Investors Are Human (The Investor’s Series)
It's a common misconception that all investors are inherently smart or always make the best decisions. And some business owners will go all the way out to impress them and even treat them like God when pitching to be invested.
Some investors are just like you and I ...human who makes mistakes and have our own biases, including making mistakes too. Not all the investments will turn out great, most of them don't at all.
Investors, like all humans, are susceptible to cognitive biases such as overconfidence, herd mentality, and confirmation bias. These biases can lead to poor decision-making too. For example, everything is AI these days, and some investors will just jump into it with the mere mention of this 'technology' even if it is a prototype of a toilet paper for your rear.
Not all investors have deep knowledge or expertise in the industries they invest in. They might rely on trends, tips, or superficial analysis rather than thorough research. Some will invest becos his buddies are in and they just joined for the fun of it without much research. It happens all the time but just that we don't tell you about it only.
That is why it is important to surround yourself with experts who knows their stuff and you pay them for it. We try to minimize the mistakes of hearsay or from another buddies sniffing some insider news.
Investing can be emotional too. Fear and greed often drive decisions, leading to buying high and selling low, which is contrary to the ideal investment strategy too. After all, we are human. We have these emotional decisions that we made and only to regret later.
Even the smartest investors can't predict market movements with certainty. The market can be influenced by a myriad of unpredictable factors, making it challenging to always make the right call. Sometimes, bets are placed wrongly despite all the stars are aligned with facts and figures. (911, COVID, collapse of govts etc)
The sheer volume of information available can be overwhelming. Distinguishing between valuable insights and noise is difficult, and even experienced investors can get it wrong. There are always companies approaching us with decks and pitches and just insufficient time and resources to absorb everything at the same time to make rationale decision. It is always best not to rush into a 'best deal' against time. Is just not worth it.
Some investors focus on short-term gains rather than long-term value, which can lead to suboptimal investment choices. Is there anything wrong with that? Remember cryptocurrency?
Like everyone else, investors take time and practice to get things right and if mistakes are made, we just have to bite the bullets and move on. Investment is a probability game, you need that 1, 2 deals to recover back the rest of the other bad ones. Is the holding power and the ability to take the negative impact that separate a good investor looking at mid to long term.
