7 Effective Habits of an Investor
Principles that increase the chances of achieving satisfying investment results—not only on the stock market, but also in other investment markets.
Find your “why”—invest with intention, in other words… have a plan 😉
Investing without a plan is like driving a car without a map. Before you buy any securities, ask yourself: why this particular company or ETF? Why this investment? Why this specific REIT now, and what is your time horizon?
Are you counting on profit growth in the industry? Or maybe the company is undergoing a technological transformation, the results of which will be visible in 2–3 years? Perhaps you’re investing for dividends? Or maybe all the indicators you consider important look excellent, and the timing is just perfect? Write down your “why” and revisit this document during each portfolio review. It’s your compass.
And if you can’t explain in 30 seconds why you bought a given stock — you probably shouldn’t have bought it in the first place.
Have a courage to admit a mistake
Sometimes the market shows us that we were wrong. And that’s not a failure—it’s a normal part of the game called stock investing. The real problem begins when we ignore new information just to avoid “admitting” a loss.
If your original “why” no longer applies (e.g., the company changed its strategy, lost its competitive edge, or the management team fell apart), then it’s no longer the same investment you originally bought into. It’s time to let go.
Better a quick breakup than a toxic relationship with… (insert your own metaphor 😉)—in our case, “stocks with no future.”
Only invest in what you understand (really understand—not just what you think you understand).
If you can’t explain to a 10-year-old how a company makes money, you probably shouldn’t be buying its stock. If you can’t name at least three competitive advantages of the company you’re considering investing in, it’s better to walk away from the idea. Investors often get caught up in hype (AI, biotech, blockchain…), but real strength lies in understanding the business mechanics—not the buzzwords.
Look for companies whose business model, entry barriers, and profit generation you can clearly explain—ideally on a single A4 page. When you understand the business, you can make better decisions—especially in times of crisis.
Remember: the value of understanding > the value of forecasts.
Conduct regular, emotion-free reassessments of your investments.
Many investors treat their portfolio like a collection of keepsakes—full of sentiment. That’s a mistake. Portfolio reviews should be cold, analytical, and as ruthless as a debt collector.
Ask yourself questions like:
Does the company still have a competitive edge?
What does its balance sheet look like? Are revenue, operating profit, and free cash flow growing?
What’s its debt-to-revenue ratio?
Is the market recognizing its growth—or ignoring it due to perceived risks?
Prepare a “pros and cons” sheet (or use one of the many available portfolio analysis tools) and treat every investment as if you were deciding whether to buy it today at the current price. If you wouldn’t buy it again—maybe you shouldn’t keep it.
Look closely at who’s steering your investment — the owners, the management team, or maybe investment funds.
Human and ownership capital often make the biggest difference between an average company and a phenomenal one. Check:
Does the management have skin in the game (stock holdings, options)?
Do reputable funds hold shares?
Does the CEO and CFO own actual shares, or just options that can be dumped after the lock-up period?
Ideally, the management’s goals and yours should align—e.g., long-term, focused on value growth rather than short-term KPIs tied to annual bonuses.
Important: if the CEO hasn’t bought any company shares in the past year, while you’re just buying in now, ask yourself: who’s playing the game, and who’s just selling tickets?
Don’t act impulsively—create your own decision-making process.
Emotions are the biggest saboteurs of profits. An investor needs a decision-making process just like a pilot needs a pre-flight checklist.
Build a simple system:
- What are your entry criteria (selection, fundamentals, valuation, momentum)?
- When do you review your investments?
- When do you exit (declining performance, management changes, valuation rising above X)?
Without a process, you’re just reacting to news, Twitter (now X 😉), online forums, or impulses from your morning coffee—and that rarely leads to success.
Take care of a healthy portfolio—diversification, liquidity, balance.
Profit is one thing. Survival is another. Even the best ideas can come at the wrong time. Even a good company listed on a less liquid market might not be a smart choice. So, when building your portfolio:
Don’t put all your eggs in one basket.
Keep cash or liquid assets on hand—not just for opportunities, but for peace of mind.
Watch your allocations—don’t let a single company dominate your portfolio.
Experience shows that sometimes a portfolio should be like a well-balanced diet: boring, but healthy.
A diversified portfolio may not win a beauty contest, but it greatly increases your chances of not losing your financial game.
Summary: Investing is a marathon, not a sprint.
Good investment results are usually not the outcome of one brilliant trade, but the sum of small, consistent decisions. And those decisions should be based on:
- knowledge,
- a plan,
- a process,
- common sense,
- and a bit of humility toward the market.
One bonus habit to add: sometimes the best investment decision is… no decision at all. Doing nothing is also a strategy—especially when you don’t have an edge.
…you’re very welcome 😉😉😉
Rafał Jankowski
