Michael Mauboussin, a successful value investor, has identified 10 characteristics of great investors. These include:
- Being numerate: Understanding accounting and numbers
- Understanding value: Understanding the present value of free cash flow
- Assessing strategy: Understanding how a business makes money
- Comparing expectations and fundamentals: Comparing what is expected with what is fundamental
- Thinking probabilistically: Recognizing that there are few certainties
- Updating views: Treating beliefs as hypotheses to be tested, not truths to be protected
- Being aware of behavioral biases: Minimizing constraints to good thinking
- Knowing the difference between information and influence: Distinguishing between information and influence
- Position sizing: Adjusting the size of an investment based on perceived risks and rewards
- Reading and keeping an open mind: Reading and being open to new ideas
Mauboussin is the author of books such as The Success Equation and More Than You Know. He is also the Head of Consilient Research at Morgan Stanley Investment Management.
No comments:
Post a Comment