Ritholtz on the 'Many Hats' of a Great Investor

KnowNOW!

Global Economic Watch

Syndication

Recent Posts

Tags

Archives

Barry Ritholtz's blog The Big Picture is one of the most popular--and frankly one of the best--in the econo-business blogosphere.  But he's not above making an appearance in old media every now and then.  He has a column in today's Washington Post that is worth a read.  In it, Ritholtz muses on what it takes to be a great investor.  He argues that an investor wears many hats.  At times, an investor is an Historian:

Knowing what has happened in the past (and how often) is an enormous advantage when it comes to investing. It informs you of the range of possibilities, allows you to conceptualize possible outcomes to various scenarios and provides a framework for thinking about market cycles.

Heading into the market bottom in 2003, some market historians warned about a secular bear market. These are the decade-plus long periods of huge rallies and great collapses. Some warned that investors should not be surprised if after a decade, the markets were essentially unchanged, which is exactly what happened.

Think back to the market lows in March 2009. After about a 20 percent bounce off the bottom, quite a few commentators expressed fears that the markets had gone “too far, too fast.” Market historians knew that the median bounce after a drop of 50 percent or more was 75 percent. With that information, you might not have been scared away from equities just before they gained 80 percent in value over 18 months.

At other times he/she may be a Psychiatrist, a Trial Lawyer, a Mathematician, or an Accountant.  Read the full column here


Posted 05-22-2011 1:17 PM by Graham Griffith
You must login to your account to comment. If you do not have an account, please register to enjoy the full benefits of the site!