EQ versus IQ
Which one is more important for an Investor?
Emotional Intelligence known as Emotional Quotient (EQ) is the most important skill any investor can have. I am not saying IQ is not important but if I had to pick one of them, I would go for EQ any day. Any person with an average IQ can be a successful investor too if his EQ is high.
Renowned Psychologist and Author Daniel Goleman has written about Emotional Intelligence as a group of 5 skills of which 2 are absolutely relevant for every investor.
The 2 skills are Self-Awareness and Self-Regulation.
An investor who is self-aware “that he might act against his own self-interest” of not Buying Low puts his investments on Autopilot (so he automatically invests) or does not look at his investment often or seeks the guidance of a financial advisor.
Self-Regulation is so important that it helps you to Invest or Avoid Selling or Stopping your Systematic Investment Plan (SIP) in declining markets. People who have the gift of self-regulation have far better investment outcomes than others who do not. This is because the self-regulated folks are able to manage their emotions and avoid irrational decisions.
Think about it. Everyone wants to buy low.
If there is no loss of income, and investments are on Sale, why would you not invest?
Why are some people waiting for the right time to invest? What is this bottom thing?
There is nothing called Waiting for the Bottom…
If at all, form logical but firm rules such as I will invest:
- When there is a Vaccine Found or
- When the markets have gone up more than 50%
However these logical rules will also fall flat even if a vaccine is found or if the virus is under control; because then there could be something else such as the US Election, Trade Wars and 100 other things.
Author Rolf Dobelli has written “News is to the Mind what Sugar is to the Body“.
There will always be plenty of News that will Test your EQ and is thus so much more important than IQ.
What do you think?