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The Most Important ThingUncommon Sense for the Thoughtful Investor$
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Howard Marks

Print publication date: 2011

Print ISBN-13: 9780231153683

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231153683.001.0001

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The Most Important Thing Is … Combating Negative Influences

The Most Important Thing Is … Combating Negative Influences

Chapter:
(p.80) 10 The Most Important Thing Is … Combating Negative Influences
Source:
The Most Important Thing
Author(s):

Howard Marks

Publisher:
Columbia University Press
DOI:10.7312/columbia/9780231153683.003.0010

This chapter discusses an important need for successful investing: combating negative influences. Inefficiencies such as mispricings, misperceptions, or mistakes that other people make provide potential opportunities for superior performance. Exploiting them is, in fact, the only road to consistent outperformance. To be distinguished from the others, the investor need to be on the right side of those mistakes. Many people possess the intellect needed to analyze data, but far fewer are able to look more deeply into things and withstand the powerful influence of psychology. The biggest investing errors come not from factors that are informational or analytical, but from those that are psychological. This chapter examines a number of psychological factors that lead to incorrect investment decisions, including greed, fear, envy, and ego. It also offers suggestions on how investors can avoid psychological urges that push them toward doing foolish things.

Keywords:   psychology, investment, greed, fear, envy, ego, investors

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