I was reading Harvey Mackay’s business classic Beware The Naked Man Who Offers You His Shirt and was pleasantly surprised to read, as Mackay talked about how knowledge of self is essential to success, a bit on investing.
“Successful traders and successful investors both will tell you that their single most important asset is self-knowledge, not stock knowledge. They know themselves well enough to understand the level of risk they can live with.
Traders let the market tell them whether they’re right or wrong. They have the self-discipline to turn on a dime with the market goes against them.
Investors have a different test of character: to stay with a commitment regardless of what the market does on a short-term basis. They have the self-discipline not to turn on a dime when the market surprises them.
The surest way to lose money is not to know which breed you belong to: holding on to a loser when you’re really a short-term trader looking for a quick turn or selling too soon, whether it’s up or down, when temperamentally you’re really a long-term investor. Before you make any major commitment, of time, of money, of yourself, you have to be honest enough with yourself to understand how you will react if things happen that you don’t expect.”
The timing couldn’t have been better as I’ve been re-evaluating my position in a company. Right now, the stock price is tanking big time but my thinking still is that a year from now, after the company has absorbed the smaller company it just devoured, the stock price not only will pop up nicely but offer a healthier dividend as it does.
I’m an investor, not a trader and so I’m holding onto it.