Traits Of A Great Investor

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Traits Of A Great Investor

I went to a lunch today where I heard one of the best hedge fund investors over the past 25 years speak. It was a great talk and focused on many issues that I found relevant to our work.

My favorite part of the talk was where he said that great investors share a number of personality traits and then went on to list them. Here is his list:

Tenacious (but not stubborn)
Creative (but not overly so)
Logical Thinker
Thorough (but not too thorough)
Values and invests In relationships
Adjusts to and bounces back from mistakes
Decisive (but not impetuous)

It's a great list. I might put it up on my wall right next to the "what are you gonna do" picture.

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Posted November 10, 2005 in Venture Capital and Technology

Comments

I'd love to know more about what he meant by "creative but not overly so."

Posted by: Abby | Nov 10, 2005 9:17:00 PM

I think I've figured out the algorithm:

X (but not too X)

I just need to backtest it against NASDAQ.

;)

Posted by: Derek Scruggs | Nov 10, 2005 11:30:25 PM

Good post. This is definitely a most interesting topic.

Now I am sure this gentlemen is da' bomb, but asking a successful person about success always exposes the answer to hindsight bias.

Reflecting back on a career and asking "what contributed to my success", you can come up with any old set of criteria - anything from having a certain personality trait to wearing the right colour tie. Whether it's "being decisive" or consistently sticking with "baby blue" which contributed to your success, we'll never know. Both answers are hardly available for empirical testing.

With financial markets, for example, there are millions of people out there placing bets, which determines the price of any given asset. The people react to news. News is random by it's very nature. So prices move randomly. Out of this pool of millions, you are guaranteed to get your outlier who has flipped heads 100 times in a row, or who has always selected the right short, or the right long at the right time. It's a mathematical certainty that out of a large enough data set, you'll get this person.

It's the same with entrepreneurs getting to IPOs, you can't ever tell if they were the statistical outlier, or it was a product of skill.

I, myself, hope that it's skill- either some kind of special talent for investments, or the skill to understand your numbers and play them properly. Otherwise- where's the fun?

Beut yeah...interesting post.

Posted by: Daniel Nerezov | Nov 10, 2005 11:37:35 PM

I'll add one more thing, with a credit to Paul Ferri at Matrix Partners: Lucky

Posted by: Mike Feinstein | Nov 10, 2005 11:54:03 PM

A VC

Musings of a VC in NYC