Lately, I’ve been thinking about great investors and what they’re made of. Are there any similarities? Or commonalities to study? I want to share my first draft here and get as much feedback as possible. At the bottom, you can find my inspiration for this post. Let me know what you think.

One – Great Investors Are Doers

One common trait stands out. Yet it goes overlooked all the time. Great investors get things done. We often miss the first step to becoming a great investor… you need to have money to invest Great investors built a portfolio, worked their way up or started a company from scratch. They pooled assets together, they hired legal teams, accountants, and more. This is, without question, a special trait they all share and it’s probably the most important.

Two – Great Investors Do It Their Way

Great investors seem to be particularly passionate about their style. There is no one size fits all in markets for all great investors. Each great investor has their own unique story, set of skills, and tactics that got them to where they are. It could have been a conventional method such as buying value stocks, growth companies, real estate, angel investing or even index investing. They found the opportunity and they went after it with a strategy specific to them.

Three – Great Investors Lost At Least Once

I know no great investor who won all the time. Actually, a common trait for most great investors is that they have lost before. Or have gut wrenching stories to tell about their portfolios collapsing. There is something about being wrong, learning, and not repeating the mistake. It sounds simple, but it is not. To avoid making the same mistake twice, especially in an area that is so dependent on your beliefs or decision making, you have to be open and flexible enough to change your mind. Dogmatism won’t get you very far in the the investing world.

Four – Great Investors Understand Luck

One thing I am often inspired by with great investors is how they attribute at least some of their success to luck. They understand the bigger picture. Every decision you make in markets could have gone the opposite way. Understanding that luck always plays a factor is a humbling but realistic shared mentality among the greats.

Five – Great Investors Know How To Ride Winners

There is nothing more tempting than selling an asset after it has had a sizable gain. The green, the potential, the ability to realize profits are all in front you. But, have you noticed how many people have stories about the time they bought Amazon in 2002 and sold after a small gain? How much money would they have had they held all this time? Millions? That’s the difference. Great investors hold on to their winners and see the full potential of the assets they are convicted on.

Six – Great Investors Do What They Love

Most great investors do what they love and it is beyond money. They are interested in markets, supporting great businesses, putting their money to work to solve problems or to get a return for their clients. Money is just a secondary reward of the passion they have. That’s why I think it’s important to always know that if you are an investor, you also should have a vision beyond the money. If everything went to zero today, you should still be able to say that you did what you loved doing. If not, that means you are literally just working for the chance you could strike it rich and I’m not sure that kind of attitude yields anything positive ever.

Seven – Great Investors Know The Risk of Ruin, But Also The Fat Pitch

To produce abnormal returns, you usually have to take abnormal risk. With risk, comes the chance of ruin. In this sense, great investors walk a very thin rope connected between two very tall buildings — one called risk and the other called return. But this is why the fat pitch is important. Great investors seem to know their fat pitch. And they sit. And they sit. Until suddenly, there it is. The fat pitch is the investment that, in their eyes, has the best returns with lowest risk and it can afford to be a larger than usual position. This is not easy to do or spot, but many great investors have made their career one or two fat pitches.

Eight – Great Investors Research and Think Before Believing

Each day, new pieces of information are thrown at us, books are being published, people are selling services and products, and the news is always looking to provoke the next big talking point. Great investors are rarely swayed in either direction when it comes to this. From what I’ve seen, great investors have a sound process of research, but more importantly a passion for that research. Some of the best investors I know actually get angry when they see certain things being thrown around that are obviously wrong, but people were too lazy to do their own research. They take it personally because they actually did the research first before blindly believing.

Nine – Great Investors Understand Time

There are no get rich quick schemes. There are no hidden secrets. Everything a great investor will accomplish whether it’s an aggressive stock pick strategy or a day trading algorithm is accomplished over time. Understanding the long game, the journey, and the process over 30, 40 or 50 years is something that has to be planned out and constantly baked into the decision-making process. Markets are not going anywhere and they have existed since the dawn of civilization. No one day makes a new trend. No great investor got rich in one night. Things are built over time.

Ten – Great Investors Understand The Basics

This should go without saying, but actually, you will be surprised by how many people are investing or moving money around today and could not tell you what Free Cash Flow means in two or three sentences. Great investors understand some aspect of basic business operations because they have run their own, studied other companies or learned about it through the years from their own work.

Thanks for reading and I hope you enjoyed this first draft. I still have some work to do on it. Most of my insights are derived from reading about the greats, meeting many smart investors throughout my years in the industry, and also things I have learned first hand managing my own portfolio. You can read the inspiration for this post here from Michael Mauboussin or leave a comment if you have anything else to add.