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Fortune Cookie

The Five Virtues of a Wise Investor

Five Virtues of a Wise Investor

#1: Curiosity

For the next few blogs, I’ll be writing about a topic I think about a lot: The virtues that can make someone a great investor. I’ll share my list of five important characteristics you may want to cultivate yourself, as well as look for in a wealth manager.

At first glance, it might seem like these virtues aren’t at all connected. However, I sort of think of them like the lessons the magical Mr. Miyagi taught the young Daniel in “The Karate Kid.” Separately, each investor virtue may sound a bit odd. However, when you put them all together, you’ll clearly see how they intersect.

Remain curious

To illustrate the virtue of “curiosity,” consider a psychological experiment University of Wisconsin-Madison and Northwestern University researchers conducted with 100 people and some tempting fortune cookies.

To start, researchers offered participants the choice of a plain fortune cookie or a chocolate-dipped one. As you might expect, most (80%) of the participants chose the chocolate version.

Next, researchers offered a different set of people a choice between the two cookies, but added a twist. They told participants that there was a fortune inside the plain cookie that revealed something the researchers knew about the person. In this case, curiosity trumped chocolate. Almost three-fourths of participants (71%) chose the plain cookie with the intriguing fortune.*

What does this tell us about human nature? Instead of choosing what we think is the obvious best answer (the chocolate-covered cookie), being curious can open our minds to other good choices (the plain cookie with secret information).

Curiosity challenges the status quo

Curiosity can also have a big impact on investing choices. Curious folks—both investors and wealth managers—make a point to look carefully at potential financial opportunities. Curious individuals tend to look harder and longer to find good bargains. They also ask more questions, such as “Why is everyone buying that stock?” or “Why is everyone running away from this area of the market?” They usually don’t blindly copy other people’s financial choices.

Curious investors often look outside their comfort zones. They’ll investigate options that might provide great financial opportunities—such as investing globally or in emerging markets.

Questions can lead to a well-diversified portfolio

Curious investors tend to consider a larger set of financial options, which in turn prompts them to diversify their portfolio, which in turn can help them to take less risk with their money but earn potentially higher returns.

When stretching a little isn’t completely natural to them, investors work with curious wealth managers who can help them broaden their investing perspectives.

Here’s a good self-test to see if you are a curious investor.  If you are completely comfortable with every investment in your portfolio, you may not be curious enough. Most people stick close to home or within their comfort zone when it comes to investing. However, being truly curious means expanding your horizons a little.

That’s my take on curiosity as a key virtue of a wise investor. Stay tuned for my list of four more. No hints! Hey, I want to keep you curious!

* By the way, everyone’s fortune said the same thing: “You are not illiterate.” True, but a little bit of a bummer. No psychic insights or revealed secrets after all.

Important disclosure information

Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by RegentAtlantic Capital, LLC (“RegentAtlantic”) will be profitable.

Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request.

This article is not a substitute for personalized advice from RegentAtlantic. This article is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

RegentAtlantic does not provide legal or tax advice. Please consult with a legal and or tax professional of your choosing prior to implementing any of the strategies discussed in this article.

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