An investor’s life begins as a stock analyst, grows into the role of a strategist, and then evolves into that of an investment manager. As wealth grows, the need to become an asset allocator rises significantly. The highest demands expected of him are at the asset level.
Most investors tend to think highly only of the first role of stock analyst and carry a lowly view of the subsequent roles. This tendency itself can become the Achilles heel of an investor. When an investor fails to understand the evolutionary needs in his investment journey, this can become his biggest limitation. This lack of understanding becomes the most limiting factor for his growth.
Investors fail to prepare for growth. There can be no greater weakness to carry. When investors fail to prepare well in advance, they are forced to learn from a crisis. The casualty is time, and the consequence is instability. Lacking stability when it is much needed can even threaten the very survival of the investor. When an investor does extremely well, it is his duty to prepare for the future, ring-fence himself from adversity, and stay grounded. Being a great stock picker is by itself not enough for an investor to survive and ride the cycles.