By Andrew Wong      1st Sept. 2003

Investor Types

Different people invest with different strategies or no-strategies. This article describes in more details different behavioral patterns of investors of four distinct types.

When trying to make observations of types of investor behavior, this QuaSyLaTic invariably uses his own investment philosophy and strategies as reference for making observations. Hence the set of characteristics and attributes on what constitute a focused and disciplined investor to create wealth is first described.

Characteristics and Attributes of Focused & Disciplined Investor

  • Taking investment as a serious study, research and monitoring work not a casual game with hear-say and hope for the best.
  • Understand investment is a matter of timing, not blindly trusting in long term
  • Invest in market instruments that have potential to bring the best return, not using diversification to mix up good apples with bad fruits.
  • Study risk / reward carefully and prepare to exist if faced with high uncertainty to protect acquired gain, or preserve capitals or cut loss.
  • Make research on future scenarios of investment performance with monitoring to validate the assumptions and do not deal with uncertainty or unknown.
  • Take care of every dollar of investment to ensure its value creation.

With the above as criteria, four distinct types of investors are observed.

Type 1 : Investors who subscribe to the above stated strategies or approach but do not have the interest to study and take up the discipline. Or they do not have any preference for any particular strategy or approach. They prefer to let “consultant cum investor” handle everything and their fund, as long as they are being kept informed. Most important of all, they understand the nature of investment risks and blame no one.

Type 2: Investors who also let “consultant cum investor” handle everything and their fund, but they want to learn the above described strategies and approach, with the views that one day they can handle on their own investment. They also understand the nature of investment risks.

Type 3 : Investors, who has their own strategies and willing to put in hard work to monitor and validate their assumptions in order to grow their wealth. They may have different strategies or approach from the above. This QuaSyLaTic will network with these people for networking and exchange of ideas. 

Type 4 : Investors who do not subscribe to the above stated strategies and approach. Usually they do not do serious research and monitoring work. They do not show consistency in the investment decision. They use general investment ideas as strategies, with hope for the best. They may not have the stomach for investment losses. They don’t cut loss and hope for the best into the future.

 

End.

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