Your Mind Is the Most Important Factor in Successful Investing
Investment icon Warren Buffett once said, "Success in investing doesn't correlate with IQ ... what you need is the temperament to control the urges that get other people into trouble in investing." In other words, it's not about being smart, it's about how you think. Warren Buffett actually learned that from value investing legend Benjamin Graham, who was extolling the importance of emotion in investing before Buffett bought his first stock. In fact, there's now a whole branch of finance that looks at this issue, called behavioral finance. It's basically a blend of psychology and finance that examines all of our all-too-frequent mental mistakes. You make them -- but we all do.
If you want to be a successful investor, you need to understand these misconceptions. Here's a primer on why your mind is the most important factor in investing.
If you ask a room full of people if they are above-average drivers, almost everyone will raise their hand. That's statistically impossible, since roughly half have to be worse than average. This is anecdotal, but it gets to the heart of the matter. We all think we are better than we really are. And in investing that's a big blind spot, and one that will often lead you astray.
Source Fool.com
