The Right Mindset for Investing

The Right Mindset For Investing - TheIndinaTrader

If you want to be successful in investing in the stock markets or any other field, the first and most important preparation you can do is to prepare your mind.

The mind has a powerful way of attracting things that are in harmony with it, good and bad.

Idowu Koyenikan

Therefore the mindset needs to be just right for investing as well so that you attract all that’s good and stay away from the bad.

Who to learn from?

Now, the question comes who do you learn from about all the psychological aspects of investing? The answer to this is simple – learn from the best in the business. So, unarguably the greatest investor of all time is Warren Buffett and that’s who you should learn from. That’s how it’s done, Think like greats to become great and I don’t think you wish to be anything less.

Look inside the mind of Warren Buffett

Warren Buffett has been so successful that so many people have tried to understand how he thinks, many have interviewed him, many have also written and read books about him. There is so much stuff to read about him on the internet that you might get overwhelmed and not get the essence of his thinking.

So, I suggest you watch this elegant documentary by HBO first, before reading about him because video helps to understand the bulk of ideas quickly and in brief. It is approximately 1.5 hrs long but I assure you, it provides priceless insight into his life.

Now, that you have watched this documentary and have an idea about his way of life and thinking, you can go about reading books about him. I would suggest starting off with The Snowball, which is the first biography of the GOAT of Investing.

Develop Your Own Mindset

According to Wikipedia, mindset is a set of assumptions, methods, or notations held by one or more people or groups of people and it can also be seen as an incident of a person’s world view or philosophy of life.

Therefore it is not something that can be developed just by reading something or watching a few videos. Here are a few tips to help you develop your own mindset:

  • Find a Mentor and learn from him.
  • Learn & Apply. Without application, you might know what to do but come the time we do not act accordingly.
  • You need to be open and receptive to different views.
  • It is said ‘People should surround themselves with people that match their desired mindset’. Find such people.
  • If it gets difficult to find people with a similar desired mindset so read books of such people. By doing so, you remain motivated and their right-thinking gets imprinted in yours too.

Benjamin Graham’s rules from The Intelligent Investor

Benjamin Graham played a mentor’s role in shaping Buffett’s career and investment philosophy. Warren Buffett learnt from Graham so I would suggest you do the same!

So here are the core principles as written in The Intelligent Investor (Considered as the best book written on investing by Warren Buffett):

1. A stock is not just a ticker symbol or an electronic blip; it is an ownership interest in an actual business, with an underlying value that does not depend on its share price.

2. The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap). The intelligent investor is a realist who sells to optimists and buys from pessimists.

3. The future value of every investment is a function of its present price. The higher the price you pay, the lower your return will be.

4. No matter how careful you are, the one risk no investor can ever eliminate is the risk of being wrong. Only by insisting on what Graham called the “margin of safety”—never overpaying, no matter how exciting an investment seems to be—can you minimize your odds of error.

5. The secret to your financial success is inside yourself. If you become a critical thinker who takes no Wall Street “fact” on faith, and you invest with patient confidence, you can take steady advantage of even the worst bear markets. By developing your discipline and courage, you can refuse to let other people’s mood swings govern your financial destiny. In the end, how your investments behave is much less important than how you behave.

Benjamin Graham

I suggest you read it at least twice if you are serious about getting better at investing. Now you have a SOLID platform for your own mindset.

Conclusion

Developing a strong investing mindset is a journey, not a destination. I could have given a few rules that you need to abide by to be a successful investor like everybody else, but I did not. The reason is, if you just read the rules, you might get to know what’s right but you don’t actually start believing it.

I have given you the exact path any great has followed to learn from other people and then have a sound, unique mindset which they firmly believe in. This will only happen if you put in the work.

And now, that you have read this post completely you can start off your own journey!


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Nishant

I started to learn about the stock market in 2014 after getting excited by watching the movie The Wolf of Wall Street and reading about people like Warren Buffet, George Soros, Steven A. Cohen who earned a lot of money in the stock market. I wanted to do it too. I wanted to learn how to do it.

Well, this is the point where the problem and my journey to solve it begins. After reading about a few market wizards I was certain about one thing that without knowledge this was not possible. The big problem was I had no prior knowledge of the stock market whatsoever. However, the bigger problem was I did know where I could get the required knowledge from. Neither the books helped initially (because there is no course or guide for this thing only stories and novels) nor I knew anyone who did not have a negative position about stock markets (or ‘Jua’ as they called it).

Still, I was stubborn enough to not listen to anyone and continue learning about the stock markets until I felt I was ready. Well, it took time but yes I did enter the stock markets with some knowledge, a plan and also a vision.

Success story..? Well, let’s see..!!~

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