How to win the “inner game” of investing
“Amazon’s shares lost more than 90% of their value between 2000 and 2001”
One skill that separates good investors from bad investors – and great investors from those who are merely good – is the ability to understand the role that psychology plays in investing. With markets at least partially driven by fear and greed, being aware of your own flaws and controlling your emotions can help you avoid bad investment decisions. What’s more, recognising the same flaws in others can also help alert you to the investment opportunities created by market irrationality. Here are five tips to help you win the “inner game” of investing.
1. Be patient
Financial markets have a tendency to change their mind frequently in the short run. Sometimes this is justified by genuine changes in events, such as the Wall Street Crash of 1929. In other cases it is a reflection of genuine uncertainty, like the rapid fall and rise of global stockmarkets during the first few
