5 Traits That Smart Investors Have

There are plenty of smart investors in the stock market. You can pick them out because they share certain character traits. If you want to be a smart investor as well, you should imitate the characteristics that lead to their success.

Here are 5 traits that smart investors have.

1. Patience

Smart investors have patience. They don’t try to make a quick buck in the stock market. Instead, they know that stocks are long-term investments and they’re willing to park their money in the stocks of good companies and ride out the market swings.

If you want to invest in your future, you’re going to need patience. Examine the fundamentals of various publicly traded companies (their P/E or price to earnings, cash flow, operating margins, etc.) and determine which companies are worth your money. Then, buy shares in those companies over time. Ride out the market swings and hold on to the stock even if the company reports a sub-par quarter and the stock takes a temporary hit. Stick it out and, over the long run, you should be rewarded.

There is a book entitled “Get Rich Slowly.” That should be your motto when it comes to investing in the stock market.

2. Discipline

Smart investors are also disciplined investors. They’ve established a set of criteria for buying and selling stocks and they stick to their game plan. They don’t follow the herd and rush to buy certain stocks because everybody else is buying them; they don’t chase stocks when the price runs away from them; and they don’t participate in building tech bubbles that will eventually burst.

Before you invest, do some research and come up with a game plan that identifies your criteria for buying and selling stocks. Then, follow that plan instead of buying on impulse or selling in a panic.

3. Ambition

Smart investors are also ambitious investors. They’re willing to take risks in the stock market because they know that they make money by taking risks. That’s the essence of capitalism.

What’s your goal for investing? Are you hoping to save money to buy a big-ticket item like a luxury car or a boat? Are you saving to buy a home? A vacation house?

Whatever your goal, develop an investing plan that will help you reach that goal. Use your spreadsheet to determine how much money you’ll have after a certain amount of time based on the return you’ll expect to receive.

Remember, though, to take into account brokerage fees in your outlook. If you’re planning for retirement, be sure to account for 401k fees as well.

4. Adaptability

Smart investors know that they will never have the stock market “figured out.” They know that they’ll never be able to predict exactly what’s going to happen 100% of the time.

As a result, they reevaluate their strategies and goals and revise them accordingly.

5. Good Instincts

Smart investors have learned to trust their instincts. As we’ve seen, nobody can predict exactly what the stock market is going to do at any point in time. That’s why smart investors often go with their gut.

If you want to be a smart investor yourself, develop the characteristics of people who already are smart investors. You’ll find that you enjoy their success when you imitate their traits.