Wednesday, May 25, 2011

Myopia

I was thinking of why it is so difficult to make money from assets when it is rather easy to understand companies and financial statements; a few things come to mind.
1. Stupidity
2. Ignorance
3. Myopia
4. Haste
5. Shallow comprehension abilities

No. 5 is important because I believe many investors tend to see objective data and base decisions on them - quite ridiculous because that is not how an entrepreneur or a CEO runs his business.

No. 3 is explained well in this post. Our endeavours, in whichever field tend to be short-term in nature with results expected quickly. May be farmers are the best counter-argument to this case :)
Post-investment, downturns, price movements, and investors' sentimentality make decisions short-lived. It is rather important to stay put and trust one's or another's decision(s).

There is a 6th point which I believe is most important. Discipline. I will not elaborate on this point.

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