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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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The Most Important Thing Is … Combating Negative Influences

The Most Important Thing Is … Combating Negative Influences

(p.97) 10 The Most Important Thing Is … Combating Negative Influences
The Most Important Thing Illuminated

Howard Marks

Columbia University Press

This chapter looks at an important requirement for successful investing: combating negative influences. It describes the emotional pressure most investors feel when confronted with the power of a bull market. It argues that exploiting inefficiencies such as mispricings, misperceptions, or mistakes that other people make provide potential opportunities for superior performance is the only road to consistent outperformance. Many people possess the intellect needed to analyze data, but only a few are able to look more deeply into things and withstand the powerful influence of psychology. The biggest investing errors come from factors that are psychological rather than informational or analytical. This chapter considers 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 drive them to do foolish things. Comments and insights from four famous investors and investment educators are presented.

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

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