What type of investor you are

"You do need the right temperament for investing, which is much more important than IQ. If you've got more than 120 points of IQ, sell the rest — you don't need it. But you do need the right temperament: you have to be able to think for yourself."

You do need the right temperament for investing, which is much more important than IQ. If you've got more than 120 points of IQ, sell the rest — you don't need it. But you do need the right temperament: you have to be able to think for yourself.

There's no single right investor profile - only the one that's right for you: how much you can stand, psychologically and financially, to watch your portfolio's value fall without selling at the worst possible moment.

The cautious profile handles swings poorly: a 20% drawdown is enough to make it check the portfolio every day, and in the worst cases to sell right when the price is at its lowest. That's not a flaw - it's a fact about yourself worth recognizing before building a strategy, not after a crash. If you recognize yourself here, you're better off favoring companies with lower volatility and a wide margin of safety, which leaves room for a temporary price drop without calling the thesis into question.

The balanced profile can take moderate swings without losing sleep, but a very deep drawdown - 40-50% - still makes it uncomfortable. It's the most common profile: it tolerates the volatility of solid companies the market treats nervously, but prefers spreading capital across several sectors rather than concentrating it in a few high-conviction ideas.

The aggressive profile treats a deep drawdown as information, not an alarm: if the fundamentals are still solid, a sharp drop is a chance to buy with a wider margin of safety, not a reason to sell. This profile only makes sense for capital you won't need in the short term - a long horizon is what makes tolerating wide swings sustainable, not the other way around.