Taking One’s Temperature
Many places we go these days they take your temperature. This past week I had my annual physical. Before I could enter the clinic waiting room, my temperature was taken. At church yesterday, the children’s check-in included taking the temperatures of our grandchildren. This week I have a dental appointment, and they will take my temperature before I see the hygienist. You should also take your temperament temperature as an investor.
What is Temperament?
One aspect of temperament is the energy level of a positive or negative response. Do you tend to react intensely to a situation, or do you have a calmer response? Are you easily disturbed by changes in your environment? Do you lose focus easily or can you maintain focus based on facts and plans? Another way of saying this is, “do you have self-awareness and self-control?”
As an investor, self-control and calm during the storm is vital. If you don’t have these attributes, then perhaps you need to pay for the services of a financial advisor. On the other hand, are you willing to change your mindset and start to behave like an adult when it comes to financial choices?
The Biblical Approach is Wisdom
The scriptures are full of reminders related to this area of life. Here are just a few of them from the English Standard Version:
Proverbs 14:29 “Whoever is slow to anger has great understanding, but he who has a hasty temper exalts folly.”
Proverbs 21:5 “The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty.”
Proverbs 25:28 “A man without self-control is like a city broken into and left without walls.”
Galatians 5:22-23 “But the fruit of the Spirit is love, joy, peace, patience, kindness, goodness, faithfulness, gentleness, self-control; against such things there is no law.”
2 Peter 1:5-7 “For this very reason, make every effort to supplement your faith with virtue, and virtue with knowledge, and knowledge with self-control, and self-control with steadfastness, and steadfastness with godliness, and godliness with brotherly affection, and brotherly affection with love.”
John Ray’s 1678 proverb collection also said it well: “Haste makes waste, and waste makes want, and want makes strife between the goodman and his wife.”
Elements of Wise Investing
Wise investors learn, have self-control, and stick steadfastly to a written plan. Emotions are not helpful for the prudent investor. You don’t have to have a high school or college degree to be successful as an investor. But you do have to be willing to learn. You also need to understand your own temperament and adjust according to your temperament temperature. The quote from Charlie Munger on today’s Charles Mizrahi’s 3-1-Q is worth remembering.