Taking Care of Your Investments Like Warren Buffet and George Soros



Salam,

Today's post is a bit out of norm as I would like to review, as well as share some of the pointers I acquired from reading a book by Mark Tier entitled "The Winning Investment Habits of Warren Buffett & George Soros". This book by Mark Tier listed and elaborated the 23 common traits and habits of the 2 most successful traders and investors the world have known today; Warren Buffet and George Soros and how their seemingly different career world ( Warren Buffet trade stocks while George Soros trade currencies) and trading approach does actually share a lot of common grounds.



The reason's for the review was, for the past few days, I saw the important points elaborated in the book being discussed in various websites as well as newspapers here in Malaysia. Syazwan from Saifulsham.com for example posted an entry entitled "Exit Strategy" which happens to be one of the 23 Winning Investment Habits of Warren Buffett & George Soros. You can also view my comments on the post here.

Reading the book I have identified some of my weaknesses ( I expect to learn more of them as I'm still halfway reading this book) when it comes to trading forex.

Among other, quotes and pointers such as "Invest, don't speculate" allow me to realize that all these while I'm trying to predict (speculate) the market when I should be reacting to signals the market have given. This kind of approach (predicting and speculating) is dangerous as no one could ever know exactly what will happen in the market the next moment.

Then there's this quote from Warren Buffet " Stay within the circle of competence" is an enlightenment to me, to never jump into investment (or trades) that is outside my circle of competence. I'll give you an example, previously I would open up 5 to 7 charts of currency pairs and try to trade them although I am not really familiar with their behavior. Of course my trades would end up in losing position as I have never really understand what drives them (whether up direction or down direction) in the market. The same advice would also applies to other types investments or businesses that one would like to try. If you are an internet marketeer for example and you are already successful at it, it is best for you to focus in the current business and not jumping into forex or stock trading and hoping to be successful at them also, UNLESS you had done your due diligence and acquire as much as knowledge and experience to competently handle the new business you're venturing into.

And the last pointer (but not least) that I would like to share is "to know your exit strategy". I recalled watching the movie "Ronin" when the main character Sam (played by Robert De Niro) said something like this ""I never walk into a place I don't know how to walk out of". Well how true it is. According to Mark Tier in his book, both Warren Buffet and George Soros would carefully plan their exits (in investments) in detail even before they place the investment itself. And how is this "know your exit strategy" stuff applied in our real world investment? One might ask.

Well, it is quite simple. Before putting your hard earned money into any investments ask yourself these 2 questions:

i) What should I do when the investment reaches my investment goals.
-( in other words when should I secure and take the profit?)
ii) What should I do when the investment doesn't go as planned ?
-( when should I bail out from the investment? how much loss I am willing to risk / take?)

I guess that really sums up my post for today. If you need to learn more on habits that made Warren Buffet and George Soros successful in their investments, then I'd suggest that you grab a copy of Mark Tier's book "The Winning Investment Habits of Warren Buffett & George Soros" from your nearest book store, priced at RM39.90, it is a good read for all investors wannabe.