• June 15, 2018

What Type Of Investor Persona Are You?

If you have ever seen the film ‘Wall Street’ (1987), or even the sequel, you might have a dramatized idea of what investing is like. The reality is that investing is less about making and fighting enemies and more about simply deciding on your risk profile and what kind of companies you want to invest in. This is mostly down to your own personality or your investment persona. Here are some of the archetypical type of investors that throw their weight around on the market, perhaps one will describe you.

Let My Money Work for Me

Maybe you’re a ‘let my money work for me’ type of investor. This is someone who would go with pre-defined portfolios that are being managed for a fee. You love those risk versus return sliders and most likely will have settled on something in the middle. You couldn’t care less about where the money is invested as long as your portfolio return is good. Seeing your capital grow is addictive, and you’ve set up a direct debit to contribute from your wages to see it grow further. From time to time, you will open the app on your phone and do a little celebration dance seeing week on week growth!

Reactionist Investor

If you don’t like not knowing, maybe you’re a reactionist investor. You keep a close eye on the DOW index and know exactly what your portfolio is worth at any given time. A ticker tape is like hypnosis for you. Speed is the key to your success as making your capital grow is about beating everyone else to the punch. You are the kind of ‘shoot now ask questions later’ type of person and most likely also into extreme, high adrenaline sports.

Strategic Investor

If reactionary might not be your style, an expert strategic investor might be more your label. You are not too concerned about daily fluctuations as you are a modern-day Nostradamus. It’s all understanding that history repeats itself and everything is cyclical. You have done your homework and created a bang-on-trend analysis. Based on your research and intuition you have predicted the future, and therefore tidy returns.

Risk Taker

You see new opportunities as a challenge. For you, the thrill of investment is as important as the profit that you reap. You’re happy to jump on new trends such as margin trading, you’re happy to borrow more so that you can reinvest it into a new project, leveraging all that you have already.

Because you are willing to take risks, you often reap the rewards.

Green Is Good

Perhaps tidy returns are not your primary objective. There is more to life than money; there is an earth and civil society to look after! You don’t subscribe to Gecko’s school of ‘Greed is Good’ and will go with a more nuanced ‘Green is Good’ that is open to interpretation. Your investment is an extension of yourself, and your portfolio only contains companies that are ethical and socially responsible. You believe that voting with your money is a purposeful way to influence the future. It’s a win-win, not only are you on the right side of history, you are getting some excellent returns while doing so!

Bricks and Mortar

Maybe you are more of a ‘bricks and mortar’ kind of investor. If you can’t physically visit and touch the product you’re investing in, why trust it? The idea of your capital going up and down randomly terrifies you. No thank you; you want something tangible. The cornerstone of your portfolio is property and loads of it. Clearly, history will not repeat itself, and a subprime mortgage financial crisis is an impossibility. Property value can only go up, right? And if the property market has lost its shine, there is collectibles, gold and maybe even bonds.

The trick to getting a really great deal on a property is to find a top real estate agent. When you work closely with an estate agent, you are more likely to be able to see properties before they hit the market. Working alongside a real estate agent is also better for people who don’t have a high-risk tolerance. They will be able to discuss the property’s value, tell you more about the area, and give you a wealth of other information. Giving you the opportunity to make fully informed decisions with the advice of a professional.

Buy Low, Sell High!

If you are a different kind of traditionalist than the good old property and gold investor, maybe you subscribe to the school of ‘buy low, sell high!’. A simple rule but for you, it’s a life motto. You are always on the lookout for negative and bad press as it heralds the opportunity to buy stocks for pennies on the dollar. If you had a magic lamp and only one wish, you would wish for a time machine. You would go back to 1980 and buy every Apple (AAPL) share you can get your hands on.

Your Word Is Your Bond

Another kind of traditionalist is the loyal investor; a ‘your word is your bond’ type of person. Reacting to daily market fluctuations is for children, adults make the right choice and stick to it. You have considered going to or have been to general assemblies of shareholders and feel a real connection to the companies you hold shares of. A connection that sometimes stems from childhood memories. Steady as she goes and let the dividends roll in.

I Will Try Any Loophole

An investor with none of that sentiment might better describe you. Maybe you are an ‘I will try any loophole’ kind of investor. The first time someone explained derivative trading to you, you couldn’t believe your ears. How is value created out of thin air? Once you grasped the concept, and moreover the almost infinite size of the market, you were sold. Ever since you have been going through options, futures, forwards, and swaps. You laugh when someone says to be trading in actual products as you know the real money sits in derivatives. ‘The Big Short’ (2015) is your favorite film, ever.

Half Human, Half Human Calculator

Maybe you are a ‘half human, half human calculator’ type investor. Like the scene in ‘The Matrix’ (1999) where Neo starts seeing streams of code in the world around him, that’s how you sometimes imagine things to be as well. Maybe you are a quant or know a quant; you are intimately comfortable in using an Algo Terminal where you test and tweak your strategies. Data is everything, and you have loads of it, and more importantly, you know how to use it. In a way, it’s less about making money and more about building this living and breathing mathematical creature. It’s a modern-day Goose that is going to lay you golden eggs.

Regardless of what kind of investor you are, make sure you understand the risks involved and to never invest more than you can afford. Remember that past results are no guarantee of success in the future. Using common sense and a realistic risk-appetite, remember Bud Fox’s words: “Life all comes down to a few moments. This is one of them.” and make it happen.

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