Buffet and Soros Habits 7-13

By: Tinaye Muzanya

Habit 7: Do your own research
Soros and Buffett do their own research to find investments that suit their investment criterion. They rarely listen to analyst with the exception that the analyst has an investment style similar to theirs.

Habit 8: Be patient
Buffett was quoted saying, “The trick is, when there’s nothing to do, do nothing.” Soros says ,”To be successful, you need leisure. You need time hanging heavily on your hands.” As an investors or trader never be pressured to make an investment because you feel you should have a position opened so as to feel you are doing something. When Buffett or Soros “can’t find an investment that’s meets their criteria, they have the patience to wait indefinitely until they finds one that does. (Tier, 2006:84)”


Habit 9: Act instantly
As Mae West said, “He who hesitates is a damn fool”. When Buffett or Soros finds an investment that meets their investment criterion they do not hesitate to act. Once they make a decision they stick to it.

Habit 10: Hold an investment until there is a reason to exit
Before one enters a trade they should know when there are going to exit or what may cause them to exit a trade. Warren Buffett‘s aims to hold shares of a company forever once there are bought. He “continually measures the quality of the business he invested in with the same criteria that he used to invest in the first place… he will sell a stock market when any of those criteria have been broken (Tier, 2006:120)”

Habit 11: Never doubt your system
Buffett and Soros follow their investment strategy religiously. Hence their investment criterion does not change. If it has to change it will be improved but the core of the strategy will not change.

Habit 12: admit your mistake and correct them
Successful people focus on avoiding mistakes, and correcting them the moment the become evident (Tier, 2006:128). “Most people think of investment mistakes and losses as being equivalent. The master investor’s (Soros and Buffett) definition of a mistake is more rigorous: not following his system. Even when an investment that did not fit his criteria ends up being profitable, he still views it as a mistake (Tier, 2006:130).” Buffett admits his mistakes and with the help of Charlie Munger with helping him understudy the importance of rectifying his mistakes. On the other hand Soros said, ““I have a criterion that l can use to identify my mistakes,” he writes “The behaviour of the market.” When the market tells him he’s made a mistake he immediately “beats a hasty retreat” (Tier, 2006:131).”

Habit 13: Learn from your mistakes

Always treats mistakes as learning experiences. “”To others,” he (Soros) says, “being wrong is a source of shame; to me, recognizing my mistake is a source of pride. Once we realize that imperfect understanding is the human condition, there is no shame in being wrong, only in failing to correct our mistakes” (Tier, 2006:133).” Once an investor “has cleared the decks by getting rid fo the offending investment his mind is free to analyse what went wrong. And he always analyses every mistake. First, he doesn’t want to repeat it, so he has to know what went wrong and why. Second, he knows that by making fewer errors he will strengthen his system and improve his performance. Third, he knows that reality is the best teacher, and mistakes are its most rewarding lessons. (Tier, 2006:131).”