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The Most Important Thing IlluminatedUncommon Sense for the Thoughtful Investor$
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Howard Marks

Print publication date: 2013

Print ISBN-13: 9780231162845

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231162845.001.0001

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PRINTED FROM COLUMBIA SCHOLARSHIP ONLINE (www.columbia.universitypressscholarship.com). (c) Copyright University of Minnesota Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CUPSO for personal use.date: 21 June 2021

The Most Important Thing Is … Second-Level Thinking

The Most Important Thing Is … Second-Level Thinking

Chapter:
(p.1) 1 The Most Important Thing Is … Second-Level Thinking
Source:
The Most Important Thing Illuminated
Author(s):

Howard Marks

Publisher:
Columbia University Press
DOI:10.7312/columbia/9780231162845.003.0001

This chapter discusses an important requirement for successful investing: second-level thinking. Investing, like economics, is more art than science. One must remember how essential it is for one’s investment approach to be intuitive and adaptive rather than fixed and mechanistic. The definition of successful investing is doing better than the market and other investors. Would-be investors can take courses in finance and accounting, or receive mentoring from someone with a deep understanding of the investment process. But only a few of them will achieve the superior insight, intuition, sense of value and awareness of psychology that are required for consistently above-average results. Doing so requires second-level thinking. This chapter articulates the critical importance of second-level thinking to investment success and presents three examples illustrating its distinction from first-level thinking. It includes views and insights from four renowned investors and investment educators.

Keywords:   second-level thinking, investment, investors, psychology, first-level thinking

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