Please ensure Javascript is enabled for purposes of website accessibility

This Is the Most Important Decision an Investor Can Make

By Danny Vena - Jan 26, 2021 at 11:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Knowing who you are as an investor is the first step toward lasting success.

Every investor has had a knee-jerk reaction and made a decision that, in hindsight, might have not have been the best move. It may have been the result of a rapid increase or decrease in the value of a particular stock, or based on incomplete information. These rash decisions are typically rooted in fear and can be wealth-killers over the long run.

On this episode of Fool Live that aired on Nov. 30, 2020, contributors Danny Vena and Brian Withers discussed how knowing who you are as an investor can keep you from making costly mistakes.

Brian Withers: Know yourself and invest that way. Danny do you have anything to share, I'm catching you cold here.

Danny Vena: It's interesting that you brought that up because one of the things that I used to post on the boards all the time was the quote, "Investor know thyself.'' Because I think it's really important. Not everybody can be comfortable investing in high-risk, high-reward companies, which is an area where a lot of my investments are or at least they start out that way. I think it's important for folks to be able to sleep at night.

Find an area of the market, find an investing style that they're comfortable with. Like you said, whether it's dividend, whether its growth, whether it's value, whether it's stocks that have been mispriced for one reason or another, I think folks that find an area that they're comfortable with and develop a certain amount of expertise will be successful as investors and help them sleep at night.

I think it's important, like you said, that it's important to know who you are and invest that way.

One of the things that worked early on for me and made my life easier as an investor is the fact that I picked a couple of areas that I was interested in and that I wanted to become somewhat of an expert in. Those areas are the ones that primarily fill out my portfolio. I am invested in e-commerce, I am invested in software-as-a-service stocks, I'm invested in streaming video, I'm invested in telehealth. If you look at my portfolio, I'm just going to guess, but I would say probably 75% of my portfolio falls into those broad categories.

Whenever a stock makes a big move up or down, I'm comfortable sitting down and trying to figure out what has caused that move. In that way, I don't have to make rash decisions.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.