Let's go back to the spring of 1720. At that time, Sir Newton owned the most popular South China Sea company stock in the UK. Seeing that the stock market was losing its mind, the great physicist claimed that he "can calculate the movement of celestial bodies, but cannot figure out the madness of humanity." Newton cleared all the stocks of the South China Sea company, making a profit of 7,000 pounds, with a return rate of 100%.
But only one month later, under the influence of market fanaticism, Newton bought the stock back at a much higher price, and lost 20,000 pounds (converted to the current currency value, which is about 3 million US dollars). After that, he would not allow anyone to mention the word " Nanhai " in front of him again throughout his life.
According to the vast majority of people's definition of the word "smart", Newton is definitely one of the smartest people ever. But according to Graham , there is still a big gap between Newton and smart investors. The greatest scientist in the world acted like a fool because he was blinded by the fanaticism of the masses.
In short, if you fail to succeed in the investment field, it is not because you are stupid, but because you, like Newton, do not establish the psychological constraints needed to succeed in your investment. You must know how to expand your wisdom by controlling your emotions and avoiding the irrational fanaticism of the market. It is important to be a smart investor, character rather than intelligence.
