when your emotions are clouding your rational judgment could save you a lot of trouble!
Another trait that successful investors have is the ability to stay calm and composed. Yes, even in situations where your finances are in deep trouble! But how? Despite this, quarterback Joe Montana keeps his cool, reassures his teammates and scores a perfect touchdown to win the game. His ability to stay composed enabled him to win four Super Bowls!
Last but not least, good investors are always wary. Risk is a word that gets thrown around a lot by investors. But it can mean many different things to different people. For some, risk is tied to losing money, whereas others see it as volatility.
But in every case, risk is always attached to rewards, a relationship which also shapes your investment choices. To put it simply, greater risks yield greater rewards. Nothing is free! This is the case with different asset classes in investment.