Warren Buffett on emotional stability
Warren Buffett quotes:
"You don't need tons of mental IQ in this business, if you have 160 give away 30 points-what you do need is emotional stability"
"You should not care what other people say, follow the facts"
"If you cannot control your emotions, than you cannot control your money"
"The stock market is a device for transferring money from the impatient to the patient."
"You don't need tons of mental IQ in this business, if you have 160 give away 30 points-what you do need is emotional stability"
"You should not care what other people say, follow the facts"
"If you cannot control your emotions, than you cannot control your money"
"The stock market is a device for transferring money from the impatient to the patient."
Emotional stability
Emotional stability and stocks
To have success in investing in stocks, you are required to have a stable personality- not a high IQ. Your ability to have a stable emotions is essential, what differentiates a good investor from those who beat the market will come down to emotional intelligence. The way in which you make money in stocks is to not get scared out of holding them, you can never predict when your stock will be up or down in the short run but you can make a rational judgement on what the underlying business will be like in years to come. The key to succeeding in stocks is to hold them for the long term, ignoring market swings.
Emotional stability is so essential in beating the market, as to beat the market you have to invest with the intent of beating the market and going against the grain whilst doing this. You have to have the gut to make these decisions whilst having the mental discipline to hold and stick with your decision for the long run. If you are able to hold your stock for the long term (10+ years), you can have the ability to beat the market if your reasoning is right. You don't beat the market by going with the crowd, you go against it and have the knowledge to justify your choice in addition to having the gut to go with your decision for the long term.
Mr. Buffett has made it clear that you do not need tons of IQ in choosing and selecting stocks, what you need is discipline in emotion alongside the ability to think independently. A 130 IQ will beat a 160 IQ as long as the 130 IQ has the right emotional temperament. Emotional intelligence can be learned through education, it is one of the most important traits when it comes down to investing in the stock market, if you are reactive, compulsive or unable to hold onto a stock for the long term- investing in the stock market is probably not for you.
Emotional stability is so essential in beating the market, as to beat the market you have to invest with the intent of beating the market and going against the grain whilst doing this. You have to have the gut to make these decisions whilst having the mental discipline to hold and stick with your decision for the long run. If you are able to hold your stock for the long term (10+ years), you can have the ability to beat the market if your reasoning is right. You don't beat the market by going with the crowd, you go against it and have the knowledge to justify your choice in addition to having the gut to go with your decision for the long term.
Mr. Buffett has made it clear that you do not need tons of IQ in choosing and selecting stocks, what you need is discipline in emotion alongside the ability to think independently. A 130 IQ will beat a 160 IQ as long as the 130 IQ has the right emotional temperament. Emotional intelligence can be learned through education, it is one of the most important traits when it comes down to investing in the stock market, if you are reactive, compulsive or unable to hold onto a stock for the long term- investing in the stock market is probably not for you.
Should you be in the market?
Investing in stocks is not for everyone, most people do not simply have the temperament for it. You need to be able to employ massive amounts of patience as well as having a strong mindset and good emotional intelligence.
Looking at the price is not investing
The price of a stock tells you almost nothing about the value of the business. The key driver of investment success is to determine which stocks are going to be able to produce the most value in the future relative to the current position. So many people get caught up in the price, that they actually forget to even understand the value behind the business.
How to choose stocks
Warren Buffett's strategy for picking winning stocks starts with evaluating a company based on his value investing philosophy.
Emotional stability
Buffett looks for companies that provide a good return on equity over many years, particularly when compared to rival companies in the same industry.
Circle of competence
When looking for a great company to invest in, Buffett also reviews a company's profit margins to ensure they are healthy and growing.
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