It’s been some time now since we have complained about long-term thinking. Every time we see “quarterly results”, we get uncomfortable with short-term thinking, which then steers the stock market for a while. In our view, however, the long-term vision is what sets us apart as investment advisors for our esteemed expat clientele.
In our opinion, there are three things that make an investor successful:
- Emotional stability
- Long term vision
- Common sense
Emotional stability is priority number 1. If you miss this when investing, you will make wrong choices. No matter how intelligent you may be. We personally know several doctors and engineers who have lost a lot of money investing, even though they are extremely intelligent. Each time this could be avoided while having control over their emotions.
Of course, you need a healthy dose of common sense. After all, it is very important that you understand what a company does, how it makes a profit, and that you can see through the accounting tricks of some business leaders. You don’t have to be a genius to be successful in investing. That is why long-term vision is high on our list.
With the right vision normally comes a plan. And with that plan, it’s easier to maintain your emotional stability. Does that mean you shouldn’t occasionally trade in a stock to grab a quick profit? Absolutely not, but make sure it fits into your long-term plan.
If you were to ask us what the three most important skills of good management are, you will notice that we repeat two things:
- Long-term vision (and plan)
- Common sense
Naturally, you want the management you entrust your money to be honest and with integrity.
Warren Buffett once said the following:
“If you want to hire someone, look for three qualities: integrity, intelligence, and commitment. If the person doesn’t have the first trait, then the other two will destroy you. If you hire someone with no integrity, you’d rather have them lazy and stupid.”
And here too it is best that a healthy dose of common sense is present. Certainly, with listed companies, there is a lot involved in leading them, and then you want to be able to rely on him or her being the boss.
The second point is one that we perhaps took too little account of ourselves. However, the evidence was always right in front of us. For example, there are numerous studies that show that family businesses perform better on average. The reason for this is obvious. What they do, they no longer do for themselves. Often, they have more than enough money. But they work to take care of the next generations. They think long term.
Recently it became clear to us that Amazon’s Jeff Bezos also makes a difference compared to many other tech entrepreneurs of his generation. And that this is also the reason why Amazon, like Google, is one of the companies that have grown so strongly and were survivors of the dotcom bubble.