Becoming rich can be premeditated and the world’s best investors have deliberate systems that ensure that they win more than they lose in their investment endeavors.
The book begins with a brief discussion on the learning process and mental habits, critical because the investment process is first and foremost a mental exercise. And the underlying theme throughout the book is that the mental habits of successful investors are what make them successful, so by learning these habits significantly improves the investors’ chances of earning good returns on their money.
Tier begins his book by outlining the seven deadly sins of investment, which include the idea that, one needs to predict the market to be a successful investor, inside information is key, to make big profits one needs to take big risks and diversification.
The successful investors are all to a fault conscious of losing their capital, after all once you have burnt your capital you are out of the game. They ensure safety of capital by adhering to their system, a system often unique to the investor and one designed to capitalize on high probability events.
There as many investor types as there are securities to place money on and what underpins all successful investment systems is what each investor chooses to measure, so Warren Buffet looks out for a margin of safety and George Soros measures a stock’s price movement against his perceived hypothesis. If a stock violates their criteria they avoid it like the plague.
On the other side of the pendulum when a stock meets their criteria the super investor cannot have enough, betting big, pigging out.
The best investors do one additional thing they remain within their “circle of competence” investing only in things they have a deep familiarity with so your unlikely to find Buffet in real estate or Donald Trump in stocks and bonds.
At the highest level investing is not an ego-play, in fact the master investor’s ability to take a loss, to invest against the market sentiment and oftentimes to seat out the frenzy is a manifestation of their ability to divorce the ego from their craft.
Having taken a position the master investor however does not invest unless he has an exit strategy and when the inevitable loss comes a long the master investor learns his lesson and moves on.
Tier closes the book by counseling on how ordinary investors can make these secret s work for them by clarifying investment goals, crystallizing your investment system and developing your own circle of competence.
A well written350-page book, which switches effortlessly from anecdotes to theory, illustrating and simplifying the lessons beautifully and making the art of investing more accessible to everybody who cares to learn.