What Do the Best Investors Do That the Rest Don’t?

Charlie Munger, the Vice Chairman of Berkshire Hathaway and Warren Buffett’s partner said something simple yet profound at the 2017 Berkshire Hathaway Annual Meeting: “A lot of other people are trying to be brilliant and we are just trying to stay rational. And it’s a big advantage.” Some might think that becoming an excellent investor requires off-the-charts intelligence or some highly proprietary model that leads to an edge that nobody else can replicate. That is not what experience has shown.
Here are some traits and behaviors that have allowed investors to excel over the long-term:
1. Temperament. Temperament is the most important quality for an investor to have. My observation of many investors over my 15+ years of professional investing has led me to believe that temperament cannot be learned, but rather it is an innate characteristic of one’s personality. Some people are able to remain rational and continue to follow their process even under great duress or during periods of external upheaval. Others get swept up in the emotion that typically runs amok during such circumstances, and abandon their discipline.