Rules-Based Investing

What are the traits of a successful investor. I’ve tried to make clear in Retirement Watch that in all your financial decisions you need a process. People make mistakes when they don’t have a process. They use rules of thumb, short cuts, intuition, or whatever bit of information they recently encountered. This article explains from an interesting perspective the key traits of a successful professional investor. It’s worth reading.

As a psychologist who works with a wide range of money managers, from purely discretionary to wholly quantitative, I have enjoyed a privileged window on the factors that lead to trading and investment success. That view has shown me that the best predictor of long-term returns is the presence of a well-considered, rational decision-making process that displays a deep understanding of the dynamics of the marketplace.