The consummate leader cultivates the moral law, and strictly adheres to method and discipline; thus it is in his power to control success.

The Art of War : Tactical Dispositions

Investors themselves are the main drivers of investment success or failure. If investment management is done well, there will be profits; if investment management is poor, there will be losses. Therefore, in addition to actively acquiring knowledge in investment analysis, investors must also focus on cultivating personal qualities and maintaining strict discipline. Only by doing so can they increase their chances of success in the stock market.

Upholding Principles

Investing in stocks is like fighting a war without gunpowder. If investors want to win this war, in addition to having knowledge of investment analysis, they must also possess a strong investment mindset. Only then can they navigate the ever-changing stock market and secure victory.

Therefore, an investor’s personal qualities play a crucial role in investment. Besides investment strategies and analytical skills, emotional management and psychological resilience are equally important. Successful investing requires integrating all these aspects and continuously improving one’s mindset to adapt to ever-changing market conditions.

Warren Buffett’s mentor, Benjamin Graham, once warned him that the greatest enemy in investing is oneself. To be an outstanding investor, one must have a strong psychological foundation; otherwise, no matter how much knowledge one possesses, success in investing will be difficult to achieve.

Buffett’s extraordinary success in stock investing stems from the perfect combination of his investment strategy, analytical ability, and personal qualities. Learning Buffett’s investment strategies requires integrating these strategies with his exceptional personal qualities. Only then can one, like Buffett, navigate the stock market and achieve substantial long-term gains.

Below are some of Buffett’s key personal qualities that provided a strong foundation for his investment success. For investors looking to follow in his footsteps, these qualities are worth learning and cultivating.

A Calm and Steady Mindset

Greed and fear are the two primary human weaknesses that investors must overcome. These weaknesses are the most significant obstacles to investment success. When a stock’s price keeps rising, investors who do not own it may succumb to greed, unable to bear the thought of missing out on profits, and irrationally rush to buy at foolish prices. Conversely, when stock prices fall, investors who hold large amounts of stock may become anxious and fearful, terrified that their investments will vanish, ultimately panic-selling at a loss. Therefore, investors who cannot overcome these psychological weaknesses, regardless of their knowledge level or analytical skills, will eventually be defeated—not by the market, but by their own emotions.

In the 1960s, the U.S. stock market experienced a period of prosperity, with electronic and technology stocks being highly sought after. Their prices continuously reached new highs. Tempted by enormous potential profits, most investors became extremely greedy, rushing into these stocks like starving beasts, completely ignoring the potential risks.

Buffett, however, remained rational and composed. He realized that there were no longer any good investment opportunities in the market and decided to exit, leaving the market entirely.

History proved Buffett’s decision to be correct. When the stock market bubble eventually burst, those who had recklessly entered suffered enormous losses, while Buffett, calm and rational, survived unscathed.

Despite the lure of massive profits, Buffett remained undisturbed. How did he manage to stay so calm and rational in the face of market fluctuations? This can be attributed to Buffett’s investment philosophy. He viewed the stock market as a place to invest in businesses, not to speculate on stock prices. He consistently focused on investing in companies and holding them long-term to share in their operating profits. He once said:

I never attempt to make money from stock market fluctuations. When I buy a stock, I imagine that the stock market might close tomorrow and not reopen for five years.

Warren Buffett

Buffett’s focus was always on whether the companies he invested in were operating well. As long as they continued to perform well, he would hold onto them long-term, making short-term price fluctuations irrelevant to him.

In contrast, most investors fantasize about getting rich overnight. They are unwilling to wait patiently for company profits and instead seek to make quick profits from stock price movements. Their focus is on price fluctuations rather than the businesses behind the stocks. They see only the potential gains or losses from price changes, making it impossible for them to maintain a calm mindset in the stock market.

Therefore, overcoming greed and fear in stock investing requires a fundamental shift in investment thinking. Learning from Buffett means adopting a mindset of investing in businesses and profiting from their operations rather than speculating on price movements. Once this mindset changes, the investor’s attitude will naturally follow. By treating stock investments as business investments and focusing on company operations rather than constantly watching price charts, investors can prevent their emotions from being swayed by market fluctuations. Only by maintaining a calm attitude toward stock market changes can investors make rational decisions and ensure successful investments. The key is to resist temptation, remain unfazed by fear, and use personal investment criteria to evaluate every investment opportunity. If an investment does not meet the criteria, no matter how attractive the market seems, ignore it; if it does meet the criteria, take action decisively, regardless of market conditions.

Exceptional Patience

Buffett’s investment principles—value investing, long-term holding, and buying undervalued assets—have garnered widespread attention among stock investors. Many people understand his investment philosophy, yet very few can replicate his consistent success. Ultimately, the reason investors fail to achieve Buffett’s level of success is that they overlook one of his most crucial qualities: patience. Buffett’s winning strategy lies in his ability to patiently wait for the right investment opportunity and to hold onto his investments for the long term.

Buffett once said:

We don’t get rewarded for frequent investing. We get rewarded for making the right investments. As for how long we are willing to wait for the right investment opportunity, we are willing to wait indefinitely.

Warren Buffett

This statement highlights Buffett’s incredible patience in waiting for the right investment. When he cannot find a suitable investment opportunity, he is willing to wait as long as necessary—even indefinitely. Buffett frequently reminded his partners that simply making frequent investments does not guarantee profits. The only way to succeed in investing is to make the right investments. However, in reality, investors often have to wait a long time for the right opportunity to appear. During this long waiting period, many investors, lacking patience, ultimately give in and make impulsive investments. As a result, when the real opportunity arrives, their funds are already tied up, forcing them to watch helplessly as the opportunity slips away.

Buffett’s long-term holding strategy further showcases his patience. When he buys stock in a high-quality company, his goal is to hold it for the long term, not to sell it quickly for short-term gains.

My favorite holding period is forever.

Warren Buffett

Buffett typically holds his investments for over ten years. He does not concern himself with short-term market price fluctuations; instead, he focuses on whether the company continues to operate well. As long as the company maintains its competitive advantage, he is happy to hold it indefinitely. In contrast, impatient investors tend to sell as soon as stock prices rise, fearing that their profits will disappear. This short-sightedness often causes them to miss out on much greater future gains, leading to deep regret.

Buffett believes that only through patient, long-term holding can investors benefit from the power of compound interest. Compound interest refers to the process of reinvesting every profit earned to generate even greater returns. The effect of compound interest is enormous. If an investor starts with $1,000 and achieves a compounded return of 10% per year, after 45 years, the investment will grow to $72,800—over 70 times the original amount. If the compounded return is 20% per year, the same $1,000 investment will grow to $3,657,200—over 3,657 times the original amount. Although the difference in annual return rates is only 10%, after 45 years, the final outcomes are vastly different, demonstrating the incredible power of compound interest.

Buffett’s investment strategy is simple: invest in high-quality companies with strong return on equity, hold them for as long as they remain excellent, and patiently wait for them to grow, generating compounded returns. Time is the key to compound growth—the longer the time, the greater the compounding effect, and the more wealth an investor can accumulate. Those who lack patience cannot reap the full benefits of compounding.

By patiently waiting for the right investment opportunities and patiently holding great companies, Buffett has built immense wealth through investments in Coca-Cola, The Washington Post, Disney, McDonald’s, Wells Fargo, and other outstanding businesses. His success is a testament to the importance of patience in investing.

Maintains Discipline

Apart from having the right mindset and strong psychological qualities, investors must strictly adhere to the investment rules they have set for themselves. Otherwise, even with an ideal plan and strategy, if they fail to execute it rigorously when the time comes, their investment approach will become chaotic and unstructured, making it difficult to succeed.

Warren Buffett’s investment method is very simple: assess investment value, avoid risks, maintain a margin of safety, and hold long-term to allow compound interest to take full effect. Buffett has always adhered to his principles, only buying stocks that he understands and can evaluate, and only purchasing them when they are very cheap. Anyone can understand these simple principles, but very few can strictly implement them. No matter how brilliantly a military strategy is written, if one cannot rigorously follow it, studying it will ultimately be in vain.

In the stock market, successful investors like Buffett do not rely solely on choosing the right investment strategy but even more on the strict execution of these strategies. Buffett’s success is not only reflected in his outstanding investment acumen but also in his extraordinary self-discipline. He not only adheres to his investment principles but also demonstrates great restraint and composure in the face of market fluctuations and external temptations.

The so-called “Maintains Discipline” refers precisely to Buffett’s unwavering commitment to his investment principles. No matter how the market fluctuates, he remains unmoved, insisting on only buying stocks he truly understands and only acting when their price is below their actual value. This ability to adhere to principles allows him to avoid many unnecessary risks and maintain investment stability.

Buffett’s self-discipline is particularly evident. During market booms, many investors become overly optimistic and blindly chase rising stocks, whereas Buffett remains calm and steadfastly follows the principle of “margin of safety.” He does not easily change his strategy due to short-term market fluctuations. This discipline not only helps him avoid common investment mistakes but also allows him to achieve significant long-term compound returns.

Buffett’s success comes not only from his unique investment insights but also from his strict self-discipline. He clearly understands that investing is not a short-term gamble but a long-term practice. Only those with strong willpower and rigorous execution can truly “cultivate themselves and uphold principles” in the ever-changing market and ultimately achieve sustained wealth growth.

During the tech stock boom, Buffett’s spirit of “Maintains Discipline” was especially evident. From the late 1990s to the early 2000s, internet technology stocks sparked a frenzy, with many investors pouring into these rapidly growing companies, including Amazon, Yahoo, and Google. At the time, the market was highly optimistic about the future of these tech companies, and stock prices soared. Almost everyone was eager to seize the opportunity to reap huge profits.

However, Buffett chose to stick to his investment principles during this period. Although he acknowledged the potential of the technology industry, he insisted on only investing in businesses and companies he truly understood. He consistently emphasized that he could not accurately assess the future value of these tech companies, so he avoided investing in them. This decision was met with much skepticism and ridicule at the time. Many critics believed that Buffett had “missed out” on the new economy’s wave and described his reluctance to engage with tech stocks as outdated and overly conservative.

However, when the dot-com bubble burst in 2000, tech stocks experienced a massive crash, and many investors suffered heavy losses. Because Buffett had steadfastly adhered to his “Maintains Discipline” philosophy, he avoided the risks of this crash, and his company, Berkshire Hathaway, remained unscathed, continuing its steady growth.

This case vividly illustrates Buffett’s discipline and adherence to his investment philosophy. Even when facing enormous market temptations and external skepticism, he still chose to stick to companies he could understand and evaluate, refusing to venture into unfamiliar territory. This commitment to principles not only shielded him from bubble risks but also solidified his long-term success in investing. This is the core of Buffett’s investment wisdom—always staying calm, adhering to the rules he has set, and not being swayed by short-term market sentiment.

Therefore, to achieve success in the stock market like Buffett, one must not only learn his investment strategies but also cultivate personal qualities, practice self-discipline, and uphold principles.