Top 10 Traits of Self-Aware Investors That Set Them Apart

Are you a self-aware investor? Do you stick to your own rules when investing, or do you easily go along with what others suggest? Let’s shake things up and uncover the secrets for becoming a more skilled, robust, and emotionally strong financial player.

The Context

The American Psychology Association (APA) defines self-awareness as the capacity to pay attention to and recognize one’s thoughts, feelings, and behaviors, promoting a deeper understanding of oneself.

Self-awareness holds significant influence over various facets of our existence, actions, and behaviors.

From an investor’s perspective, being self-aware means knowing yourself, having confidence in your decisions, and understanding your goals, feelings, thoughts, strengths, and weaknesses. It’s about understanding your true self and asserting your rightful individuality.

In a paradoxical twist, we inhabit a connected world where external opinions consistently evaluate us, creating a mix of influences that directly affect and occasionally taint our choices.

Let’s pause for a moment of self-reflection! This article points out ten traits that can subtly define your actions as an investor. Your self-reflection on these statements will either push you toward success or reveal what’s holding you back from reaching your full potential.

Note: This article is tailored for experienced investors who are already involved in multi-asset portfolios to some extent.

10. You Feel at Ease When Welcoming New Opportunities?

You’re open to fresh investment experiences, recognizing that taking chances can foster financial growth. Exploring innovations in uncharted sectors doesn’t intimidate you, and you’re unafraid to move forward, even when unsure about the next steps.

Does this resonate with you?

If it does, it could indicate your self-awareness; otherwise, it’s worth reflecting on. Research suggests that emotional self-awareness is vital for risk-taking. Interestingly, those who take risks often possess higher emotional intelligence and, consequently, greater self-awareness.

So, if you’re ready for calculated risks, it likely means you have solid control over your investment ventures and a realistic understanding of what you can achieve.

9. You Possess a Clear Vision of the Future

While irrational worrying about the future is unproductive, it’s important to envision potential future scenarios.

Having a narrow focus solely on today or the next weekend party contradicts the essence of self-awareness.

Picture scenarios where the stock market continuously multiplies your investments indefinitely or experiences a crash tomorrow, marking the start of a prolonged economic downturn lasting a decade. You might envision working your current job until retirement, or you could find yourself seeking new employment soon due to probable layoff.

Having a vision of your future self connects you with your real-life situation. How can you work towards your goals without an envisioned tomorrow that considers all variables? Knowing what you’re investing for and understanding your aspirations once you achieve your future targets is a significant part of becoming a self-aware investor.

8. You Refrain From Relying on Lucky Streaks

Imagine knowing nothing about investing and putting money into a random stock. It goes up by 50%, and excited, you invest more, only to see the price fall rapidly. Waiting for luck to turn in your favor might not lead to profits, and even breaking even can be tough.

Let’s face it. Are you just waiting for your financial situation to improve? It’s crucial to understand that investment opportunities don’t just happen; you create them with purpose. Recognizing that you control your investment choices is a key part of self-awareness. The stock market won’t grant you any special privileges unless you actively work to earn them.

Feeling in control means you’re aware of your possibilities rather than just being an object of chance.

7. You Feel at Ease When Making Tough Decisions

Imagine you’ve found a great investment opportunity, but right before investing your hard-earned money, you get stuck in a decision freeze.

Do you often delay decisions? Do you shy away from taking risks even when they could boost your financial growth? It might be time to move forward.

Understanding your strengths and weaknesses is part of being self-aware. Sometimes, making tough decisions and even experiencing failure is essential. Why? Because successful investors know that taking risks is a key to success.

Consider this. If you consistently avoid difficult decisions, are you truly examining your thoughts and feelings objectively? Making challenging decisions is a way to learn more about yourself. A self-aware investor prefers taking action over hesitation.

If you want to learn more about overcoming decision paralysis in investing, check out this short video on our YouTube channel.

6. You Admit Your Mistakes Without Guilt?

Consider the last mistake you made. Was it something small, like picking a company that went bankrupt, or a more significant one that felt like a global financial collapse?

Regardless, you likely felt uneasy because nobody enjoys making mistakes yet they help us grow as an Investor. However, it’s alright. As the well-known Canadian cartoonist Dave Sim once said, “There is nothing wrong with making mistakes, but one should always make new ones. Repeating mistakes is a hallmark of dim consciousness.”

Everyone makes mistakes—it’s a human thing, and it’s good for understanding yourself better. The important part is to learn from those mistakes. And remember, messing up in investing doesn’t mean you’ve failed.

So, if you pick up useful lessons from your past slip-ups, it shows you’re a more self-aware investor than you realize.

5. You Reflect on Your Thoughts

Surprisingly, when we look at how successful investors behave, they are actively thinking, always checking and assessing opportunities to create better-than-average investment strategies.

For the average person, daily thinking ranges from simple tasks like brushing their teeth to tackling complex financial calculations.

Ever considered how much you think overall? In psychology, it’s termed “metacognition” – reflecting on your thinking. If you are familiar with this concept, it’s not surprising for you to know that metacognition enhances self-awareness.

Do you understand your thoughts? Do you question widely accepted views instead of blindly adopting them? If so, your mind is ready to advance and enhance your self-awareness for success.

4. You Question Yourself

Reflecting on your investment choices involves asking yourself direct questions. Why did you commit to a specific investment? What influenced your stock selection? What situations will dent your confidence?

Define your success—does a specific return percentage satisfy you, or is it an ongoing, never-ending pursuit? These questions help in objectively assessing your feelings, thoughts, and real-life actions.

Consider when you last pondered such matters—was it yesterday, last week, or perhaps it’s a regular part of your daily routine?

3. You contemplate your emotional state

What do you feel when you’re about to make an investment decision? Is it anxiety, happiness, sorrow, unresolved financial trauma, a craving for more, or an unnecessary urge to prove yourself to your imaginary foes?

If you pause to recognize these feelings means you understand your current emotions, and this is a key trait of a self-aware investor.

Not recognizing your emotions indicates dependence on a passive mental state, urging a deeper reflection on why you might be following a monotonous path.

Renowned psychologists such as Howard Gardner and John Mayer emphasize the importance of emotional intelligence, particularly in being aware of your own emotions, for personal, social, and financial success. Mayer emphasizes that acknowledging and understanding our own emotions is the fundamental aspect of emotional intelligence.

2. You Are Willing to Admit You Don’t Know Everything

Thinking you know everything is a challenge for overconfident investors but an opportunity for the smart ones. Self-aware individuals accept they can’t know everything about investing—it’s normal.

It’s similar to the famous wisdom found in Socrates’ philosophy: “I recognize my intelligence because I acknowledge that I know nothing.”

Think about the expertise in specific sectors. A doctor skilled in prescribing medicines might be the go-to person in their hospital for insights into pharmaceutical breakthroughs. However, they may not have a clue about a manufacturer dealing with refractory products that support the steel and glass industry.

After consuming unverified, high-energy YouTube videos, and Instagram stories, and diving into some best-selling investing books, admitting you lack complete knowledge about investing becomes a challenge but is crucial.

Acknowledging that there’s much you don’t know can help you concentrate on your goals and identify areas you want to learn.

1. You Bother to See Things Differently

To grasp this key question that qualifies you as a self-aware investor, let’s dive into the basics of making investment decisions. When choosing between stocks like Stock A or Stock B, people rely on information analyzed through fundamental and technical methods. Unless it’s illegal insider info, everyone in the market, from big institutions to individual investors (sometimes called “Ants” 개미 in the Korean stock market), has access to the same data. Although institutions have faster access due to their resources, the rules aim to keep things fair.

Breaking free and independent from any system’s predefined path isn’t easy, but it’s achievable!

In a scenario where everyone has the same information, the game can only be changed by having a different perspective. This unique approach helps investors by offering alternative insights, finding hidden opportunities, and addressing risks that might be missed with a common and easily accessible outlook.

To develop your personal view in investing, explore different information sources, be open to different opinions, and regularly question what you assume.

Conclusion

Building self-awareness is tough because it involves honestly looking at yourself, acknowledging strengths, and recognizing weaknesses. Yet, for retail investors (the ‘Ants’ of the system), it’s vital. It means making smarter choices by understanding your risk tolerance, emotions, and biases. This awareness helps you steer clear of hasty decisions, adapt to market shifts, and enhance your financial future.

As the saying goes, “Know thyself.” – Socrates

Thanks for reading. Feel free to share your thoughts in the comments section below.

Frequently Asked Questions (FAQs)

1. Why is self-awareness crucial for investors?

Self-awareness helps investors understand their goals, emotions, and decision-making processes. It fosters confidence in choices, prevents biases, and leads to more informed and successful financial strategies.

2. How can having a different perspective enhance investment decisions?

In a market with shared information, a unique perspective offers alternative insights, identifies hidden opportunities, and addresses risks. Exploring diverse information sources and being open to different opinions can contribute to a more independent viewpoint.

3. Why is acknowledging ignorance important in investing?

Recognizing that you don’t know everything about investing is crucial. It allows for continuous learning, focusing on specific areas for improvement, and helps avoid overconfidence, fostering a more humble and informed investor mindset.

4. Why should investors consider their emotions before making decisions?

Understanding and recognizing emotions before making investment decisions is crucial. Emotional intelligence plays a key role in successful investing, helping investors navigate uncertainties, manage risks, and make rational choices.

5. How does self-awareness contribute to learning from mistakes in investing?

Admitting mistakes without guilt is a sign of self-awareness. Acknowledging and learning from mistakes helps investors grow, refine their strategies, and avoid repeating errors, contributing to continuous improvement in their investment approach.

🔔 Happy Investing!