Did you know there’s a psychology behind investing?
Billionaire value investor Seth Klarman thinks about investing in terms of an intersection at which economics and psychology meet.
“The economics, the valuation of the business, is not hard. The psychology — How much do you buy? Do you buy it at this price? Do you wait for a lower price? What do you do when it looks like the world might end? Those are the harder things,” he’s quoted as saying.
Klarman believes you can become adept at this with experience, but says you have to have the right psychological makeup in the first place. He suggests he and others have a “gene” that naturally allows them to not panic with gyrations in the market, but for many people “it’s fighting human nature.”
Do you have the “gene” for value investing?
Source: WSJ Money Beat
