Quote of the Day: The Defining Reason Why Some Succeed and Others Fail at Investing

In Jack Schwager's Hedge Fund Market Wizards, Columbia Business School professor (and author, and successful investor) Joel Greenblatt describes how he begins his Value and Special Situations Investing course:

In the first lecture of the course I point out that although they are all very smart there are many other good business schools in the country whose students are also very smart. Most MBAs who get involved in the market will fail. I explain that, therefore, it can't be intelligence that is the defining reason why someone is successful in the markets. I think the difference between those who succeed and those who fail is how they think about the market. Everyone is bombarded every day by price movements, explanations for those price movements, macro events and lots of other information. You need a methodology for cutting through all of that information and see things as they are.

We're all human, and for some it takes monumental effort to see the world as it is, versus as their personal screening, or scripting -- we'll say their biases -- might suggest. Successful investors suspend their wants, their fears, their, for example, political biases, and so on, and see the facts on the ground -- the data -- as they are to guide their decisions.