Decision-making applied to investors, traders and modern value investors.

Although it’s common to accept higher valuations these days, the case of traders is that they can survive for some time, only to be cooked on Christmas.

Marcelo Marini, trying to figure out Crowd’s mentality among investors, traders and modern value investors.

Dear reader,

People’s behavior.

Why is it simple to understand? Most people are emotional. Emotional people don’t find enduring success in life. Rational people wait, irrational people move. Then they choose. Why? Think about it… it’s rather simple to act on someone else’s flaws than on your own certainty.

People can have lots of brain activity and no original thought…

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Investor’s behavior.

Although it’s quite rational, it generally involves exhausting amounts of time trying to figure out what’s wrong with the government, prices, companies, economy… they think too much. It freezes certainty and action. They buy, then they change their mind, because they are always trying to figure out… are we right, are we wrong… most of the time they are in doubt. Activity doesn’t mean thought. People can have lots of brain activity and no original thought. Via negativa, mental detox, are some processes that help the independent-thinking seeker.

Trader’s behavior.

Trader’s behavior is actually crowd thinking. Although they are not together physically, they are on the same wavelength, they have similar—yet not original—ideas, they copy, they imitate, they talk about others. They follow the trends. Sometimes they are right, not as a case of intellectual achievement, but by chance. During the trends, crowds are often right. That’s why they think they are always right. They are right most of the time. It doesn’t mean they won’t be madly wrong—such as in the case of Palantir, or other extreme valuations. Although it’s common to accept higher valuations these days, the case of traders is that they can survive for some time, only to be cooked on Christmas.

Value investors.

Value investors survive most of the time, because they think wisely and follow the right heuristics. One is the margin of safety, another is the long-term view. There are more… It doesn’t depend too much on intelligence. It’s like wearing the seat-belt on a daily basis.

Regards,

Marcelo Marini

Now let’s discuss people’s behaviors and its influences in our present and future.

People’s behavior.

Why it’s simple to understand, most people are emotional. Emotional people don’t find enduring success in life. Rational people wait irrational people move. Then they choose. Why? Think about it… it’s rather simple to act on someone else’s flaws than your certainty.

Investor’s behavior.

Although it’s quite rational, it generally involves exhaustive times trying to figure it out, what’s wrong with the government, prices, companies, economy… they think too much. It freezes certainty, action, they buy, they change their mind, because they are always trying to figure out… are we right, are we wrong… most of the time they are in doubt. Post written, remember activity doesn’t mean thought. People can have lots of brain activity and no original thought. Via negativa, mental detox, are some processes that help the independent thinking seeker.

Trader’s behavior.

Trader’s behavior are actually crowd thinking. Although they are not together physically, they are in the same length of vibration, they have similar not original ideas, they copy, they imitate, they talk about other’s. They follow the trends. Sometimes they are right, not a case of intellectual achievement. By chance. We need to add a crucial information. During the trends crowds are right. That’s why they think that they are always right. They are right, most of the time. It doesn’t mean won’t be madly wrong. As the case of Palantir, or other extreme valuations. Although it’s normal to accept higher valuations these days. The case of the trader’s is that they can survive sometime and be cooked some Christmas.

Value investors.

Value investors survive most of the time, because they think wisely, follow the right heuristics, one is the margin of safety, the other it the long-term view. It doesn’t depend too much on intelligence. It’s like wearing the seat-belt all days.

Real-estate investors.

Real-estate investors are not wiser than value investors, there are some differences, for today, let’s play with two… First point to begin with is that the Real-estate market (understand as people’s dealing behaviors) form of behaviors that is commonly accepted, is to hold the investment for long years. The second point is that they don’t have to make many decisions everyday. Some broker may call, some other places may appreciate, nothing special, sit and wait. Is it good, is it bad? we don’t hold oppinions without reasoning. I will also add that investors will have this behavior in the future, it’s a matter of time for non-thinking individuals understand what hurts less.

Independent Thinking

It’s peculiar, markets at all time high, what we find? opportunities. Let me bring one example. We believe people can make investments in something they don’t understand, if they have the appropriate strategy. It’s the future. You just have to be more rational, it doesn’t have nothing to do with opinions, just facts. It’s finding asymmetries without losing reason. Don’t get emotional involved with your ideas. Understand when your cards. Then understand the game. Why? You don’t have to hold the best cards to win the match. Understand the context, the more optionallty we add to our lives the more skilled we are, greater our chances of success. The real edge against markets, and inflation.

Certainty turns to a no brainer. Although we were hoping for times like these, we may have some doubts about the future ahead of us…

Who controls a company?

Stretch your thinking… think of a listed company… try to understand who controls it… pick one, try to find out… stay tuned.

More coming.

Think wisely, act right.

Regards,

Marini.

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