Value Investing: What Makes Great Investors Great?

A list of habits, all under our control, that can make us better investors

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Jan 21, 2020
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As in most walks of life, there are those in the investing industry who generate such exceptional results, and keep generating them, that we call them great investors.

In chapter nine of “Value Investing: A Comprehensive Beginner Investor’s Guide,” Blaine Robertson described the defining habits and traits of the investing greats. This is the list:

They do their homework

Robertson argued that exceptional investors use research to take advantage of all the information available to them. He calls them not just researchers, but great researchers because they take the time to examine the advantages and disadvantages of each business situation. And, we must follow their lead if we are to become better than average investors ourselves.

Great investors have deep knowledge

The author made the interesting argument that intense competition exists among the uninformed, but not so much among the very well informed. When you have extensive knowledge about the business in which you invested, you will make better decisions. As Robertson pointed out, you will not just have to make decisions, you will have to make decisions regularly, so you cannot afford to be a novice.

They diversify

In this section, Robertson was making a case for generalized knowledge, knowing a little about many subjects rather than a great deal about just one subject. Michael Mauboussin dedicated a full chapter to this issue in "More Than You Know: Finding Financial Wisdom in Unconventional Places."

The gurus are visionaries

They’re looking 10 years ahead, according to Robertson, and not just trying to make a quick buck in a matter of months. Before taking action, they plan thoroughly and know what they are getting into. As he pointed out, they have a couple of powerful weapons: insight and foresight. This doesn’t just apply to buying: They cannot be pressured into selling because they know the real value of their businesses.

They learn from their mistakes

The greats recognize they will make mistakes, even though they may be very knowledgeable and had planned well. Despite making the occasional mistake, they don’t criticize themselves. Instead, they look at mistakes as learning opportunities. Some would even say their past mistakes gave them the expertise needed to gain success. As Robertson put it, they consider themselves wiser because of their past mistakes.

The greats are tenacious

These are people who like challenges, being able to do what others may consider impossible. What’s more, they are confident in their own abilities and not swayed by the opinions of critics. More specifically, they do listen to others and take constructive advice, but pay no attention to naysayers. Robertson added that when we ordinary investors are faced with challenges, we shouldn’t give up; rather, we should try to understand where we went wrong, do more research and keep going. There’s a word for this sort of spirit: resilience.

Stability matters

Great investors understand the long process by which small companies become big companies, and prefer to see steady, sustainable growth rather than quick and wild growth. With that in mind, they avoid shortcuts and quick fixes that might turn bad in the future. They approach their investments in the same way, ignoring faddish trends or investing in a hot stock because a lot of other investors are. As Robertson observed, they don’t resist innovations, but do stick with those that fit their core values.

Calculated risks

They’re not afraid to make decisions, but because they have done their homework and carefully researched the companies in which they might invest, they know many of the risks they might face. The author pointed out that the business world is no place for people who are rash, nor for people who are afraid to make decisions. Risk is always present, but those who are well prepared normally avoid most of the volatility.

Internal control

Consider the psychological concept called “attribution,” It refers to the distinctions we make, and might be summed up in these questions: “When you succeed, is it due to internal or external factors? When you fail, do you look inside or blame external factors?” Robertson noted great investors look inward for validation of their wins and losses.

Valuing people

For outstanding investors, the goal is to serve people and, by doing so, be rewarded. They don’t directly go to making money because they believe that long-term profits are only available by being of service, not chasing dollars. For investors, that could mean putting their money into businesses that improve products and services used by customers.

Great investors are made, not born

The road to investing greatness is open to everyone. Robertson wrote this status is not a “lofty dream” reserved for a select group of people. It is open to anyone who is prepared to pay the price, and by that, he meant taking the time and making the effort. Set appropriate priorities and work hard, and it’s possible you might join the greats.


In his second to last chapter, Robertson has listed some of the habits and traits of great investors, those who have a solid track record of above-average returns.

As might be expected, some are to be expected, including hard work, digging deeply into information about target companies and making long-term plans. Others recommend that investors think broadly rather than narrowly, value people and hold themselves internally accountable for successes and failures.

No one can be expected to check off every item, all the time. But continually striving to improve our mastery in each of the items will surely make us better investors.

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