Think Like the Great Investors: Make Better Decisions and Raise Your Investing to a New Level

Chapter 27

Failure traits

Investing involves making sound decisions. We all have personality traits that generally serve us well in most aspects of our lives. Under stressful conditions, however — and investing can be very stressful — they can let us down.

In their brilliantly insightful book Why CEOs Fail, David Dotlich and Peter Cairo describe 11 behaviours that can derail chief executives. It struck me how each of these behaviours also derails investors. This is not surprising, when we consider that investing should be treated as a business undertaking. As the chief decision maker in that business, we are subject to the same risks that our personality and habitual behaviours will hold us back unconsciously from attaining our goals.

It may seem strange to focus on why investors fail, rather than on how they succeed. However, every one of us will have one or more of these behaviour types deeply ingrained in our thinking processes. Becoming aware of these traps, so we can recognise them in our investing, is the first step in managing them. Each of the 11 derailing behaviours will be discussed under Dotlich and Cairo’s name for them. When reading about them, bear in mind that we may have a mix of these behaviours in our make-up and that they will be represented to a greater or lesser extent.

1 Arrogance. Investing requires a strong measure of self-confidence. Problems emerge when ...