In a recent interview with Fortune magazine, Berkshire Hathaway Chairman and Vice-Chairman Warren Buffett and Charlie Munger were reminiscing about their early days together when Buffett declared that ‘temperament is more important than IQ.’ As human beings, Buffett knows that we’re all emotional creatures – so when it comes to investing, he always cautions us to stay insulated from our feelings. Back in the day, his long time friend and teacher, Ben Graham instilled in him the concept of Mr. Market – ‘the mental attitude toward market fluctuations that I believe to be most conducive to investment success.‘
In a nutshell, Mr. Market is your imaginary investment partner who influences your decision making based on the fluctuations in the market. On good days, he’s euphoric and sees only the good; and at other times, he’s depressed and can see nothing but trouble ahead. In either scenario, he’s irrational and if you fall prey to his influence, ‘it will be disastrous to your portfolio.‘ As investors, the smart way to succeed is to ‘couple good business judgement with an ability to insulate your thoughts and behavior from the super-contagious emotions that swirl about the marketplace.‘ It’s no accident that Mr. Buffett is considered the greatest investor of our time.
Learning to manage your emotions is a lifetime endeavor; but for those who can master the habits, it’s the difference between sleeping walking through life and actually living. Ken Linder honed his emotional intelligence playing competitive tennis and managing broadcasting’s most influential talent. In his book, Your Killer Emotions, he gives you this process to manage your most important decisions.