转载文章：

Saul referenced a post by Tinker (https://boards.fool.com/tinker39s-post-34532153.aspx) that explains why we are able to achieve returns that shouldn’t be possible year after year.

“We are the top 1% of all investors. We do not revert to the mean, never have, and we are not stuck buying the market (thus ensuring mediocrity), and we are not stuck investing in systems.”

But what does it mean to be a great investor? It surely can’t just involve picking the best stocks, anyone can copy what stocks we buy and should earn similar returns…yet why don’t they? 

I came across this speech that former hedge fund manager Mark Sellers gave to a class of Harvard MBAs on why most people, including them, have almost no chance of compounding money at 20% or 25% over their careers . 

https://moiglobal.com/wp-content/uploads/mark-sellers_you-wa...

He believes that it doesn’t matter what school you went to, how many books you’ve read, or even how many years of experience you have. These are things a lot of people have and can increase your chances of success, but you can’t buy or study your way to becoming a great investor. 

This board proves his points. Few people have professional certifications like an MBA or CFA, most of us are self-taught. Most of us read a great deal and also have years of experience but I’d wager that we are not in the top 1% for either of those categories. 

So, what does it take to really stand out from the millions of other market participants? Just like a company, the ‘moats’ for investors are structural. They are psychological and hard-wired into your brain and things that even if others knew, they couldn’t copy. 

He lists 7 of these traits:

1. Buying while others are panicking and selling while others are euphoric

不从众，敢在大跌时买，疯狂时卖

Sounds simple to do but in practice, it’s hard to buy when it seems guaranteed you’ll lose money just as it’s hard to sell when your stocks continue to climb, especially when you risk falling behind peers. 

Remember back in March when our stocks were falling 10-20% day after day? It seemed a stupid decision to even consider buying anything! Even those who timed their sales perfectly before the drop may have missed buying back in before the subsequent run-up. In hindsight, holding and adding when and where we could would have been the best course of action, yet who followed through? 

The same applies to selling. Saul mentioned in the Knowledgebase that he sold during the tech bubble as valuations became detached from reality. This was certainly not easy to do in the moment, yet many highly educated and experienced investors could not bear to take money off the table and risk falling behind their peers in performance. 

This is the first evidence of a different mindset. 

2. Obsessive about playing the game and wanting to win

吃饭睡觉都想着自己的组合，极度渴望赢

It’s one thing to enjoy investing, it’s another to live and breathe stocks. “They wake up in the morning and the first thing they think about, while they’re still half asleep, is a stock they have been researching, or one of the stocks they are thinking about selling, or what the greatest risk to their portfolio is and how they’re going to neutralize that risk.” Sellers describes this obsession as sometimes getting in the way of personal relationships as their head is always in the clouds, thinking about their portfolio. 

This is also something that cannot simply be learned or taught, you’re either obsessed with something or you aren’t. 

3. Willingness to learn from past mistakes

从自己的错误中学习的强大能力

Everyone makes mistakes but what sets some investors apart is their intense desire to recognize, analyze, and learn from their own mistakes rather than simply repressing them. Experience helps by giving you more learning opportunities. This board is not only a great way to share our collective wisdom but also our collective failures. 

I can personally relate to this, being in my early 20s and lacking experience. When I started out, I had no one to teach me what to do or what not to do so I naturally made every mistake in the book and lost what was not an insignificant amount of money because of it. Of course, in hindsight those lessons seem to be quite cheap, as ever since I’ve been very disciplined in sticking to my investing philosophy and learning as much as I can, as fast as I can. 

4. An inherent sense of risk based on common sense

天生的风险嗅觉能力，换“队员”的能力

Sellers gives the example here of Long-Term Capital Management which had a team of 60 to 70 PhDs with sophisticated risk models that failed to realize they were overleveraged and collapsed when the market turned against them. 

The world is never stagnant, so why should our portfolios be? Saul is very good at adjusting his allocations to reflect changing confidence levels while keeping the same investment philosophy. Some may label this as momentum investing but I think that is missing the point entirely. 

5. Confidence in their convictions and sticking by them even when facing criticism

坚信自己的投资策略，即使在被批评时

2018、2019年，SAAS股票估值遭遇大幅下跌，SAUL依然坚信他的策略

It’s easy to be bullish on a stock that’s in an uptrend. It’s much harder to be contrarian AND be right. Remember last fall when SaaS valuations collapsed while the market continued to test all-time highs? There were many posts exclaiming that our stocks would take years or even NEVER revert back to all-time highs again. Yet here we are. This could be chalked up to luck as we live in circumstances that are especially favourable to hyper-growth SaaS companies, but it was our investment philosophies that allowed us to take advantage of that ‘luck’ and be where we are today. 

6. Keep both sides of their brain working

定性、定量双层分析能力

短期+微观 vs. 宏观+长远

Quantitative and qualitative are equally important. It pays to both be good at crunching numbers as well as keeping the big picture in perspective and recognize how intangible factors like management quality can influence different outcomes. This is also something I noticed Saul is very good at. He was able to quickly realize that Zoom was going to report massive growth and act accordingly, as well as having the vision to see what Zoom could eventually become and not sell out based on short-term overvaluation. 

Sellers notes that the majority of people in finance are left-brain oriented, great at crunching numbers and modelling outcomes, but not so great at seeing the big picture and communicating their thought processes. I studied finance in university, but I would consider myself more right-brain oriented which I found to be quite beneficial. It’s easy to miss the forest for the trees when we place such an emphasis on metrics like EV/S and finance courses don’t really teach you the qualitative side. 

7. Keeping your investment philosophy consistent through volatility

Sellers argues that few investors can handle the volatility required for high returns; they can’t handle short-term pain even if it would result in better long-term results. Especially as the amount you have invested grows, it’s difficult to do nothing, let alone average down, in a market crash. 在市场起伏中生存，少进进出出

On the flip side, averaging up at all-time highs is something that does not come naturally. We have many biases like anchoring to historical prices “it was $50 a week ago, I’ll wait until it gets back there” or not wanting to sell for a loss, even if in reality, you would be losing both on the underlying investment and the opportunity costs. Yet holding and adding to winners is exactly what results in long-term outperformance.  不要价格锚定

I read a great Seeking Alpha article on this: https://seekingalpha.com/article/4352387-art-of-not-selling. The author mentions a study that reviewed the historical distribution of 8,000 stocks trading on the NYSE, AMEX, and NASDAQ over 23 years (1983-2006) and found that the best performing 25% of all stocks were responsible for all of the gains. 全市场绝大部分涨幅是由25%的优质股票贡献的

"The outliers -- the stocks that beat the market by 500% or more -- are the core drivers of the indexes' performance. They compensate for the losses generated by the majority of the market. Missing them can lead to a dramatic underperformance, which is what has led many investors to embrace passive investing via mutual funds or broadly diversified ETFs."

It's scary to buy these stocks, they all appear overvalued. Yet why shouldn’t they? Why should an asset with fundamentals as rare and unique as DDOG be priced in the same league as the rest of SaaS? 好股票都令人怯步，因为它们永远估值过高

Ultimately, financial education, reading, and investing experience are all important but they’re table stakes and can be copied by anyone. There’s a reason why the vast majority of investors fail to outperform the market over the long run. 

The key starts with changing your mindset. 

My original thread (https://twitter.com/richard_chu97/status/1274865022976614400...)

Richard