For investors and traders, the importance of mindset is still overlooked. Too many people think that method or strategy is king. If we can get this right, then everything else will fall place. However, this is far from the truth of the most successful investors, traders and business people alike.
Our personal experience now spanning some two decades in the markets is- mindset must come first. This is not to say our method, strategy, analysis and so forth are not important, they come second.
What do we mean by mindset? This is our approach to our work, the purpose of our work, and the purpose of life and work, linked. These must be aligned. Mindset is also relevant at practical levels, such as how to manage cognitive biases common to traders and investors; the most common which is failing to cut losses.
The importance of putting Mindset first is not peculiar to the finance sector. In business more generally, management and leadership drive business. A corporation might have the best product, the best processes, but it will eventually fail if it does not put its people first- and this necessarily means focusing on mindset.
Similarly, the best corporations throughout history have focused on mindset, people and innovation. This is why, as investors too, we must study, in some detail, the qualitative elements, including management, leadership the ability to innovate and manage change. For example, does the business have a Moat?
In the tech ort start-up space the situation is the same- mindset first. Here innovation and managing change is extremely important. Beyond this level, there is something in this sector which I personally love- the vision and passion to use tech to ‘change the world’ for the better.
This is not ‘blue sky’, this is not idealistic. We have reached a stage in human history where our technology and markets have advanced so far and so quickly, that nearly anything is possible. The ‘nearly anything’ bit is very exciting. It means we can harness human creativity and innovation like never before. To do this we must put mindset first like never before.
The most successful corporations this century, the most successful start-ups, the most successful people will realise the answer is inside us- we just need to look, sow, harness and give.