The Psychology of Investing

Generally, people tend to use other people’s money to invest. Some never figure it out and just bail; others lose a lot of other people’s money before finally figuring things out on their own—and then they refuse to manage money for others anymore. When they use your capital, they’re hoping you’ll shoulder the risk for them. But once they feel there’s truly no risk, they’ll want to harvest the profits themselves using their own money. Because actually, making money is constrained by the capacity of your capital pool. (Those with small principals won’t feel this; those with large principals feel it deeply.)

This is the human nature issue you simply can’t avoid when you hire someone else to manage your funds.

Every industry has barriers to entry. You have to study to become a coder—so why should investing require zero learning? Is investing really that easy? That undemanding? Could literally anyone off the construction site with an ID card be profitable? Then why not go to a casino and become the God of Gamblers?

What are your outlook on life and values? Are you willing to embrace the four words: “seek truth from facts”?