ARE YOU AN INTELLIGENT INVESTOR?

In 1998, Long-Term Capital Management

L.P., a hedge fund run by a battalion of mathematicians, computer scientists, and two Nobel Prize–winning economists, lost more than $2 billion in a matter of weeks on a huge bet that the bond market would return to “normal.” But the bond market kept right on becoming more and more abnormal—and LTCM had borrowed so much money that its collapse nearly capsized the global financial system.

And back in the spring of 1720, Sir Isaac Newton owned shares in the South Sea Company, the hottest stock in England. Sensing that the market was getting out of hand, the great physicist muttered that he “could calculate the motions of the heavenly bodies, but not the madness of the people.” Newton dumped his South Sea shares, pocketing a 100% profit totaling £7,000. But just months later, swept up in the wild enthusiasm of the market, Newton jumped back in at a much higher price—and lost £20,000 (or more than $3 million in today’s money). Sir Isaac Newton was one of the most intelligent people who ever lived, as most of us would define intelligence. In short, if you’ve failed at investing so far, it’s not because you’re stupid. It’s because, like Sir Isaac Newton, you haven’t developed the emotional discipline that successful investing requires.

Now, “intelligent” investor according to Benjamin Graham; tutor of the world's best investor Warren Buffet, defines the term—and he makes it clear that this kind of intelligence has nothing to do with IQ, academic performance, GRE, GMAT and/or SAT scores. It simply means being patient, disciplined, and eager to learn; you must also be able to harness your emotions and think for yourself. It's a trait more of the character than of the brain.”

If you have built castles in the air, your work needs not to be lost; that is where they should be. Now put the foundations under them!

#TheInvestor